2009 Depression Will Be Nothing Like 1929 216 comments
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Let’s call a spade a spade and quit trying to sugar coat yesterday’s financial debacle by calling it a recession. It is obvious, we are in a full blown depression, but stacking up the Great Depression to the current situation is simply not an “apples to apples” comparison, when it comes to the stock market. There is abundance of noise alluding to the fact, that since the 1929 depression saw the stock market fall 85% from its highs, then today’s stock market must also repeat the same fate, and eventually fall to the 2100 area. Nothing could be farther from the truth.
The differences between now and then are vast:
- We are in a global economy.
- We have the computer, incredible technology and the ability for instant communication.
- We have the internet, the single most powerful business tool. Bears, put that in your pipe and smoke it.
- We have the knowledge and ability to learn from the last economic debacle-history has basically made us smarter.
- Margin buying power leverage of ten to one has been reduced by 80%.
The bottom line is we have a much better economic system (with better checks and balances-not perfect) in place than we did 80 years ago and a drop of another 1500 Dow points is about as bad as it will probably get, if it happens at all. We could just as easily rally 2000 points in the next month.
What to do: Don’t listen to the “end of the world” prognosticators. They are simply trying to make a name for themselves by putting out the most outlandish predictions possible. Their gloom and doom stance should be taken with a grain of salt (maybe they are heavily invested on the short side) as everybody seems to have a “spin” these days, including me. Many figure if they throw enough garbage against the wall, something will stick. They should be ashamed of their sensationalistic antics. Their attempt to achieve some type of notoriety is simply disgusting.
Rise above the smoke and noise: It’s pretty simple. Disregard all the panic permeating amongst the so called experts and buy high relative strength stocks. You certainly want to be long any stock that is doing well in this environment. Consumer staples stocks such as Autozone (AZO), Wal-Mart (WMT) and McDonald's (MCD) are prime examples of quality stocks rising in a horrible market. These are the type of stocks you should be slowly accumulating. Don’t follow the crowd, go against it. Those that have the bravery to buy when others are fearful make the largest fortunes, just do not prospect in the junk yard as you usually end up with what you pay for. Stick with high quality, dividend paying, low debt stocks with high relative strength, and your ship will come in. I can’t overemphasize the importance of relative strength enough, when stock picking.
If you can’t beat em, join em: Besides owning a portfolio of high relative strength stocks, make sure you are exploiting the downside of the market with plenty of short positions. Why not make money on the downside? My perennial short favorite is AMZN, because it is still quite expensive, with a ridiculous 40 times 2009 earnings estimates. The fact that it is merely a retailer, dealing in discretionary items that most consumers do not need, cements it as a perfect short. It is one of the few stocks left out there that still has not completely cratered-in other words it still contains a lot of water waiting to be let out. A $25 drop is certainly not out of the question, especially if the Kindle fails to live up to all its hype. Its declining gross profit margins also give credence to my bearish outlook. The Nasdaq 100 (QQQQ) should also be considered a core short holding.
Disclosure: Short AMZN.
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This article has 216 comments:
I'm an optimist but I won't be suprisedsto see that hapennig. World will have riuned economy and massive debt.
Well, for someone who is bashing doom and gloomers, this is a pretty bold statement. And if you don't mean like the Great Depression...well, what do you mean? I'll stick with deep recession for now.
And ... no matter what you call "IT", it will be years before "normal" is returned.
On Mar 06 06:36 AM ArkansasAngie wrote:
> Call it a dad gum cheesecake.
>
> And ... no matter what you call "IT", it will be years before "normal"
> is returned.
>
in 1929 the US was the biggest creditor in the world. Today is the biggest debtor.
in 1929 the dollar was the strongest currency in the world. Today Mrs Clinton is begging the Chinese not to drop their holdings of US Treasuries.
in 1929, the depression was deflationary, which explains the 80% haircut on the stockmarkets. However this depression will be inflationary, so you could have a Dow 20.000 and still be worse off than in the previous depression, as stocks will rise with the inflation, but will not keep up with inflation and the dollar will lose whatever is left of their purchasing power.
Don't even try to establish comparisons in Nominal terms, does not make any sense mate...
In '29 there was still plenty of oil
Yes the Internet will tell us instantly which cities are having riots
This time it is much worse. Yeah, we can manipulate the economy more but that only makes a greater collapse when it happens. We're due for a crash, a crash much worse than in 1929.
The people and the Government of the United States are in such debt that they will be in much dire circumstances this time than last time.
And contrary to one of the above comments people have much less savings now than in 1929. If someone loses their job they will likely will have to file for bankruptcy. In 1929 most people either owned their homes or rented.
Last time people knew how to grow their own food, they knew how to live off the land, they knew how to deprive themselves in order to survive. This time people don't have a clue about these things.
On Mar 06 07:04 AM seldon wrote:
> errr...indeed, this depression has nothing to do with the one in
> 1929.
>
> in 1929 the US was the biggest creditor in the world. Today is the
> biggest debtor.
> in 1929 the dollar was the strongest currency in the world. Today
> Mrs Clinton is begging the Chinese not to drop their holdings of
> US Treasuries.
> in 1929, the depression was deflationary, which explains the 80%
> haircut on the stockmarkets. However this depression will be inflationary,
> so you could have a Dow 20.000 and still be worse off than in the
> previous depression, as stocks will rise with the inflation, but
> will not keep up with inflation and the dollar will lose whatever
> is left of their purchasing power.
>
> Don't even try to establish comparisons in Nominal terms, does not
> make any sense mate...
The savings rate is about 1% at this time. It was much higher in 1929.
On Mar 06 06:14 AM 22thoroughbred wrote:
> I still want to know what a "depression" looks like when people have
> some assets, during '29 our grandparents lived check to check, waited
> in soup and bread lines, etc. because they had no savings, today
> a reasonable percentage of people have a 401K with $100k or more,
> have some money saved, so what will an '09 depression look like,
> because honestly I believe as an economy we are there and it will
> get worse before it gets better. Thoughtful replies please
The savings rate is about 1% at this time. It was much higher in 1929.
