Originally Posted By Sport Goofy << It is not 1929. The market is so completely different now, I can't imagine the same day-to-day trends would match. Maybe the overall trends, but not the day-to day stuff. >> Last week was an incredibly close match to the week of October 28th 1929. You might not be able to imagine the similarities, but they are close enough to make you want to go back and study history again.
Originally Posted By RoadTrip <<Last week was an incredibly close match to the week of October 28th 1929. You might not be able to imagine the similarities, but they are close enough to make you want to go back and study history again.>> There were far more differences than similarities. Among other things, the market was far more overvalued in 1929. At that time stocks were selling at 40 times earnings. Current PE ratios are about half that. Recovery now will be far easier because the underlying value is there. 1929 was a price bubble bursting made worse by so much stock having been bought on margin. The current crash has been largely based on panic resulting from credit markets freezing up. Once the credit problem is resolved, the value is there to support a relatively rapid recovery. It amazes me how it appears you guys are happiest when you are able to talk about how lousy everything is.
Originally Posted By Sport Goofy << 1929 was a price bubble bursting made worse by so much stock having been bought on margin. The current crash has been largely based on panic resulting from credit markets freezing up >> Yeah, the difference between 1929 and 2008 is that our entire economy has been bought on margin for the last 25 years. This is the beginning of the reset. Just look at how few cars are being sold now that the home equity lines of credit have disappeared with declining home values. We've created a phony economy for 25 years based on a pyramid scheme. Anyone who thinks we're just going to work through this and be back to the way things were in 2005 doesn't understand what got us here in the first place. But I'll let you be happy for the next six months or so. It will take about that long for the current market disaster to work its way into the real economy. So, sometime after Christmas you'll see the effects of all this in unemployment, corporate earnings, and more stock market turmoil. Until then, enjoy your Santa Claus rally.
Originally Posted By hopemax > Yeah, the difference between 1929 and 2008 is that our entire economy has been bought on margin for the last 25 years. Yep. There's been a lot of screaming for a return to responsibility. Responsibility in lending, responsibility in buying. Not an unwise position, but when we've built an economy on a lack of responsibility that adjustment is going to be painful. Housing prices aren't going to stabilize until inventory is reduced. Difficult to reduce inventory when banks are returning to old standards of income/down payment requirements. Difficult to buy "stuff" when credit limits are being slashed and home equity lines of credit are being eliminated. Freeing up credit at the bank level will help businesses with the float necessary for making payroll/buying equipment, etc. But at the consumer level, things are going to still be tight. Just read a story yesterday where a guy was upset because he couldn't buy a new car with only a $200 down payment! Is that something we expect to see a return to once the "credit loosens up?" We're in the middle of a wave coming from the top. It hasn't made its way to the bottom (consumers). And when it hits the consumers, it's going to ripple it's way back up. Actually, it's probably like an underwater earthquake...it has a potential to create a tsunami. We had the earthquake. Tsunami may not come, but the water at the shoreline might be receding. You can play on the beach if you want to though.
Originally Posted By mawnck >>DJIA up 570 at this point. I'm amazed no one has even mentioned it.<< Geez, what am I? Chopped liver? <a href="http://mb.laughingplace.com/MsgBoard-T-100923-P-1.asp" target="_blank">http://mb.laughingplace.com/Ms...-P-1.asp</a> Post 7
Originally Posted By fkurucz <<Just look at how few cars are being sold now that the home equity lines of credit have disappeared with declining home values>> No kidding. GM, Ford and Chrysler are pretty much considered finished and heading into bankruptcy. Considering that they survived the Great Depression in fairly good shape it certainly makes one pause to realize that we live in "interesting times".
Originally Posted By barboy But don't forget that the Japanese and Korean invasion wasn't here yet in the 1930's.
Originally Posted By barboy Also, the Hitler mobiles weren't readily available in the US either, unless you were rich.
Originally Posted By fkurucz <<But don't forget that the Japanese and Korean invasion wasn't here yet in the 1930's.>> The big three were doing fine selling light trucks and SUVs until just recently. One of them is alleged to have been planning on getting out of cars altogether. It also didn't help that their financing divisions went from hero to zero in a short timeframe. <<Anyone who thinks we're just going to work through this and be back to the way things were in 2005 doesn't understand what got us here in the first place.>> So true. It will soon become painfully evident just how hollow the US economy has become. And just as it happened with the mortgage crisis, the experts will be proclaiming that "no one saw this coming". Never mind the naysayers who were reminding us that trillion dollar trade deficits were unsustainable and that the savings rate was negative and that everyone was up to their eyeballs in debt. We just covered our ears and said "we can't hear you!"
Originally Posted By hopemax > And just as it happened with the mortgage crisis, the experts will be proclaiming that "no one saw this coming" One of the posts on DailyKos (I know, I know ) was talking about the beating Paul Klugman, today's winner of the Nobel Prize for Economics, got in 2005 when he predicted the housing bubble was about to burst.
Originally Posted By RoadTrip +936.42 Yes, I know we certainly aren't out of the woods yet. But we're not dieing in there either. Things will be OK in the end. They almost always are.
Originally Posted By RoadTrip <<Almost? RTR says "almost"??>> I was going to say always, but then I remembered times when a loved one died. So almost always. And who knows? Once I’ve seen the afterlife, maybe it will be back to always.
Originally Posted By Kar2oonMan <--- wonders if Visa and MasterCard bills carry over to the next life?
Originally Posted By Sport Goofy << Things will be OK in the end. They almost always are. >> You usually have to do something about things in order to make them OK. Right now, we're not really doing anything about these problems at all. We're throwing money at the problem and hoping it will go away. Things will be OK, but it's going to take a lot more hardship for our society to figure out that it needs to move in a different direction to get out of this mess. Right now, people are hoping that this mess will pass and they can return to their prior self-indulgence. It's not going to be that easy.
Originally Posted By Mr X ***Yes, I know we certainly aren't out of the woods yet. But we're not dieing in there either.*** Isn't this what everyone said 2 weeks ago Tuesday when the market was up 500 points? I do HOPE this is the start of a turnaround, but increased and ridiculous volatility either way is NOT a good sign in my eyes. I guess we shall see. I don't equate a couple of record up days in the midst of crashing carnage to be a net plus however. I'd rather see some sideways consilidation, followed by a slow and steady recovery. Call me crazy. On the plus side though, I think a good friend of mine might have gotten out of a financial mess thanks to the huge upswing today, so that's nice.
Originally Posted By RoadTrip It won't be easy, but as we move away from the extreme credit based society we have become we will all be better off in the end. I guess I can be optimistic because I always take a really long term view of stuff. I can be pretty certain of a good result because I'm willing to wait a long time for it. In the meantime, I try to always have fun.
Originally Posted By fkurucz <<It won't be easy, but as we move away from the extreme credit based society we have become we will all be better off in the end.>> That will take one serious weaning.
