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Comparisons with the Great Depression etc


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#1 Steve Netwriter

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Posted 25 September 2008 - 09:08 AM

A post by Ologhai Jones:

QUOTE (double-agent @ Sep 24 2008, 11:33 PM) <{POST_SNAPBACK}>
Congresswoman Marcy Kaptur's take:



[Tin foil hat: ON!] smile.gif

I am fascinated by trying to spot correlations between the situation we're currently experiencing and other economically interesting times -- particularly between 1900 and 1930 or so.

What this congresswoman has to say reminded me of a piece from a video I've linked to before (as have others I'm sure) which is an account of the shenanigans associated with the setting up of the Fed and in the decade or three that followed.

The video documentary is Zeitgeist, and the bit I was thinking of begins at 1:17:40 (interestingly with the Jefferson quote mentioned in the quotes thread).

If anyone has ten minutes to spare to watch a bit of this video, I'd be interested to hear what others think about the points of similarity between then and now (at least as Zeitgeist reports them -- although how accurate this video is, I can't say).

What is really going on behind the scenes, or is this just a poorly-thought-out (but necessary?) bailout as a result of simple greed and fear (in that order) of ordinary traders, borrowers and lenders? If we're living through times similar to around 80 to 100 years ago, at what stage (and in what year) are we at when compared with that period?

Last time, the behind-the-scenes goal (or perhaps one of the goals) was the setting up of the Fed. If there really are shadowy figures behind the scenes pulling the strings, what's their plan this time? When we look back at now, what will we realise they've achieved that our current situation is greasing the wheels for?
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#2 Steve Netwriter

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Posted 25 September 2008 - 09:08 AM

I think this deserves its own thread.

So, what is happening now, and did the same sort of thing happen before ?

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#3 Ologhai Jones

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Posted 25 September 2008 - 09:39 AM

What caught my attention was the similarity between what the congresswoman began with, namely:

"Rule 1: Rush the decision. Time the game to fall in the week before Congress is set to adjourn and just six weeks before an historic election... Rule 2: Disarm the public through fear..."

and the bit I recalled from Zeitgeist (starting around 1:19:10):

"Putting the pieces together a few years later, Frederick Allen of LIFE Magazine wrote, 'The Morgan interests took advantage... to precipitate the panic [of 1907] guiding it shrewdly as it progressed'... and two days before Christmas, when most of Congress was at home with their families, the Federal Reserve Act was voted in."

Are Paulson and Bernanke the Aldrichs of today? And is it going to be McCain or Obama who becomes the Woodrow Wilson character, and, whichever it is, what will they be expected to do after being supported into the White House?

(As you can see, I still have my tin foil hat on... rolleyes.gif)



#4 id5

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Posted 25 September 2008 - 09:46 AM

QUOTE (Ologhai Jones @ Sep 25 2008, 10:39 AM) <{POST_SNAPBACK}>
...
(As you can see, I still have my tin foil hat on... rolleyes.gif)


I have a feeling that you may want to nail that hat on sad.gif
The market can stay irrational longer than you can stay solvent. - John Maynard Keynes

I must remember that investing is a marathon and not a sprint!

#5 Steve Netwriter

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Posted 25 September 2008 - 10:34 AM

OJ,
A good start biggrin.gif
It's always difficult to know what is real and what is orchestrated, and what is hidden.

Just a thought. Do you have any information of who held gold and who holds it now.
For example, do you think Paulson does ? biggrin.gif

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#6 Ologhai Jones

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Posted 25 September 2008 - 01:44 PM

By coincidence, there was a teensy bit on the comparison between now and then on today's The Daily Politics on BBC2.

A guest on the show today was historian Andrew Roberts (not someone I really know anything about, although I've seen his face before -- presumably either on The Daily Politics or other shows), and when DP co-host Andrew Neil made some mention of the US 'grappling with the worst financial crisis since the great crash of 1929'.