On Mar 06 06:14 AM 22thoroughbred wrote:
> I still want to know what a "depression" looks like when people have
> some assets, during '29 our grandparents lived check to check, waited
> in soup and bread lines, etc. because they had no savings, today
> a reasonable percentage of people have a 401K with $100k or more,
> have some money saved, so what will an '09 depression look like,
> because honestly I believe as an economy we are there and it will
> get worse before it gets better. Thoughtful replies please
And the jobless rate being reported is totally wrong because it only reports people who are getting unemployment checks in the mail. Well what about those that don't qualify anymore? If you've been unemployed for more than 6 months the government doesn't consider you unemployed in their report, what a convenient way to make things appear better than they are.
At least in 1929 there were still a large amount of people acutely aware of what was going on. After the crash there were actual treason charges brought against the (privately owned and operated) Federal Reserve and many large Wall Street firms. Today no one cares as long as they don't miss American Idol tonight.
And then we get to the point of discussing the FDIC, which many people believe is supposed to prevent us from having runs on the banks. Yet the FDIC recently released a report saying they don't have nearly enough money to cover the deposits of most of the country if there were an actual run on the banks (news.yahoo.com/s/afp/2...).
The global nature of the current depression is far more pervasive than in the 1930s:
In the 30s about 50% of the world was a subsistence economy and was completely unaffected by the depression. Now those who live at subsistence level are certainly no more than 10% of the world population. Thus this depression hits 90% of the planet
We have no idea how that will impact geopolitical events that are just now beginning to unfold and are likely, thanks to the internet, to spread far and wide very quickly.
Also, there's the little problem that the reputation of fiat currencies has deteriorated, with no immediate prospects for self-discipline in money creation among central bankers.
But most dangerously, out of control military expenditure is continuing without much debate, or even discussion. I believe NATO itself has promoted economic instability to a threat level higher than Terror (whatever that is), but even they don't yet realize that the V-22 & friends are pointing more at *us* than at them.
Why? Well Mr O declared "no torture". A most cowardly declaration and done not to only protect terror suspects (and they are thrilled) but almost exclusively to protect the Madoffs and Stantons of the world... because if they were tortured we would find out the hundreds in political office who were co-conspirators in their fraud and schemes. Mr O is terrified of who they are and what might happen if the public were to see the list of names and what they did to the country. Treason? Yes, many, hundreds in power, possibly thousands in regulatory capacities.
On Mar 06 08:24 AM User 370942 wrote:
> I think this was the best article in many many months. If only such
> articles were to flood the system, we would be out of this mess very
> soon. Ofcourse habbits might change a bit but the whole global economy
> has no where to go but forwards. This is a correction period and
> is certainly a gloomy period but it is also a period of rejuvination
> / new growth after a wild forest fire. We will soon (if such articles
> keep us optimistic) see new grass growing and the whole economy stabilizing.
> Great going, please dont keep quiet but put forth more of such wonderful
> articles. These are like vitamins/nutrients for a debilitated mind
> right now. WE NEED PEOPLE LIKE YOU TO SHOUT OUT LOUD NOW.. PLEEEEASE....
I don't know the final resting place for the DOW (I'm guessing 4000), but I can tell you what will happen:
* Real estate will continue to go down
* There will be continue to be bankruptcies
I'm a little concerned about the overall health of the banking industry. The problem is *DEBT*. It was also a problem in 1929. It's going to have to be cleaned out of the system and will take some time.
There are still perils ahead with Municipal bonds and commercial real estate. Tax bases are decreasing around the country, which could cause munis to default. Commercial RE is plagued with decreasing occupancy rates and less timely rents.
Add to that the still problematic mortage forclosures, declining house values, frozen credit markets, and teetering financial and automotive industries, as well as Obama's plan to spend even more to nationalize healthcare and there is no wonder people are pulling out of the market.
I am sorry to say, but we aren't even close to being out of the woods yet.
Uh, this isn't about being rosy or doom and gloom, its about being analytical. My professional background is CPA, and I have a minor econ degree. I can opine professionally about the ability of an entity to continue as a going concern. If i went into an audit being cheery and said to myself if I am happy and positive then this company will survive (even though internal controls and financial fundamentals were bad), then I would be acting negligently. What we need is to face the facts and fix the problems.
On Mar 06 08:24 AM User 370942 wrote:
> I think this was the best article in many many months. If only such
> articles were to flood the system, we would be out of this mess very
> soon. Ofcourse habbits might change a bit but the whole global economy
> has no where to go but forwards. This is a correction period and
> is certainly a gloomy period but it is also a period of rejuvination
> / new growth after a wild forest fire. We will soon (if such articles
> keep us optimistic) see new grass growing and the whole economy stabilizing.
> Great going, please dont keep quiet but put forth more of such wonderful
> articles. These are like vitamins/nutrients for a debilitated mind
> right now. WE NEED PEOPLE LIKE YOU TO SHOUT OUT LOUD NOW.. PLEEEEASE....
7 "Thu Oct 02 01:00:00 CDT 2008 A new study released this week highlights what experts have been saying for years: the U.S. faces significant risk of power brownouts and blackouts as early as next summer that may cost tens of billions of dollars and threaten lives.
The study, "Lights Out In 2009?" warns that the U.S. "faces potentially crippling electricity brownouts and blackouts beginning in the summer of 2009, which may cost tens of billions of dollars and threaten lives." ..."
www.utilityproducts.co...
They also didn't have the equivalents of an Obama and Pelosi and an obvious tax cheat for the Treasury secretary leading the way. We had a moral compass at the head, and that is more important than the internet or any other technical tool.
Reasons why this one is different (and presumably not as bad): the Internet...
...are you kidding me?
2) Instant pricing technology may actually make things worse as it destroy pricing power and profits from intermediation.
3) I see no evidence that "the economic system is better". Many assumptions are being challenged right now and I expect that many more will be challenged in the future.
4) The Depression was finally ended by WWII. With current technology, that outcome is no longer plausible (not that War is ever a desirable solution).
