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The Depression's history lessons

DEREK DeCLOET

From Saturday's Globe and Mail

Latest comment posted at 7:47 AM EST 14/10/08

It's far too early to know the impact of the past month's remarkable stock market plunge – but not too early to learn from the mistakes, and masterstrokes, that followed the greatest crash of all ...Read the full article

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  1. Paul Dieter from Canada writes:
    The top ten reasons that you know Capitalism is in big trouble.....

    and the number ten reason...

    The Globe and Mail runs a lead story in the business section entitled:

    The Depression's history lessons...!

    and the number ten reason is:

    George "Bolshevik" Bush nationalizes the USA's banking system!!!

    If only Tommy Douglas were here to see this...imagine Dubya implementing one of the key principles in the Regina Manifesto!
  2. ALASTAIR JAMES BERRY from Nanaimo BC, Canada writes: FINALLY ....... The word DEPRESSION has appeared. And surely the world is in the EARLIEST stages of a repeat of the 'Dirty Thirties' or so it seems to an old guy like me. Platitudes from Politicians, Learned long winded explanations from Financial Pundits ARE A MAJOR SIGNAL that disaster is afoot! Wild swings on the market which heads inexorably down is another bad sign. And later the explanation "WE DIDN'T WANT TO 'PANIC' THE PUBLIC". Which translates as 'WE WANTED TO RETAIN POWER' in the election. There are only two ways out..........(1) JINGOISTIC MILITARISM AND PATRIOTIC WAR(as chosen by Hitler)............or(2) a return to the GOLD STANDARD! As yet, it seems our Finance ministers and Central Bank Governors are still hypnotized by the dreams of KEYNESIANISM, promising NIRVANA!!......................It has taken only about 50 years to prove that KEYNES was 'A FALSE GOD' and now we are going to suffer in a deep depression as the excesses of the past 50 years are beaten out of the WORLD'S MARKETS! We need to forget fancy financial creative accounting. We need to forget Governments FIGHTING FOREIGN WARS and BALANCING DEFICITS simply by PRINTING WORTHLESS PAPER MONEY.............................. THE WORLS NEEDS TO GET BACK TO INTRINSIC VALUE AS MEASURED IN GOLD!! FOR 5000 YEARS, GOLD BACKED THE WORLDS CURRENCY AND INTERNATIONAL TRANSACTIONS........................................ AND IMPOSED DISCIPLINE ON BOTH GOVERNMENTS AND CITIZENS. And the discipline and lesson gold taught ? If you haven't got the gold to pay.........YOU CAN'T HAVE IT.
  3. Ann Ig Norant from I want global warming and grow bananas in my backyard, Canada writes: and for almost 5000 years usury was considered a sin
  4. duff bourassa from Canada writes: one cant help but think....if george bush were to resign... confidence might return to the market
  5. J. Michael from Australia writes: We do not know what would have happened if there had been different action during the Great Depression. What we do know from history is that the GD changed the way people viewed things, and changed their spending habits, etc.. These may have been habits that probably needed to change, I'm not 100% sure. However, what we seem to be proposing today is: let's try to avoid any discomfort or pain so that we can go on doing the same thing. To those bankers that have failed, may we bring them comfort?! What this will lead to is something much worse than the Great Depression.
  6. Peter Stern from Toronto, Canada writes: Yep... last time I heard the word Depression being thrown around a lot was 1991... lots of books to help you prepare for the "depression of the 1990s". Look people, what made the depression of the 30s worse was that the government of the time was doing idiotic things that made stuff worse like raising tariffs and interest rates even though there was deflation.
  7. Roop Misir from Toronto, Canada writes: Will librium or valium do? Ad what about St. John's wort?
  8. Double Money from Canada writes: Good article. Quick dramatic plunge in the stock markets and we all look for a prior period to compare with and the Depression comes to mind. I don't think a Depression would happen with the safety nets available now such as Employment Insurance but we could be in for a severe recession.

    www.doubleourmoney.ca
  9. Dave Patterson from Thailand writes: There was one central lesson from the Crash the led to the Depression - letting private banks control the nation's money supply essentially unregulated is a bad, no, a very, very VERY bad, idea. Various controls upon such banks were implemented in the 30s to put some reins on them all, including in Canada with the Bank of Canada. But by the 70s this most important lesson had been forgotten, and the politicians began, with some urging of course from the banks and their hefty campaign contributions etc, hand in hand with large corporations also wishing to expand their profits, to deregulate everything. The results were never in question - Canada faced it's first bank bailouts by the early 1980s, and we've never looked back. Nor has the media ever tried to make Canadians aware of the true situation here, of banks creating 98% of the Canadian money supply, and collecting interest on the money, year after year, which also raises the point that we all need to understand that there is more to the world, Horatio, than gets reported in your mainstream media. Insanity for 'we the people', golden goose for the banks. BANKETEERING http://www.rudemacedon.ca/lgi/banketeering.html
    First we take back our brains, then we go for the country.
  10. Blaque Jacque Shallaque from Canada writes: Good article. It indicates that some lessons have been learned, and I find it reassuring rather than frightening.

    So far to my eyes at least, the economic problems of the late 1980's and early 1990s were more severe than what we are experiencing now. Maybe the worst is yet to come, but by historical standards what we are experiencing is not so mind boggling. A few more trillion dollars of bad debt to unwind, and we should be there....
  11. sean smith from Canada writes: This article forgets the biggest lesson learned from the Depression: that it was socialism for the people that mattered NOT socialism for the rich and their corporations. All what we are doing is propping up the elites and shredding our safety nets for everyone else.

