Depression the sequal? [I'm just sayin']

[jAQUAN]

The roaring 20's

The problem with such heavy concentrations of wealth and such massive dependence upon essentially two industries is similar to the problem with few people having too much wealth. The economy is reliant upon those industries to expand and grow and invest in order to prosper. If those two industries, the automotive and radio industries, were to slow down or stop, so would the entire economy. While the economy did prosper greatly in the 1920's, because this prosperity wasn't balanced between different industries, when those industries that had all the wealth concentrated in them slowed down, the whole economy did. The fundamental problem with the automobile and radio industries was that they could not expand ad infinitum for the simple reason that people could and would buy only so many cars and radios. When the automotive and radio industries went down all their dependents, essentially all of American industry, fell. Because it had been ignored, agriculture, which was still a fairly large segment of the economy, was already in ruin when American industry fell.

source

The Great Depression

One reason why the Federal Reserve did not act to limit the decline of the money supply was regulation. At that time the amount of credit that the Federal Reserve could issue was limited due to laws which required partial gold backing of that credit. By the late 1920's the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit was in the form of Federal Reserve demand notes. Since a "promise of gold" is not as good as "gold in the hand", during the bank panics a portion of those demand notes were redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by a greater reduction in credit. Several years into the Great Depression the private ownership of gold was declared illegal and reduced the pressure on Federal Reserve gold.

source


Today

Bernanke said that current losses from the subprime mortgage mess were probably about $100 billion but cautioned that this figure could wind up being higher.

Former Treasury Secretary Larry Summers told lawmakers on Tuesday that Congress should consider a stimulus package of up to $150 billion. He proposed an immediate injection of $50 billion to $75 billion through a combination of tax cuts and increased spending on unemployment benefits and other programs. He also advocated that another $50 billion to $75 billion be set aside in case economic conditions weaken further.

During Thursday's hearing, Bernanke said he thought a fiscal stimulus package of up to $150 billion, would be "reasonable."

source

I know it's the chicken little theme song to cry "new depression" but they don't even have a plan. Their fix is FK'ing buyagra!
Fact: The federal reserve is not a government institution. It is a business and their employees' jobs are to ensure profits.
Playing dress up with numbers appears to be catching up to them. And their "fix" is for us to go buy american!? WTF are we supposed to go out and buy? TV's? nope. Electronics? nope. Cars? yeah right.

And now a word from our sponser, the value of gold.

source

What's that you say? we should reinstate the gold standard?
But who out there know enough about monetary policy AND wants to reinstate it?
Hmm, maybe someone on the freakin' House Banking Committee who's been fighting for the return of the gold standard since day one!

sorry.
/just sayin'

[yasunobu13]

Oh, just wait 6 months when things will really start going downhill.

[gerbick]

The damage control had already started on Fox News and CNN months ago. CNN had something like a "recession primer"... the oil going over 100 bucks a barrel scares me.

[FlashLackey]

Good grief. After 5 years of strong growth, we have a few months of down numbers and people are calling it a sign of a depression.

http://moneycentral.msn.com/investor...m=1&CP=0&PT=10

There are all kinds of people working around the clock analyzing the situation and making plans to correct problems. In this case, the suggestion is to lift taxes on dividends, among other things.

http://money.cnn.com/2008/01/17/news...anke/index.htm

Also, dropping the gold standard was one of the things that marked our climb OUT of the depression.

http://averages.dowjones.com/mdsidx/...es&decade=1930

[gerbick]

erm. Tell that to Wells Fargo and Merrill Lynch.

And that's just the home sector. People keep insisting that the economy is strong...

WHERE!?

The Canadian dollar is stronger/worth more than the US dollar. The Euro went from being under to being above the US dollar. Hell, just about everybody but the Yen is gaining on the US Dollar.

Job numbers repeated ad nauseum doesn't equal a strong economy. It means it's a busy one. And you can be busy all day and not accomplish anything.

The gold standard was dropped by Richard Milhous Nixon. The depression was "climbed out of" before the end of World War II. 30+ years difference dude.

This is the pre-cursor to something bigger than CNN and MSNBC will fully admit to... and the Dow Jones took a big hit in the last week. A 300 point hit.

[Dricciotti]

Ron Paul is for a commodity-based standard (not just a gold standard). This would limit the amount of money the government could just freely print.