It seems that the internet as a technology is a highly deflationary one.
It will take some time following this period of creative destruction before jobless ad/newspaper/tv, etc. professionals find jobs in other productive endeavors.
On Mar 06 09:54 AM Harry Tuttle wrote:
> 1) The economy was more globalized in 1929 than you think. Indeed,
> the Depression may have started by the England's pursuit of getting
> the Pound back to its pre-war value in Gold.
>
> 2) Instant pricing technology may actually make things worse as it
> destroy pricing power and profits from intermediation.
>
> 3) I see no evidence that "the economic system is better". Many
> assumptions are being challenged right now and I expect that many
> more will be challenged in the future.
>
> 4) The Depression was finally ended by WWII. With current technology,
> that outcome is no longer plausible (not that War is ever a desirable
> solution).
This series of cascading events that takes down a large percentage of the world's largest commercial and investment banks may likely provide an entirely new world bank in concept and fact, to replace the old fallen (if not mortally wounded) system. This type and magnitude of global economic adjustment might serve as an entirely new lens through which future economist shall analyze fiscal theory and response.
An orange of entirely different stripes, for better or for worse…
Fool!
I suggest you take a few hours out of your busy day and research generational patterns, starting over at www.generationaldynami...
Then research The Great Depression and actually read writings from that period instead of what historians have written. You will find that things were very similar to now and that few believed that things could get worse until they actually got worse. You will also find that in fact, the government did a lot to try and stop the rapid decline but as now, was unable to.
Once you build up a huge amount of leverage in a financial system there is only one way to go: deflation. You should also be open to the idea that is may be WORSE this time because we have such a globally linked economy. As they say, "The bigger they are, the harder they fall".
> 4) The Depression was finally ended by WWII. With current technology,
> that outcome is no longer plausible (not that War is ever a desirable
> solution).
Please quit spreading this fallacy. The economy was on the mend in late 1932 and was then hampered by government intereference, especially high taxes. Still, the economy was already improving quite rapidly through most of the 1930's, it's just that the damage was so great that it was going to take a decade or so to restore confidence to the American people and the business community.
data.bls.gov/PDQ/servl...
Yes, the country needs to work out some more problems before there is confidence to be back in stocks where people belong for the long term (if anyone even remembers what that means any longer...).
I know being gloomy is the thing to do right now, but this country has a GDP of over $13 trillion per year even after accounting for the drop in 2008 production- how can anyone think a machine like that is going to dry up to the point where S&P levels should drop to 400? seriously, you must be joking if that sounds rational.
While everyone is running around screaming about the sky falling, I will continue to accumulate equity positions at prices that are at least 20% below their book value, even after accounting for the drop in short term earning potential.
I would like to thank all of the panic sellers for doing so much to help me fund a comfortable retirement with these ridiculously undervalued prices.
On Mar 06 12:06 PM Dr Death wrote:
> I will survive on rice,beans,cup o noodles,tap water!
On Mar 06 12:13 PM User 371158 wrote:
> The unemployment rate was well over 7% in 1958, it was around 7%
> in 1961, it was consistently in the 7+% range for the mid 1970s and
> it was well over 10% in the early 1980s. The historical average
> is around 5 to 5.5% on the long term here in this country, which
> your "efficient economy" theorists will say is about right.
> data.bls.gov/PDQ/servl...
>
> Yes, the country needs to work out some more problems before there
> is confidence to be back in stocks where people belong for the long
> term (if anyone even remembers what that means any longer...).
>
>
> I know being gloomy is the thing to do right now, but this country
> has a GDP of over $13 trillion per year even after accounting for
> the drop in 2008 production- how can anyone think a machine like
> that is going to dry up to the point where S&P levels should
> drop to 400? seriously, you must be joking if that sounds rational.
>
>
> While everyone is running around screaming about the sky falling,
> I will continue to accumulate equity positions at prices that are
> at least 20% below their book value, even after accounting for the
> drop in short term earning potential.
> I would like to thank all of the panic sellers for doing so much
> to help me fund a comfortable retirement with these ridiculously
> undervalued prices.
My father lived through the real depression, fought in a world war, lived through a time that overcame the global threat of fascism and communism and worked hard and prospered. To see the descendants to that generation … when we have absolutely no real threat out there except to face the consequences of our own stupidity and greed … something that absolutely pales in comparison to any real danger the world has faced in the past … gripe and run scared like mentally incompetent babies … I am truly, truly at a loss for words.
Every person here who writes the words that are the equivalent of curling up and a ball and giving up … I say to you … you should take a long hard look in the mirror and realize what a pathetic site you have staring back at you. God forbid you ever have to face a real problem. You are obviously way too soft to deal with it. And maybe that is the real problem here … we as a nation are way too soft. Soft doesn’t even begin to describe it.
So run and hide you emotional monkey brains … run and hide. In your basements with your spam and shotguns is where you belong. Leave the great outer world to those who have the strength, integrity, courage and wisdom to enjoy it.
While admitting that I certainly do not have all the answers, with the market down around 50%, it seems more likely that it will eventually go up from here, rather than down. Selling call options against positions in quality companies purchased at these levels could also generate some nice income due to the high volatility. I am also wondering if we are seeing capitulation.
Of course, the world could end. Certainly we have enough nuclear weapons and nuts around to get the deed done. But if that happens, it doesn't matter whether you invested or not.
On Mar 06 12:47 PM Jonny Rotten wrote:
> All the people freaking out on this web site, other web sites and
> tv, etc. are total babies. As well all sit in our luxury homes, with
> the highest standards of living in the history of mankind, with access
> to amazing institutions of education, a great legal and business
> system, the world best health care system and life span, a wonderful
> physical and technological infrastructure … and the cry over it and
> fret about losing it like total babies … I have to say I am becoming
> totally disgusted with 95% of the people I encounter. Not only are
> they fools and mental infants … they are embarrassing to have as
> fellow citizens.