    Bad times are coming for average Canadians who are footing the bill for the greed of the elites.
  12. George BrownIII from Christmas Island writes: In the early nineties there was the economist Dr Ravi Bhatra of Southern Methodist talking about the coming depression, after predicting black teusday correctly in 87. Never mind the economists and the politicians it is time to polish up on John Stenbeck's "The grapes of wrath", and reread on the Joads trip to California.
  13. Do The Math from Canada writes: Good article. Those who ignore history are doomed to repeat it.

    One difference today is that we have tightly linked global markets and global capital flows. The current crisis has rapidly spread beyond the US. The leaders of the G8 plus (China, India, Brazil) need to work together NOW - or hang separately.
  14. Jonathan T from Canada writes: I think there are a couple posters here that are optimists. One mentioned 1991 'depression' which of course never materialized. I think the difference between now and 1990 is that the entire market has lost 100% of their confidence. It is complete anarchy and panic. As Warren Buffet put it, people have never been so scared economically in all his adult life.

    If one can't read that previous article and tie in the fact that, despite everything, it kept getting worse. Just because we move faster and swifter, it does not mean that this will end any differently. The world has way too much debt and all that backs it up is confidence that the debt will be repaid. Without that confidence, all debt becomes worthless.

    I see in the future that more and more debt will be defaulted on. US government will initially bail out this debt, such as the 600 billion by the auto manufacturers... but as the US debt approaches 15 trillion and its economy in depression, it gets to the point that US is basically insolvent. Finally, by 2010 the US admits it can no longer afford to pay back its debt, at which point all lending seizes. As a result, emerging economies and oil economies go bankrupt as well. If history has anything to say about this, then a great war is triggered. East vs West. Good ol GM factories start producing missiles and China's manufacturing centre likewise.
  15. ichabod plain view from Canada writes: I don't know what will come, but I don't believe what they do at the top will have any bearing on the outcome.

    I believe a recovery will come from the bottom. We know there are truckloads of private money waiting on the sidelines. They will start lending to individuals and small business after a few years and they will start selling cars and homes again.

    For a few decades until someone looks at how much money they can make saturating civilization with debt, bundling them as securities and selling them for top dollar to unsuspecting buyers. The crash will happen again.
  16. A Reader from Canada writes: The problem with articles like this- and Ben Bernake's oft-repeated claim that he is the formost expert in the history of the great depression- is it assumes that we can objectively look at complex historical events without applying our own biases, or selectivly focus on points that support our preexisting views. In fact, anyone from almost any ideology (i'm sure everyone from libratarians to communitsts, ) can look back at these events and selectively focus on failed policies that run against their views, and write a very 'convincing' argument that the opposing viewpoint was the 'cause' of the great depression, since almost everything that happened then was a total failure. The great depression had many causes, and the severity of the structural problems (huge debt bubble, excessive borrowing, risk-taking by financial insitutions, unsustainably large inequity between rich and poor) prior to the start of the depression may well have meant that most, if not all actions were bound to fail. Just because there was government inaction in the early years of the depression does not mean that transferring problems from the financial industry to the taxpayers then or now would have solved their problems.
  17. c j from Canada writes: How it's different: Social programs help cushion the blow Unemployment insurance, old age pensions, Social Security in the U.S. — these things either didn't exist in 1929 or existed in only a limited form. They're called "automatic stabilizers" because they put money into the economy as the private sector contracts. I need to comment on this one point. UI will last as a cushion between jobs. Now a family that works in a good paying job, lets say Forestry, and on average makes $28 an hour. he loses his job, places in the waiting period, falls behind in the mortgage... and the other bills PILE UP. He will never get caught up again, unless he has a bank cash cushion. (in todays instant gratification world) my guess is he has all the trappings of *success* line of credit, card bills and a house full of toys, most paid for on the buy now pay later plan. The fellows at the job site say that in a few weeks they should have 1 shift going. After a few months he realizes that the only way that he will be called back is to help the company at the auction. the Forest job is gone for ever, owners throw in the towel and in a blink of an eye life changes forever. The bank calls the loans, jobs that can be found pay $10 hour if that town still has any jobs at all. then place this back into the how these times are EXACTLY the SAME as the 30's. Jobs are going fast. People aren't STUPID in Canada, it is the Government that thinks we are stupid. Guess what you can't dumby down the educated.
  18. c j from Canada writes: One last comment..... History is repeating itself....

    Here is an insightful quote from page 135 "The Stock Market Crash of 1929" by Gordon V. Axon

    "The old saying that a stitch in time saves nine applies with force to controlling speculation and a booming economy. The nation as a whole can produce only so much wealth. No country, no system, has found the means to rapidly stimulate national wealth, over a period of years, without facing either serious social problems or a dramatic setback. Wealth does not normally increase rapidly, but through the slow processes that increase industrial and argricultural productivity as the years pass. So any stock market boom that rapidly outpaces the economy is bound to collapse sooner or later. Any economy that is stimulated to excess will surely have setbacks that undermine the future."
  19. john gan from Burnaby, Canada writes: I am facinated that a credible business newspaper such as yours will continue to seek out so called experts who have no credibility and been proven dead wrong for their predictions.

    I refer to this Rubin guy from CIBC worldmarket who predicted oil will be 200 dollars a barrel and the TSX index goes to 15000 by year end. Just because he is outspoken and wiling to market himself on media and BNN does not make him an expert. Many billions have been lost from buying oil stocks based on his prediction.

    John
  20. A Smith from Canada writes: john gan from Burnaby, Canada writes: "I refer to this Rubin guy from CIBC worldmarket who predicted oil will be 200 dollars a barrel and the TSX index goes to 15000 by year end."

    I don't know the context of his prediction, but the TSX did go to 15000. His wording may have been at year end. Or before year end. Regardless, 15000 was hit, and it was probably time to get out of the market. I wish I had! Instead I have some cash sitting aside which I will be investing in the coming weeks, once the US presidential election is over, and the credit market has cleared up.
  21. Dick Garneau from Canada writes: An expert is one who never makes a mistake towards the great fallacy.

