We Are Not Headed for a Great Depression

How can we truly pass the blame of this financial mess squarely on the shoulders of bankers and the government?Point that long bony finger at the person staring back at you in the mirror.Come on people,honestly,if you cant afford it ,don't buy it ,wow what a novel concept.

Well, 7% (actually, 8.5% from the time Elizabeth posted) in one day doesn't feel much like "drifting lower" to me... If we go back before the 90's boom, to 1992, the djia was at about 3300. Applying inflation and ~2% real market value gain (the long term average) - 6600 would have been a "rational expectation" in 1992 for the djia in 2008. We're standing at about 8600 - still about 23% over valued relative to that. How badly scared will people get if we just drop 23% more - forget about under-shooting the market's real value. Alternatively, reverse inflation on 8600, and the market hasn't been this bad since the djia bottom for 1997 (~6700). Or, if we consider the market price to have been rational in 1997 rather than 1992, and project it forward (2%/yr, 2.5%/yr average inflation = 4.5%/yr), the djia should be at around 10500. (Of course, in 1997 people were talking about "the long boom" upon which "Dow 36000 -(C)1999" was based.) So at best, the market should be considered to have crashed 20% below a "1997 rational expectation" level. If we don't get back to 10500 in the next 3 months, I think we'll have to accept the market's verdict that investors in 1997 were already drinking the coolaid, and that the credit crunch has caused enough damage to throw us into a DEeP REceSSION. Soup lines would only appear well AFTER the market crashes, Elizabeth. The main indicator that the Great Depression was going to be "different", was that timely efforts by the rich and powerful to stop the market slide - by injecting liquidity - had no sustained effect. A tipping point had been reached, and any small recovery was seen as an opportunity by investors to secure some cash "just in case". Wave after wave of investors got fed up watching their wealth evaporate, and sold off more and more of their holdings, desperately hoping to get enough cash to "buy in at the bottom" and recover some of their losses, or to at least have something to live on until the recovery. I've taken out my "just in case" cash, but my investment advisor tells me that I'm in the tiny minority - most of his clients are sitting fully invested, desperately hoping that the slide reverses. Maybe they're right and I'm wrong - or maybe there's just a lot more people out there who have not yet "taken out some cash, just in case".

Isn't it time WE as Americans say enough is enough. We tell our state reps. how we feel about the bailout, yet they decided to add more pork and vote yes for it! They said their computer server went down and couldn't get our e-mails, How convient! We (or should I say "our let us down house of reps") give A.I.G. money to fix their problems and what do they do? Have a party, to the tune of $440,000. We have corp. officials running failing businesses and STILL getting multi-million dollar bonuses. I don't know about everyone else here but if I don't do my job I get fired, not a bonus. I ask you again, when are we going to say enough is enough? It looks to me like we need cut our losses, go to Washington and demand resignations from the entire House and Senate, replace all of them with someone other than lawyers and lifetime politicians and start thinking about the United States for a change. Does anyone remember "By The People And For The People"? Our government evidently doesn't.

Anyone can set forth various doomsday scenarios which might unfold if the economic meltdown continues. The important question is how do we, as a nation, extricate ourselves from this mess. America needs to manufacture and produce more goods, and become less of a service type economy. We need tariffs. Tax credits and benefits should be allowed to American employers for hiring and retaining employees. Tax penalties should be imposed on those companies that outsource jobs. The government should reinstate the draft and the services to be performed should not be limited to military service, but should also include work on domestic infrastructure projects, such as roads, bridges, levees, power plants, electrical grids, etc. Finally, when we develop alternatives to oil, we should mandate that the technology be patented for 99 years and that the foreign owned companies be denied its use. Let Toyota develop their own technology without copying American innovation.

Experts like this nobel prize winner have little credibility. Where was he 1-2-3 years ago warning about this downturn? If he did not see this coming then how does he know what will happen next? Noriel Roubini, Peter Schiff, and Ron Paul have been warning us about this for a couple years. Glenn Beck has also been way out in front. They have credibility.

Hi folks, lets look at our country today as compared to 1929. 1929: gas was .15 a gallon and we produced all of the oil that we needed. 1929: we produced all of our necessary products, i.e. shoes, irons, etc 1929: most of our familys were on farms or even in the cities, like my family we had a chicken coop in our back yard. 1929: the beginning of the great age of the auto and we lead the world. 1929: we had the best steel foundries in the world. 1929: We were family centered. 2008: gas 3.50 a gallon 2008: we produce few if any of our necessary products, i.e. shoes, irons, etc. 2008: most of our familys live in the city and don't even know where eggs come from. 2008: our auto manufacturers are in the tank. 2008: we import 90% of our steel from china. 2008: we are a nation of irresponsible spoiled brats. Are we prepared for a deep recession, depression or anything resembeling hard times? Are we emotionally able to cope with hard times, little food, no jobs? Trust in yourselves your God, Guns and store food, water and other essentials.

