Is it 1929 all over again?

[Bigted]

I think one of the big differences between now and 1929 is the expectation of people with regards to the role of government. I wasn't around then but I believe that people were more self-reliant, and hoped the government would help them out of the current situation. Now, we have a big (and getting bigger) segment of people that expect the government to take care of them throughout their life.

What this could mean, is that when we do come out of this, the government will be a much bigger part of our lives - from now on.

 

[BOSS]

Yes sfox... thats back when they built things to last... energy wise, I'd say the new model... but....

I'll throw this out there for anyone wanting to read up on the Great Depression...

Get the book The Forgotten Man : A new history of the Great Depression

Read part of it HERE

The similarities today, to the events of the years following 1929 are strangely similar...

 

[RWK]

Well, as bad as I hate to say it, a lot of this was brought own by our own greedy selves.

I mean, how many people were either stupid enough or crazy enough to go for an ADJUSTABLE RATE MORTGAGE. The first time I saw such a thing advertised,

I looked at my Dad and asked him point blank....."Who in the hell would be stupid enough to go for that?". His answer " Son, The same people who think money grows on trees - People will be hooked by the prospect of super low payments and not even think about how that low payment now will double or triple if that interest rate goes up a few points. " I still have trouble thinking there are people out there who were so stupid as to go for something like that.

On top of that, The Credit Card companies got greedy and were giving anybody and everybody huge lines of credit ..... I can't count the number of "You're pre-approved for thousands of dollars of credit today" mails I get everyday and have gotten for years now. They all go in the trash. Even my TWELVE YEAR OLD NEPHEW got one about a year ago, He was pre-approved for Ten Thousand Dollars Credit. His Mama has the good sense to toss that thing. How in the hell is a twelve year old going to handle ten thousand dollars of credit wehen they are not old enough to even work?

America's own greed got us in this mess.

 

[Bigted]

I mean, how many people were either stupid enough or crazy enough to go for an ADJUSTABLE RATE MORTGAGE.

Rick, you are right about excess debt (or more specifically, living beyone our means), at the consumer, business and government level being the main cause of our problems.

It's hard to blame the "sub-prime" ARM borrowers. A lot of them did know it was risky, but with the chance (probably their only chance) to buy a house, and a mortgage guy saying "don't worry you can sell or refinance when the rates go up", they signed on the bottom line. In my mind the companies that gave them the loans should be held accountable, along with the people in government that encouraged them to do it.

It's a great example of good intentions gone bad. We will see a lot more examples of this over the next 4 years as we try to "fix" the problem.

 

[Flowerchatter03]

Rick, you are right about excess debt (or more specifically, living beyone our means), at the consumer, business and government level being the main cause of our problems.

It's hard to blame the "sub-prime" ARM borrowers. A lot of them did know it was risky, but with the chance (probably their only chance) to buy a house, and a mortgage guy saying "don't worry you can sell or refinance when the rates go up", they signed on the bottom line. In my mind the companies that gave them the loans should be held accountable, along with the people in government that encouraged them to do it.

It's a great example of good intentions gone bad. We will see a lot more examples of this over the next 4 years as we try to "fix" the problem.

Oh I definitely agree that those companies should be held accountable but I do think that consumers need to take responsibility for signing up for something that they didn't understand.

In 2001, I purchased a home on a 5 year ARM, knowing that it was my responsibility to make certain that I had new financing in place within that time. Before my 5 years was up, I refinanced and locked in my rate.

People need to take responsibility for themselves and read up on stuff before they jump into something, whether it's buying a home, buying stock, or leasing a car. Read the fine print....there's always fine print!!!

 

[Mikey the Flower Guy]

Oh I definitely agree that those companies should be held accountable but I do think that consumers need to take responsibility for signing up for something that they didn't understand.

In 2001, I purchased a home on a 5 year ARM, knowing that it was my responsibility to make certain that I had new financing in place within that time. Before my 5 years was up, I refinanced and locked in my rate.

People need to take responsibility for themselves and read up on stuff before they jump into something, whether it's buying a home, buying stock, or leasing a car. Read the fine print....there's always fine print!!!