>
> My father lived through the real depression, fought in a world war,
> lived through a time that overcame the global threat of fascism and
> communism and worked hard and prospered. To see the descendants to
> that generation … when we have absolutely no real threat out there
> except to face the consequences of our own stupidity and greed …
> something that absolutely pales in comparison to any real danger
> the world has faced in the past … gripe and run scared like mentally
> incompetent babies … I am truly, truly at a loss for words.
>
> Every person here who writes the words that are the equivalent of
> curling up and a ball and giving up … I say to you … you should take
> a long hard look in the mirror and realize what a pathetic site you
> have staring back at you. God forbid you ever have to face a real
> problem. You are obviously way too soft to deal with it. And maybe
> that is the real problem here … we as a nation are way too soft.
> Soft doesn’t even begin to describe it.
>
> So run and hide you emotional monkey brains … run and hide. In your
> basements with your spam and shotguns is where you belong. Leave
> the great outer world to those who have the strength, integrity,
> courage and wisdom to enjoy it.
>
You can’t cheat nature … and there really is no free lunch. If you want to build a real, strong worthwhile society I can GUARANTEE you won’t do it screeching like a baby on an internet chat page while shivering and waiting for the end of the world.
I will say right now that EVERY person who pours their fears out on these pages I have nothing but contempt for you.
1) If you really think the world is going to collapse then at least have some integrity and keep your panic to yourself for the sake of those around you. Keep quiet.
2) If you are just trying to scare other people then you are even lower than that. As I said look long and hard in the mirror and realize you have a LONG way to go to develop into a decent human being. A LONG way. So you too … have some integrity and Keep Quiet.
3) If you are thoughtful and truly want to put forward a reasonable point for discussion. Then please do. If not … Keep Quiet.
On Mar 06 01:09 PM Jonny Rotten wrote:
> Now that I think about it … looking out over a sea of people who
> sit in front of their computers and endlessly try to ‘game’ each
> other and then fret, whine and ultimately panic when it all goes
> against them … is quite a funny … and ultimately a extremely sad
> site. I am even ashamed of myself for even take part in this non-sense
> even in the smallest degree.
>
> You can’t cheat nature … and there really is no free lunch. If you
> want to build a real, strong worthwhile society I can GUARANTEE you
> won’t do it screeching like a baby on an internet chat page while
> shivering and waiting for the end of the world.
>
> I will say right now that EVERY person who pours their fears out
> on these pages I have nothing but contempt for you. You are weak
> and stupid.
>
> 1) If you really think the world is going to collapse then at least
> have some integrity and keep your panic to yourself for the sake
> of those around you. Keep quiet.
> 2) If you are just trying to scare other people then you are even
> lower than that. As I said look long and hard in the mirror and realize
> you have a LONG way to go to develop into a decent human being. A
> LONG way. So you too … have some integrity and Keep Quiet.
> 3) If you are thoughtful and truly want to put forward a reasonable
> point for discussion. Then please do. If not … Keep Quiet.
>
Yes they do ... if the people that are being told are truly weak and stupid.
On Mar 06 01:17 PM Jonny Rotten wrote:
> >> Decent human beings don't tell people they don't know that they
> are weak and stupid.
>
> Yes they do ... if the people that are being told are truly weak
> and stupid.
I've been weak and stupid in the past ... and probably will be again many times in the future. But I am not afraid to look at that and deal with it and try to make myself better.
Anyone who yells 'fire' in a theater that is NOT on fire needs to be dealt with as they needlessly and foolishly endanger and hurt other people. That is what many of these comments are the equivalent of. I value my community and I am not going to sit idly by and watch this nonsense and say nothing about it.
I'm sorry you chose to focus on such a narrow point of my message. I say to you ... relax ... a little sober thought without a needless worry about hurting someones feelings is what is required in the middle of this type of lunacy.
I think my grandmother would agree with me 100%. I know my grandmother and what she lived through ... she would be just as ashamed of the people on this board as I am. That is the way I was raised - thankfully.
The more I think about this the more I can't believe you wrote that. So lets go back to something like the Nuremberg trials ... no you are right ... decent people NEVER tell other they are weak and stupid.
Come into the real world brother/sister. People are weak and stupid ALL THE TIME. It is not a crime or a failure to point that out ... its your duty as a human being.
As for me, I'm not panicking. I saw this coming years ago and got the hell out. Out of the market and out of the country. My gold bullion has gone up 50% since I bought it. Sold some at $997 and used all proceeds to by silver bullion.
If I knew more about shorts I'd short the USD and US bonds for the pure satisfaction of it.
On Mar 06 01:21 PM Jonny Rotten wrote:
> >> Decent human beings don't tell people they don't know that they
> are weak and stupid.
>
> I've been weak and stupid in the past ... and probably will be again
> many times in the future. But I am not afraid to look at that and
> deal with it and try to make myself better.
>
> Anyone who yells 'fire' in a theater that is NOT on fire needs to
> be dealt with as they needlessly and foolishly endanger and hurt
> other people. That is what many of these comments are the equivalent
> of. I value my community and I am not going to sit idly by and watch
> this nonsense and say nothing about it.
>
> I'm sorry you chose to focus on such a narrow point of my message.
> I say to you ... relax ... a little sober thought without a needless
> worry about hurting someones feelings is what is required in the
> middle of this type of lunacy.
----------------------...
These safety stocks also won't go up as fast as more volatile, high beta, cyclical stocks in a recovery. In fact, they'll probably underperform the market and riskier stocks on the way up because high beta companies are more discounted right now. If you sell your more volatile stocks on the way down, and buy safety stocks with small gain potential on the way up, you have ensured underperformance against the market by locking in oversized losses and undersized gain potential. When the bottom hits, you'll want to be in high beta - but solid - companies. The good news is that there are plenty of them available. Examples: staffing agencies, technology, international stocks, entertainment & leisure, etc. Many of these shares will appreciate over 100% in the next 3 years vs. maybe 30% for pricier but safer shares like WMT (what, you think their P/E will rise to 25 or something?).
If you think that's wildly optimistic, take another look at stock values after the bottom of the great depression. A lot of investors had fled to safety at the time, due to no better reason than emotion and a horrible external environment. They locked in their losses early and missed double-digit gains in the later half of the depression and WW2.
