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This is a post from last April that I want to bring back to the forefront.
Below, I've liberally excerpted from an article I read a couple years back that always stuck with me.
Since our challenge today is to know whom to trust and which story to believe, I thought I'd bring this one back to the forefront, because the parallels are so striking between the late 1920's and now.
Below is a graph of the Dow Jones during the years of the 1920's bubble, the stock market crash of 1929, and the onset of the Great Depression. The numbers in bubbles indicate when one or more quotes from a famous expert were captured.
I happen to believe that we are somewhere between points #8 and #18.
I get chills every time I re-read them...
Link to original article at Gold-Eagle.com
Number 7:
"The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin." - Stuart Chase , NY Herald Tribune, November 1, 1929 "Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929
"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929
"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."Number 8:
- Harvard Economic Society (HES), November 2, 1929
"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929
"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (Pres. of the Block newspaper chain), editorial, November 15, 1929
"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
Number 9:
"I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929
"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929
Number 10:
"For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930
Number 11:
"...there are indications that the severest phase of the recession is over..."Number 12:
- Harvard Economic Society (HES) Jan 18, 1930
"There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930
Number 13:
"The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930
Number 14:
"... the outlook is favorable..."
- HES Apr 19, 1930
Number 15:
"While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
Number 16:
"... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930
Number 17:
"... the present depression has about spent its force..."
- HES, Aug 30, 1930
Number 18:
"We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930
Number 19:
"Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931
Number 20:
"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933
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So is it serialised Chris?, Do we get the other bits12-20 as they were said then in our real time? The chills are part of the "awareness" process so are the sweats. But I guess you know that. Not to mention the bodily secretions. I'm trying to guess at number 20; "this will never happen again we have learn't our lesson"? Anyone else with some suggestions?
Don
Hey, don't leave us hanging! What are the rest of the quotes?
Thanks for all you do.
Nop...
"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933
I cheated......;-)
Wow.
That's why I pretty much ignore most mainstream editorial features about the crisis. They're clueless parrots.
I recently watched a debate between Peter Schiff and Art Laffer (http://www.youtube.com/watch?v=IU6PamCQ6...) from 2006. Schiff is saying that the economy is in peril and it's going to go down. Laffer keeps calling him an idiot (more or less) and implying that Schiff must have missed out on the "new economy" instruction that Laffer and all of his buddies got.
It's just amazing that all of these high paid economists can't understand something that a 12-year old can easily grasp. Too much spending and borrowing with not enough saving and producing = bankrupt.
Thanks!
Now....with extra quotes!
Well, that was one heck of a bear market rally. If it turns out that Chris is correct then we are in the range of #6 heading for a continued rally potentially through the election. I can't believe I just said rally. I just sat and started as the market blasted off...
Anyways, what baffels me is that the markets take off into worsening news. Is it because people felt the market was oversold given the present economic data? I wonder if the Fed will still lower the interest rate tomorrow...
This may be just like the Great Depression where we had a big drop a retracement, and then a continuation of the big drop. I don't seeany fundamentals that have changed.... If anything they have worsened.
-T
After looking through the rest of the quotes Chris just posted (thanks for posing those)... YIKES
Yes the markets took off today, including Canada where I am, all of them and I repeat all of them at exactly 2:00pm in the afternoon.
What happened at 2:00pm??? Who did what to whom???
Tom
This quote seams appropriate:
As I read this post today, I turned to my copy of The Black Swan by Nassim Nicholas Taleb. I went to his website just now and found this link:
http://www.fooledbyrandomness.com/imbeciles.htm
A snippet:
Globalization creates interlocking fragility, while reducing volatility and giving the appearance of stability. In other words it creates devastating Black Swans. We have never lived before under the threat of a global collapse. Financial Institutions have been merging into a smaller number of very large banks. Almost all banks are interrelated. So the financial ecology is swelling into gigantic, incestuous, bureaucratic banks – when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crises less likely, but when they happen they are more global in scale and hit us very hard. We have moved from a diversified ecology of small banks, with varied lending policies, to a more homogeneous framework of firms that all resemble one another. True, we now have fewer failures, but when they occur ….I shiver at the thought.
Banks hire dull people and train them to be even more dull. If they look conservative, it's only because their loans go bust on rare, very rare occasions. But (...)bankers are not conservative at all. They are just phenomenally skilled at self-deception by burying the possibility of a large, devastating loss under the rug.
<sigh>
Scott
"We don’t watch the news for the information, we watch if for THE LIE." From Chartingstocks.com. "There you go man, be as cool as you can. Face piles of trials with smiles; it riles them to believe that you perceive the web they weave. Keep on thinking freely!" The Moody Blues