Posted on 09/09/2001 5:28:59 PM PDT by It'salmosttolate
August 19, 2001
Updated on September 8, 2001
Pierre Rinfret
Can a depression happen again?
Why not, humans know no limits to their stupidity.
Unfortunately, I have to say 'Yes, it can happen again.'
The folly of man knows no limits as the bubble that used to be the Asian boom now shows conclusively. It is never the forces of which you are aware but the ones you don't think about that always get you.
As an historian of economic and financial affairs if there is one thing I know it is that the follies and stupidities of man know no limits.
Yes, it can happen again. I hope and pray not but it is more than stupid to think or say we have licked, forever, the horrible specter of a domestic and world depression."June 1997; Depression; Internet; http://www.parida.com
Source: http://www.rinfret.com/depression.html
As of September 8, 2001: The news gets worse and worse and what is most disturbing is that no government appear to recognize what is happening and could happen; to wit a depression now appears entirely possible. The bad news has gone from manufacturing to non- manufacturing. In other words the deterioration is spreading like a cancer!
The stupidity and ignorance of the administration is hard to beat! First the President cays he is "concerned" and what that means is beyond me and what if anything he is going to do is beyond me (he refused to take questions at the press conference announcing his stately "concern").
But the incompent untrained neophyte Secretary of the Treasury is even more ludicrous in what he announced recently: I would say he suffers from th denial syndrome!
"09/08 09:44 U.S. Economy Showing Signs of Recovery, Treasury's O'Neill Says By Brendan Murray
Suzhou, China, Sept. 8 (Bloomberg) -- The U.S. economy is emerging from a slowdown that sent unemployment to a four-year high last month, reassuring Asian countries that the biggest engine of global growth won't drag the world into recession, Treasury Secretary Paul O'Neill said.
Joblessness in the U.S. rose in August to 4.9 percent, to the highest level since September 1997, the Labor Department said yesterday. O'Neill said the number is a ``lagging'' indicator and doesn't take into account 'anecdotal' evidence he has gathered from businesses showing company orders are increasing.
Article continued here: www.rinfret.com/depresion02.html
Is Rinfret selling a book too?
Probably not because firms nearly universally keep MUCH closer track of their sales and inventory levels and make frequent, small adjustments on a continuous basis. They are able to do this because of computerized inventory control systems and bar code tracking of inventory items and items sold. The ability to make frequent, small adjustments in purchase orders and production levels makes nationwide, or worldwide, sell-off panics of goods very, very unlikely these days. Many other safeguards are in place in the stock market and in banking as well that were instituted after the big depression of the 30s.
Well suppose all investors woke up tomorrow and decided to sell all equities because they ALL thought there was nowhere but down to go? Admittedly, this is a bit of a stretch.....this would be more likely by Wednesday morning, at the current rate.
Well, I'm sure all sorts of counteracting mechanisms would kick in when prices drop - but how long will that solution last? That's like saying, "Nope. That 10 ton weight won't drop, we got some toothpicks underneath it now." The mass and inevitability of a monolithic market move would seem to be more than a match for any puny safety contraptions backed - by what?
Sure, they can shut the market down. Then what? A massive "Nuthin' to fear but fear itself" campaign?
What am I missing here? What is truly and realistically in place to thwart a crash?
Has there been wildly different accounting information posted in the last 2 years to account for the 70% loss in the NASDAQ?
Actually, even during the great depression, retail unemployment was 50% while industrial sector unemployment was 80%. So I don't think inventories of consumer goods is key. New plant construction, raw material processing and the like were hit the hardest the earliest and longest. It's pretty hard to JIT that sort of stuff -- as you're always trying to guess where consumer spending is going to be in the future. Always a tough call.
When the current slump is cogently explained on page 1 of USAToday, my advice is to buy like there's no tomorrow.
Aren't you the blithe spirit!
You're probably right, though. Like the Edwardians were surprised by the appalling realities of WWI, us 'Millenians' will be pole-axed by economic events outside our envelope of expectations.
It won't be pretty.
A market crash is a symptom of a credit bubble. That means a market crash is a symptom of depressive economic forces. Market crashes don't "cause" depressions.
We will have the most difficult economic times of our lives, because we are facing the largest debt (and I'm not talking about the national debt)of all time.
What is a technical definition of depression? Is it a matter of degree of unemployment, or is that a result? Someone once told me that a depression is when the currency is undergoing deflation and the economy is actually shrinking. After some number of years of such deflation and shrinking the depression would become Great.
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