In WW1 and WW2, the gold standard meant that to raise money for the war, the government couldnt just print money. They needed to get money via taxes; which people paid because the supported the war (i heard rates of up to 95%! not sure though)

Now, without a commodity based standard, money printing is easy and we're running up ridiculous debt and all sorts of other problems. A war can be funded without cranking up taxes. This is a very dangerous thing for our country.

[gerbick]

He ain't gonna win. Forbes wanted a flat tax... he didn't win either.

[Dricciotti]

I think he has a good chance. He is very strong in straw polls in lots of states(getting in the top 3)
edit: And he's the only republican who isnt out of money for his campain

Just cause forbes lost doesnt mean anything dude.

So you oppose a return to a commodity based standard?

[gerbick]

I oppose nothing, RP fanboy. Cool your jets.

I think the fact that the best ideas never win was lost on you.

[jAQUAN]

Good grief. After 5 years of strong growth, we have a few months of down numbers and people are calling it a sign of a depression.

http://moneycentral.msn.com/investor...m=1&CP=0&PT=10

Agreed, it's only a month's worth of data. But the bail outs coming from foreign banks is scary. How many pockets will we be in by the time this one rights itself? To be honest I don't know how the bush tax cuts work but I do know that if they were originally planned until 2010, they weren't designed as a permanent solution so talk of extending them seems desperate. I've always wondered how everything keeps running with these cuts anyway. If it's just that simple, why weren't they made before?

There are all kinds of people working around the clock analyzing the situation and making plans to correct problems. In this case, the suggestion is to lift taxes on dividends, among other things.

http://money.cnn.com/2008/01/17/news...anke/index.htm

Yes, more of the same. and I used that same link in my last quote

Also, dropping the gold standard was one of the things that marked our climb OUT of the depression.

http://averages.dowjones.com/mdsidx/...es&decade=1930

From that link,

The two historians agreed that World War II was the spark that finally ended the agony. Said Mr. Sobel: ''The war took the country out of the Depression, not Roosevelt.''

I need to read up on how the two are connected.

[FlashLackey]

erm. Tell that to Wells Fargo and Merrill Lynch.

Two companies having bad quarters does not equate a recession or even indicate that those companies won't bounce back in the next quarter.

The Canadian dollar is stronger/worth more than the US dollar. The Euro went from being under to being above the US dollar. Hell, just about everybody but the Yen is gaining on the US Dollar.

There are all kinds of reasons for different currencies to be exchanged at different rates. By itself, this is not a good barometer of how an economy is doing.

The gold standard was dropped by Richard Milhous Nixon. The depression was "climbed out of" before the end of World War II. 30+ years difference dude.

See March 18: http://en.wikipedia.org/wiki/1968#March

Anyway, I'm not necessarily against adopting a gold standard. Just pointing out that the lack of a gold standard is probably not really the primary source of any financial woes we're having.

This is the pre-cursor to something bigger than CNN and MSNBC will fully admit to... and the Dow Jones took a big hit in the last week. A 300 point hit.

Maybe it is. But, you could say that about any down-turn. Any down-turn might lead to a bigger one. But, it might not either. The fact is, stocks go up and down for all kinds of reasons in all sectors. There are certainly areas of the economy that need to be addressed. But, we are a long ways away from an indication that this is anything more than the relatively normal fluctuations of business.

If we really want to see a recession, we'll just vote Democrat and watch national health care suck the wind out of the sails.

[jAQUAN]

I think he has a good chance. He is very strong in straw polls in lots of states(getting in the top 3)
edit: And he's the only republican who isnt out of money for his campain

If Thompson wins in SC, that'll be four states and four winners leaving the candidacy up for grabs. Nevada looks good.

From AP

By contrast, Republican candidates have stayed away from the diverse electorate and unfamiliar electoral landscape as Nevada voters weigh in earlier than ever before.

No major GOP candidate has set foot in the state for two months, and some Republicans are bracing for a possible surprise first-place showing by long-shot Texas Rep. Ron Paul, the only Republican to broadcast TV ads in Nevada.

[Dricciotti]

South Carolina is gonna be nuts. I havent seen a poll from there lately

Sorry gerbs, i read a lot of negativity in your post.

[FlashLackey]

Agreed, it's only a month's worth of data. But the bail outs coming from foreign banks is scary. How many pockets will we be in by the time this one rights itself? To be honest I don't know how the bush tax cuts work but I do know that if they were originally planned until 2010, they weren't designed as a permanent solution so talk of extending them seems desperate. I've always wondered how everything keeps running with these cuts anyway. If it's just that simple, why weren't they made before?

