The Crash of 1929: Are We on the Verge of a Repeat?
Snipped from alternet.org.
I’ll be the first to admit that I have failed miserably in every foray of mine into the stock market. So, for those who know how to play the game, my hat goes off to you. With the huge loss yesterday in the market, I am wondering if it doesn’t foretell a future disaster in the making. So, with all the negativity in the country from the sub-prime market and housing taking a beating, I am concerned that yesterday may be just the beginning of a true stock market disaster. So when I came across the article in alternet.org concerning a repeat of the 1929 market crash, I just had to read it. The article is extremely well written because even I was able to grasp the dire situation that our “hyper-real” stock market is in. You may find this article will help your understanding of what is really behind this new term, but old strategy, called “naked shorting” and exactly what this means to giant hedge funds of today.
It all begins with an acknowledgment that “the American economy is a hyper-reality that has been engineered by Ph.D.s working hand-in-hand with colluding media multinationals, political officials and some of the biggest names in the business–and the banks that invest in them”. In an age in which 97 percent of stock transactions are conducted electronically, we no longer have a paper trade. Combine that with hedge funds, mortgage-backed securities, subprime loans and naked shorting, you have a scenario in which there are virtual transactions that never actually occur.
When a person “buys” a stock, then the expectation is that that stock is real. But when you have hedge funds who are betting both sides of the fence and in the case of “naked” shorting, in effect, borrow the share (they don’t really own it) to replace it later, then you have created a market in which there are more shares than actual stock. And, that’s what creates a hyper-real economy and conditions ripe for another repeat of the 1929 stock market crash.
Here is a portion of the article that explains this in more detail.
“It’s essentially counterfeiting,” Byrne added. “You’re creating counterfeit shares in the system. It works like this. In a normal stock transaction, you give me money and I give you stock. And not paper stock anymore. It turns out that there is a loophole in the system: When I come to give you the stock that you bought, if I don’t actually have any stock, I can give what is effectively an IOU. Now you never know about this unless you know the right question to ask your broker, but it’s possible that all you really have in your account is an IOU from your brokerage account from a different broker working with a hedge fund.”
It is precisely this imbalance between real and invented shares that Byrne and others argue is primed to explode the subprime collapse into a full-blown economic depression.
“There are a lot of us who think we are living on the edge of 1929,” Byrne continued. “When you consider what’s happened with mortgage-backed securities, you get the feeling these might be the first rumblings. There may be more IOUs in the system than there is liquidity, in which case the entire thing is going to vapor lock as soon as it is exposed. One of the healthiest indications of the vibrancy of an economy is capital formation. Seven years ago, America was responsible for 57 percent of IPO capital raised around the world. Now it’s down to 16 percent. A national disaster.”
If you would like to read the full article click the image below.
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New Scientist
The Onion
Media Matters
Newsvine
Associated Press
Liars figure, figures lie. I think there may be another big stock market crash, and what’s described above makes it seem most likely to be an invisible, stealth crash.
But my opinion is that the BIG stock market crash will definitely happen right after our national bankruptcy occurs, after China and Japan //too?// stop funding us and call in their outstanding mega-loans. It will be different, I think, this time because put-to-work people digging holes and filling them up again, will be paid with government-issued paper I.O.U.s. Brother, can you spare a dime?
On average, we have a bear market about every 2 1/2 years. But it has now been over six years. We are soon to have a major correction. Of this there is no doubt. So the question is, how bad will it be? And if it is real bad, how best to survive it?
At the very least, it behooves people to get their money out of stocks. It’s time for caution.
It’s also time for a new vision for the United States. And to think that William Kristol is declaring how great our economy is in the same breath that he is saying how things are getting better in Iraq.
If the situation in Iraq rates “Good” in Bush-Speak, then what does that really mean for our economy?
I believe greed will finally do this country in. You talk about an economic correction–this country is past due for a societal correction regarding corporate greed. It is killing the middle class and our democracy through out of control corporate influence peddling and a colluding Congress and White House who have a “For Sale” sign on their front lawns. It’s just a matter of when not if.
