“There’s nothing that’s come anywhere near this.”
Alan Valdes, a trader for brokerage and financial services firm Hilliard Lyons, said past market crises ”” the 1987 crash, the dot-com bust, the savings and loan collapse ”” were “child’s play” compared with the last two weeks on Wall Street.
[blockquote] Valdes, the Hilliard Lyons trader, said it’s impossible to pick a bottom, but has words of wisdom for investors with a long-term perspective.
“Ten years from now, you’ll be kicking yourself if you don’t buy,” he said, adding he is basically optimistic the markets will recover. “Is IBM going to go out of business? I doubt it. Is Johnson & Johnson going to go out of business? I doubt it.” [/blockquote]
This is the side of things that needs to be taken into account along with all the panic. We don’t yet know how it’s all going to work out, but I believe that it’s well to be prepared for a good outcome as well as for the worst.
From [url=http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18]here[/url]:
[blockquote]In fact, the current economic woes look a lot like what my 96-year-old grandmother still calls “the real Great Depression.” She pinched pennies in the 1930s, but she says that times were not nearly so bad as the depression her grandparents went through. That crash came in 1873 and lasted more than four years. It looks much more like our current crisis.[/blockquote]
[blockquote] This is the side of things that needs to be taken into account along with all the panic. We don’t yet know how it’s all going to work out, but I believe that it’s well to be prepared for a good outcome as well as for the worst. [/blockquote]
Half of buying low and selling high is buying low. I don’t think the market has hit bottom yet, but there are going to be some real deals very soon. It’s a crisis, but it’s also an opportunity.
Nothing has come anywhere near the immorality of our day…500 million abortions is just the beginning. People living by the unfillable cravings of their souls. Even churches, priests and bishops turning away from God’s word, truth, love, life, holiness, virtue, honor, reverence, purity, dignity, decency, self-control…humility.
Isn’t the mission of the Federal Reserve to prevent these boom/bust cycles?
They are failing badly. We need to return to either a silver or gold standard and stop the financial merry-go-round with all it’s ups and downs. All that fiat money has lead to is an illusion of prosperity, a house of cards, and unbelievable corruption.
“Past market crises—the 1987 crash, the dot-com bust, the savings and loan collapse—were ‘child’s play’ compared with the last two weeks on Wall Street”
Those events hardly amounted to “crises” in the sense of “unstable or crucial time or state of affairs in which a decisive change is impending.” Markets stabilized shortly after the market plunge of Oct. 19, 1987. The savings-and-loan debacle never reached the crisis stage because depositors trusted the government’s guarantee of deposits. The dot-com bubble deflated gradually, without destabilizing financial markets.
PS to #6:
Alan Valdes is right, of course: there’s been nothing like this since 1930-1933.
“We need to return to either a silver or gold standard and stop the financial merry-go-round with all it’s ups and downs”
The current crisis is much like the financial panics the United States repeatedly had while on the gold standard with no central bank (1836-62 and 1873-1913). Without a central bank, booms tend to be bigger and busts tend to be more severe.
The Fed’s errors during the early 1930s in no way disproves this point. Any institution (including elected legislatures and other democratic institutions) can make errors of judgment.
Without a central bank, booms and busts tend to be smaller and localized, not world wide. Also, as I stated, the entire reason for the existence of the Fed was to stop the very thing we are now experiencing. One big difference now is that the currency truly has no intrinsic value and can free fall to nothing. What good is “full faith and credit” from a government that is trillions of dollars in debt?
What good is the Fed? The Republic got along fine without it until 1913. It was their expansionary monetary policy that allowed misallocations of capital resources and supported a massive housing bubble in the first place. They have failed to stop inflation wich is their legislatively mandated duty and they have failed to maintain stable prices…which has consistently hurt wage earners because wages don’t keep pace with inflation.
If they can’t do their job, which the current crisis amply demonstrates, then we need to do away with the Fed!