    .
  22. K Ross from BC (Bring Cash), Canada writes: Excuse me, but can someone explain who is buying all the stocks being sold? Methinks some very savvy people have virtually everyone singing from the same hymn book. I mean, the talks keeps driving prices down and some folks are going to lock in some solid profits when (not if) things rebound. What, we're not going to be buying bread or gasoline and those industries are bound to collapse? C'mon already. Stop acting like Canadians and show a little intestinal fortitude, will ya? Canada's time has finally come and all those jokes about hewers of wood and haulers of water have come to benefit us. The world needs commodities the likes of which we have plenty of. Sure, it's going be a roller-coaster ride, but we're going to do pretty damn good when all the accounting is done. Bully for Canada!
  23. Carl Hansen from Canada writes: This is going to be so bad the DOW will hit 2700 again. I don't see a way out of this melt-down. Probably the wages and living conditions in NA will equal those in China. One world socialism is on the way.
  24. Wise Guy from BC, Canada writes: Here's something I don't understand about the stock market (pardon me). If the economy in general (GDP?) grows at 3% a year, how can the stock market (value of the companies in it) grow faster than that over the long term? If it is representative of the economy, how can it grow so much faster? Could this incongruity be one of the hens that comes home to roost every so often?

    Wasn't that the problem with the dot.com bubble. You had these stocks growing 10 or 100 times in value based on peoples hope or imagination they would eventually generate large revenues.

    Also I read recently that real minimal economic growth of late has only been a result of accelerating borrowing. So for every dollar of real growth, $10 had to be borrowed to generate it. And that $10 was growing exponentially. Since 2000, the argument went, there really hasn't been any legitimate economic growth but rather an illusion of growth made possible by this excessive borrowing. The sub prime mortgage scheme was a deliberate way to quickly get out of the dot.com bust.
  25. M G from Canada writes: Time to gather everything you've got and BUY good stock!
  26. c j from Canada writes: All the bubbles are exploding at the same time. Housing, Credit, Stock Market, the Derivatives Market, and the Construction bubble. Wise Guy from BC, Canada writes:Also I read recently that real minimal economic growth of late has only been a result of accelerating borrowing. So for every dollar of real growth, $10 had to be borrowed to generate it. And that $10 was growing exponentially. Since 2000, the argument went, there really hasn't been any legitimate economic growth but rather an illusion of growth made possible by this excessive borrowing. The sub prime mortgage scheme was a deliberate way to quickly get out of the dot.com bust. You are close to your assumptions, the major growth in N. America has been from a housing bubble, (as has been the boom bust sequence that is playing out around the world) the housing industry has carried the economic growth on its back for the last 8 years. the bubble made everyone who bought into the notion that paper wealth was the same as debt wealth. The general population was lead to believe that owing $450K on property made you RICH, when in fact it has left you in perdition. As for the 1/10 ratio I can't comment on this, however, where you maybe confused is that leverage could get you 1/10, meaning that for every 1 you invested you could borrow 10 on it. I am not sure if that helps explain this.
  27. William Scott Lee III from Vancouver, Canada writes: To c j from Canada

    Unlike you and most of the readers here I have been through an actual Depression when I was in Indonesia in 1998 as defined by economists (plus a real revolution with riots, violent demonstrations and ethnic lynchings). A Depression is defined as when the economy shrinks 10% in a year. In one year, Indonesia's GDP dropped 17%, inflation went to 100%, the local currency fell 75% in less than a month, the majority of the banks were insolvent and some companies had to resort to barter. Some companies would pay for stuff using land, tooth paste etc.

    The Great Depression was a lot worse than Indonesia in 1998, GDP growth fell by 29% from 1929-1933, then another -10% in 1937. What ever is going to going to happen in Canada it is not going to be like what happened in Indonesia in 1998 let alone the Great Depression.

    I don't agree with the article about having to move fast. In the Depression and in Japan they stalled for months or even years before anything was done. I agree with Harper, the Americans are in panic and throw good money out the window. They passed the bailout package in less than six days basically in hopes that they would restore confidence. Right now they should forget about restoring confidence because it is too late and instead take the time to construct a plan that actually addresses the problems. Despite his experience, Paulson is acting in the same way as Suharto, the late Indonesian dictator in 1998. When the Indonesian Rupiah and economy was tanking in early 1998, Suharto tried every gimmick to get the Rupiah back up. Despite his experience, Paulson is doing the same thing, the bailout of B and S, AIG and $700 Billion are "meant" to restore confidence is not a real solution.
  28. John Hidden from Puntarenas, Costa Rica writes: No, no, no. You don't get it.... This time it is different.

    Right.
  29. Edwin Elbert from Kemptville, Canada writes: Doesn't the economy come down to jobs? If people are working and at the very least able to afford to pay these stupidly high mortgages for the stupidly large luxurious houses and amenities, wouldn't the banks just be able to bumble along?

    Our adult child tendency just wanted the good life now and are willing to lease their lifestyle as opposed to creating net wealth (for themselves). The regulators got to greedy and let out to much rope and did anyone not see the noose at the end?
  30. Mickey Hickey from Toronto, Canada writes: There is a credit crisis and it is not confined to business borrowers, in the past week Lines of Credit have been pulled on individuals whose circumstances had not changed. That is their income continued and there was no reason to believe that they were in peril. I expect that credit card companies will lower the ceiling on each card. I know for sure that I have not received a single solicitation from credit card purveyors in the past two months. The Bank of Canada should lower its rate to 1/4% immediately and not dribble it down over the next 12 months in a too little too late fashion. Deflation will take hold unless bold measures are taken. The Fed. and provincial gov'ts must buy preferred shares in banks in amounts that will ensure the stability of the banks and reassure the public that Canada has its act together federally and provincially. If I hear the phrase balanced budget in these circumstances I will puke. You hear that Harper/Flaherty.
  31. Helene McKenzie from Thunder Bay, Canada writes: Jonathan T wrote: "One mentioned 1991 'depression' which of course never materialized."

