Second Depression has already started
Posted October 6th, 2008 by Raymond
output
A great side-by-side comparison of today and 1929. Ends with a great quote from Ron Paul.
This country has been living in false prosperity since the early 1980s: The huge McMansions, luxury cars, high tech gadgets, granite kitchens, second homes and exotic vacations were all purchased with debt. These “assets” are depreciating rapidly, and consumers and companies are selling them desperately to pay down their suffocating debts.
The psychology of this country has begun to change from conspicuous consumption to forced liquidation and saving. The most recent flow of funds data shows that total credit market debt is $51 trillion; our GDP is $14.3 trillion. Debt as a percentage of GDP is now 356%; during the Great Depression, it was 260%. This massive buildup of leverage is just beginning to unwind; the pain will be tremendous when it gains momentum.
Coming Depression?
There's no consensus regarding the causes of the Great Depression, but some common themes are clear. I will try to evaluate today’s environment versus the conditions that existed in the 1920s.
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"were all purchased with debt"........not
In 1999 only about 62% of privately owned homes carried a mortgage. Not sure what the figure is today, probably a bit higher.
The point is that about 35% of homes are paid for.
If fact, although it is not reported, lots of people/businesses actually pay off stuff.
Are people/businesses still using credit too much? Yes...of course. If people/businesses started to save more and borrow less, would the stock market go down substantially? Yes...but for only for a while. Then our economy will be stronger than ever. Hopefully, we don't start borrowing when the economy picks up.
But it isn't as bad as the fear-mongers are saying.
Don't buy the hype.
What I hate is that the bailout postponed the innevitable correction in our economy. What is going on in our stock market are people taking their profit...but soon they will invest that profit...hopefully in the US.
The public is about as prepared as wagon wheel repairmen were
...at the beginning of the 20th Century.
Just imagine... it's 1910 and you think you got it good... repairing wagon wheels...then all the sudden you see a strange horseless contraption... "It will never catch on..." you say to yourself...
When things change... they do so fairly rapidly... don't get caught thinking everything is just fine like George Bush! = D
Mike
"Fire Team for Freedom" and "Revolutionary Business"
visit www.mikeandjake.com
attitude adjustment can be good
We need a good cleansing of those living on CREDIT vs those who are frugal...The imbalanced lifestyle sucks people into being mezmerized by those who seem to have it alll...This ajustment is a good thing if it doesn't happen too fast....Population will get an attitude adjustment on use of money......This may finaly get reflected into the GOV'T attitude, hopefully...
weee
I think
I think confusious...confused...I have been living below my means all my life ,same job for 27 years,always pay off my debts on time,bought a house when I was a young man...but realized that I was getting into trouble paying the interest rates on my arm in the 80's so I sold the house at somewhat of a loss and took the hit because it ws the right thing to do. I have been renting ever since.
Now today I know several people who bought houses since then and have taken several loans on them and bought everything under the sun knowing fully well that they were just going to default on the loans and skip out with all the cars ,boats ,100 inch tv's,housefulls of furniture and the like!
I'm beginning to believe that...
I did the right thing but...
THEY did the SMART thing!
sierra say confucios brings
sierra say confucios brings up good point! weeee!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
Yeah, that would be a good
Yeah, that would be a good side effect.
confusious is
wise.
"The Constitution was written not to regulate you in any way, the purpose of the Constitution is to restrain the government." Ron Paul.
http://hk.youtube.com/wat...
Maybe I just don't know as
Maybe I just don't know as much but I still don't see a massive depression. If nothing else, the actually real numbers are just really high. Today is bad but the dow is still in the 9000s. That's a lot of capital. It would just seem absurd if it continues to just go down and down and down. Don't you think at some point wall street will stop and say wait let's think about this. In other words, I kinda keep thinking there's enough of a buffer zone that it won't be a colossal depression.
its built like a house of
its built like a house of cards adam..there is actually no real money backing anything! its paper..
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain
The problem is that the
The problem is that the capital is so heavily leveraged.
There has been a huge rise in the homeless population,
in Massachusetts. This is only the beginning, I pity the fool who is our next President.
"The Constitution was written not to regulate you in any way, the purpose of the Constitution is to restrain the government." Ron Paul.
http://hk.youtube.com/wat...
this will be known as the
this will be known as the GREATER DEPRESSION... not just the second one! this thing is going to be much worse!
"When governments fear the people there is liberty. When the people fear the government there is tyranny."
-Thomas Jefferson
I am more concerned about the return of my money than the return on my money. --Mark Twain