The bottom is never a time to follow the herd into supposed safety. It's when stocks get irrationally cheap that you get rewarded for thinking for yourself and being agressive. Unfortunately, we investors tend to do the opposite.
Of course. I am not saying anything about that.
I am talking about comments like this ...
>> Yes the Internet will tell us instantly which cities are having riots
... of which there are no shortage.
-97% say things are much worse than this author thinks.
- 3% drank the same kool aid he is offering.
Another Big Difference between then and now:
During the Great Depression we were a creditor nation and energy
independent.
The title of the article had me intrigued: "2009 Depression Will Be Nothing Like 1929". I thought he would expose the cold hard facts, but it was just another fluff piece.
On Mar 06 01:58 PM Jonny Rotten wrote:
> >> Telling the truth about the markets is not the equivalent of yelling
> fire in a theater that's not burning.
>
> Of course. I am not saying anything about that.
>
> I am talking about comments like this ...
independent.
I really don't know where to begin. If you are really that stupendously blind to miss ALL the great things that have occurred in the US and the world over the last 80 years that so ridiculously mitigate all the other factors - that will keep us from being anywhere near like the 30s then I really don't know what to say.
Dude ... you are TOTALLY ignoring MASSIVE advances in information technology, food production, health care and medical care and technology, infrastructure, social programs, transportation, education, etc, etc, etc ... I could go on for days!
THAT is why we are not heading into ANYTHING LIKE the 30s. God ... I wish people weren't so myopic and fearful! That is the most depressing thing ... so MANY people have no idea what they have and insist and missing the entire boat regarding reality and where the world is today.
In the 30's you have nothing like the know-how we have today, nothing like the technological capabilities of the modern world.
Yes ... we may be more energy defendant ... but our technology has improved so vastly in that time that NO ONE would want to go back to the 30s and the energy infrastructure and capabilities they had then.
This is not NOR is it ever going to be the 30s.You have to be TOTALLY out to lunch to even think of that.
I mean really ... what would you rather have ... our level of 'energy dependence or fascism and communism threatening the free world.
Plucking 2 thing out of the air and pointing to them with out any contextual relevance at all is ... just really not that bright.
www.ted.com/index.php/...
Hey, you're the one still in that cesspool and you'll be the one that has to suffer the consequences of you poor choices. Good luck with that.
On Mar 06 02:13 PM Jonny Rotten wrote:
> >> Then there is Presidential Directive 51.
>
> Ok ... nevermind ... you are crazy. Good luck with that brother.
>> Then there is Presidential Directive 51.
Its just a real shame to see the potential of a human brain ... a miracle of evolution ... wasted on needless paranoia. Granted you may not like to hear me say that ... but what can one do. I don't say it vindictively or mean-spirited ... you can believe that or not. I'm just don't have that much time.
A stock market crash qualifies. Civil unrest qualifies.
On Mar 06 08:33 AM User 370947 wrote:
> OK...Can you please tell us what the next bubble will be based on?
> Since our country and most people in it are insolvent, what are we
> going to do for an economy? Can you explain to me who will buy our
> debt? Who will rent all the vacant commercial property, which by
> the way will start to crumble this spring and summer. Oh let's not
> forget that the second wave of ARM defaults have yet to hit, what
> happens then? Many of the MSM predict a bottom at the end of 2009,
> BASED ON WHAT? How is the GDP going to grow? Are we going to start
> charging more stuff on our credit cards? We don't manufacture much
> of anything in our country anymore, we can't afford to buy anything,
> so please tell us why we should listen to you, you have a factless
> opinion advising people to put money into long and short positions
> in crashing global crisis. Yes you're right on one thing, this depression
> will be nothing like 1929, it will be much much worse. Put that in
> your delusional pipe and smoke it.
You know nothing about me. You know nothing about my achievements. Ad hominem attacks are forbidden on SA.
On Mar 06 02:39 PM Jonny Rotten wrote:
> >> Mind your tone.
>Its just a real shame to see the potential of a human brain ... a miracle >of evolution ... wasted on needless paranoia. Granted you may not like >to hear me say that ... but what can one do. I don't say it vindictively or >mean-spirited ... you can believe that or not. I'm just don't have that >much time.
That many hard working, educated Germans believed the man right up until he capped himself is the part of history we fail to learn from.
Civil unrest? Ok ... yep ... sure. Then you should go back and read what I said above.
This is NOT just about the stock market now. You are talking crazy non-sense and I'm calling you on it. You should NOT be making such irresponsible statements. If people engage of civil unrest because of a loss in the stockmarket then they are insane!
Human kind has survived, prospered and made it through FAR greater events that that without the need for hysteria or civil unrest. The suggest it as reasonable or likely means you are "out of your tree".
You have no grounding in reality. If you think that is a real danger - stock losses - then I really don't know what to say!
If there were actual artillery shells crashing you'd have a point. My point is the stock market down 50% is NOT an artillery shell. NOT EVEN CLOSE BY 100000000 miles. To compare it to one is nuts. To make that statement is nuts and irresponsible.
The fact that you even see the two things are remotely linked means you are a fool ... a soft spoiled fool.
Look you've drunk the kool-aide. Fine by me. You are the one stuck in that cesspool of the formerly free. Very soon events will prove one of correct. C-YA.
On Mar 06 02:55 PM Jonny Rotten wrote:
> >> A stock market crash qualifies. Civil unrest qualifies.
>
> Civil unrest? Ok ... yep ... sure. Then you should go back and read
> what I said above.
>
> This is NOT just about the stock market now. You are talking crazy
> non-sense and I'm calling you on it. You should NOT be making such
> irresponsible statements. If people engage of civil unrest because
> of a loss in the stockmarket then they are insane!
>
> Human kind has survived, prospered and made it through FAR greater
> events that that without the need for hysteria or civil unrest. The
> suggest it as reasonable or likely means you are "out of your tree".
