And Now the Great Depression

[Joseph Burkeson, CMI]

I find it doubtful that anything can be done to prevent this from happening all we can do now is to be prepared.

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And Now the Great Depression
Barry Eichengreen | Sep 23, 2008

A couple of months ago at lunch with a respected Fed watcher, I asked, “What are the odds are that U.S. unemployment will reach 10 per cent before the crisis is over?” “Zero,” he responded, in an admirable display of confidence. Watchers tending to internalize the outlook of the watched, I took this as reflecting opinion within the U.S. central bank. We may have been in the throes of the most serious credit crisis since the Great Depression, but nothing resembling the Depression itself, when U.S. unemployment topped out at 25 per cent, was even remotely possible. The Fed and Treasury were on the case. U.S. economic fundamentals were strong. Comparisons with the 1930s were overdrawn.

The events of the last week have shattered such complacency. The 3 month treasury yield has fallen to “virtual zero” for the first time since the flight to safety following the outbreak of World War II. The Ted Spread, the difference between borrowing for 3 months on the interbank market and holding three month treasuries, ballooned at one point to five full percentage points. Interbank lending is dead in its tracks. The entire U.S. investment banking industry has been vaporized.

And we are in for more turbulence. The Paulson Plan, whatever its final form, will not bring this upheaval to an early end. The consequences are clearly spreading from Wall Street to Main Street. The recent performance of nonfinancial stocks indicates that investors are well aware of the fact.

So comparisons with the Great Depression, which have been of academic interest but little practical relevance, take on new salience. Which ones have content, and which are mainly useful for headline writers?

First, the Fed now, like the Fed in the 1930s, is very much groping in the dark. Every financial crisis is different, and this one is no exception. It is hard to avoid concluding that the Fed erred disastrously when deciding that Lehman Bros. could safely be allowed to fail. It did not adequately understand the repercussions for other institutions of allowing a primary dealer to go under. It failed to fully appreciate the implications for AIG’s credit default swaps. It failed to understand that its own actions were bringing us to the brink of financial Armageddon.


Excerpt, I wouldn't read the rest here if you have a weak stomach: http://www.rgemonitor.com/latam-moni...eat_depression

[John McKenna]

Joe,

What have you done to prepare?

Food, live in the country, generator, survival, protection, garden, money, barter,
water well, fuel, alternate income, cash, etc...

BTW... if you tell me where your stash of cash is, I won't tell..

If we have a depression, then crime will go crazy in the streets and there there will
be no police force that can contain all the people being forced to stand in soup lines.
Our society in different than it used to be.

As long as Walmart is open, I can make it...

[Randy D. Stufflebeem]

The real deal is most banks will stay open, most homeowners are paying their mortgages, most all people are working who want to, and we are going to reward the very people that put us into this mess with a bail out!

[Jae Williams]

Originally Posted by rstufflebeem

The real deal is most banks will stay open, most homeowners are paying their mortgages, most all people are working who want to, and we are going to reward the very people that put us into this mess with a bail out!

The "bailout" should do no more than guarantee the safety of the mortgages involved--and only for those who pay the mortgage...

Those who were the upper echelon in these deals should spend the next few weeks trying to make bail...

Congress must take note of all that is happening and dismantle the business aspect of Congress. Governments is just that--government. It is not a business enterprise. (Most of Congress is made up of lawyers--very few are businessmen.)

[Joseph Burkeson, CMI]

Originally Posted by jmckenna1

Joe,

What have you done to prepare?

Food, live in the country, generator, survival, protection, garden, money, barter,
water well, fuel, alternate income, cash, etc...

BTW... if you tell me where your stash of cash is, I won't tell..

If we have a depression, then crime will go crazy in the streets and there there will
be no police force that can contain all the people being forced to stand in soup lines.
Our society in different than it used to be.

As long as Walmart is open, I can make it...

Hey John, do what you want, think what you want, believe what you want, it is a free world. All I can say is that many here ridiculed me when I began posting how sub-prime mortgages would crash the housing market and other articles other relevant economic conditions over two years ago.

Whatever is going to happen won't happen tomorrow or overnight, it will be spiral down until it can no longer be propped up look for signs along the way.

As far as my personal preperations... If I told you I would have to kill you, don't worry about me I have been prepared for a long time.

If things get better from here I'll be pleasantly surprised and adjust accordingly but on the other hand should they get worse then so be it.

[Randy D. Stufflebeem]

Originally Posted by jburkeson1

Hey John, do what you want, think what you want, believe what you want, it is a free world. All I can say is that many here ridiculed me when I began posting how sub-prime mortgages would crash the housing market and other articles other relevant economic conditions over two years ago.

Whatever is going to happen won't happen tomorrow or overnight, it will be spiral down until it can no longer be propped up look for signs along the way.

As far as my personal preperations... If I told you I would have to kill you, don't worry about me I have been prepared for a long time.

If things get better from here I'll be pleasantly surprised and adjust accordingly but on the other hand should they get worse then so be it.

If you can't get work here Joe, is there any chance you would consider Iceland? I hear home inspectors make bundles there!

[Joseph Burkeson, CMI]

Originally Posted by rstufflebeem

If you can't get work here Joe, is there any chance you would consider Iceland? I hear home inspectors make bundles there!

What leads you to believe I need work, or for that fact money? Not every NACHI member lives hand-to-mouth or week-to-week only most members.

[William J. Decker]

When we see 25%+ uemployment, then I will believe.

[James H. Bushart]

Originally Posted by jburkeson1

Hey John, do what you want, think what you want, believe what you want, it is a free world. All I can say is that many here ridiculed me when I began posting how sub-prime mortgages would crash the housing market and other articles other relevant economic conditions over two years ago.

Whatever is going to happen won't happen tomorrow or overnight, it will be spiral down until it can no longer be propped up look for signs along the way.

As far as my personal preperations... If I told you I would have to kill you, don't worry about me I have been prepared for a long time.

If things get better from here I'll be pleasantly surprised and adjust accordingly but on the other hand should they get worse then so be it.

Just as NACHI has also dwindled down to a "virtual" association with 40 to 45 prolific posters left since its peak of two years ago, the changes will be slow and subtle.

You have insulted these, my fellow Republicans, by bringing these facts to light during our term in the White House. Unfortunately, during the first term of President Obama is when the full effects of these recent weeks will probably be taking their toll on mainstream America.

If the NACHI lights are still on during that period, be sure to pull these posts out of the archive for them to read as they try to lay this upon the new administration.

[Randy D. Stufflebeem]

Originally Posted by jburkeson1

What leads you to believe I need work, or for that fact money? Not every NACHI member lives hand-to-mouth or week-to-week only most members.

You may if we experience this great depression!

[Joseph Burkeson, CMI]

Originally Posted by rstufflebeem

You may if we experience this great depression!

I am a free-thinking problem solver who loves puzzles, bring it on.

"Its better to burn out than to fade away" - Neal Young

[Randy D. Stufflebeem]

Originally Posted by jburkeson1

I am a free-thinking problem solver who loves puzzles, bring it on.

"Its better to burn out than to fade away" - Neal Young

Puzzles!

Neal young & Def Leppard

[Joseph Burkeson, CMI]

Next installment: Zeitgeist Addendum

WARNING! Not for those with weak stomachs.

[Joseph Hagarty, CMI]

New Design of the Dollar Bill being reviewed by the Treasury