Oh, spooh! “wich” should of course be “which”
We had booms and busts of extreme severity prior to 1913 with the gold/silver standard and the “Fed”. We are having booms and busts post 1913 with the “Fed”. What is needed is ethical regulation (with severe penalties) which will constrain the greed of the Financial sector. That might moderate the ups and downs. A great deal of the problem is psychological – lack of confidence among investors, and part is lack of knowledgable and ethical leadership in Government. The current electorate gets what it deserves. The trouble is, the few of us who know better get drug down with the mob.
To clarify: Before 1913 we had the Federal Government and post 1913 we had both the Federal Government and the Federal Reserve Bank (privately owned). Both have failed to insure financial stability.
Yes, but the boom/busts were local/regional…not national/international. With the globalization of fiat currency, there are no safe havens anymore. Everything is linked together and we are all only as strong as the weakest link. Before this centralization, it was more of a cellular model. It was inherently robust and self healing. Now, there is no place to find economic safety.
“Yes, but the boom/busts were local/regional…not national/international” —S&T;[#13]
Wrong again.
— The Panic of 1837 was national and resulted in a five-year downturn that Milton Friedman called a “Great Depression.”
— The Panic of 1857 was international.
— The Panic of 1873 was international.
— The Panic of 1890 depressed commodity prices worldwide.
— The Panic of 1893 was national.
— The Panic of 1896 was national.
— The Panic of 1907 was national.
Ok, I got it wrong. Put a notch on your pencil.
Please explain to me how we are now so much better off with the Fed and how we are better off with baseless currency. Explain to me how constant inflation that eats away our purchasing power is a good thing. Educate me.
“Please explain to me how we are now so much better off with the Fed and how we are better off with baseless currency. Explain to me how constant inflation that eats away our purchasing power is a good thing. Educate me” —S&T;#15
S&T;: Past experience has taught me that you are no more willing to listen when you say “Educate me” that you are at other times.
“Please explain to me how we are now SO much better off with the Fed”
Since when is the standard “SO much better off”?
Steady, prudent monetary policy (as we saw, for example under William McChesney Martin and during most of Alan Greenspan’s tenure) has softened economic up and downs and facilited balanced economic growth.
The Fed’s role as lender of last resort to the banking system has helped avoid old-style financial panics.
The modest inflation we saw during the Clinton-Greenspan years posed few problems. Inflation fell to the point that you could make business decisions without having to worry much about inflation. That qualifies as price stability.
Better a trace of nonaccelerating inflation than the wracking deflation of the 19th century.
Irenaeus, the personal rancor of your remarks toward me is unbecoming in anyone, let alone a Christian.
You claim: “The modest inflation we saw during the Clinton-Greenspan years posed few problems.â€
Yet, real wages for most workers fell for most of the 1990s. Real wages declined 0.8% annually from 1989 to 1996. Real wages finally started to grow from 1996 to 1998, but were by mid 1998 still lower than they had been in 1989. The wage gap between the top tier and the middle class widened during that time period as well. The rich got richer while everyone else worked harder.
http://www.epi.org/content.cfm/issuebriefs_ib127
You claim: “Steady, prudent monetary policy (as we saw, for example under William McChesney Martin and during most of Alan Greenspan’s tenure) has softened economic up and downs and facilited balanced economic growth.”
Yet, anyone paying any attention to the current global economic crisis can see that the actions of the Fed have clearly NOT softened the down side and have not “facilited balanced economic growth.”
[b]A financial crisis unmatched since the Great Depression, say analysts[/b] http://www.guardian.co.uk/business/2008/mar/18/creditcrunch.marketturmoil1
[b]Worst Crisis Since ’30s, With No End Yet in Sight[/b]
http://online.wsj.com/article/SB122169431617549947.html
[b]The Crisis Goes From Bad to Worse[/b]
http://online.wsj.com/article/SB122376223214326135.html?mod=googlenews_wsj
Clearly, we have different world views and different understandings of the meanings of words.