    Not too sure I agree with you. Semantics (and definitions) aside, I lived through that time. I had just graduated from college and couldn't for the life of me find a job in my trade. I ended up on social assistance for 3 months before finally landing a "go-nowhere" Woolco position. Recession or depression, it doesn't much matter when you've got no money, no where to live and no food to put on the table.

    sean smith from Canada writes: "This article forgets the biggest lesson learned from the Depression: that it was socialism for the people that mattered NOT socialism for the rich and their corporations. All what we are doing is propping up the elites and shredding our safety nets for everyone else."

    Have to agree with you here. One of the main reasons that the though times in the '90's weren't as bad as they could have been was for the simple reason that we did have the social programs for people to fall back on. Now, with CAP gone and federal transfer payments sitting (in Ontario at least) about 18%-19% of the total costs, the provinces are being left high-and-dry as to how they're going to fund anything else to help out their citizens.

    I am desperately hoping Harper doesn't end up with a majority government as this problem will only get worse with him at the helm of our country. Catering to the wealthy doesn't help the 90% or so of us who work for a living.
  32. Prudent Deuce from Daphne, United States writes: I understand that everyone believes recapitalization of our banks is a must, cause nobody wants to be accountable for the deserved pain we are trying so hard to avoid. What I continue to miss, is why ignore the cause of this train-wreck..... Paulson and the G7 talking heads are nothing but elected officials. who take their cue from the scummy scarecrows that got us in this mess, their way over there heads but to big headed to seek help from sound scholars with no skin in the game, which would most likely ask them to stay away from the cameras and take a deep breath. PAIN, and lots of it, as never been more deserved than now.....But no, we will ream ourselves in the behind to try and keep this boat afloat. The US Federal Reserve is maxing out $$$, the US debt is to the moon, we've allowed congress to scare the tax payer into bailing-out the wallstreet mafia, and all this will bring on a serious death spiral caused by nothing less than pure ignorance and denial. $$$$ = EVIL GREED = CORRUPTION = THE LIVING HELL WE ARE ALL ABOUT TO GO THRU,....this next leg down(depression if you wish, myself, I think we need to rename it "world war III) so could of been avoidable ....
  33. Prairie Boy from Canada writes: My mother grew up during the depression. Single parent, 7 kids. They worked when they could to help out. My father died young and at the time a woman could not get a loan without a man's co-signing. I grew up in a home that did not borrow money. I learned that lesson and my habits are the same. I hate owing money so I don't. When I wanted something I could have bought it but my way was to save for it. By the time I had the money saved I usually didn't want it and a good portion of the time I would ask myself why I did in the first place. I have never invested with money I could not afford to lose and I regard buying stock as lost money. It is an asset but not one to borrow or rely on. My portfolio is down as everybody else's but I don't have to sell in a down market.
  34. Tim in Texas from United States writes: Bernanke is a renound expert on depression era economics. He certainly has the credentials to know what levers to pull, and he's got a much stronger Central bank to work with. But the Fed's got a weak partner in the US Gov't. Forget Bush. Neither presidential candidate apears up to the task either, and congress is awash with corrupt politicians and destructive political agendas. God help us all...
  35. rich fallis from marshall, United States writes:
    It's so good to see that we are so much smarter now.

    Let's see...we still borrow money from shysters at the Federal Reserve instead of creating it debt-free as determined by the Constitution (I really really hate it when the constee-tu-shun gets in the way of professor smartees).

    And private banks now create money out of thin air in a 10-1 ratio instead of the 5-1 ratio in '29. Yum.

    So when there's a crunch...these days...there's really a crunch...but hey we got the Fed who is more than happy to loan us more of its 'created-out-of-thin-air' funny money...at interest of course.

    And of course we have to protect the big banks. Let's see like JP Morgan in '29? The House of Morgan and its friends were more than happy to buy up assets at pennies to the dollar. Doing a good deed and all. Just like Citibank and Goldman. What a buncha great corporate citizens we have today.

    Here's my prescription: nationalize 'em all. Eminent domain doncha know. Including the Fed.

    Any of the well-heeled debt-meisters try to scuttle control over the right of Congress to create money and regulate its value-thereof, should be declared traitors in the morning, tried, and hung before sundown with their bodies carved up and sent to each bank President's office around the world.

    Might make an interesting object lesson.

  36. bruno tomassini from Canada writes: Good article.

    All of you posters have a good day and visit www.voteforenvironment.ca then on Oct. 14 start something new, empower yourself and make your vote count.

    Together we can make a difference.

    cheers!
  37. Silver Standard (Used to be gold) from Canada writes: What a bunch of nonsense, the Feds actions CAUSED the depression. Bernanke knows absolutely nothing. Its gov interference that made it worst and made it last longer. Central banking and paper money were the root cause of the depression because they blew the bubble up during the "roaring" 20's. Another misleading article.
  38. Prudent Deuce from Daphne, United States writes:
    Tim in Texas....says, congress is awash with corrupt politicians and destructive political agendas.

    It is the system Tim. You hit the nail on the head.
    A complete flush out is all that can right the ship at this point.

  39. Prudent Deuce from Daphne, United States writes: What do I see as I check in to CNN international this morning.....Bush again, reading from a prepared text again, with Paulson flanking his right again, and some buggy eyed chick flanking his left. Maybe if he tried selling us this bill of goods without reading from a teleprompter all the time, he'd be slightly more believable......This is downright comical, I consider myself an outsider looking in and would never expect any born and bread patriotic American to confirm my thesis..........But HELL, this is a truly screwed-up situation, watching a whole country being so dependent on these self-destructive rigged markets perpetuated by lies and deceit as gotten pitifully shameful. Maybe Obama can somehow begin the process of flushing it all out, highly doubtful for two reasons. 1- The system would not allow it. 2- He's most likely just another politician.