>
>
> You have no grounding in reality. If you think that is a real danger
> - stock losses - then I really don't know what to say!
In the macro view, this world will not stop growing, producing, and consuming. It's really hard to believe that companies have really not added any value since 1995. On an inflation-adjusted basis alone, we should be higher. A great big chunk of wealth has rightfully been destroyed, but not 14 years of retained earnings.
Someone also implied that the mass integration and acceptance of Internet is a net negative? Are you kidding me? Yes, newspapers and brick-and-motor places have gotten slammed , but do you realize the unquantifiable productivity, creativity, and revenue stream increase we've seen because of it? At these prices, we are basically discounting any value the Internet has brought this us.
The USD being the reserve currency of the world is helping us fight deflation right now and the almost inevitable future inflation will help us get past this crushing debt. The deleveraging and strength of the dollar is simultaneously encouraging America to save and is also giving us incredible borrowing rates from foreign capital.
In addition, the redistribution of American economic hegemony to other countries won't necessarily decrease the earning power of American companies. Rather this means that the rest of the world is growing faster and catching up with us, not that America is falling off a cliff.
IT'S DIFFERENT THIS TIME!!!!!
Don't you love it?
Am also a fan of the Goebbels diaries. Also Jacques Ellul and Elias Canetti.
It appears you have struck a nerve in some posters here. Such is life.
What did Ortega ye Gasset say? Something like "If anything can be learned from history it is that people do not learn from it"?
On Mar 06 02:54 PM EX-AD-MAN wrote:
> Joseph Goebbels broadcast happy talk even as Russian artillery shells
> were crashing in the Teirgarten in April of 1945. I mention this
> here because some whole, intact sentences of the nastier perma-Bull
> commentary I'm reading could be lifted verbatim from the Chancellor's
> diaries - which are a fascinating read when absorbed in the glow
> of today's media saturated times.
>
> That many hard working, educated Germans believed the man right up
> until he capped himself is the part of history we fail to learn from.
market-ticker.denninge...
"The differences between now and then are vast:
1. We are in a global economy."
Globalism is a fraud...and has helped bring DOWN this nation.
" 2. We have the computer, incredible technology and the ability for instant communication.
3. We have the internet, the single most powerful business tool. Bears, put that in your pipe and smoke it."
Which are ALSO incredible time wasters. Net neutral, IMO.
" 4. We have the knowledge and ability to learn from the last economic debacle-history has basically made us smarter."
Apparently not!!! We are repeating the same Keynesian mistake.
" 5. Margin buying power leverage of ten to one has been reduced by 80%."
Huh? It's clear you have ZERO idea what is going on, and what is STILL out there!!!
Seriously now ... you just posted a link that has a page that lists 10 items that all start with .... X 'will happen' when ... blah blah blah ...
go watch the video I posted ... its not about a bunch of non-sense that some crackpot thinks 'will' happen ... its about what already has happened and why ...
Seriously .. everyone here ... take a few minutes and watch this ... it will do you some good. Its real.
www.ted.com/index.php/...
* We just entered this depression
* We have several years before all the bad debt will be flushed out of the system
* This may end up being a hyper inflationary depression as opposed to pure deflationary (we are no longer on the gold standard).
* We don't have the equivalent manufacturing base of the 30's
* I think this one may end up being worse than the '29 depression because of our high debt relative to poor manufacturing strength.
** Batten down the hatches **
So today we had 650000 new reported job losses. Over 50 states that's just 13000 people a state, over 25000 tows and cities in the US that's just 26 people for each one.
No one likes to lose their job ... I feel sorry for each person but 26 people a town is NOT a disaster ... not even close!
But people see 650000 and think ... my god ... what a huge number ... I don't understand that number ... I am scared.
Its the same with a 9 trillion debt (or what ever the number is). The US has a GDP of 14 trillion ... probably a weath base of 150 trillion. A 9 trillion dollar debt is like a guys that makes 150K a year with a million in the bank having a loan outstanding of 90K. Hell ... that is nothing. I'd even say it would be wise to borrow more! The average person in the US has a mortgage worth a greater percentage than that and all these people think their homes are the best thing the ever bought.
Debt is not a bad thing if you use if for productive purposes. The US uses its debt to improve it infrastructure, educate people, do research, provide vital infrastructure and on and on ...
The US debt is a good thing and in fact they have too little.
Its just that its such a big scary number that people don't understand that they get scared.
THANK GOD there are smarter people than than actually running the government.
>> We don't have the equivalent manufacturing base of the 30's
Man ... wrong, wrong and wrong ... go take economics. Why do we as dumb evolved monkeys only value what we can touch.
The US has the largest reserve of knowledge and education in the world. You don't need everyone working looms to be a rich nation. One guys can invent a machine that can make the goods that a million people once made by hand ... and we are all better off ... since we have a these same goods for FAR less and are free to spend our time on more productive things.
Man ... the fact that we evolved out of the trees and are on average really BAD ad understanding more complex ideas is pretty sad ... but I guess just something that the human race will have to muddle through UNTIL we can all stop needing to spend our time assembling crap and can get educated and REALLY contribute to our society.
I take that back ... from what I can see the average republican ... with a decent smattering of democrats is no where near understanding that.
I often have to wonder how such WOEFULLY uneducated people ended up being senators and making policy. Most of the time the populist nonsense these guys say ... and actually believe I might add ... is nothing short of astounding.
I guess while I am at it ... for those of you who bother to take the time to read what I wrote ... it may enlighten you just a touch on why you are part of the herd and why you get taken advantage of in 'crisis' times like these.
You 'think' you are smart because you hold all these backwards naive ideas about things ... and then you go out defending the backwards concepts (like we would be stronger if we had a bigger manufacturing base of uneducated people doing menial labor) ... and then get suckered into doing all the sames sorts of wrong things with your money ... like buying high and selling (not buying low).
You do it because you 'think' you are smart and in that pathetic hubris you get taken to the cleaners over and over.
Go read a book ... in fact read 200 books ... and read them with an open mind and be open to being wrong and having everything you believe overturned. Then you might one day start to have a clue.