Because many Democrats support their political careers by making people believe they are Robin Hood's merry men and women. They, either sinisterly or foolishly, prevent tax cuts out of fear that corporations might benefit. Some of them believe that it will lead to programs and entitlements being cut. Ironically, tax revenues increased due to the additional economic stimulus after the Bush tax cuts.

Yes, more of the same. and I used that same link in my last quote

More of the same is exactly what is needed. "The same" worked! Look at the Dow chart. We need more of what was affecting that growth for five years. Most economists, including Bernanke, attribute that, in part, to the Bush tax cut. The same thing he recomends doing again.

The tax on dividends is a major peeve of mine. I don't know how there is anyone dishonest enough to continue fighting to keep that in place. I guess the general public is just a few facts away from knowing what it is....

[gerbick]

Two companies having bad quarters does not equate a recession or even indicate that those companies won't bounce back in the next quarter.

It's just a start. If I were to link to each and every major blue chip stock/company that's having a bad year or quarter, you'd be reading a who's who list like no other.

It's bigger than just the incredible amount of Carl's Jr. and Walmart jobs being created now.

There are all kinds of reasons for different currencies to be exchanged at different rates. By itself, this is not a good barometer of how an economy is doing.

Reason #1 is usually weak economy.

See March 18: http://en.wikipedia.org/wiki/1968#March

Repealed the necessity of a commodity based economy versus actually dropping it are two different actions... read below:

The United States abandoned gold as the foundation of its monetary system in two steps. In 1933, President Franklin Roosevelt ended Americans’ right to surrender paper dollars for gold and even to own gold bullion. Step two came in 1971 when President Richard Nixon “closed the gold window” and denied foreign governments the right to turn in paper dollars for gold.

Gleamed from here... I'd suggest a bit o' research.

Anyway, I'm not necessarily against adopting a gold standard.

I am. Now can we move forward?

Just pointing out that the lack of a gold standard is probably not really the primary source of any financial woes we're having.

No argument. But dropping the gold standard is not the reason how the Depression was ended as you had erroneously stated previously.

Maybe it is. But, you could say that about any down-turn. Any down-turn might lead to a bigger one. But, it might not either. The fact is, stocks go up and down for all kinds of reasons in all sectors. There are certainly areas of the economy that need to be addressed. But, we are a long ways away from an indication that this is anything more than the relatively normal fluctuations of business.

It's still something bigger over the horizon. How in the hell can the media overlook the grand scheme of things... simply because some people are making hand over fist on some finite materials - read: Oil - then yes... there's no problem.

But the sheer amount of foreclosures have even made the cover of Newsweek, The Economist, Der Spiegel, and other rags that are worth a read. Yet, CNN et al just seem to overlook how Bush would not do anything about the strengthening Euro... something that the Federal Reserve warned against... multiple times. Why not?

That remains unanswered.

If we really want to see a recession, we'll just vote Democrat and watch national health care suck the wind out of the sails.

Not if this trillion dollar plus war on two fronts that might not ever end doesn't already do that.

Oh wait... it's already happening.

Eight years from surplus to deficit. And a Dem won't introduce health care yet because they'd have to cover the ever growing list of hurt soldiers first.

Thanks Bush. So sayeth this damn republican.

[FlashLackey]

Gleamed from here... I'd suggest a bit o' research.

I was already aware of the two different events. However, it is not uncommon for people to refer to the Roosevelt action as "dropping the gold standard" (see link I referred to earlier). That's the way I learned it in school.

No argument. But dropping the gold standard is not the reason how the Depression was ended as you had erroneously stated previously.

That is not what I stated. I just pointed out that it marked the beginning of our climb out. I can see how that could be taken to mean that it was the cause. My point was that, if a lack of gold standard is a big problem, as Ron Paul suggests, our economic improvement after it was dropped contradicts that idea.

[Dricciotti]

IMy point was that, if a lack of gold standard is a big problem, as Ron Paul suggests, our economic improvement after it was dropped contradicts that idea.

My grandfather was born when our economic improvement started. Should I have another grandfather to help the economy?

[ihoss.com]

Have you seen this graph?

[cancerinform]

I was wondering where all those political discussions went

Well the crisis is not only in the US, but seems to be worldwide. German banks lost a lot of money I saw the other day. It's the greed of a few, which destroys the wealth of many. These people belong into a jail for what they have done..

In my opinion the mortgage crisis could have been prevented with a bit more control. But the government liked to see the uncontrolled growth (like cancer ).