    The US fiscal debacle situation is pathetic to say the least. Why would anyone want to live with subsidized capitalism soon to be quasi-socialism better known as denialism.
    Theirs only so much crap you can shove down someones throat, this is all very hard to digest.
  40. Philosopher Dog from Toronto, Canada writes: Quite an interesting piece. Very informative. I think that it's surprising how the piece seems to miss the role of government policy in causing the crisis however, especially political ideology. Isn't this the big story here? We've heard the fiscal policy drums beating to the Friedman School tune for so long perhaps we've forgotten exactly what ideas have caused this crisis. It seems to me that this crisis is the direct result of an economic philosophy that is itself bankrupt. I think we need a deeper analysis if we're to understand what really is going wrong. Otherwise we will find ourselves back here again in the next bust cycle.
  41. Billiam Smith from Canada writes: It bears pointing out that the banks have always been proponents of government deficit spending. Governments raise their debt money through the banks, so the fact that we have been balancing our books for the past decade or so means that they lose out on all sorts commission gravy. Boo-hoo.
  42. Dr Demento from Canada writes: Depressions are a natural part of the Kondratieff cycle. They are inevitable - but recovery is also part of the cycle . . .
  43. David Hyder from Canada writes: THAT IS NOT THE NEW YORK STOCK EXCHANGE

    It's Federal Hall. Congratulations Mr DeCloet for your excellent fact-checking.

    How seriously can you take this newspaper if they can't even identify the New York Stock Exchange.

    This is after all the same newspaper that tells us that Steve-O is "an economist".
  44. Dave C from Canada writes: We are heading for a Depression or much worse. Do a search on the Derivatives and the estimated Quadrillion, no that was not a typo, I said Quadrillion dollars worth of unregulated debt, which most of it is at risk.
  45. Tom Araxias from Chatham, Canada writes: ALASTAIR JAMES BERRY from Nanaimo BC, Canada writes: FINALLY ....... The word DEPRESSION has appeared. And surely the world is in the EARLIEST stages of a repeat of the 'Dirty Thirties' or so it seems to an old guy like me. Platitudes from Politicians, Learned long winded explanations from Financial Pundits ARE A MAJOR SIGNAL that disaster is afoot! Wild swings on the market which heads inexorably down is another bad sign. And later the explanation "WE DIDN'T WANT TO 'PANIC' THE PUBLIC". Which translates as 'WE WANTED TO RETAIN POWER' in the election. There are only two ways out..........(1) JINGOISTIC MILITARISM AND PATRIOTIC WAR(as chosen by Hitler)............or(2) a return to the GOLD STANDARD! As yet, it seems our Finance ministers and Central Bank Governors are still hypnotized by the dreams of KEYNESIANISM, promising NIRVANA!!......................It has taken only about 50 years to prove that KEYNES was 'A FALSE GOD' and now we are going to suffer in a deep depression as the excesses of the past 50 years are beaten out of the WORLD'S MARKETS! We need to forget fancy financial creative accounting. We need to forget Governments FIGHTING FOREIGN WARS and BALANCING DEFICITS simply by PRINTING WORTHLESS PAPER MONEY.............................. THE WORLS NEEDS TO GET BACK TO INTRINSIC VALUE AS MEASURED IN GOLD!! FOR 5000 YEARS, GOLD BACKED THE WORLDS CURRENCY AND INTERNATIONAL TRANSACTIONS........................................ AND IMPOSED DISCIPLINE ON BOTH GOVERNMENTS AND CITIZENS. And the discipline and lesson gold taught ? If you haven't got the gold to pay.........YOU CAN'T HAVE IT.
    Posted 10/10/08 at 10:13 PM EDT | Alert an Editor | Link to Comment

    Excellent post. Well done.
  46. Yvonne Wackernagel from Woodville, Canada writes: General Motors felt it incumbent to state yesterday that it was not planning to go into bankruptcy but, in the meantime, they got rid of 43,000 jobs in Europe. And their potential job cuts for Canada have not started and will not start for another few months, hopefully. Plus all the jobs from its ancillary companies. Today -as from yesterday- the Globe & Mail tells us that the Tories are now going to win, maybe by a majority. DON'T BE FOOLED! The Tories are going DOWN. The World is in a mess, Australia, New Zealand, Hong Kong, Japan, China, Russia, and all of Europe: NOT TO MENTION WHERE THE MESS STARTED, THE GREAT UNITED STATES OF AMERICA. We cannot escape and, if you think that by Harper buying WORTHLESS Asset Backed Commercial Paper from the Banks is the answer, you must need to examine your heads. Having said that, it is my opinion that our banks are in a reasonable shape and are just being very prudent at this time, which I actually appreciate. Anyone who deliberately over-extended themselves through greed or just for the fun of having whatever they wanted, can now suffer, as far as I am concerned and my only sympathy is for their children who did not ask to be born. HOWEVER, I wish the national papers would tell us the truth, notwithstanding the Federal Government because WE CAN ALWAYS GET IT FROM THE WORLD NEWS.
  47. North Star from Canada writes: "The economy is sound' Herbert Hoover

    "Economic fundamentals are sound" George W. Bush

    "Economic fundamentals are strong" Stephen Harper
  48. A Allan from vancouver, Canada writes: Two things - first, why does the Globe always go to CIBC analysts for insight? They rate among the worst offenders for riding these phony waves to make the fast buck. Second, I'll bet theyre gonna complain because the gov't won't spend their way out of the problem. It would solve their problem - learning how to manage their business properly, wouldn't it?