See ... knowledge is valuable .. and I didn't need to make it or manufacture it from anything that I could touch.
I'm not saying if the stimulus will be successful or if this even larger bank bailout will work, but we're not throwing all the money down the toilet. These bank loans (at least some of them) will be repaid with interest and the stimulus will create some value. It's better than all the ignorant Republicans saying "Let everything fail". It's easy to armchair QB this situation and say that things would've been better off if we let things run their natural course. Countless small, medium, and large size businesses would've become insolvent if something wasn't done to halt the credit freeze.
It's better to swallow the anger because Merrill, Goldman, Citi, AIG, BAC all going under would've destroyed the global economy, not just themselves. There's no such thing as an orderly bankruptcy with these companies under these conditions.
Unfortunately, people usually won't pay for "pride", but they may very well pay for "products" made with pride... shoot - that's the way I shop.
Yes ... I agree. What the world needs MUCH more of is education. When they day comes ... if it EVER comes ... that they average person ... especially the people in government ... actually understand these things it will be a great day for all. ALL this time that is wasted arguing over idiocy can hopefully one day be spent talking intelligently about how to make the world EVEN better than it already is. The economy progresses because people get smarter NOT because we make more ... because we can make FAR more and FAR better with FAR less. We do that through knowledge and THAT is what has VASTLY increased in the US since 1930. Forget energy dependence and manufacturing ... thinking like that is COMPLETELY backwards and show you don't really understand the first thing.
That is also the reason why NO ONE here would want to go back to 1930. They just don't see that because they are far too busy having their amygdala being on hyper drive with fear to think.
I've posted to internet boards maybe 3 times in my life. But after reading all this stuff here lately and talking to people around me ... I can't take this utter foolishness any further. I just have to say something.
Dude ... they stuff they make ... we invented! Don't worry about balance of trade non-sense ... just keep inventing new things. THAT is what makes countries rich ... not millions of people in sweatshops. The US is NOT going to regress backwards because we don't have enough factories.
Goods are what you need for prosperity... the cheaper you can make them (and there is PLENTY for everyone) ... the more time you have for HIGHER pursuits.
You have it ALL backwards.
America's REAL problem is that it has stopped educating its youth. That can turn into a problem. Not that the country doesn't have factories.
You DON'T want factories. You want educated people to solve the problems of your society in ever increasingly efficient ways.
STOP thinking about things like country borders .. these are artificial things. They really mean nothing anymore. All human beings are in this together ... and the smarter we ALL are the better for everyone.
Still, I really don't think anyone knows how things are going to turn out.
For now, I think the wisest thing to do in stay in USD cash. At least for a couple of months.
History states that all empires crumble........so is it our turn??? or not???
Again, no one really knows.
I must concede with Johnny, that I would not want to go back to 1930's. Living in the south without air-conditioning would be hell on earth.......:)
Sal
Its really hilarious to watch millions of people as they watch millions of people and everybody is trying to figure out and predict in some sort of pseudo-scientific fashion what everyone else is going to do ... and how they can take advantage of if while sitting in their pajamas in front of their computers.
Everyone staring at everyone else trying to figure out the best way to 'game' what everyone else is doing.
Its like the final scene in Reservoir Dogs played buy the entire country with each other at once.
No wonder this thing is collapsing ... haha ... what kind of nutty society has this internet unleashed?
Haha ... yes. Especially if you were black.
>> History states that all empires crumble........so is it our turn??? or not???
I don't think empires crumble as much as the landscape slowly shifts under their feet and things slowly change.
Looking back over time all at once things seem to happen abruptly ... when in actually its never really the case.
America .... the empire ... will not collapse ... its just that as the world around it gets smarter the serendipitous advantage that discovering a brand new isolated, resource rich continent!!! (how lucky was that!) once conferred ... will slowly recede into the past.
EXACTLY!!!
On Mar 06 12:04 PM freddyv wrote:
> On Mar 06 09:54 AM Harry Tuttle wrote:
but it did join the race ... and kept running and improving all the way along ... as it did for the 10,000 years of modern civilization before that.
Hell ... forget going back to 1930 ... is there ANY date in history that ANYONE would want to go back to and live ... haha ... I think not ... not unless you like dying at 45.
Things have gotten better FOREVER ... and they will continue to do the same simply BECAUSE we get smarter every passing year.
What makes a caveman's life different from a life today is not a manufacturing plant ... but the KNOWLEDGE of how to built that plant. That is what makes a country ... AND a person ... rich (in many, many, many ways) ... knowledge.
Hopeless people commit suicide or spread their hopelessness.
Poor does not, nor ever has equaled hopeless.
So keep being hopeless and those with hope will keep on keeping on.
I pretty sure the only thing history can teach us is human nature stays true to course:
I over we. Short term over long term. Herd mentality.
Easy as that. All this economic mumbo jumbo is a lot of hot air.
*chuckle* ... its called evolution ... not being sidetracked. Haha... in the market of ideas people chose what they want to talk about.
The tragedy of the commons. What are you gonna do ... create smart regulation ... haha ...
Huh ... who really gives a crap about that? You can pick any stock on any given day and flip a coin and you have a 50% chance of being right. Being right one day shows nothing ... thinking it shows something ... actually does show something ... and nothing good I might add. Haha ...
Is that the same as me wondering why people who talk about the end of days immediately bring up their gun. But they say they just have the gun to protect their family, but everyone knows what they really mean is they are itching for things to go south so they can blow some heads off.
On Mar 06 05:49 PM Mark Krieger wrote:
> You guys are getting a bit sidetracked..the article was also meant
> to demonstrate how good AMZN is as a "short play"---The stock plummeted
> almost 5% today despite the Dow ending up in the green.
That is the BEST comment here today! The BEST!
Human beings ... despite what many want to believe .. are just monkeys in better clothing. When they lose something or feel threatened they go all primal.
When one money goes all primal all the other monkeys start going primal as well because they get caught up on the emotion. Just like if you start laughing other people will start laughing ... just because you are laughing.
