Great Depression II (2000-201?)

[harrytrader]

Quote from harrytrader:

NOBODY ? Of course there are SOME that see it coming,

it's rather the HUGE MAJORITY DON'T WANT TO SEE IT THAT IS COMPLETELY DIFFERENT !

It is true that it is difficult psychologically that something similar to what happened to the Grandfather of Scientist in Germany (and also to my grandfather who was the richest man in the region except that the catastrophe was communism) could happen today but there were clear signs at that time as there also clear signs today. But if you don't want to foresee it then you'll have to undergo it. In fact I don't think that many of us will have any choice than been completely ruined because when millions or even dozens of millions of dollars accumulated during your life disappear in hyperinflation...

http://www.elitetrader.com/vb/showthread.php?s=&threadid=30200&perpage=6&pagenumber=1
My family lived in Germany during that time, and until the late 90's. I am still half-German and I've grown up and been schooled there. So I've gotten a good bit on the German history.

My family during that time, spell great-grandparentsn were very very wealthy...

To make it short, we were a Hanseat Hamburg-based dynasty of coffee traders for several centuries (about 500 years afaik), and later on controlled a lot more, such as several of Hamburg's largest banks at the time.

When Hitler took Germany, it was all over. Finance went down, and inflation came. My grandfather's grandfather at the time, who owned the largest bank back then, was part Jewish, and Hitler had taken most rights and control off him. Yet, he pretended everything was OK, and continued going "to work" at "his bank" for another 8 years, just not to worry his family.

Hyperinflation came, and my family, not long before worth hundreds of millions (at a time where you could buy a nice car for DM 800 or so), had left nothing, but the places they lived in. It didn't take long till their net worth was that of a postage stamp... I still have some 500-Million-Reichsmark stamps in my collection here... It was a crazy chain of events.

Of course they had to give up all their possessions too, just to be able to eat. They couldn't maintain anything.

 

[bali_survivor]

Quote from harrytrader:

It is true that it is difficult psychologically that something similar to what happened to the Grandfather of Scientist in Germany (and also to my grandfather who was the richest man in the region except that the catastrophe was communism) could happen today but there were clear signs at that time as there also clear signs today.

In another post I mentioned the following a while back:

There is a lot of similarity ot the 1920 era. In those days the car and the telephone / telegraph was revolutionising the social structure and shifting where everything was produced.

Today we have the internet, container shipping and air travel doing the same on a global scale. The 1930's depression was a result of "new technology coming of age". We could say the same about today.

Underlying the US economy is not that strong: There used to be a technological advantage but even that is exported to third world countries (or Russia). Think about the computer industry and even administrative jobs being done now in other countries. What is left for the US? Where is the advantage?

After reading harrytrader's piece I am reminded about the pre-WW II era in Germany where a few companies (I believe 6) more or less told the government what to do. IS that any differrent from what is happening today?

The coming of the next depression is more or less inevitable. The laborforce is presently "exported" (to other parts of the planet) in big numbers and this starts the downwards cycle.

If you start to think about it: the social circle is broken: The big firm send jobs to far away, the local staff is laid off, the local ex-staff has no money to buy goods, the local shop keeper has to lay off staff etc etc. And so we all spiral down the tube.

How is that today different from the 30's? Only the distance has changed.

But the markets can stay irrational longer than that your trading account can stay solvent so in the meantime you may want to stick to TA and keep alert on the fundamentals.

Peace

 

[ramuk]

It's very possible that the policy of very low interest
rates by the Fed could be a trigger for a depression.

It does seem to make sense in the short term (especially from
previous experiences).

The reason for a depression is always clear looking backwards.
As an example, in the 1930, trade tariffs etc were put up
with the view to avoid a depression/recession and not to create
one. But that is exactly what happened.

I argue that we could be doing the same thing this time, only
it's the other way around.

I make this point to support teh hypothesis that a depression is always unexpected.

 

[bali_survivor]

Quote from ramuk:

The reason for a depression is always clear looking backwards.

It may be simpler than we think. I am reminded of something that happened some years ago here in Auckland, New Zealand while I was working in Asia.

The center of Auckland went for an extended period in a "blackout" because electricity grid could not cope with the load and some main trunks blew out and took time to get replaced. Many businesses went under during that time in that location.