    Part of the problem was the US gov't spent their way out of the chaos brought on by the 911 attacks. They didn't reign it in as time went on however, and now we reap the benefits as the bills come in. Bin Laden must be howling with laughter.
  49. Normand LaBine from Winnipeg, Canada writes: Kudos to Derek DeCloet! One of the best Self-Help articles on the potential mess and well-documented and researched. Excellent! I'm sure it will be cross-referenced many times over the next 4 years.
  50. Sylvia Wilson from Canada writes: I wish governments could wave a magic wand and make this economic emergency go away. But they're experiencing great difficulty getting the banks to unfreeze their lending practices. Free market and laissez-faire economics don’t do any favours for the public. I have to take exception to this article on the basis that one of the best economist’s the world has ever seen was John Kenneth Gailbraith. His ideas were rooted in Keynesian economic theory, strengthened by being an institutionalist and rooted in 20th-century American and Canadian liberalism and progressivism. The depression was caused by deregulation, just as this downturn in markets are. Markets must return to regulation and away from free-market and laisseze-faire economics in order for people to survive. http://en.wikipedia.org/wiki/John_Kenneth_Galbraith Dion said, he would not 'cause' a deficit, but who better to manage one? Canada is headed for deficits regardless of who caused it. Several times the liberal party has rescued the Canadian economy and turned it from deficit financing to surplus. The transition from one to the other is painful, but needed again. Hard times lay ahead until markets recover. Pay off any debt you have, grow a vegetable garden and become as self-reliant as you possibly can.
  51. GlynnMhor of Skywall from Canada writes: One major difference between 1929 and now is that the world has been irrevocably committed to much more freedom of trade.

    The major exacerbating factor of the Great Depression was the collapse of world trade as economically important countries all erected tariff and other barriers to trade, ostensibly to 'protect' their internal industries and markets.

    The colony-empire approach was still in vogue, which meant most trade was only practical within an empire, and stifled between empires.
  52. Normand LaBine from Winnipeg, Canada writes: You noticed that the US Fed, et al, had to go to Congress to get their 'Intervention' plan approved? And Harper didn't? He just snuck it under the radar, in the middle of an election, and let the cheques get written. Man of the hour! So efficient! No debates, no Parliamentary grand-standing, no oversight, no other ideas permitted. Just Aim and Fire! 30 billion dollars bought of US currency (to prevent market freeze-ups) Actually creating demand for worthless currency that hasn't been printed yet! 20 billion to lubricate the banking system 10 days ago. It was 8 billion, then bumped to 20 billion 5% Prime rate drop to further lubricate the sleazy loss-takers. 25 billion in Mortgage Securities, preloaded with a 5% CMHC fee on the Mortgages (since we own CMHC, that's the net lubrication, and we just got our own FannyMae/FreddyMac fiasco in the making. Delayed Disaster. $75 billion in 10 days of new intervention, with some of the securities at risk in this crisis economy (how many will default during a time of constrained cashflow. Those August 107,000 jobs were part-timers and low-wage jobs. Alberta's housing is devaluing and winter won't help the construction game. The Roadrunner coyote is gonna do more than a soft THUD! Thanks Harper/FlogHurty. You left the cupboard fall off the wall and no cookies. Gonna be a quiet parliament without money, for 9 more terms (35 years of mortgages). Or 10 days to dump them at a discount?
  53. Prudent Deuce from Daphne, United States writes: GlynnMhor of Skywall from Canada writes: One major difference between 1929 and now is that the world has been irrevocably committed to much more freedom of trade.
    --------------------
    Point understood, but how can one claim this interwoven global amateur hour's any more stable, when unwinding all this excessive bad debt????? The bigger the maze, the harder it is to find one's way.
  54. ALASTAIR JAMES BERRY from Nanaimo BC, Canada writes: REPORT.......The proof that the G7 is focused is underscored by the statement's terseness: Barely half a page, compared with previous communiqués that run several pages in length. ------------IT MEANS - "ALL OUR SILVER BULLETS ARE USED UP - BUT WE ARE TRYING TO FIND SOMETHING ELSE!".................................. Well, the paths ARE very few and limited but the ONE THAT CAN RESTORE CONFIDENCE AND STABILITY to the WORLD'S MARKETS is STILL being IGNORED...................a return to the GOLD STANDARD! And why is it being ignored ............. THE PRINTING OF PAPER and calling it MONEY is a very addicting to all governments.......and it permits all sorts of PHONEY FINANCIAL of SERIAL DEFICIT BUDGETS ..............and it promotes INFLATION that transfers wealth(as measured as PURCHASING POWER) to the central Governments too, from citizens pay packets and savings!! Talk about getting addicts off HEROIN........GETTING GOVERNMENTS TO STOP JUST PRINTING PAPER AND CALLING IT MONEY IS 10,000 X WORSE! AND GOLD DISCIPLINES THESE YOUNG WHIPPER SNAPPERS in the VARIOUS FINANCIAL HOUSES............IF YOU HAVEN'T GOT THE GOLD you just CAN'T HAVE IT!! Things are set to get a damn sight worse until these facts are appreciated................................................................ AS in ALCOHOLICS it is often NOT UNTIL THEY HIT THE GUTTER, DO THEY SEE THE NEED TO CHANGE THEIR WAYS!!
  55. Canadian Infidel from Cranbrook, Canada writes: This is one of the greatest articles I have ever read. Well researched and is of real benefit to not only the elite whom run this country without education but, also to the general populace. Worthy of a Noble Prise to "understanding financial folly". The difficulty is that this was addressed to us, the general public, when it should have been addressed to the Elite!!!!!!! The "depression mistakes" are easily visible by hindsight, but apparently our current Elite whom lead us...are in "never, never land still arguing supremacy of Business over the Peoples", "current understanding rather than Lon term understanding", yet one wonders when both are logically totally dependent upon one another why we constantly fight. It's the 50/50 things that will always be with us! Lastly, you cannot be "Free" unless you recognize both sides, i.e. Business, the People and All other Nations on this Planet that want to deal with you on "equal footing". Trade barriers where and obviously where the cause of "The Great Depression", and resulted from selfish voters, the like of which is going on now in North America. Take care to redirect this article to those in Power immediately! Love this article..will save for posterity..if there is any! Canadian Infidel
  56. Marcus L from Calgary, Canada writes: Let's take a step back here for a moment. A few banks fail, a noteable percentage of U.S. mortgages are in trouble (but haven't foreclosed), and financial institutions stop lending to each other and have sell off their equities to cover what they owe. Everyday lemmings don't understand why their stocks are selling off in the public markets, so they hit the "nuke my portfolio" button. The large majority of real-world big business still have strong balance sheets and commodity prices remain high once some perspective is applied. Definitely potential for a global recession, but since when did "Recession = Depression"? Where are the mass layoffs? Real corporate losses? Small business collapsing? In fact, what we have is one of the best long term investment opportunities in decades. When this market stabilizes, it's time to buy, buy, buy. Don't let a cowardly "Great Depression II" lemming tell you otherwise.
  57. Prudent Deuce from Daphne, United States writes: Marcus.......I have to ask, what flavor Kool-Aid are you drinking?