It would likely do us both good to pray for each other. For my part, I wish you no ill will. God bless.
Sick & Tired [#17]: We no longer live in the Clinton-Greenspan years (1993-2000). Nor have we recently had monetary policy as prudent as that provided under William McChesney Martin (1951-1970) or during all but the first 15 years or so of Alan Greenspan (1987-2006). Hence the irrelevance of your 2nd through 7th paragraphs.
_ _ _ _ _ _ _ _ _ _ _
If a central bank maintains price stability and bank liquidity, it does its job. No central bank has the tools for, or mission of, maintaining workers’ purchasing power in the face of adverse changes in production, productivity, commodity prices, and trade deficits.
What exactly would you have the Fed do to offset the harm higher oil prices do to Americans’ purchasing power? Higher prices transfer wealth from oil users to oil producers. All Americans are oil users but few are oil producers. Only 1 in 6600 Americans receive Alaska-style oil royalty checks. Even fewer own oil fields. Thus higher oil prices necessarily reduce our purchasing power, since we must pay more for the same things we bought before (e.g., heating oil, gasoline, diesel fuel, jet fuel, natural gas, electricity, plastics). How can a central bank fix that without exercising magical or dictatorial powers?
_ _ _ _ _ _ _ _ _ _ _
Don’t take criticism of your comments for personal animosity. But in our exchanges, your comments have often shown considerable resistance to facts and reason. This pattern has, unfortunately, held true on topics I know well—topics on which other people pay me to write, speak, and give advice. (I could be wrong, of course, but probably haven’t succumbed to the Humpty Dumptyism you imply.)
In any event, I wish you the best.
In #18, the 2nd sentence should read:
“Nor have we recently had monetary policy as prudent as that provided under William McChesney Martin (1951-1970) or DURING the first 15 years or so of Alan Greenspan (1987-2006).”
Irenaeus,
In post #8 you said: “The Fed’s errors during the early 1930s in no way disproves this point.â€
Then, in post #16 you said: “Steady, prudent monetary policy (as we saw, for example under William McChesney Martin and during most of Alan Greenspan’s tenure) has softened economic up and downs and facilitated balanced economic growth.â€
And: “The modest inflation we saw during the Clinton-Greenspan years posed few problems. Inflation fell to the point that you could make business decisions without having to worry much about inflation. That qualifies as price stability.â€
First, you discount the Great Depression as evidence contrary to your position. Then, you raise the Greenspan tenure as an example of the virtue of the Fed. Yet, when I provide evidence that the time period you brought up was actually bad for the majority of workers because their real wages decreased .8% annually during what you call “a trace of nonaccelerating inflationâ€, and that the gap between the rich and the middle class increased, you discounted that as irrelevant.
When you discount evidence that is contrary to your point of view, it is hard for a fellow such as myself to find common ground. Your sweeping away of the Great Depression as evidence of failure on the part of the Federal Reserve is most unconvincing. Would you care to elaborate for the benefit of simple folk like me on why the Great Depression doesn’t count as evidence of the failure of the Federal Reserve Bank? I would also be interested in knowing why you brought up the Greenspan years as an example of how good the Fed is but then say it is irrelevant when I document that real wages declined and the gap between the middle class and the rich widened.
I might also mention that the Greenspan years brought us the Tech Bubble and it’s deliberate bursting because Greenspan, fighting what he called “irrational exuberance†raised interest rates until it crashed the market. Tens of thousands were put out of work because of the deliberate credit crunch engineered by the Federal Reserve. Retirement accounts shrank by about 40% over a two-year decline. Software engineers ended up flipping burgers.
So, forgive me if I am a tad dense on how wonderful the Federal Reserve Bank system is.
You have accused me of “considerable resistance to facts and reason.†Pray, what is it when one discounts the Great Depression as evidence of a significant failure on the part of the Federal Reserve?