I am not sure if a Great Depression is on the way or not. Nobody can tell us exactly what is going on. We could not get an answer as to if the bail outs were going to work, and we cannot get an answer as to where our economy is heading....nobody knows. I will say this. Americans are tapped out! We are not purchasing anything we do not need right now. We can't just go out and shop to boost the economy, we've been doing that for years and our debts have come due. Our government relies on the consumer to keep our economy strong. When the consumer is not running up debt, our economy will hurt. Wall street is reacting, and they are throwing a fit. Other countries rely on the American consumer to spend...why? Because they make everythng that we Americans buy....and we are not buying anything or borrowing any money right now. I will not be surprised if the media starts singing the "Don't Panic Song", when last week we could all see they were the ones that were panic stricken. I'm sure we will hear our government tell us everything is looking better, go out and shop! Government knows if we are not shopping, the whole world, including the markets, react. Whatever happens, we will all be in it together, and we will get through it.

Not a Great Depression?...yet. Ford is at $2.72/share GM is at $5.70. How can huge industrial companies continue with such a little market cap? They can't and people are not buying anything but necessities. Pessimism abounds. Its a classic spiral downward. The Real estate markets are falling, n some areas faster than others. Oil is sinking. remember last year when the experts said its demand. Really? did demand drop 40% in the last six months? No, its has been going higher but not spiking. thanks oil speculators. the same goes for commodities, fertilizer and the like. I am a lawyer. People who need my services are delaying payment. That delays my payment of things and so on and so on.... We must jettison the buying frenzy of the last 15 years. Get down to basics, re-group and appreciate that things take time and we don't have to have them instantaneously. when that happens, things will stop and become normal again.

I have 1 year supply of rice/beans and a loaded 120gb Zune, I can sit in the basement and wait this one out.

A simpler way to solve this mess is to have all countries get together and agree to forgive the debts owed to each respective country. Each country forgives the debts in its own borders. Everyone starts from ground zero with a 750 credit rating and we should have about fifty good years before we screw things up again. That sounds as easy to do as creating 700 billion dollars and trying to get out of the mess we are in. I know it is not a high tech plan, but still very effective. We could have forty years of growth followed by 10 years of decline followed by another reset to zero. If we can bail out the financials, lets just go ahead and bail out everyone.... because lets face it...humans have a tendency to mess things up.

Let's get real. This isn't a free market. A truly free market does need some (read: some) regulation, such as the FDIC and SEC. However, a free market does NOT involve a central bank that unconstitutionally sets interest rates! I suggest everyone read up on Article 1, Section 8 of the Constitution, as well as Jefferson and Hamilton's debates about central banks, to gain some real insight into how lousy the concept of the Fed really is. Keep in mind that JP Morgan Jr, along with 11 other banking families, strongarmed (successfully) some unwise Democrats in 1913 to create the Fed. All because of their "panic" in 1907. And, sometime after Woodrow Wilson signed it into law (i.e. the Federal Reserve Act), he commented about how he had "unwittingly" placed our economy at the feet of credit. Not exactly a successful policy, to base an economy on credit more than anything else (~68% of our "growth" is credit, last I checked). I'd suggest everyone -- liberal, conservative, Democrat, Republican, Independent -- do their own research about who is to blame for starting all this mess. A nice data flow diagram would look something like Bankers -> Government -> Bankers -> Government...and so on and so forth, ad infinitum. The bankers cry for bigger government and socialism when they lose their rears; they scare the Legislative and Executive branches; buy the Legislative and Executive Branches via campaign financing and lobbying; and get bailed out by the very same government when all goes awry. Even proponents of a central bank, such as Alexander Hamilton, believed that having one provides both efficiency and convenience. Look around you: When is the last time any of these corporate behemoths were convenient for you, the depositor? When have they been efficient? Even poor Hamilton would have shuddered at the notion that the Executive Branch, via appointments to the Treasury and Fed, would have control over the creation AND regulation of our money. Now naysayers will tell you that we had Panics in the past. The problem in the Free Banking Era was that we didn't have good regulation like the FDIC and the SEC. Banks were generally more conservative than now, because they couldn't rely on the Fed to bail them out, set rates, etc. However, on occasion we did have bank runs and bad lending practices. For instance, there was a panic back in the 1800s where almost 50% of banks went under due to speculation and easy lending. The answer to such problems is GOOD regulation, not over-regulation. The Fed was like dropping a nuke on an anthill that was leaking plutonium. It only exacerbates the problem and lines the pockets of its member banks. Think of it this way: our country is basically in the hands of a few dozen bankers. Now do you want to trust these guys? The same ones that are setting interest rates too low to bail out their own bubbles; lending to people that shouldn't have the loan in the first place; and buying politicians to allow the process to continue? Please folks, don't take my word for it. Look to our Founding Fathers for more insight. Do NOT listen to lawyers and businessmen, who are apologists for their own kind; they have the most to lose in the long run. Also, research the constitutionality of the Fed. If you read the Constitution and our Founding Fathers' debates, you will reach the same conclusions I have.