    The "nuke my portfolio" button is getting slammed by edge funds and all other big equity holding entities who are having to dump shares to cover their overleveraged rear-ends. Remember that ride to the moon you was on.....welcome to the other side buddy. And if you are so sold on the idea of stocks being cheap, get a second mortgage on your home and double down will ya.
  58. c j from Canada writes: William Scott Lee III from Vancouver, Canada writes: To c j from Canada

    Unlike you and most of the readers here I have been through an actual Depression when I was in Indonesia in 1998 as defined by economists

    UMMMM I have lived thru the 80's and that was pure torture, If the 80's had the leveling effects to slow down the province of BC as it did, we are in for HUGE trouble here...... if you are old enough to remember how hard the 80's were you will also know how BAD this time around can get.
  59. GlynnMhor of Skywall from Canada writes: Prudent Deuce from Daphne, United States writes: "GlynnMhor:... how can one claim this interwoven global amateur hour's any more stable..."

    Well, the dominance of the free trade paradigm means that, unlike in 1929, the popping of the market bubble is far less likely to implode the working economies of countries in anything like the same way it did back then.

    Canada's economy has even created more jobs over the last month by some 100,000 despite the market crisis.
  60. Marcus L from Calgary, Canada writes: Duece, I've been already loading up on my long-term yield-paying holds in companies who don't need to borrow to make money. Thanks for the hand-outs. :)
  61. Prudent Deuce from Daphne, United States writes:
    Marcus....if this baby has another leg up you'll do well.....good luck
  62. Don Portz from Trochu AB, Canada writes: This is the classical "history will repeat itself" Each generation will continue to make the same mistakes as the previous one. Why? It is because although they see what happened in the past, they really believe they know better. In fact they just make the same mistakes but only in another form.
    Also I think we are in for a rougher ride due to the elections in the US and Canada at this specific time as the politician are promising all kinds of things to cury the vote rather than deal with the issues (which are not popular) that are really required. Certainly I do not believe that any party can put together a definitive plan in times of so much uncertainity.
  63. Dr Demento from Canada writes: GlynnMhor of Skywall from Canada writes: "Canada's economy has even created more jobs over the last month by some 100,000 despite the market crisis."

    90% of which were part time jobs . . .
  64. Prudent Deuce from Daphne, United States writes:
    To all of my yankee friends, how about a new kind of investment. We can invest a little time in understanding how if we make $15/hour, we can't buy a $350,000 house.
  65. GlynnMhor of Skywall from Canada writes: Dr Demento from Canada writes: "GlynnMhor: 90% of which were part time jobs..."

    Do you think that no jobs is better? Or fewer jobs?

    Besides, many of the baby boomers who are in the vicinity of retirement WANT part time jobs.

    I have two of them myself which both offer flexibility that I never could get working full time.
  66. Prudent Deuce from Daphne, United States writes: Fresh off the press-----------------The global financial system is on the brink of a meltdown and additional steps must be taken immediately by the richest nations to calm jittery bankers and investors, the International Monetary Fund warned Saturday.

    Advise from a true blue amateur if anyone will listen: TAKE THE PAIN NOW, AND MAYBE OUR KIDS WILL HAVE A CHANCE. KEEP BAILING OUT THE FELONS AND ARE KIDS WILL TAKE THE PAIN............
  67. Conservative for lower taxes, cheaper gas, less government from Canada writes: A depression is caused when the Banks CEO's and board members do not respect the rules of banking. When a banks CEO allows his bank to become leveraged by 45 to 1, rather then the 12 to 1 rule, you'll have a depressionj every time.
    ................................................. The other stupid thing that is being allowed is day trading. On TV the other day we had a fellow who is never has any money in the market unless he is in front of his trading screen. He goes to the bathroom and he closes out all his positions, He goes home at night with all his positions closed. Yet the banks and mutual funds loan him your stock so he can short the market. He has no skin in the game but makes all the profits. This is organized crime by any standard.
  68. GlynnMhor of Skywall from Canada writes: Don't forget that most day traders lose their shirts eventually.
  69. Prudent Deuce from Daphne, United States writes:
    Four key periods of modern era stock trading.

    1-Up till the crash of 87, you had the big boys and conservative mom/pop long term looking pay me a dividend type investing.

    2-Post 87 crash, till end of 98, daily volumes are 2.5 to 3 times greater with approx. 300,000 shares traded per day. The wealth creating machine is discovered. returns are great....