Roberts replied that he thought it 'actually looks a little bit more like the 1906 banking crisis'.

Even JP Morgan (as in the banker not the institution) gets a mention, and it was interesting to compare their perspective of the activities of Morgan with those presented in Zeitgeist.

There's not much about it (sadly), although what there is begins at about 1:40 of, as I say, today's The Daily Politics show.

As I mentioned, I don't know anything about Andrew Roberts, but, throughout today's programme, it did seem useful to have someone who appeared to be a fairly clued-up historian on hand to chip in on the various topics covered. It's a shame historians don't feature more often on political and economy-related shows.

#7 sonixtorm

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Posted 25 September 2008 - 03:26 PM

QUOTE (Steve Netwriter @ Sep 25 2008, 10:08 AM) <{POST_SNAPBACK}>
So, what is happening now, and did the same sort of thing happen before ?


I am re-reading 'A Short History of Financial Euphoria' at the moment; lots of parallels with what we have seen over the past few years and the actions following the inevitable bust. I couldn't help but smile when I read this (relating to the 1929 crash):

"During the previous summer there had been, it was belatedly discovered, a weakening in industrial production and other of the few currently available economic indices. To these the market, in its rational way, had responded. Not at fault were the speculation and its inevitable aftermath; rather, it was those deeper, wholly external influences."

The "external influences" card has been played before smile.gif

#8 Ologhai Jones

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Posted 25 September 2008 - 06:33 PM

Oops -- a bit of an error there. You can delete this reply if you like... wink.gif

#9 lowrentyieldmakessense(honest!)

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Posted 25 September 2008 - 07:02 PM

QUOTE (Steve Netwriter @ Sep 25 2008, 10:08 AM) <{POST_SNAPBACK}>
I think this deserves its own thread.

So, what is happening now, and did the same sort of thing happen before ?

QUOTE
Statement Before the Financial Services Committee, "The Future of Financial Services: Exploring Solutions for the Market Crisis," September 24, 2008

Mr. Chairman,

It is truly a shame that, less than two decades after the fall of communism, the lessons of price control are completely lost on most Washington power-brokers. The Treasury proposal before Congress is nothing more than a form of price control, an attempt to keep asset prices artificially elevated.
The root of our recent economic boom, as in any other business cycle, was government intervention into the market under the guise of lowering the interest rate, which is itself a price. The function that prices play in the market in equalizing supply and demand, and the distortions that necessarily accompany each government effort at price-fixing, are forgotten by too many in Washington.

One of the primary causes for the length and severity of the Great Depression in this country was the federal government's attempts at keeping prices artificially elevated. A typical example of getting causation backward, the federal government assumed that falling prices caused the depression, whereas in reality the falling prices were the result of the economic depression, and were necessary to bring the economy back into equilibrium. In its attempt to keep agricultural prices high, the federal government began to pay farmers to destroy their crops, while unemployed people lined up at soup kitchens around the country.

A similar situation exists today, where many mortgage-backed securities and other similar assets are horribly overvalued. The market response would be to allow these assets to be sold on the market at whatever price they would bring. This would result in a shakeout of bad debt and a shorter, sharper correction than would otherwise occur. Unfortunately, the political will to allow banks to take the responsibility for their lending actions is at times lacking.
Many here in Congress are asking where the money for this bailout will come from, and indeed it is a good question. $700 billion does not just materialize out of the ether, but then again neither do the hundreds of billions of dollars that we spend every year to fund our imperial war machine. We must the face the fact that our country is dead broke, and not just that, we are facing over $10 trillion in debt, and tens of trillions more in unfunded liabilities. This $700 billion bailout will only increase that debt, and increase the amount of money we pay merely to service the interest on that debt. The end result of this is higher taxes on our children and grandchildren, and the full-scale destruction of the dollar.