Thanks for the comments guys. And Greg, you’re right–anyone who listens to Billy Kristol needs to have their head examined.
Hey, Unum, we might have had another great depression today just by what happened to the stock market this weekend. What a downer! Some small investors (of most of their money) won’t be paying the rent or buying much food. If Bush had had us investing our social security money in the stock market, like he proposed, then there would be soup kitchens again and, of course, “Brother, can you spare a dime?” And the increased number of people, including those without their social security retirement money //in stocks because of Bush// who would be worrying this weekend to see what happens with the market on Monday would be awesome. Then, too, there’s the foreign stock markets to worry about come Monday.
Unum, just how much social security money would have been lost this time on last Friday if it was invested in stocks under the Bush plan?
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Bush and his fanatical “privatization” of America is costing us billions in tax dollars. I can’t imagine how he justifies the fact that the taxpayers are better off with contractors who, as we all know, have to make a profit and end up in bed with the congressional and executive powers that be. It’s insanity.
With all the power that Wall Street wields, I’m really surprised that his privatization of Social Security didn’t succeed. Maybe there’s hope after all.
Today’s update (Thursday, 9 August) on the stock market: Davey Jones’ Locker — the deep six! Moreover, what happened today in other countries should lead us to consider a world-wide great depression and when, not if. Imagine getting a notice that “You can no longer withdraw any of your money from us!” It’s not too late to buy gold, or is it?
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Today’s Update: (Monday 13 August) on our stock market and foreign stock markets: Friday and today, the U.S. and several foreign governments have been pumping huge amounts of money into their markets to prevent disaster and steady the world economy. And, of course, they released a coverup, spin story about why. –Lack of ready cash/bank overnight interest rates. ??? And to insure cash is available so you’ll receive your weekly paycheck. ??? Give me a break.
Hello, history to Wall Street. Days prior to the 1929 big crash, the big money private people //robber barons// tried the same thing: pumping in huge loads of money to save the stock market of 1929. Guess what happened? Major Kaka! And The Great Kaka!
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First bailout of sub-prime loans — Great Britain has done a U-turn on bailout in their country. The Bank of England granted an emergency loan to mortgage lender Northern Rock that caused panic withdrawals. Check out: http://news.bbc.co.uk/2/hi/business/7002628.stm
More background info at:
http://news.bbc.co.uk/2/hi/business/7005557.stm
and at: http://news.bbc.co.uk/2/hi/business/7004001.stm
Our sub-prime loan defaults continue to up, to up, to up the global credit crunch. //the U.S. federal government refuses to grant any bailouts. //not yet, but probably soon//
And, guess what? Our record sub-prime loans fiasco has laid the foundation for a global depression. One of the major starter-indications that a depression may really happen is the rising price of gold. Yesterday (Thursday) gold went to a 27-year high at $746 an ounce because of a tumbling U.S. dollar. More info? Click on:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/09/20/financial/f134816D83.DTL&type=business
Are you worried now? Don’t know what to do? Then click on:
http://austincoins.com/confirmation-AEG.htm
to buy your own gold //recommend American Eagle Gold Coins// I predict that a credit cardholders default will be next, as bad or worse than the sub-prime loan defaults. Oh Gawk! “Hey, Brother, can you spare a dime?”
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First-Bailout Update. The sub-prime loans’ ignited-punk continues to worm its fiery, insidious way into the world’s banking systems. Invading, most likely, the economy next. Yesterday, the dragon worm coiled its way into Great Britain again. Private shareholders learned there will be no dividend next month from mortgage lender Northern Rock; Learned too of hints of a shareholders’ lawsuit re “management’s improprieties.” Millions of pounds were withdrawn by customers in a panic after the government’s bailout announcement. Now the big mortgage lender, Northern Rock, is up for sale and/or wants a takeover. Kid you not! click on:
http://news.bbc.co.uk/2/hi/business/7014007.stm
How bad will it be here in the U.S. when the worm turns? U.S. banks and other lenders have been pumping mucho big bucks into loan-lending companies, hoping to score in the long run. Example: Bank of America recently, on a gamble, lent Big Bucks to one U.S. mortgage loan company to keep them afloat.