    3-98 to now, volumes explode to well over 1 billion shares traded daily. Average S&P 500 returns DO NOT keep up with inflation, again, 10 years of negative returns. All while the smart money discovers the gullibility level of the average citizen. Massive churn and volatility in daily volumes, brings unprecedented profits for investment banking while Joe six pack gets nada.

    4-2008 until .............insert your guess here!
  70. Prudent Deuce from Daphne, United States writes:
    GlynnMhor of Skywall from Canada writes: Don't forget that most day traders lose their shirts eventually.

    ---------------------

    Most do GlynnMhor, Unless you get into big money trend making players. The Golden Slacks of the world, the big fish who never loose. The real organized crime of wallstreet.
  71. Steve I'm Not an Alberta Redneck from Calgary, Canada writes: Every crisis has its distinguishing features. My prediction is that the problem with this one will be that those currently in power believe that its the fall of land and stock prices that is the problem when in fact its their serious over valuation.

    In the thirties, at least, this had been cleaned up before attempts were made to put the economy back on track. This ultimately led to a sound economy that prospered for decades but it took a long time for the turnaround.

    What we may find is that these poorly planned programs to pump trillions into the markets will only temporarily slow the correction and when it is finally realized that it is the real economy that needs to be helped, the government's hands will be tied by this ill considered spending.
  72. Dr Demento from Canada writes: GlynnMhor of Skywall from Canada writes: "Do you think that no jobs is better? Or fewer jobs?"

    Not at all - I'm just pointing out that your claim of 100,000 new jobs created is misleading since the vast majority are part-time jobs. In any case if you expect a trend of increasing jobs to continue, you will be disappointed . . .
  73. GlynnMhor of Skywall from Canada writes: Dr D, it's not misleading to repeat the employment reports.

    A tight linkage between the markets and the economy would have resulted in a decline in employment, not an increase, and that was the point being made.
  74. Dr Demento from Canada writes: GlynnMhor of Skywall from Canada writes: "A tight linkage between the markets and the economy would have resulted in a decline in employment, not an increase, and that was the point being made."

    Not necessarily. There are many reasons for this sort of minor fluctuation. Many people leave jobs and take all or part of the summer off - returning to a new job in September. Many students take part-time jobs when they return to school.

    As I said in my previous post - if you believe this is a sign of an upward employment trend, you are just as wrong as you are on the trend in global average temperature - but this time in the opposite direction . . .
  75. GlynnMhor of Skywall from Canada writes: D, I've not suggested an upward trend, only the basence of a downward one.

    Meanwhile, as far as temperatures go, there is certainly no upward trend despite the rapid increases in GHG concentrations, a factor that is not alone among the reasons to doubt the AGW panic-mongery.
  76. Mo Friendly from Edmonton, Canada writes: I read about half way through and couldn't continue. Too many lies and half-truths to keep track of. The Fed didn't sit on it's hands during the Great Depression. The money supply was deliberately reduced to create deflation and tighten credit. Interest rates were increased to make credit more expensive thus reducing people's ability to adapt to the market conditions through new business development. The Great Depression didn't just happen. It was manufactured. Major crisis are needed in order to justify major shifts in law and institutions. Whether it was using war to justify income taxes that stayed and grew. Pearl Harbour to catalyze Americans into seeing the war as their war and supporting military involvement. Sept 11th to gut the most fundamentally important aspects of the constitution and put massive spending in place to take advantage of those changes. (btw your rights are inalienable and not bestowed upon you by the government). Or today, giving Paulson the powers of a financial dictator, or else. If you think the Globe and Mail isn't a rag, and their BS is accurate then explain how, when Kitco has run out of nearly every silver and gold bullion product they carry and isn't even taking orders for most, and during heightened economic uncertainty, Gold and Silver prices have plunged. Explain that. I can, but using Globe and Mail propaganda, I know you can't.
  77. GlynnMhor of Skywall from Canada writes: Mo Friendly, you need less paranoia.

    Not everything that happens is some sort of grand conspiracy to screw you over.
  78. Mo Friendly from Canada writes: GlynnMhor of Skywall, you need to actually bother to learn history and think critically. Your denial is so thick you've probably forgotten that you pay over 50% tax. You probably think you're free too. You keep less than half, and only in the form of paper play money at that, but you're free.
  79. GlynnMhor of Skywall from Canada writes: Mo, 'thinking critically' does not involve blanket assumptions of conspiracies everywhere.

    Just sit back, relax, and tighten the strap on that tinfoil hat you have.
  80. michael luger from montréal, quèbec, Canada writes: Like Mo, I had to stop reading this drivel, but for me it was the caption on the picture that did it.

    "Three unemployed men in March, 1932, start a cooking fire in a vacant lot in New York where they live when they are not searching for work."

    Total propaganda; total b.s.
  81. Dr Demento from Canada writes: GlynnMhor of Skywall from Canada writes: D, "I've not suggested an upward trend, only the absense of a downward one."

    And do you really believe that the trend won't start to plummet starting this month?
  82. c j from Canada writes: michael luger from montréal, quèbec, Canada writes: Like Mo, I had to stop reading this drivel, but for me it was the caption on the picture that did it.

    "Three unemployed men in March, 1932, start a cooking fire in a vacant lot in New York where they live when they are not searching for work."

    Total propaganda; total b.s.

    In responce to your post here, under what assumptions do you feel makes this picture "propaganda & BS?

    Do you not think that the years of the early 30's wern't the hardest of the depression, and that people did anything they could to survive?

    I recommend you go to your local LIBRARY and search out "the lost 10 years" written by Barry Broadfoot. A well respected newspaper reporter that took a tape recorder and interviewed 1000's of canadians who lived through the depression, with their own words he printed what they had to say about how they survived the darkest days in Canadian history. He crossed canada coast to coast over a 2 year span. This is the truth of the ones who suffered.

    I actually challenge all Canadians to read this book.