Panic doesn't help anything, but everyone should be concerned. Before the last depression, there were low interest loans. If you wanted a radio (and who didn't) they could get a loan for that. When they lost their jobs, people blamed them for being "deadbeats" - they shouldn't have a radio, if they didn't have the cash. If you have enough money, you will probably be okay. That's the way it happened the last time. Now it is homes. We have been encouraged to put everything on a home. When you can't pay for these "lyin' loans", you are punished for even trying. As you can see, the large companies have welfare, the rest of us are in deep s@#t. What we should be concerned about is our jobs. In the last depression, the rich got frightened so they started fired people. What is happening now? The same thing. If people don't have jobs, they don't spend. They couldn't pay for their homes. They couldn't buy food. People were starving. They were homeless. They did what they had to to survive. They couldn't afford to pay things from the rich. When the rich weren't able to make a profit, the banks started folding. The rich were scared and hoarded their money. They layed off people in droves. What is happening now? Forbes just had an article about a handful of the "poor" rich, who lost millions. They didn't miss a meal. They didn't loose their businesses. Now they only have hundreds of millions, instead of billions. They are so frightened that they keep on laying off people. They are withdrawing their money from Wall Street. Now the gold sales are going over the top. The rich that made money were employing people, because labor was cheap. My parents worked for $1/mo. Their employers gave them a bed. There was still had food, they just wouldn't give it to the poor. The government would buy the milk to keep the farmers in business and then they would poor it on the ground, because no one had money to buy it. The government would print money and sell bonds. My grandfather bought bonds, because they were told that the government would not loose money. They lied. He lost everything to the government. The rich were not harmed. What is happening now? The McMansions are holding their "value". The cheaper homes are going for firewood. Or from what one article said, the government was tickled because now they could buy these homes for cheap, to house (warehouse) the poor. If they are forcing people to lend money, they should be loaning to small businesses and they should force businesses to keep jobs. Maybe not with our police state, but with legislation that says "if you get a loan, you may not lay off people". If you can afford to hire someone, do that. Supporting banks and the rich will NOT trickle down. What we need to do is to help someone if you can. If you can afford to hire someone, do that. If you have any survival skills, teach them. And I do support jail time for the scammers from the politicians to CEO's to the medical industry's fraud. Lock 'em down! Or maybe we could tag them, give them a disability designation, stick them in a decrepit foreclosure and refuse to hire them forever. That might restore a little confidence.

Unsustainable debt levels, whether they be individual, corporate, or government, are looming on our horizon. An economy, whose growth is based on borrowed money, cannot be sustained indefinitely.

I am no financial expert, I am just a normal citizen. The bailout was the stupidst thing I've ever heard of. We are in this boat because of bad credit etc. Ft. Knox has an estimated 600 Billion in Gold. I wonder if there is any more out there to back our currency? The Government prints money every day de-valuing the dollar. The DOW has dropped every day for the past week and a half. No-one can predict the future, we don't know what is going to happen to our economic system. One thing we do know is that neither political party has the answer. Are we not all in this together? Why do we have to point the finger at everyone else? I think the best thing to do is stop bailing out irresonsible banks, restore confidence in our economy so the investors on wall street will stop selling at an alarming rate, and maybe we should do away with credit completely? If you don't have the money, you CAN'T afford it. Plain and simple. I've learned that lesson the hard way, and maybe all of America will to.

We forgot The Great Depresion started TWO years after the stock market melt down. If we don't do the right thing know, God only knows what will happen. The real bail out plan should be keep mortgage holders in their homes, Mandate,fix all the ARM's to 30 years mortgage. Nobody wants to loose their homes.