Where I was in Asia they kept on chuckling about the "first world" being down like that. There, with the regularity of the clock, (almost weekly) the power would go off and they just would walk to their generator, start it up and switch over. After ten minutes the whole street (in the business district) would have their generators running and business was back to normal.

There was a student in the US who started to map all the internet connections and the US government started to jump on him. As the story goes it appears that there is quite some vulnerability in the internet.

Now with the whole world being "connected" and relying on this internet we get some strange skewing of responsibilities etc.

How about the sewage treatment plant in Europe controlled by some people sitting in the Philippines? How about a power plant controlled in the Ukraine? Accountants in India? Chip design Moscow? Where is the end?

But if the internet goes down then how does the whole lot keep operating? Like Auckland the "first world" may be totally paralyzed and the situation may be like the Year 2000 problem in programming: no one any longer knows why things were programmed in that way. (many were complacent too in the early days: "Those programs won't be running by 2000" was the reply when you would say something about it back in 86. Well, as we all know, many programs were still running.) Similarly in the first world there may not be any capability (knowledge) to run it without input from the third world.

I am reminded about the dustbowl, the potato blight etc. Whenever anything gets "uniform" then it does not need much before the whole card house crumbles. Could it be that the internet is the achilles heel of this civilization?

Peace.
--------------------------------------------------------------------------------
The market can stay irrational longer than that your account can stay solvent.

 

[QdzResurrection]

You have my sympathy. That said, don't call your personal tragedies others great depression. That is no such a called great depression lately. America is fine if not always better than before. Thank you.

 

[harrytrader]

Quote from harrytrader:

NOBODY WARNS ? Of course there are SOME that see it coming,

it's rather the HUGE MAJORITY DON'T WANT TO SEE IT THAT IS COMPLETELY DIFFERENT !

Anne Williamson for example on worldnetdaily whose editor said "one of the world's most knowledgeable experts on the International Monetary Fund and the World Bank"

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=22824

WorldNetDaily.com

I've never been more proud of any piece of journalism than I am of this month's cover story in WorldNet magazine, the offline companion to WorldNetDaily.com.

Written by Anne Williamson, one of the world's most knowledgeable experts on the International Monetary Fund and the World Bank, it tells a fantastic but true story of money and power and the way these institutions adversely affect the lives of millions and threaten the financial and personal security of every American.

Most people don't understand this story. Most people don't have a clue as to what the IMF and the World Bank are. Most people don't know anything about the way they threaten the interests of average Americans.

I never understood it myself until I read Anne Williamson's extremely insightful piece in WorldNet Magazine this month.



http://www.financialsense.com/Experts/2001/Williamson.htm
Anne Williamson, Contributing Writer, WorldNetDaily.com
"The Fed: How your money - and life - are controlled by America's banking system"
http://realmedia.cts.com/ramgen/crash/jpuplava/netcastdaily/radioexperts/050201.rm

http://realmedia.cts.com/ramgen/crash/jpuplava/netcastdaily/radioexperts/092601.rm
http://realmedia.cts.com/ramgen/crash/jpuplava/netcastdaily/radioexperts/061201.rm

Even in 1929 it was false that nobody warned : the Roger Babson's warning is famous and look what "they" answered which proved unconstestably their pretentious silliness ... the same kind of answer you can hear today from the ever-gullible-of-new-age-era:

In 1929 writing a "Special Letter" to his Babson Reports on October 14th explaining twelve characteristics of a "bear market."

Even prior to this response to an already sagging 1929 stock market, Babson had been suggesting that the level of credit (which might more properly called debt) was much too high for a sustainable economy and implored everyone to eliminate his debts less he become sucked into the vortex of a market collapse. In the Retail Ledger of January, 1928 an article runs, "Babson Fears End of Prosperity: Can't Last Forever, He Says in His Year's Message to Business. (Jan. 17)."


Put your business and your personal affairs on a safe foundation.
Get out of debt, wholly if possible, otherwise, reduce your indebtedness as much as possible.

There is no reason why the wheel of fortune will not continue to turn for many generations as it has in the past. Panics and depressions may some day be eliminated, but little has yet been done to bring such a millennium about. The Federal Reserve system may have put banks in an impregnable position, but it has not changed human nature.

