Today’s Market Is Mirroring The Crash Of 1929 Almost Perfectly
| Key Factor | 1930's | Right Now |
| Initial Collapse | -49% | -52% |
| Length of the Subsequent Rally |
155 days | 150 days+ |
| Gain of the Subsequent Rally |
+50% | +50% |
| Final Collapse | -70% | Coming Soon |
Posted on 10/27/2009 5:42:27 PM PDT by SeekAndFind
Remember last spring, when many Republican governors balked at accepting Stimulus funds? Governors such as Rick Perry and Bobby Jindal sounded the alarm that these funds came with many unpalatable strings attached. Well, it hasn't taken long for the chickens to come home to roost, as Rev. Wright would say.
The United States, thanks to the policies of the Obama Administration, officially is in the midst of the longest recession since 1933 according to the National Bureau of Economic Reserach. While the federal government can deficit spend in unheard of amounts, the states cannot. Because of the continuing high unemployment and lack of economic growth, most states are facing deficit problems worse than those experienced in 2009.
In an op-ed in the Investors Business Daily reveals what is happening in the State of Washington as a result of rushing to accept $4 billion in Stimulus funds to help close their $9 billion deficit in 2009.
When Washington legislators began looking for ways to close their next billion-dollar deficit, the legislative staff informed them that their options were limited. The "maintenance of effort" provisions in the Recovery Act mean that Washington state cannot adopt eligibility standards for Medicaid that are more restrictive than those in effect on July 1, 2008.
Most states were still basking in the economic growth of 2007 at that point, and were at their most generous level of eligibility standards. Almost every state is in this same sinking boat.
Restrictions on K-12 education budget reductions are also extremely severe. Because state lawmakers accepted $820 million in education stimulus dollars, only 9% of the state's $6.8 billion K-12 budget is eligible for reductions in fiscal 2011. The same restrictions apply to the current fiscal year.
The options left to the states are now severely limited. Many governors will again look to the federal government for a second stimulus package ceding even power and control to Washington D.C. Most states will again raise tax rates which will only have the effect of reducing revenues and causing business to potentially move to a less onerous tax environment in another state.
The only real hope for the states is for dramatic economic growth, but that will not happen with all the tax, spending and new regulatory policies coming out of Washington. Add to that the burden now placed on the states by the central government requiring a higher level of taxation and spending by the individual states. The economic activity in the United States will be anemic at best for many years to come.
But the progressive dream to centralize power in Washington D.C. will come closer to reality.
| Key Factor | 1930's | Right Now |
| Initial Collapse | -49% | -52% |
| Length of the Subsequent Rally |
155 days | 150 days+ |
| Gain of the Subsequent Rally |
+50% | +50% |
| Final Collapse | -70% | Coming Soon |
Obama IS just like FDR, minus the experience.
hey remember when we were cool
An honest to God WWIII in the making?
Who would be the Fascist leader of the axis powers this time?
And what would happen if a state cut spending more than the allowed amount? Would they throw the Governor in Prison?
We know the answer to that one. At least this time we won’t have to march very far to get into the fight.
Except this time we're broke...
I’ve been thinking that right now is a good time for a short sell strategy and make some good money on the coming Obamunism misery.
In 1932...the Feds had’nt already exhausted their line of credit...
RE: I’ve been thinking that right now is a good time for a short sell strategy and make some good money on the coming Obamunism misery.
Some ETF’s to seriously consider if you believe that this recession is going to double dip and the dollar will tank further ....
# UltraShort Financials ProShares (SKF)
# UltraShort Russell 2000 ProShares (TWM)
# Gold ETF (GLD)
Just my humble opinion.
Here’s the 3 Card Monte in Modern Finance: The Dollar, Commodities & Stocks
These 3 assets revolve around one another like fish in a bowl, but most people would have you believe their relative movements are random.
They’re not, and there are good reasons for this thanks to the pressures on the government from all sides.
The Fed can – at best! – protect only 2 out of 3 at once. Usually it’s only one of them. And what’s more, the Fed can’t help but leave signs about which one it will sacrifice next.
Which sector will go up has a lot to do with the country that will probably become the world’s dominant economy sooner than you think.
If someone understands who’s pulling the strings (and why, and when), he’ll know exactly how to play each of the dollar, commodities and stocks for maximum gain at any point in time.
RE: In 1932...the Feds had’nt already exhausted their line of credit...
Let’s add to that the following factoids anyone interested can observe :
Industrial capacity at an all time low: In May ’09 industrial capacity was 68% — roughly 1/3 of our plants are doing nothing at all.
Falling revenue and profits: Even after laying off people and cutting costs, Q-over-Q Corporate Revenues and Profits fell 17% and 33% in 2Q09.
Food stamps in America? There are more than 30 million Americans on food stamps. That’s 1 in 10 people folks !
A creeping socialist tide: A full 18% of incomes are coming from an already broke government.
Unemployment desperation: No less than 7 million people will run out of unemployment insurance by Christmas (add their families and you have 13 million folks becoming destitute).
Plunging state coffers: Tax receipts are at their lowest levels since 1932.
Bankrupt governments: As many as 32 states have budget crises ($121 billion in total deficits) and the Federal Government has a $2 trillion deficit.
Derailed transportation: Rail carload volume for 1H09 is down 19% from the already dropping level of 1H08.
Very interesting (thanks)! SKF has a nice 5 day run, especially today...
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