Hello....Unless your sleeping through this, the world is in an Economic Crisis. Yes, this is the start of the next Great Drepression and won't take years to see a soup line start forming. Wake up, this is happening in days & weeks, not years...

Most of the numbers presented by the author can be ignored as the scale of then and now are not comparable. Conveniently she also manages to maintain somehow that the devaluation of the markets and growth of unemployment have stopped. Her piece was posted before yet another 650 point loss. How prescient she is, no wonder she is not a rich successful investor. Just another commentator tell all to BUY BUY BUY as they SELL SELL SELL.

You are comparing now to the depths of the Great depression. You are forgetting one important thing. We are just getting started. This is October 28, 1929. WE haven't reached October 29, 1929 yet. Just wait..rj

Whether we are heading for another "Great Depression" is yet to be seen. The "Great Depression" did not happen overnight and not even over a year. We do have some so called safeguards in place such as deposit insurance on bank deposits. This does not mean that there will not be a continued run on Wall Street. There is no insurance covering our investments there. When and if that happens we will see massive business bankruptcies and then layoffs and then.........comes the soup kitchens. We are at a fork in the road. One road leads to Depression and Dispair and the other leads to hyperinflation and homelessness. I hope we have the wisdom to choose.

I am glad someone is talking real here - the average drop in a bear market is 36%; so far we are at AVERAGE. Now the fact that as an investor I have had to bring 3X more money to the table to purchase a nearly foreclosed home (changes in the last 3 weeks) because of the bailout bill from hell because the mortgage insdustry is in a meltdown already - that pisses me off. Especially since I make twice annually what I am purchasing the house for... which I was going to lease back to the current owners for about $300 less than their mortgage payment - but really why would anyone want the PRIVATE SECTOR TO BE ABLE TO FIX THIS PROBLEM. Now I am going to sit on my cash and that family of 5 will be on the street..... So I don't think this is anywhere the same as the Great Depression, it's just a recession with no credit.

Look here is the porker Barny Frank you can put lipstick on him but is is still a pig. Now american people suffer. It is ashame that the people of Massachusetts won't vote this obese marxist out of office.

Another one to two thousand drop in the DOW does well, it is over valued anyways along with the financials on the market. The market is now smells the the festering oder of Rat, unfortunately, it reeks even worse whenever Secretary Paulson opens his mouth and over-reacts in panic. The world will begin to see an even larger financial scandal that I believe involves Secretary Paulson, Chairman Bernacke, Gov Corin(sp?) of NJ, Chris Dodd, Barney Frank and his significant other Herb(Fannie Mae Insider), Franklin Raines,to name a few. Enron is nothing that compares to this, and the taxpayers will really be outraged, and will vote with their dollars and at the polls.

Major issues late in an election cycle should ALWAYS be examined to determine it they could be politically driven. The larger the issue, the more it should be questioned. The questions to asked are: Is the issue real or a media frenzy? - In this case the issue is definitely real. Who does the issue help? - You decide. Is the timing of a real issue hitting the fan suspicious? - The current problem has Fannie Mae and Freddie and bad leanding behind them. Various people have tried to address excesses with these institutions since 2002. The problem surfaces and causes a market meltdown six weeks before an election? The timing id definitely suspicious. Is the issue being dicussed honestly? (Actually, they never are the trick is vigure out who is spinning succesfully, they probably had more time to plan.) - In this case, a problem rooted in two Government Sponsored Enterpises and a bad law the Community Reinvestment Act, are commonly attributed to "Greed on Wall Street", and a failure of oversight by the Bush Administration. A couple notes: Fannie and Freddie are in DC not on Wall Street. By Law they are exempt from oversight by the SEC, part of the administration. By Law they are overseen the House and Senate Banking Committees. The timing looks suspicious to me. I hope I am wrong. However, these are the same spinners who talk about Clinton inheriting a country in recession from Bush senior. That election was won on "It's the economy, stupid!" Bush sr. was so dumb he did not realize the economy was still in recession he claimed the recession was over. (For the record: the official (NBER - the folks the media uses) end of the recession that occured during Bush Sr's was March 1991. 20 Months before the election won based the economy being in recession. NBER made thier annoucement on 12-22-1992 when nobody pays attention the economic news.)

Moderator please delete the last two messages. Submit works too easily.

Major issues late in an election cycle should ALWAYS be examined to determine it they could be politically driven. The larger the issue, the more it should be questioned. The questions to asked are: Is the issue real or a media frenzy? - In this case the issue is definitely real. Who does the issue help?