People are in debt today to an extent never before. Sooner or later the dam will break, to be followed by unemployment, failures and hard times.

This reply in the Clients Service Bulletin by the American Appraisal Company dated January, 1928 follows Babson's prouncement:

If enough folks will interpret the admonition about the "safe foundation" and the "budget system" as a direct warning that they better have an appraisal right away, "we," speaking editorially and personally, eventually or possibly by about next December may be able to comply with the instructions about debt. But at this writing what with Christmas bills on the one hand and March 15th on the other, we view the suggestion "Get out of debt" with the same perplexity as the bashful young man who had been advised to "assume an easy and graceful attitude in the presence of ladies." However, we'll do our derndest, Roger, and thanks for giving us the idea. It always has seemed to us that what you say about service is the best or at least the safest policy to pursue.

-------

Hahahahaha laughable no to read this : 'we view the suggestion "Get out of debt" with the same perplexity as the bashful young man who had been advised to "assume an easy and graceful attitude in the presence of ladies."'

That's why those who pretend to make laugh of that will be the ones who will be catched in their stupidity and pretention.

 

[harrytrader]

Bubble is created today by the same manner as it was in the past ! Babson said:

"The investment trust has become a great factor in boosting prices by the buying of securities to hold. The average market operator during the last twenty years has bought today and has sold within a week. This means that the selling has always about equalled the buying. Under such conditions a market could be very active without any considerable increase in stock prices.
The investment trust, however, has bought the leading stocks and held them. This means that there has been considerably more buying than selling, by the same people. As a result, the floating supply of these stock has been pretty well cleaned up and it has been very easy to mark up the prices thereof. "

 

[harrytrader]

Quote from harrytrader:


Hahahahaha laughable no to read this : 'we view the suggestion "Get out of debt" with the same perplexity as the bashful young man who had been advised to "assume an easy and graceful attitude in the presence of ladies."'

That's why those who pretend to make laugh of that will be the ones who will be catched in their stupidity and pretention.

Also laughable :

In the Boston Herald of October 31, 1929 the Financial McNeel's Service ("An Aristocracy of Successful Investors," 126 Newbury St., Boston) took out a full page ad asking "Who Killed Cock Robin ? Are The Prophets of Disaster Now Satisfied?" :

What caused the panic?
What put consternation into millions of American investors? What happened to cause investors from the Atlantic to the Pacific to throw their stocks overboard, all at once, regardless of price?

A few weeks ago all was serene. Men were willing to buy and sell stocks at the then existing prices. Business conditions were fundamentally sound. Financial conditions were fundamentally sound. the world's gold -- a very substantial part of it -- rested in America. The Federal Reserve Banks were seldom in better condition.

Why in the middle of a normal Stock Exchange session did stocks go tumbling down?

Did someone yell, "Fire!"

Although there was no fire, did men become panicky and in an effort to save themselves bring ruin to themselves and others?

A great tribute, perhaps when the American nation reposes such great confidence in anyone, but a national disgrace when such confidence is so unintelligently betrayed.

Men in high positions should properly recognize public responsibility.

When they cry, "Panic!" though there is no panic, do they not themselves create it?

 

[harrytrader]

I admit that today there is Prechter who plays the doom and gloom but I suspect this guy is a manipulator: it is since twenty years that he announces the Great Depression, for example when the Dow was just under 10000 he was predicting a plunge to 5000, whereas I said that it would pass 10000 (I have the proof on googlenewsgroup for that). He is a manipulator because he can't ignore that Elliott himself has said that the market's Bull should terminate around 2012, which is funny because my model points towards the same period although I'm not sure that we will reach the target of 16000 I have calculated since I don't know if the law still hold for such scale I don't have thousands of years of stock market history to test it, I can just make the hypothesis that if market stays fractal then the law would be the same.

Now for long term the best is not Elliott nor my model it's just the fundamental: demography dictates long term cycles of economics and wars because when people get old, well they are just useless assets. To get rid off them economically speaking it is ... just economic if one follows the logic of some: why feed useless old people instead of pocketing their money if one has the power to do so ? And why not pocket it before they just realise that ? Of course those who control Wall Street, banks and corporates all over the world are Saints, they have proved so multiple times, there is no need to think that they are so immoral to just do that. What's bad when one want to make profits since it is economic business just at very big scale of a nation or the whole world ? Below God there is the Business God on earth let's honor him since he can be so great.