The only viable solution to this financial crisis is to keep the government from intervening any further. The Federal Reserve has already loaned hundreds of billions of dollars through its numerous lending facilities, and the Congress has passed legislation authorizing further hundreds of billions of dollars to bail out Fannie and Freddie, yet each successive crisis event seems to be advertised as larger and more severe than the previous one. It is time that this Congress put its foot down, reject the administration's proposal, and allow the bust to work itself out so that our economic hangover is not as severe as it might otherwise be.

QUOTE
"You have to choose, as a voter, between trusting to the national stability of gold and the natural stability and intelligence of governments. I advise you, as long as the capitalist system lasts, to vote for gold."

George Bernard Shaw


QUOTE
The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.

Sir Josiah Stamp, director of the Bank of England and the second richest man in Britain in the 1920s

#10 Ologhai Jones

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Posted 26 September 2008 - 07:49 AM

As per drminky's thread, JP Morgan 'lends a helping hand', just like they did when they 'rescued' the Trust Company of America in 1907...

Isn't the similarity all a bit obvious, or am I just dreaming? smile.gif

#11 Ologhai Jones

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Posted 26 September 2008 - 08:16 AM

At the risk of demonstrating that I glance at GHPC from time to time... tom's 'Bailouts and tin-foil hats' thread is pretty interesting.

He lists a few suspicious little factoids that support the notion that perhaps there's more to all this mess than meets the eye -- perhaps just like last time...

Oh, and both the Kaptur and Zeitgeist videos are linked to on that thread, which is interesting in itself; others are obviously making the same connections. I guess they are pretty 'obvious' (whether justified or not)... smile.gif

#12 grumpy-old-man

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Posted 26 September 2008 - 08:28 AM

QUOTE (Ologhai Jones @ Sep 26 2008, 09:16 AM) <{POST_SNAPBACK}>
At the risk of demonstrating that I glance at GHPC from time to time... tom's 'Bailouts and tin-foil hats' thread is pretty interesting.

He lists a few suspicious little factoids that support the notion that perhaps there's more to all this mess than meets the eye -- perhaps just like last time...

Oh, and both the Kaptur and Zeitgeist videos are linked to on that thread, which is interesting in itself; others are obviously making the same connections. I guess they are pretty 'obvious' (whether justified or not)... smile.gif


one of the best videos I have watched on this subject (actually 3 parts to be exact). Came from a recomendation here, can't remember who posted it though.

#13 Steve Netwriter

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Posted 02 October 2008 - 03:57 AM

OJ,
I think will be of interest to you:


Dear Mr. Sinclair,

Every time history repeats itself the price goes up.
--Unknown Author

Here is a link with some fascinating snippets from leading newspapers in the years 1929-33.

http://www.nowandfut...depression.html

Bottom callers, 1929:

.....Brokers Believe Worst Is Over and Recommend Buying of Real Bargains

Wall Street in looking over the wreckage of the week, has come generally to the opinion that high grade investment issues can be bought now, without fear of a drastic decline. There is some difference of opinion as to whether not the correction must go further, but everyone realizes that the worst is over, and that there are bargains for those who are willing to buy conservatively and live through the immediate irregularity....
-- New York Herald Tribune, October 27, 1929


England then, US now:

"...Great Britain is a highly populated industrial country, carrying a terrific burden of internal debt, dependent predominantly for existence on foreign trade, enjoying the benefits of being the world's chief banking centre, possessed of a large net income from long-term investments abroad, but heavily indebted (in her role as world's banker) to other centres on short- term account."
-- Economist, September 26, 1931, p. 548


Forgotten lesson?:

"In 1920 and 1921 the foreign governments and business were slow to realize that our era of taxpayers’ largess was over; but by 1922 they came to understand it, and the whole problem took another complexion. A boom began in foreign loans with the offer by foreign countries of extravagant interest to private lenders, from 5 to 8 per cent per annum.