Whatever. However. Whenever. Will one or more government bailouts generate panic withdrawals of regular accounts and drag huge banks like B. of A. into the vortex, too? I don’t know. No one knows.
Worms? Maggots next! by Gawk! What can one do? Buy gold, by Gawk!
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Crash Went NetBank, an online bank with 2.5 billion in assets. Crash went NetBank yesterday (9-28-2007) because of too many mortgage defaults. Those with less than $100,000 deposited with NetBank will be protected by FDIC insurance. The bank had $109 million in deposit accounts over the FDIC limit. Gawk! For A.P. news story in detail, click on:
http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/09/28/financial/f151818D31.DTL&hw=NetBank&sn=001&sc=1000
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Savings and Loan NetBank was closed by the Federal Government (FDIC) due to too many mortgage defaults on Friday (9-28-2007) because of sub-prime loans. NetBank is an online bank with 2.5 billion in assets. Those with less than $100,000 deposited with NetBank are protected by FDIC insurance. The bank had $109 million in deposit accounts over the FDIC limit. For more details, click on:
http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/09/28/financial/f151818D31.DTL&hw=NetBank&sn=001&sc=1000
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10/1/07 Update: Sub-prime loan mortgage defaults have hit Citigroup Inc. (U.S.) and UBS AG (Switzerland-based) causing significant loan-related losses. Third-quarter earnings down by 60 per cent. For full story, click on:
http://www.examiner.com/a-965835~Citigroup__UBS_Warn_of_Loan_Losses.html
NetBank Inc. had an excessive number of prime-rate mortgage defaults and was closed by the FDIC. See earlier comment for more. NTBK was the largest savings and loan failure since the S&L crisis more than 14 years ago. //I’m falling and I can’t get up//Lose a million, can’t laugh//lose more than a million/can’t stop laughing//
Ever line up a stack of play-dominos and knock the first one down onto the next. Hhhhhhhh, by Gawk!
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The Sub-prime shuffle. You dance this tune while you whistle in the dark. It is extremely interesting how the reaction to the Citgroup’s losses was so positive, yes positive, even the stock market shot up some 200 points, I think, and the word on the street was, Hey, we can see ahead now and the rest of the sub-prime mess is history. It’s behind us now. Happy days are here again and to stay. And, oh yeah, Citgroup had other losses — loans for buyouts fell thru. Money things like that. Nothing to worry about. The 4th quarter will be great. Is George Washingon still on a one dollar bill? Gawk! Thanks.
Hogwash. These are the same people who have been saying, we don’t know how bad it is, nobody knows. Liars figure and figures lie. What they need is to get their money out before you try to get yours. You’re best off buying gold if you can. Where can you buy gold? Click on:
http://austincoins.com/confirmation-AEG.htm
Let wait and see what is said when the next domino is knocked over.
HHHhhhhhhhhhhhhhhhhhhhhhh Oh no, Gawk!
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Gold Notice: If you accessed the Austin people’s website about buying gold, the “Confirmation page — brochure on its way” page came up. You are not getting any brochure from them. They confirmed MY request for a brochure after I contacted them and read their spiel. I pick up that URL address to use. So click on “Home Page.” Neither I nor Blog4Brains have any connection with the Austin gold sellers. We wish we did. Forget 10 per cent, we’ll take 1 per cent!
Gawk! Gawk!
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Citigroup $ Losses. Money Lost by Citigroup was what___? Let me see. They said they would pay 60% less this 3rd quarter. Let’s do the math — you do the backup math. Okay? I’m not trying to dog these guys; I just want them to fess up.
So number of shares equals ? /nr/. (of which number of preferred stock — they get paid first — equals ? and number of common stock equals ? /nr/ )
times dollar amount of dividend which (if 60% … they will pay 40 per cent of last quarter (2nd quarter). That means we can look at today’s stock market earnings for 40 per cent and the payout last quarter, Hey, some algebra needed here. Wait a minute. Subtract the just declared 3rd quarter earnings from the amount of earnings from the 2nd quarter to get loss per share.