 

[jstanton]

It's The Depression, Moron...



Borrowing and slightly twisting a quote from a past and somewhat colorful character from American history, “It’s the depression, moron…” True – Arkansas Billy said “It’s the economy, stupid”, but, in the end, his point is still exactly the same. In fact, Bill Clinton’s logic and powerful insight into all-things-political was so on the mark, so profound and so accurate that he stole a presidency on the sheer weight of its prevailing simplicity.
Regardless of what you may personally think about Clinton, he was, in fact, right. He was right for the moment and the deep wisdom in his little quip stands unchallenged today. The upcoming election will be determined by many confluent political forces, but none so powerful as the economy. The wit and wisdom of this single testimonial by our former Chief Executive will turn out to be his long sought after place in history just because of the sheer power of its truth.

By 2004, based solely upon the utter brilliance of this profound precision of thought, we all should have been thoroughly tutored by those four little words that comprise the bulk of the Clintonian legacy. So much so that if any American has not figured it out yet, then they have simply not been listening. Or they have been so distracted by the DNA on the blue dress that have not had the presence of mind to stop their moralistic yammering, listen and finally admit that Bill got it right at least once. It has become such an indelible fact of our culture that if anyone had not learned it by now, then they are truly, well, ...a moron.
Bill Clinton and I will agree that he was correct then about his single economic truth and he remains so today. However, at this juncture, our understanding of the meaning of the economy, moron, radically diverges. You see, Bill was talking about the economy of right now. But the real economy of the nation is not right now, it has never been, not even in the so-called new paradigm. The true economy is based on tomorrow. It is future based, future oriented and future mortgaged in every single respect. Hence, to truly understand the economy that is right at or doorstep and what it is doing, we need to see where it is actually headed.

The truth is, fellow morons, the Emperor of the economy is, at this very moment, butt naked. He sold his clothing, all of it. He had to. And there he stands out on Wall Street, grinning and flashing his wares to everyone who wants to actually open their eyes and see. But the Emperor has managed to print up enough money and pass it around to an army of people who can speak the contemporary financial vernacular. Working together, this vast sea of conflicted financial professionals have managed to convince an entire population of reasonably intelligent, public school educated, neo-Darwinian evolved humans that this economy that our former President referenced is robust and ready to roll onto new decades of boom and bubble.

The fact is, winter is coming and the Emperor is about to freeze his exposed rear off. The unmistakable signs are all around us, including ice crystals forming on both red cheeks. We are being systematically lied to by the army of economic prevaricators bought and paid for by the ones who will lose their political and economic shirts and perhaps hung in public ceremonies if (when) the populace ever finds out they have been purposefully duped.

This jolly troop of lying jesters have watched so much football that they have learned to ply their trade like a football coach on ESPN. With a carefully constructed language that stems from a short dictionary of less than 100 actual words, they have learned by proper chained-link-lingo-speak to convince the population that today’s game is somehow unconnected to the end game or even rest of the season. Or, that today’s economy is somehow unlinked to tomorrow’s sheer fiscal realities.

They are all lying and they all know it. They are successfully convincing the population that the Emperor’s clothing is exquisite because if they fail, they all will be trading in their six-digit paychecks for a victory garden planted in 5-gallon buckets on their Manhattan terraces.

What does the economy have in store, right around the corner?

The truth is, a planetary wide economic depression is right at our doorstep.

A hush settles over the normally jubilant crowd of economic revelers - the news is received as undisguised sacrilege by all...

It will be a depression so profound and so deep that there has never been one in history that has ever rivaled it before. And it is only a matter of time. Indeed, the financial disaster itself has already happened, its effects are simply delayed, waiting for the creditors bills to hit the mailboxes. The party is over. We have spent the money. The plastic won’t swipe anymore and the clerk is giving us funny looks. Now we have to pay the bills. Unfortunately, we don't have that kind of money and we don't make that much money. Our creditors will not be amused when they find this out.