Sound familiar? Replace 1929 with 2006…

Below are some quotes I’ve selected and highlighted from a documentary on “The Crash of 1929”. The full transcript can be found here: http://www.pbs.org/wgbh/amex/crash/filmmore/pt.htmlSome points to keep in mind while browsing the quotes below. Replace 1929 with 2006. In addition to the stock market, add the housing market, our national debt, credit card debt, globalization, etc…

Let me know if anything sounds familiar. Short on time? Read the items in BOLD.

“…everyone seemed to have an interest in the stock market. Certainly, the boot black, the tailor, the grocer owned shares of one kind or another.”

“The stocks themselves have no fixed value… No demand and the price goes down. For almost eight straight years, stock values had been rising. By 1929, there seemed to be no upper limits in this world of paper, numbers and dreams.”

“We were the only strong country in the world. The dollar was king.”

“One of the most wondrous inventions of the age was consumer credit. Before 1920, the average worker couldn’t borrow money. By 1929, “buy now, pay later” had become a way of life.”

“The stock market, once considered a highly risky place to put your money, was now beginning to attract a whole new group of amateur speculators.”

“Wealthy investors would pool their money in a secret agreement to buy a stock, inflate its price and then sell it to an unsuspecting public… Now, what’s happening is the stock goes from 10 to 15 to 20 and now, it’s at 20 and you start buying, other people start buying at 30, 40. The original group, the pool, they’ve stopped buying. They’re selling you the stock. It’s now 50 and they’re out of it. And what happens, of course, is the stock collapses.”

“Wall Street had its critics, among them economist Roger Babson. He questioned the boom and was accused of lack of patriotism, of selling America short.”

“Roger Babson warned of the speculation and said, “There’s going to be a crash and the aftermath is going to be quite terrible.” And people jumped on Babson from all around for saying such a thing…”

“This was a time in our history when governments did not, as now, take responsibility for the economy… what Coolidge did was to say how wonderful times were, how happy everybody was going to be and how prosperous everyone was going to be.”

“…the Federal Reserve Board… saw the speculation as reckless and dangerous because it was based more and more on the shaky foundation of borrowed money…”

“With everyone trying to borrow money to cover the falling value of their stocks, there was a credit crunch. Interest rates soared. At 20 percent, few people could afford to borrow more money. The boom was about to collapse like a house of cards.”

“Everything was not fine that spring with the American economy. It was showing ominous signs of trouble… The construction industry was sluggish. Car sales dropped. Customers were getting harder to find. And because of easy credit, many people were deeply in debt. Large sections of the population were poor and getting poorer.”

“Just as Wall Street had reflected a steady growth in the economy throughout most of the 20s, it would seem that now the market should reflect the economic slowdown. Instead, it soared to record heights. Stock prices no longer had anything to do with company profits, the economy or anything else. The speculative boom had acquired a momentum of its own.”

“It was this nature of mass illusion. Prices were going up, people bought. That forced prices up further, that brought in more people. And eventually, the process becomes self-perpetuating. Every increase brings in more people convinced of their God-given right to get rich.”

“…everyone was buying Florida real estate. As prices of land skyrocketed, more people jumped in, hoping to make a killing. Then, overnight, the boom turned to bust and investors lost everything.”

“the J.P. Morgan people would have something to say about how good things were — and I thought, “Well, they know a lot more about this market than I do.”

“Practically every business leader… and banker, right around the time of 1929, was saying how wonderful things were and the economy had only one way to go and that was up.”

“October 29th. Morgan’s bankers could no longer stem the tide. It was like trying to stop Niagara Falls. Everyone wanted to sell. AT&T down 50 percent. RCA, once $110 a share, couldn’t find buyers at $26. Blue Ridge 100 plunged to $3 and still no buyers.”

“For most others, it was all over… Hope of an easy retirement, the new home, their children’s education, everything was gone.”

“And it was just like a nightmare and I couldn’t believe what was going on here. “

“There’s nothing unique about this. It is something which happens every 20 or 30 years because that is about the length of the financial memory. It’s about the length of time that it requires for a new set of suckers, if you will, a new set of people capable of wonderful self-delusion to come in and imagine that they have a new and wonderful fix on the future.”

“At the end of 1929, as they celebrated New Year’s Eve, all that lay in the future. Nobody knew that the Great Depression was coming — unemployment, bread lines, bank failures — this was unimaginable. But the bubble had burst. Gone was that innocent optimism, the confidence, the illusion of wealth without work… they knew the party was over.”

Chicken Smith View:

Wake up people!!! This is not just a sign, it’s history repeating itself! Start fortifying your defenses. Invest in tangible goods that will hold their value. Gold anyone?

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One Response to Sound familiar? Replace 1929 with 2006…

  1. Florian says:

    Hi,
    I found your blog via google by accident and have to admit that youve a really interesting blog 🙂
    Just saved your feed in my reader, have a nice day 🙂

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