Therefore, 2nd quarter earnings minus 3rd quarter earnings equals ____ Y loss /nr/ (/nr/ means needs research) Y is dollar loss per share.
number of preferred stocks times Y equals P total of P.S. loss.
number of common stocks times Y equals C total of C.S. loss.
The common stocks owned numbers and stocks preferred numbers each are /nr/.
P loss total plus C loss total equals x (Grand total loss in dollars right now due to sub-prime mess and credit crunch)
Have I got this right?
Let me get my Cannon LC-34 electronic calculator… Oh no! It’ll take only 9 whole digits. Well, maybe you can do the needed research and the math and posted here on Blog4Brains. I know Unum would appreciate it. Gawk got too dizzy with all the digits and passed out. To think, those fat cats are laughin’ all the to the bank to take the bank. Gawk? Oh Gawk?
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Citigroup Inc. lost more than $3 billion.
Deutsche Bank writes off $3.12 Billion in losses. Another bank zapped with sub-prime residential mortgage-default loans at the mercy of the widespread impact generated from our Homeland prime-loans mess. So like the domino-effect, Germany’s largest bank became the next easy prey. For details, click on:
http://www.examiner.com/a-969824~Deutsche_Bank_to_Write_Off_About__3_12B.html
Alan Greenspan said the sub-prime difficulties were over. Alan Greenspan said that yesterday.
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Investment bank Merrill Lynch & Co. takes almost $5 billion in write downs in the wake of a credit crunch due to collateralized debt obligations, and from declines in sub-prime mortgages. Another zapped bank from our Homeland sub-prime mess. It’s like a bad summer cold that everyone’s getting all year long. By Gawk, stock up on canned food, at the current prices.
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Washington Mutual, the nation’s largest savings bank joined the other losers due to the sub-prime loan mortgage debacle. There’s a 75% drop in net income for the 3rd quarter; it’ll be $187 million instead of like $748 million last year. The spin-doctor way these banks report their “losses” make it difficult to get a raw lost amount. Oh well, another tilting domino. If you want the details for Washington Mutual, click on:
http://www.examiner.com/a-974239~Washington_Mutual_3Q_Earnings_to_Tumble.html
It seems futile to follow all the banks that lost money recently, and those to lose more money, due to the sub-prime mortgage messy… Hey, the dominos are tilting, some falling. By Gawk! So goes it.
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Denial is a bandage; it helps you get over the hurt. But complete denial? Maybe banks like Washington Mutual are doing the right thing; just write off bad debts — you’ll never collect them anyhow, anyway. And get on with life.
And you, the guy who owns the paper on some other guy’s house. Can you take the loss? Why not? Write it off your taxes. Let the IRS carry what they owe you for the next 5 or 7 years as tax credits. Can something like that be done? I believe it can.
Do I think you are crazy? No, but why choke the life out of another human being and his family members? That’s what someone in complete denial does — gets back every last penny, chokes the last breath out of them; throws them on the street. It’s their fault…whoa! Don’t go down that road. Or either side of that road.
Dale Carnegie said that if one side of the street is sunny, and the other side in shade, walk down the sunny side. That’s just as bad as denial to walk the sunny side when things are wrong.
No, I’m not asking you to be Santa Claus; I’m asking you who holds the paper on that house, on those ten houses, on those hundred and ten houses, to go see your income tax accountant. “What if I called it a bad debt, and wrote it off as bad debt? Then what?” Yes, by Gawk, then what? Let them have the house? Y-e-s. Then get on with your life.
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Not Over Yet. The sub-prime mess with Northern Rock with increased loans now at 10bn pounds. Northern Rock may have borrowed a further 2.9bn pounds from the Bank of England in the past week.
A takeover of the mortgage lending firm is closer. Maybe by Citigroup. Reports earlier in the week said the US private equity group JC Flowers had set aside 15bn pounds to buy the bank. For the full story, click on:
http://news.bbc.co.uk/1/hi/business/7029157.stm
…and see earlier comments about Northern Rock in the above comments.
