Great Depression and Today's Economy Compare and contrast the Great Depression to the crisis going on in the U.S today.  I have to do a speech on this.

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Stocks, like any other commodity, are subject to the economic forces of supply and demand.  Governments can and have attempted to intercede to create "stability" in the economy, but these measures will always fail in the long run. Economies function on the vibrancy of its components; restricting them weakens the...

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Stocks, like any other commodity, are subject to the economic forces of supply and demand.  Governments can and have attempted to intercede to create "stability" in the economy, but these measures will always fail in the long run. Economies function on the vibrancy of its components; restricting them weakens the economy. The population, in essence, votes with currency, purchasing what they attribute to be valuable, be it cars, houses, or stocks.  If enough do this, demand rises; if not, demand falls, and supply responds inversely in each case.  Trying to alter this economic rule is like trying to defy gravity. In a word, the similarities to the October 1929 Crash and the Current Economic Crisis can be summed up in "overspeculation."

In both cases, then and now, the government in allowing "easy credit," fueled this overspeculation, or ungrounded optimism.  However, specific causes between then and now are different.  Some of the regulations (Glass-Steagall) pertaining to mortgages that had been in place since the 1930's  were removed by the 1980's, causing the "bundling" of of stable and subprime mortgages, which were then divided up as "tranches" and sold to speculators.  Many of these contained bad loans, which could not be made good, which triggered the housing crisis, which has brought us to the current economic troubles.  Undoubtedly, corporations with greedy individuals played a part in this;  the corporate strategy of "IBG-YBG" ("I'll be gone, you'll be gone," implying someone else will end up holding the bag....and guess what?  That's going to be we, the taxpayers!) in making transactions had led to the inevitable tragic conclusions. The government should persecute these players for fraud, not attempt to regulate and further weaken the economy.

For an excellent article addressing many of these issues, read "The Death of Kings" in this month's (May 2009) issue of the New Yorker.

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The 1929 stock market crash which plunged the nation into 'The Great Depression' did not happen over night. The prosperity of the 1920's was in some sense an illusion, a 'false prosperity'. America, for the first time in its life bought 'on credit', and buy they did. The philosophy of credit in the 1920's had a 'give it to anyone' mentality. Manufactures produced goods at a faster rate than consumers could afford to purchase those goods.The resolution, make it easy to obtain those goods and everyone will continue to buy.Wrong, goods began to stack up on shelves,people started losing their jobs for the very products they produced which were first sold on credit and then not bought for cash or credit. Consumers could no longer afford to buy the products they produced. It could be argued that mortages on homes by the banking industry within the last decade followed the same suit. Although complicated the bottom line is this... deregulation in the banking industry as well as deregulation in the S.E.C. unleashed the monster known as greed.Banks extended mortages to people who couldn't financially handle their loans. Sold those mortages as 'mortage backed securities' on the stock exchange utilizing their 'good name' as security.When people defaulted on their mortages the value of the 'mortgage backed securities' fell. The financial 'reckless behavior' of the 20's, as banks made unwise decisions in loan approvals as well as poor investment choices seems to infected our economy again. Our most unfortunate mistake was this,in the 1920's we were for the most part sailing on unchartered territory.F.D.R.'s New Deal helped to define and establish a basic criteria to ensure economic stability. This nation held that definition and criteria for many years...The economic quagmire the U.S. faces today is the fault of both the Democrats and the Republicans. Both parties favored deregulation, perhaps with different points of view but the outcome would be same.Democrats saw deregulation as a way for more Americans to obtain 'The American Dream',Republicans cheered for free enterprise and a laissez-faire approach to business. No matter what you call it both parties,both sides, and consumers too should share the blame in this time of economic hardship.Something to think about...'Do the ends justify the means'????????

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After reading John Dos Passos's USA Trilogy, which has part of the novel set around the time of the Great Depression, I see many parallels.  In fact, a recent issue of Newsweek has an interesting article that mentions, as does Dos Passos, how J.P. Morgan bailed out the government with millions. 

People have used the word socialism lately, as you know.  You might want to explore this aspect in your comparisons.

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The History Channel has a fascinating new documentary on the Depression, particularly the Dust Bowl. It's called "Black Blizzard." You'll from it a real understanding of how overfarming, drought, the stock market crash, and other events created a hard time not just for America but for the whole world.

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The Great Depression was the greatest slump of the economy in the history of the world.  Today's financial crisis is hardly that grim, though it does share some similarities with the economic collapse of the nineteen -thirty’s.  Both the Depression and our weak economy today were preceded by a housing boom, a long period of cheap credit and a falling stock market.  Unemployment was high and the value of the dollar was low.  The production of goods dropped and industries were struggling.  Small businesses close and people who lived on credit must pay cash.  Without cash or credit people's spending stops and the demand for goods drops.  The companies lay off people because they don’t need the production which increases unemployment.  It is like a circle.  Basic economic principals come into play.  There are similarities, but if people won’t panic, according to the experts, we won’t reach that point in our history again.

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