"These loans soon began to raise disturbing questions as to their security, their reproductive character, and the methods of promotion. To serve any good purpose, such loans had to be adequately secured and should increase the productivity of the country of their destination. Out of such increases alone could they be repaid. Loans used for military purposes, for balancing budgets, and for non productive purposes generally would be disastrous."
-- Memoirs of Herbert Hoover, U.S. President 1928-1932

Warm regards,
CIGA Annette

http://www.jsmineset...amp;T_ARID=6735
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#14 Steve Netwriter

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Posted 02 October 2008 - 04:04 AM

QUOTE (grumpy-old-man @ Sep 26 2008, 08:28 PM) <{POST_SNAPBACK}>
one of the best videos I have watched on this subject (actually 3 parts to be exact). Came from a recomendation here, can't remember who posted it though.


I've just downloaded that massive video and watched it.

I feel like I'm standing on a fence, not sure which way to step.

Do I step back into "sanity" and the way things have always been. Simple, safe, trusting.

Or do I step into the world of the "nutter". A place of potential enlightenment, in which NOTHING ever seems quite the same again.

I have stopped, and am wondering whether I am being conned by nutters, or whether this revelation is a reality I have not before seen.

I fear I am losing my sheeple status totally and forever.

Please help me.

"One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle. We're no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge -- even to ourselves -- that we've been so credulous"

-Carl Sagan

unsure.gif unsure.gif unsure.gif unsure.gif unsure.gif


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#15 Steve Netwriter

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Posted 02 October 2008 - 04:15 AM

All the links from the GHPC thread:

Let's Play "WALLSTREET BAILOUT" The Rules Are... Rep Kaptur - September 22, 2008



http://www.kaptur.house.gov/
http://www.youtube.com/watch?v=7qA3cpYiz5k
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#16 DrBubb

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Posted 02 October 2008 - 09:14 AM

QUOTE (Steve Netwriter @ Sep 25 2008, 05:08 PM) <{POST_SNAPBACK}>
If anyone has ten minutes to spare to watch a bit of this video, I'd be interested to hear what others think about the points of similarity between then and now (at least as Zeitgeist reports them -- although how accurate this video is, I can't say).

What is really going on behind the scenes, or is this just a poorly-thought-out (but necessary?) bailout as a result of simple greed and fear (in that order) of ordinary traders, borrowers and lenders? If we're living through times similar to around 80 to 100 years ago, at what stage (and in what year) are we at when compared with that period?


Youn havent been reading my articles - I have been talking about the parallels to the "Rich Man's Panic" of 1907:

Historical Parallel from 100 years ago: New Regulatory framework needed


There is a historical parallel. In 1907, there was a huge stress on the US banking system, during the so-called "Rich Man's Panic", when a run on the Knickerbocker Trust caused a big slide in the stock market. The fear-triggered meltdown convinced the banks that they need a bigger safety net and larger regulatory mechanism, to shore up markets when they hit times of stress. Eventually, the Federal Reserve was created a few years later in 1913. Almost exactly one hundred years later, we are facing a larger crisis, that has some similar characteristics, but this one is more global in its consequences. For example, we have again seen a run on a big mortgage lending bank. But this time it was Northern Rock in the UK. And Bear Stearns, an 85-year old investment bank has been taken over at a few dollars per share. Trust has been shaken in the regulatory system, and Treasury secretary Paulson has proposed an outline of a new system.

Investment banks, and hedge funds, accumulate massive leverage; and are huge users of credit, and they also are huge providers of credit. The current framework applies solely to deposit-taking banks; and restricts their leverage. But non-bank providers of credit, investment banks, hedge funds; and off-balance-sheet vehicles of banks, do not have to follow the same set of rules. Some of these entities have been permitted almost infinite leverage. And that unrestricted use of credit has allowed various asset bubbles to develop. The Fed, the Treasury, and George Soros too, are all talking about the need for more regulation, and taking pre-emptive actions to prevent future asset bubbles. Probably investment banks, and some big hedge funds too, will need to be subsumed within a new regulatory framework, perhaps one which is in greater harmony with global market practices. But we cannot wait six years. A quicker fix will be needed to provide a global meltdown, which now looks likely to arise well before 2013.