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Update On Bank Fees Other Than ATM Fees. //see earlier comment re ATM’s and the forced move towards online banking// www.bankrate.com just released some interesting data. Fees for certain banking service are at an all-time high. Bounced check fees went to a record average high of $29.32 and service charges to $11.72 and to avoid a monthly service charge fee one must now keep $3,316 on deposit. The interest on such a checking account earns on average is 0.32 per cent. If you want to check it out and/or find more other financial things, click on:
http://www.bankrate.com
The government harps now and then about how Americans don’t save money. The interest rates on regular savings and checking accounts is the answer why they don’t! I do believe the banking industry wants to do away with paper money and paper checks and, yes, ATM’s. Do it all on computers. Where’s your money gone to whenever there’s roving electrical blackouts? By Gawk! Will your money all be there when the lights come back on?
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Economic Slowdown (10-9-2007) predicted for England in Great Britain. Economic pain forecasted due to world financial crisis. “Mr. Darling said that no one could be sure of the full implications of the current instability, but that it was likely to slow growth in the US and EU.” Alistar Darling is the country’s treasury chief. For the full news story, click on
http://news.bbc.co.uk/1/hi/business/7036015.stm
And so, like the poison ivy infection, the itchy red spots continue to spread. Don’t sing, I’m in the money; sing, I’m in the red, not the black, I’m in the red….
Oh shucks, Gawk!
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Government Helps. Northern Rock, the mortgage lender in England has arranged with the government to insure all deposits made since September 19th. Northern Rock had a panic run of depositors last month and today still seeks a takeover.
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Northern Rock may resurface as Virgin Money. After whining for a takeover, one seems in the works by billionaire //his money or someone else’s?// Richard Branson who has gotten a group together to inject cash into the mortgage lender Northern Rock which the British government shut down recently, causing a panic, and a run on the bank. //see allied comments to this article of Unum’s// I thought so: it’s Asian and U.S. investors //vultures, in other words//
Talk about beating a dead horse! Get up! For the in-depth full news article, click on:
http://news.bbc.co.uk/1/hi/business/7041083.stm
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It may be a conspiracy. In my opinion, not the way the news reads, but the way it doesn’t read any more, that the Bush people and the Republican party have ordered a whiteout on any and every news media item that smacks of the sub-prime crisis. And have managed to get the whole country with its head //not Bush, stupid // the whole country with its head under a basket, or is it over a basket? O woe is Gawk!
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Smooth As Silk. More firms will be exposing themselves in public when they state their earnings for the third quarter. This week, probably. Are any of them going to fess up like Northern Rock in Great Britain did? Of course not — that caused a panic run on the bank by depositors. It’s an S&L. But let’s see. If I’m not mistaken, the PR guys //lawyers with a minor degree in Spin Doctorology// will have somehow toned down the prime-rate mortgage crisis so there’s no scare and they will attribute some major-disguised-as-minor cuts in stockholders’ dividends to the “credit crunch” — the new Band-Aid word used lately. But hey, you thin, nervous, shark featured, contact lensed, Wall Street boys! i hope you tell it like it is, because I’m tell you, it ain’t over yet. Not by a long shot!
Can’t you come clean like Washington Mutual, now with a new name //cute - Wa Mu, or something like that; they were changing the outdoor sign at the branch near the Civic Center Saturday, huge letters//like Washington Mutual did? Hey, declare what really happened, take the blame, AND WRITE IT OFF!
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3 Banks Rescue Fund for smaller S&L’s who are in trouble due to the sub-prime mortgage loan mess where they can turn to for help. One of the three largest banks will buy out their debts. Citigroup, Bank of A, and Chase are pooling $100 billion for the fund. I would rather see our government’s Treasure help these losers out. I don’t know what’s going on here, but they got me bamboozled. What happens when new, additional sub-prime mortgage defaults push it beyond $100 billion? Say to $200 billion? I don’t buy their reasons given for their forming this fund — that of helping global credit. These bank guys don’t have morals…. They think of number one — their shareholders, not their fellow man. And by the way, where does the $100 million come from? O Gawk! O Gawk!