NOW you are getting scary!!..what's up with all the "common sense rhetoric"??:headbang::thumbsup

 

[sfox]

Yes sfox... thats back when they built things to last... energy wise, I'd say the new model... but....

I'll throw this out there for anyone wanting to read up on the Great Depression...

Get the book The Forgotten Man : A new history of the Great Depression

Read part of it HERE

The similarities today, to the events of the years following 1929 are strangely similar...

Boss, one thing I want to point out is that reading books, even history books, you have to be careful of what is written and how much truth it has.

I own an old history book that was printed in 1898. It was used in schools back then. What is amazing is to read what is written about the American Civil War. If you read that book and then read a book being used today in the schools, you would not think it was about the same war.

What would be very interesting is to read a history book 50 years from now and see how this crisis is being interpreted.

 

[wrdlady47]

80 years ago we had more agricultural societies. People could leave the "big cities" and go home where a family could support itself on the farm. there was less personal debt and more self reliance.

 

[strippinrose]

well since most of us only no stories about the 29 crash,all I can say is lets pray this is not like one...the younger society even us older baby boomers. feel very entitdeled to things we dont need...maybe things will turn around

 

[sfox]

well since most of us only no stories about the 29 crash,all I can say is lets pray this is not like one...the younger society even us older baby boomers. feel very entitdeled to things we dont need...maybe things will turn around

Actually, one of the new worries going around the financial community is that this financial crisis will change the way America shops. It is the Baby Boomers that are being hurt the hardest by this financial crisis right at a critical moment in their lives.

The Baby Boomers have been the driving force behind this economy for the last 50 years. It has been the Boomers with their tastes for designer clothing, German sports cars, McMansions, Harley Davidsons, etc that have fuel the sales growth of most American companies. Few Boomers worried about things like debt.

Well, with this financial crisis arriving just before the time many Boomers begin to retire, it is feared that they will change their habits and just plain quit buying, opting instead to save for their retirement years. If this happens a majority of American business, along with thousands of foreign companies will have to rethink who they plan on selling their goods and services to.

If you think about the flower business, it grew and flourished right along with the Baby Boomers. The generations that are coming behind the Boomers, don't have the same set of wants or desires as the Boomers. This means that the flowers we sell never did become as relevant to the American consumers as to the European consumers during the Baby Boomers era, what will happen to it going forward.

I won't want to be a Harley Davidson dealer selling those high priced motorcycles, if the Boomers decide to quit spending.

 

[Flowerchatter03]

80 years ago we had more agricultural societies. People could leave the "big cities" and go home where a family could support itself on the farm. there was less personal debt and more self reliance.

So true! But also back then, you didn't have a cable bill, cell phone bill, IPOD, internet service, IPhone, land line phone bill with all the technology we pay for, etc. etc and all those luxuries that people are still willing to pay. If needed, we all still could cut out things from our budget. There was nothing to cut back in those days.

One set of my grandparents had a farm during the Depression. They had a hard time. The other set of grandparents lived in Italy during the German occupancy. Wasn't a picnic for them either and they weren't even in this country.

 

[Kristine]

So true! But also back then, you didn't have a cable bill, cell phone bill, IPOD, internet service, IPhone, land line phone bill with all the technology we pay for, etc. etc and all those luxuries that people are still willing to pay. If needed, we all still could cut out things from our budget. There was nothing to cut back in those days.

One set of my grandparents had a farm during the Depression. They had a hard time. The other set of grandparents lived in Italy during the German occupancy. Wasn't a picnic for them either and they weren't even in this country.

There are so many items we call necessities these day that people would be aghast to cut from their budget. By the way, my farmer grandparents didn't have electric or indoor plumbing on the farm during the depression. Electricity and phone in the rural areas - thank FDR for that.

My Dutch Granny came over on the boat thru Ellis Island (she will be 91 in December) the stories she can tell... We've had it way too good.

 

[BOSS]

Yo sfox....

No matter what anyone says... you're a pretty smart feller...

I concur on the Boomer idea, many have seen their retirement funds reduced by 10-20 percent or more in the last few weeks as the market trys to decide what it's going to do. Again today, another 4.25% drop as of the time of this post....

There IS going to be a pull back this season, frivolous spending will be moved to well thought out spending, and onto "needs" rather than "wants".

