"Are Bound to repeat it." I don't remember whose famous quote that was, it is more widely ignored than any I know of.
"Following a ten year bull market, loose interest rates and borrowing standards, the stock market plunged amidst bank and investment house failures." 2008? Not even. That was 1929. If it sounds familiar, it is.
This condition is close to being a current event, rather than history. The things that brought Wall Street down back then was primarily a highly speculative market, in which investors borrowed to the hilt to purchase stock that was going Up ... Up... Up. When the market slipped and the banks called in margin accounts, those without means, defaulted on those loans by the thousands, causing over a period of three years, a cumulative failure of the entire economy.
Everyone has heard the term "1929 crash," but the real depth of the depression was 1932. It didn't all happen at once, and if it indeed happens again, it will also be a slow crumbling of our financial infrastructure. We didn't start recovering from the '29 crash until the industrialization leading up to World War 11.To date, in 2008, eleven banks have already failed. Washington Mutual, the country's largest savings & Loan, is teetering on the brink and will probably either fail in the next week or be bought out. All but two of the leading investment houses are either bankrupt or bought out by banks that may find themselves in the same boat.According to Taipan Publishing Group, there are currently 117 banks on the FDIC watch list. Already, the Federal Deposit Insurance Corporation (FDIC) is strained from insuring deposits from those eleven banks with many more to come.
Many people are not aware that many savings plans, money market accounts, CD's 401k's and all stock and mutual fund accounts are uninsured. Most investors have never faced a total melt-down of this country's economy. I attribute some of this to the lack of productivity we have experienced since free trade was established as our policy. Your uninsured deposits have already been loaned out to people borrowing too much on too little collateral that are in foreclosure. When/If your bank shuts it's doors, your money is gone.
Many, if not most banks are shutting the loan spigot off, attempting to get heavy in cash, which is going to cause the auto industry to crash, as the over building of real estate already has crushed that industry. If oil comes back down to around $65 or $70 per barrel, that will help. The closing of our national forests to logging, even selectively, and the curtailing of mining and heavy industry can be laid at the feet of extreme environmentalists that don't believe or don't care, that for every action there is an equal and opposite reaction.
People, we are feeling that reaction now. Prior to 1929 we had a very strong industrial base that when reactivated, produced the war materials that supported England in 1939. We do not have that base anymore. It's all offshore. If we were to try to ramp up our military in a war situation, without our allies that are producing much of our steel, aircraft parts and on & on, we can't even defend ourselves. We have sold our collective souls to save a buck and it's going to bite us on the ass.
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