Comments on: Bear Market Comparisons, 1929-2009

By: rmcginty

rmcginty — Tue, 24 Feb 2009 20:11:01 +0000

What can be done to rebound confidence and begin a new era of boom? I`m no economist, but here are a few suggestions:
Tax incentives /Tax Breaks/ Tax Subsidies for all corporations companies and individuals big and small for energy conservation, photovoltaic,solar water heating,hydrogen fuel cell and electric automobiles.(not just to “those who qualify” under IRS terms, Global warming and the economy have no preference who gets the tax breaks… why should the IRS).
Hold the American Auto industry to their promise of new fuel efficient vehicles… OR… NO MORE MONEY!!! (They be asking for more soon)…..The economy won`t be as bad as many think should US Auto companies break into smaller companies and foreign manufactures continue to thrive right here in America.
FED…FED…FED…Where are you? Just lower the rates to between 3-4% flat “Fixed 30 yrs”…You`ll set a wild fire under every home owner in America to Re-Fi and move so much money back and forth for remodeling, new construction and home buying that the Housing Market will look like a tazmanian devil moving at warp speed… (and if the banks don`t climb aboard with good loans for those who qualify, then restructure the Bail-Out and demand all the money back the Bush Administration gave them!!!)

By: MFO

MFO — Tue, 24 Feb 2009 19:20:03 +0000

The Big Question for the Big Picture is … from those bottoms depicted in that fantastic chart, how long until the previous peak value was hit again, for each datapoint? If I’m not mistaken, it took about 25 years from the bottom of 1932 … and how long, if we’re at the bottom now, until DOW 14K+ again?

By: H.T.

H.T. — Tue, 24 Feb 2009 13:43:09 +0000

That’ Great Society… And the underlying point is the systemic damage is arguably vastly larger than then.

BTW, Bush/Obama are essentially following Hoover’s lead. Hoover was in fact a Keynesian, and it wasn’t until later protectionism and an ill timed drive to balance the budget came online. Oh–that’s what Obama is talking about now…

By: H.T.

H.T. — Tue, 24 Feb 2009 13:37:17 +0000

@ Constantnormal:

Do your own homework. In fact, the Great Crash was essentially a rich man’s crash; only ~1% of the population owned stocks in 1929, v. 60% today.

Further, the real estate bubble at that time was small [Florida coast line], focused on the wealthy etc, unlike the huge losses, sweeping in scope, suffered today.

Additionally, there were not “creative” financial instruments to aid today’s consumer “have it all” as before. Again the population then was fundamentally different.

Last, we were on the gold standard, and were a creditor nation, not the worlds biggest debtor as toady.

On the positive side, we didn’t have safety nets like we do now ['Greta Society' legacy programs]

@ Barry–I think you should post my white paper on the “then and now.”!

By: Michel Caldwell

Michel Caldwell — Tue, 24 Feb 2009 02:46:44 +0000

Thanks for the informative graph. A couple of points. The DJIA currently contains the following stocks:
American Express, Bank of America, Citi, GE, GM, and JP Morgan. These are not quite the blue chip stocks that the DJIA had in 1929-32. It would be nice to see comparisons of the S&P500 or other larger indices. Yes, things are different. Back then, many people grew their own food, FDIC, social security, and other safety nets didn’t exist, most people had their money in small local banks (which may have invested in a stock market that wasn’t supposed to ever go down) rather than too big to fail international institutions. Thus today is at best a rhyme rather than a repeat. The importance and significance of these differences, I’ll leave to the reader’s judgment.

By: Clem Stone

Clem Stone — Tue, 24 Feb 2009 02:16:36 +0000

I must have had a bad dream in 1987 because i’m not seeing it on that chart. Either that or i need glasses. If memory serves, it would have put all those others to shame in terms of rapid descent.

By: usphoenix

usphoenix — Tue, 24 Feb 2009 01:27:38 +0000

IMHO we can simplify the debate. Taking it back to the most important Depression factors.

Are the people in power/control/with more than enough money, happy with how things are?

Do they want more? Can they hope for more? Well yeah. I guess the bailout and stimulus are going to pad a few pockets. And how much more do they want?

I am reminded of my parents statement, that during the Depression, people with money lived extremely well.

So what’s the limiting factor here? They are obviously in control. Either they believe they are in control and can continue to control things to their satisfaction, and feed on tax dollars, or they have some notion of social fabric and concept of civil violence, not that I’m an advocate. But the majority of voting age citizens alive today do not understand how much violence America has experienced in the past.

I have to remind myself on a regular basis, that the vast majority of American voters are not old enough to understand the civil discord the Vietnam War and the draft caused. Only after the song: “I’m not no Senator’s son”, and other important moves, did our government figure out it was an unsustainable social situation.

Nor are today’s citizens old enough to remember Watts. Well I guess today Watts is an everyday event in some cities.

Those baby boomers with anything of a stock portfolio have been co opted into a fearful position that the government has to save their portfolio. Really, really bad idea. You, my friend are responsible for your choices and actions. I have been warning people off Wall Street for decades.

Well hey, it’s not important. We can now bring the military in on things as long as there’s a reason to believe there’s a terrorist in the haystack. And I guess the aviation charges have proven it’s pretty easy to declare anyone expressing their Constitutional freedoms a terrorist.

Sorry. And not. It was real time work through. And the bottom line is that until the people in power feel threatened and unable to sustain their gated community safety, nothing much is going to change.

Business as usual. With taxpayer dollars. As usual. And so exactly where did we lose the tea party notion: No taxation without representation?

By: lfhill

lfhill — Mon, 23 Feb 2009 22:50:55 +0000

The validity of this chart depends on who picks the start date. Is it just the down-turn or the whole business cycle. From the legnth of time, it looks like just the promenent down-drafts were picked. Now the question is; are these down-drafts representative of where we are now?

I like Mark’s and PolarBears answer above that the business cycle started turning down in 2000. This is also what Russell Napier; “Anatomy of the Bear”, suggests and that large down-turns average about 14-years or so. That would mean we should see this ending about 2014 if we don’t screw it up and keep the zombie banks alive too long.

TTFN

By: rktbrkr

rktbrkr — Mon, 23 Feb 2009 21:54:13 +0000

Constant,
Actually the homebuyers in the post 2000 era probably have/had less equity in their homes than the margined stock buyers in the 20s and the mortgage holders, unlike the stockbrokers can’t liquidate them. Sooo the home price decline, which already rivals the depression, could have a more profound effect than the depression. The average American’s stock holdings in 2008 is also much more extensive that it was 80 years ago, especially considering pensions and 401Ks.

A 70% decline from 14000 takes us to around 4300 which is about a 40% decline from this mornings open, OUCH.

By: Pool Shark

Pool Shark — Mon, 23 Feb 2009 21:15:30 +0000

Sorry Barry,

Looks like that chart is already out of date….

Better mark that 2007-2009 bear market line down to -50% as of today’s close.