/see: http://www.financial.../2008/0605.html

(I reckon that No One Anywhere in the World read the article because it was too long.)
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#17 Steve Netwriter

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Posted 02 October 2008 - 09:41 AM

I suffer from 3x problems:

1. I do not read fast enough.
2. There are not enough hours in the day.
3. There is too much to read.

OJ's original post which I reposted here prompted me to download and watch zeitgeist, which although quite long doesn't take so long as a long article.

Maybe they could slow this crash down so I have time to catch up biggrin.gif biggrin.gif

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#18 Wigler

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Posted 02 October 2008 - 11:02 AM

QUOTE (Ologhai Jones @ Sep 25 2008, 02:44 PM) <{POST_SNAPBACK}>
As I mentioned, I don't know anything about Andrew Roberts, but, throughout today's programme, it did seem useful to have someone who appeared to be a fairly clued-up historian on hand to chip in on the various topics covered. It's a shame historians don't feature more often on political and economy-related shows.


Learn from the past! Heaven forbid! laugh.gif

I thought everyone here was already unplugged from the matrix.

Anyway... also worth noting that this 'Shock Doctrine' works on a smaller scale as well.

Hypnotists employ something called a pattern interrupt. People have certain patterns they run through without consciously thinking about it. If you interrupt the pattern midway by doing something unexpected they will often become confused and stuck. The hypnotists can then suggest a course of action which is readily taken. The most common interrupt is a hand-shake interrupt. As the person extends his hands you grab his hand hold it up to his or her face and tell them to go into a trance.

Also reminds of certain terrorist incidents are quickly followed by complet BS explanations which are acceped uncritically when emotions are running high. Things like passports flung from planes that crashed into a building or witnesses claiming someone jumped over a turnstyle with a backpack... dry.gif

#19 Ologhai Jones

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Posted 06 October 2008 - 01:51 PM

QUOTE (Steve Netwriter @ Sep 25 2008, 10:08 AM) <{POST_SNAPBACK}>
A post by Ologhai Jones:

[...]

Last time, the behind-the-scenes goal (or perhaps one of the goals) was the setting up of the Fed. If there really are shadowy figures behind the scenes pulling the strings, what's their plan this time? When we look back at now, what will we realise they've achieved that our current situation is greasing the wheels for?


As per the interview linked by Steve in The Gold One, at about 4:08:

QUOTE
I got word in the last 24 hours that the Europeans, Russians, Chinese and Arabs have agreed to a new world currency... The dollar and the British pound are not included...


#20 Steve Netwriter

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Posted 06 October 2008 - 11:51 PM

OJ, I fear we have chosen the wrong title and the wrong comparison blink.gif blink.gif

I think you will find this very interesting:

The Real Great Depression
The depression of 1929 is the wrong model for the current economic crisis
By SCOTT REYNOLDS NELSON
http://itulip.com/fo...52465#post52465

QUOTE
Our current episode has more in common with the 1870s depression which, as Nelson notes, was considerably worse. It was primarily caused by over-indebtedness in the commercial real estate sector, which mortgages were based on new forms of financing which were intermingled on the balance sheets of commercial banks with less rarefied assets that the banks added by making business loans. The era, as the poster to the left depicts, was one of broad based public participation in credit financed asset price inflation and speculation. When the commercial real estate market crashed, it took down the banks and caused the market for commercial credit to seize up, much as we are seeing today. Small businesses were hit especially hard. Unemployment spiked and a severe and lengthy depression ensued as financial markets throughout the world suffered, followed by international trade. The crisis emanated from Europe. It was the beginning of the end of Europe's dominance as the center of global economic power. Read on for the full story. Sign up here to be notified when my book is published. - Eric Janszen


I'm sure you're going to enjoy that article biggrin.gif

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