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The time bomb is ticking. A new wave of prime-rate mortgages is about to occur and reset to higher rates and cause another wave of foreclosures. What did Henry M. Paulson, Jr. Secretary of the Treasury have to say today? It’s hold-your-hand-in-the-dark hype and a call for help from the government and big banks. He also advocated laws and rules to keep rein on mortgage lending outfits.
Paulson said it’s not over yet and “it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.” Then Paulson goes on and on, like FDR would have, reassuring the money people and the public. I say, by Gawk, now is the time to look into buying gold, if you haven’t already done so. For one seller of gold, click on:
http://austincoins.com/index.htm
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The Stock Market average dropped more than 360 points Friday. Some say it was because it was the 20th anniversary of the Black Monday crash. Some say it was because it was the price of oil at $90 a barrel. Some say … some say … some say…. Let see what happens Monday and what some say….
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Did you as a teen and the guys go over to some old lady’s house and your buddies told you to go onto her back porch and steal her potted plant, that they’d back you and be right behind you? You went and guess what? You got caught and you called on your buddies for help and they weren’t there. Well, the same empty words were given by the G7 leaders at their last meeting to curb any more credit fallout. A pledge. What’s a pledge? An empty promise. If they were willing to do something, they would have laid out some thing, anything, some thing! But like your teen buddies — nada! By Gawk, nada!
Merrill Lynch & Co — wrote down $7.9 billion today. The earlier $5 billion was corrected. By Gawk, it ain’t over yet!
The CEO of Merrll Lynch & Co. resigned today. Doesn’t matter. They still lost $7.9 billion.
One CEO of a huge bank bit the dust, another CEO of another huge bank is on his way out. All this from massive debt caused by the sub-prime loan mess. We hear about the big guys taking the fall, what I want to know is about the little banks and little S&L’s. Are they covering up; how can they? Or is their debt so low per bank that it’s not worth reporting. Hey! Multiply the number of little guys who racked up debt times what? The resulting figures must be astounding. Yet no word on that. Could it be to keep it quiet to bolster the consumer into spending more; keep the economy sound. Whatever that it is.
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Sub-prime quicksand for Northern Rock in Britain. Four companies have bid for Northern Rock, the biggest mortgage company loser so far in the sub-prime mess but it has turned them down as inadequate bids. The Bank of England loaned Northern Rock $47 billion for six months, not to be renewed. Moody downgraded their stock because Northern Rock couldn’t find a solution. The depositors’ money is safe for now, but the government can’t guarantee the billions in loans beyond February. Unless some firm doesn’t acquire Northern Rock, then what? More long lines of depositors demanding their money as before. Banks in the U.S. have written off billions, but wait! how much more in this coming 4th quarter? The sub-prime mess has become quicksand for here and abroad.
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Northern Rock’s CEO and three board members resigned in a move towards the mortgage-lender bank’s sale. In a way, following the trend of dumping CEO’s of large U.S. institutions that had huge losses but with their firms still intact. For now.
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Yes we are on the verge of another great depression. Now is the time to use one slice of cheese instead of two or three on lunchtime sandwiches. Now is the time to learn how to sew to restore old clothing. Now is the time to park the car and get out the bike. Start walking. Family at home entertainment with playing cards and board games. A penny saved is a penny earned. Get the at-home economy under control. During the great depression, there was a popular cookbook, called, you guess it, the Depression Cookbook. We could use those money-saving, made-from-scratch recipes today when we will soon be in need without bucks to buy store stuff.
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The Bush people have a new name to describe what’s happening to the economy — to the Woe caused by the sub-prime mess. Today, instead of calling it a depression or a recession, they’re calling it a correction. Yes, the economy is going thru a correction! Doesn’t that term make you fell better?
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It just happened here. Sub-prime loans again. Just as the British Government had to step in to keep Northern Rock from going under, so too, in the U.S. our Federal Government just stepped in to help rescue the big investment bank Bear Stearns Cos. Doesn’t that foretell the onset of a depression, yes, depression? De ja vu … of 1929?
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Bush today called the economic decline a “slow-down.” Bush also claimed that there is no recession. Hello?
What’s interesting is that it looks like the economy, not the war, will be the major factor in the upcoming Presidential election.
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