Purchasing power is being removed from the equation, and survival mentality is setting in. I think I'll start selling bread and gas...

 

[bloomz]

I won't want to be a Harley Davidson dealer selling those high priced motorcycles, if the Boomers decide to quit spending.

I'm not sure about that. I think Mercedes dealers have a lot less to worry about than Chevy/Ford dealers.

Harley is a bit different animal cuz I believe a lot of their sales are based on financing. I believe a lot of the used Harley sales are Repos, and there's zillions of used ones out there for sale..

 

[strippinrose]

good points, but what I was trying to say encluding myself...we have been a wasteful nation compared to our forbearers of the 20s , and 30s,we all need to learn the value of a dollar ...especially if its a deflated $

 

[mlou]

...I concur on the Boomer idea, many have seen their retirement funds reduced by 10-20 percent or more in the last few weeks as the market trys to decide what it's going to do. Again today, another 4.25% drop as of the time of this post...

Yes, most of these investors lost more like 30% to 40% from what I'm hearing...

Also, you have the driving force of hedge funds trying to get liquid...(most of them are down 30%) 43 billion withdrawn from hedge funds last month, I'm not sure how much has been pulled this month, I assume it's a bunch. This is also causing some of the largest hedge funds to not be trading which in turn is behind low trading volume.

All the hedge funds getting out of the oil contracts has certainly helped drive the oil price down...

.

 

[BOSS]

I'm not sure about that. I think Mercedes dealers have a lot less to worry about than Chevy/Ford dealers.

I agree...

Harley is a bit different animal cuz

Well...cuz they have a lower production rate for one thing, are a smaller company and can slow down better than others...

The other thing is, Harley has a distinct following... the Yuppie buyers have run their course, and the Boomers will still buy one if they want one. But yes, there are good deals out there on new scooters with a few miles on them, but this will force HD to offer even better financing in the spring to compete with not only the economy, but good used bikes with low miles that are for sale.

 

[Bigted]

Actually, one of the new worries going around the financial community is that this financial crisis will change the way America shops.

I'm guessing (hoping) it's only temporary. The government is doing all it can to make sure people don't have to pay the piper. We seemed to be well entrenched in the "take no responsibility for your actions" mode.

 

[Flowerchatter03]

There are so many items we call necessities these day that people would be aghast to cut from their budget. By the way, my farmer grandparents didn't have electric or indoor plumbing on the farm during the depression. Electricity and phone in the rural areas - thank FDR for that.

My Dutch Granny came over on the boat thru Ellis Island (she will be 91 in December) the stories she can tell... We've had it way too good.

Thank you for mentioning the plumbing thing!!! My grandparents (that had the farm) didn't have indoor plumbing until 1965! My mother and father were married in Italy in 1964 and, when he brought her to this country, she couldn't believe they didn't have indoor plumbing. She was a city girl raised in a country that had plumbing since before Christ was born!! Brings back memories of my grandparents talking about those days. I sure miss em'!

 

[Lizi]

Yo sfox....

No matter what anyone says... you're a pretty smart feller...

I concur on the Boomer idea, many have seen their retirement funds reduced by 10-20 percent or more in the last few weeks as the market trys to decide what it's going to do. Again today, another 4.25% drop as of the time of this post....

There IS going to be a pull back this season, frivolous spending will be moved to well thought out spending, and onto "needs" rather than "wants".

Purchasing power is being removed from the equation, and survival mentality is setting in. I think I'll start selling bread and gas...

I agree with you on this. Most people I know as well as myself are asking is this something I really need or something I want. It will make a difference in how people shop for the holidays. Most people are going to buy things that have a true value to them, not just frivilous thing like in the past. I have listened to my dad talk about the 30's and 40's and am so thankful that I was taught how to sew, can, hunt and fish, make some home repairs. There are a lot of people that do not have basics survival skills, I hope I never have to put mine to the test, but some say there is a possibility that we will. I know a lot of older people that are preaching to get prepared with stocked food, water, batteries and any other staples. These are people who lived through the depression and remember how it was. These people are also scared and with reason. I think we will all have to make adjustments in every aspect of our lives.