So the more monkeys here start talking about guns ... well the more the other monkeys start talking about guns ... and it spirals downwards ... just like the S&P. Its all the same thing.
The fact that all these monkeys out there trying to 'game' all the other monkeys ... as those monkeys try to 'game' all the other monkeys back ... is even funnier.
On Mar 06 06:21 AM pelican wrote:
> "It is obvious, we are in a full blown depression.."
>
> Well, for someone who is bashing doom and gloomers, this is a pretty
> bold statement. And if you don't mean like the Great Depression...well,
> what do you mean? I'll stick with deep recession for now.
8% unemployment (just 3% above frictional) is NOT a depression.
People getting kicked out of the over-priced California 5 bedroom homes is NOT a depression.
Breadlines are a depression. Starvation is a depression.
Feeling panicked and angry while you watch the lunatic Jim Cramer on your 40 inch flatscreen is NOT a depression. Its a stupid waste of life .. that's what it is.
8% unemployment (just 3% above frictional) is NOT a depression.
People getting kicked out of the over-priced California 5 bedroom homes is NOT a depression.
Breadlines are a depression. Starvation is a depression.
Feeling panicked and angry while you watch the lunatic Jim Cramer on your 40 inch flatscreen is NOT a depression. Its a stupid waste of life .. that's what it is.
I agree we live a much better era than 1929 no matter how bad it is now. But for those who still have the memory of financial security just 2 years ago, the big gap is very had to live up with.
The depression in 1929 was partly solved by world war II. I guess the comparison between now and then is quite natural--at least it offers a BIG warning: try to cooperate with other countries, try to be more independent in energy.
As for the development of technology, it surely makes life easier but it won't necessarily make people happier.
As to the author: I don't know if short amzn is a good idea even from valuation point you are right. Now the stock price is crazier than ever before. I sometimes think if the analysts cut the earning estimate down so that each company can beat it, will that be a better place for "long"? So any company still show "growth" is already quite expensive. As long as the faith holds, it will continue to be so.
You hit on a VERY important point about human psychology!!
People are all freaked out today because they lament what they HAD. Even though they still HAVE so much now compared to any time in history ... they are still working from a brain that evolved over millions of years in the harsh grasslands and jungles and loss FEELS BAD to that brain. REALLY BAD!
In reality the world is FANTASTIC and full of promise ... but when you lose something ... no matter what you have left ... you feel like crap and like the world is ending.
That is why it is called irrational.
That is what make a person a part of the herd and easily taken advantage off. They let emotions interfere with rational forward looking decisions.
The smart thing to do now is to be optimistic and buy things like equities since they have so much promise in the future.
People can't do that because they can't get over the negative emotions they are experiencing because of their recent loss.
The 'smarter' people (at least along that metric) don't let yesterday interfere with making a rational decision today.
The average-joe does ... in fact that is what defines and separates the average-joe investor from the truly successful. Not being able to read a chart or to some fundamental analysis... or some such non-sense. That is the snake-oil that the herd is sold ... and told is the path to success.
What about the ones that have already happened in Greece?
www.independent.co.uk/...
Not coming to America, huh? Read this:
euro-police.noblogs.or...
Sure, if you want to wrap yourself in an American flag and degrade those with a critical mind, go for it. But it won't work. The truth always comes out in the end. Look at A-Rod!
So go ahead and buy your stocks. In fact, go on margin!!! That would really prove you're right. Margin is lending, so go on margin as much as possible. Then you will be as broke as the entire US economy.
That's what hurts,Exxon, Worldcom!!! Our trust has been violated. If we are unable to trust those we elect, whom can we trust?
On Mar 06 07:57 PM Jonny Rotten wrote:
> You hit on a VERY important point about human psychology!!
>
> People are all freaked out today because they lament what they HAD.
> Even though they still HAVE so much now compared to any time in history
> ... they are still working from a brain that evolved over millions
> of years in the harsh grasslands and jungles and loss FEELS BAD to
> that brain. REALLY BAD!
>
> In reality the world is FANTASTIC and full of promise ... but when
> you lose something ... no matter what you have left ... you feel
> like crap and like the world is ending.
>
> That is why it is called irrational.
>
> That is what make a person a part of the herd and easily taken advantage
> off. They let emotions interfere with rational forward looking decisions.
>
>
> The smart thing to do now is to be optimistic and buy things like
> equities since they have so much promise in the future.
>
> People can't do that because they can't get over the negative emotions
> they are experiencing because of their recent loss.
>
> The 'smarter' people (at least along that metric) don't let yesterday
> interfere with making a rational decision today.
>
> The average-joe does ... in fact that is what defines and separates
> the average-joe investor from the truly successful. Not being able
> to read a chart or to some fundamental analysis... or some such non-sense.
> That is the snake-oil that the herd is sold ... and told is the path
> to success.
Read these:
www.iht.com/articles/2...
euro-police.noblogs.or...
Sure, Jonny Rotten, it's easy to wrap yourself in the American flag. It kept Bush in office for eight years. But we'll see what it does to your bank account.
In fact, if you believe so strongly, then go on margin. Borrow as much as your account is worth! After all, that's what the US did!
lukeamerica2020.wordpr.../
Stop trying to pick meaningless acorns out of you a*s to prove some paranoid point.
On Mar 06 08:09 PM KenyaInvestor wrote:
> No riots, huh?
>
> What about the ones that have already happened in Greece?
>
> www.independent.co.uk/...
>
>
> Not coming to America, huh? Read this:
>
> euro-police.noblogs.or...
>
>
> Sure, if you want to wrap yourself in an American flag and degrade
> those with a critical mind, go for it. But it won't work. The truth
> always comes out in the end. Look at A-Rod!
>
> So go ahead and buy your stocks. In fact, go on margin!!! That
> would really prove you're right. Margin is lending, so go on margin
> as much as possible. Then you will be as broke as the entire US
> economy.
Man ... if this is your argument for armageddon you are gonna have to come up with something more than that pathetic weak stuff.
On Mar 06 08:22 PM KenyaInvestor wrote:
> or this...
>
>