1929 Reloaded
The Debt Burden
This graph relates to the last post in the August thread.
The Debt Scenario. 1929 RELOADED.
This graph relates to the last post in the August thread.
The Debt Scenario. 1929 RELOADED.
posted by Peter at 8:00 pm
5 Comments:
"The length and severity of depressions depend partly on the magnitude of the 'real' maladjustments, which developed during the preceding boom and partly on the aggravating monetary and credit conditions."
Gotfried Haberler, Prosperity and Depression, 1937
Remarks by Governor Ben S. Bernanke
At the H. Parker Willis Lecture in Economic Policy, Washington and Lee University, Lexington, Virginia
March 2, 2004
Money, Gold, and the Great Depression
http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
A speech, that I trust will be of value to economists and economic historians studying the causes of The Great Recession.
Based on the news that has been circulating as of the last week (today is 29/9/2004) broad economic sentiment appears to be changing.
If you are reading this blog sometime into the future let me provide some insight into the way people are thinking right now. Most people still believe that we are in a bull market. Most people are not unduly concerned about the future of the markets. Most people do not consider their superannuation/pensions (equity) to be at risk. Most people believe that housing prices will stabilise and recover in the near future (Australian market-but severe bubbles exist in the US also).
Those who take a contrarian position are few. Those who have identified the risk in the credit and asset price bubbles spread across so many world economies are in the great minority. There are a few informed voices speaking out but they are barely heard (Stephen Roach, Morgan Stanley is an example). Most people share in the "conventional wisdom" that the good times will continue to roll. It appears however that the conventional wisdom is under some concerted attack at the moment. The US stock market appears to be in a slow and steady decline which may again be gathering pace. Oil prices have just hit $50 a barrel.
One cannot be sure but I am prepared to speculate that sentiment will break down strongly in the next month....ominously the 75th anniversary of the 1929 October crash.
http://www.chinadaily.com.cn/english/doc/2004-09/28/content_378317.htm
I am really starting to wonder if things are in motion.
Is this a semi-official pronoucement from the Chinese government?
Hold on to your chairs!
Here is a brief quote from the conclusion of Stephen Roach's latest article on the Morgan Stanley website (www.morganstanley.com), dated 27/9/2004 and titled:
Global: Collison Course
"With the world’s growth dynamic now being effectively driven by just one consumer -- America -- and just one producer -- China -- the odds are growing short that such an increasingly tenuous arrangement can be sustained. China is probably the weakest link in this chain. That’s where I would look first as the potential trigger of the coming global rebalancing. I now suspect that China will flinch sooner rather than later."
Please follow the link to Paul Kasriel's outstanding Editorial explaining how we ended up here...at the beginning of "The Great Recession".
INVESTMENT IMPLICATIONS OF THE INEVITABLE REBALANCING OF THE U.S. ECONOMY OR MAKING LEMONADE OUT OF LEMONS
By PAUL L. KASRIEL
http://www.gold-eagle.com/editorials_04/kasriel100304.html
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