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Started By
Message
What brought on the Great Depression?
Posted on 7/9/11 at 4:53 pm
Posted on 7/9/11 at 4:53 pm
After WWI, what events transpired that led to a global economic meltdown that lasted a decade?
I'm asking more from an economic perspective, rather than a political one ....which is why this is on the money board.
I'm asking more from an economic perspective, rather than a political one ....which is why this is on the money board.
4
Posted on 7/9/11 at 4:55 pm to Luke4LSU
It was Bush's fault.....
Posted on 7/9/11 at 5:08 pm to Luke4LSU
Well lets see here stock market crashes and millions of dollars in wealth overnight is destroyed. Pretty cut and dry. Great thread bro
Posted on 7/9/11 at 5:09 pm to LSURussian
quote:
What brought on the Great Depression?
It was Bush's fault.....
Yep, must have been a Bush ancestor.
Posted on 7/9/11 at 5:19 pm to Luke4LSU
Read securities analysis by graham and dodd, the first edition was written right before that time. The investors were overconfident, much like the late 2000's.
Posted on 7/9/11 at 5:21 pm to Dredsof DOOM
So the stock market just up and crashed for no fundamental economic reason, eh??? Great response bro.
Posted on 7/9/11 at 5:22 pm to Luke4LSU
They thought trends would continue indefinitely. Sound familiar?
Posted on 7/9/11 at 6:02 pm to Dredsof DOOM
quote:
Well lets see here stock market crashes and millions of dollars in wealth overnight is destroyed. Pretty cut and dry. Great thread bro
Posted on 7/9/11 at 6:07 pm to Luke4LSU
quote:
So the stock market just up and crashed for no fundamental economic reason, eh???
It had something to do with math and stuff.
Posted on 7/9/11 at 6:20 pm to Dredsof DOOM
quote:
Well lets see here stock market crashes and millions of dollars in wealth overnight is destroyed. Pretty cut and dry. Great thread bro
You seem like a nice guy.
Posted on 7/9/11 at 6:42 pm to Luke4LSU
quote:
So the stock market just up and crashed for no fundamental economic reason, eh??? Great response bro.
It's the truth. It's the same thing that happened to the housing market in 2008. Too much easy leverage causes unrealistically high prices and when they collapse, there is a multiplier effect on the way down.
Posted on 7/9/11 at 7:07 pm to TheHiddenFlask
It was due to buying on margin, which means that investors were paying for stock with borrowed money with the idea that they would get a return on the borrowed money and be able to pay it back. Much like the recent financial meltdown, people believed that the market would continue to grow, so credit was easy to come by.
Posted on 7/9/11 at 8:06 pm to GeauxHome
So....speculation that good things will continue eventually came to a head??
Did it happen in all sectors (like 2008 housing on steroids)?
Either way, what does the money board think the next bubble to burst will be, and when?
Did it happen in all sectors (like 2008 housing on steroids)?
Either way, what does the money board think the next bubble to burst will be, and when?
Posted on 7/9/11 at 8:47 pm to Luke4LSU
the other multiplier was that banking, insurance and securities were all being allowed and done under the same company, which was subsequently outlawed and then brought back during the Clinton era. See now, "Too Big To Fail".
Posted on 7/9/11 at 8:47 pm to Luke4LSU
The thing is that whenever everyone is heavily leveraged, it goes systemic incredibly rapidly. That is because when one asset class breaks an bankrupts one large holder, it forces downward on all of the markets they are in as they liquidate there holdings, causing other heavily leveraged asset holders to luquidate, then it just snowballs.
ETA: the stock crash happened after the great depression started, if I recall correctly, I forget what actually triggered the start of the depression. The crash definitely added to the intensity of the depression.
ETA: the stock crash happened after the great depression started, if I recall correctly, I forget what actually triggered the start of the depression. The crash definitely added to the intensity of the depression.
This post was edited on 7/9/11 at 10:44 pm
Posted on 7/9/11 at 11:20 pm to GeauxHome
First ever double-post
This post was edited on 7/9/11 at 11:25 pm
Posted on 7/10/11 at 9:28 am to Luke4LSU
There was a 18 month deflationary recession (depression) in 1920-21 right after the end of WWI. The Federal Reserve lowered interest rates to combat the deflation and the US had a period of debt inflation that inflated asset prices.
The stock market crash was not the cause of the Great Depression but more of an effect of the bust of a huge debt cycle. There was a huge rally up after the crash into 1930.
Sound familiar?
The stock market crash was not the cause of the Great Depression but more of an effect of the bust of a huge debt cycle. There was a huge rally up after the crash into 1930.
Sound familiar?
Posted on 7/10/11 at 9:54 am to GeauxHome
I think you could buy only 1% back then and the rest on margin according to my econ professor.
Posted on 7/10/11 at 11:59 am to prplhze2000
That's the extreme case. Bu 10x leverage wasn't uncommon.
Posted on 7/10/11 at 12:00 pm to prplhze2000
Some quotes regarding financial markets leading into the GD:
Overconfident banksters have been around how long? Asset pumpers at any price?
LINK
quote:
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." - Irving Fisher, Ph.D. in economics, Oct. 17, 1929
"This crash is not going to have much effect on business." - Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929
"There will be no repetition of the break of yesterday... I have no fear of another comparable decline." - Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929
"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices." - Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
Overconfident banksters have been around how long? Asset pumpers at any price?
LINK
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