Tuesday, August 18, 2009

Extra! Extra! Read All About It!

Is it 1934 or 2009?

All I could say was WOW when I read this. This gave me chills. The similarities here are simply breathtaking. The cartoon below was published in the Chicago Tribune in 1934.

History repeats itself folks. You hear me say it on here all the time. Any bulltard that tells you "but its different this time" when this crisis is compared to The Great Depression is kidding themselves.

You can through that line right in the same trash can as these other famous quotes over the last few years:

"Real estate always goes up!"
"Subprime is contained!"
"There is no housing bubble!"
"The recession is over!"

Substitute the names with our current group of clueless leaders and you could have published the same cartoon in this week's Chicago Tribune and no one would have batted an eye.

I was hoping that we would have learned from our mistakes. Apparently Not:


CT-Hilltopper said...

What's that old saying, Jeff?

Those that do not learn from their mistakes are doomed to repeat them?

Something like that.

Jeff said...

I was flabbergasted by this one.

Its like we are doing the EXACT same thing all over again.


Tom said...

Hi Jeff
When does China say it's had enough? And how will that affect the US dollar?

Jeff said...


Wish I knew.

The problem is if they let us go down then they likely go down as well because they have no one to export their crap too.

Its a very difficult situation for both sides. I think ultimately China will start to walk away from treasuries.

The timing of this is the million dollar question.

Jeff said...

Ugly start this morning folks.

WOrld markets are down sharply.

ES is down -8.25.

I see no big headlines. Buffet had a piece out this morning around our massive deficits:

"Aug. 19 (Bloomberg) -- The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

The government is trying to spark business and consumer spending through a $787 billion stimulus plan spanning tax cuts and infrastructure projects, while the Treasury and the Fed have spent billions more on separate programs to rescue financial institutions and resuscitate the banking system. The U.S. budget deficit is forecast to reach a record $1.841 trillion in the year that ends Sept. 30.

“Enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects,” Buffett, 78, said. “For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.”

The “greenback emissions” will swell the deficit to 13 percent of gross domestic product this fiscal year, while net debt will increase to 56 percent of GDP, Buffett said."


Jeff said...


Futures now -10 on ES

Hold on tight folks

Anonymous said...

I think we are in a situation where now we have a junkie addicted to the "monetary medicine" just as in the 30's it took years to right our spending addiction and become a fiscally responsible nation, oh yeah we had to have a world war. This time we may not be able to dig ourselves out of this hole.
The comparison to the 30's is really kind of eerie and CT-Hill hit it on the head with the not learning from mistakes quotes. Overleverage caused the 29 crash, same thing today.
On a side note I don't know if you are familar with Barry Ritholtz but I find he has some realistic points of view as well.

Anonymous said...

Hey Jeff, if you invested in the Dow anytime 1934 guess how much you would have made just 2 years later? Try 70%. Oh wait, it must have been Goldman Sachs manipulation!

Jeff said...

Anon 1

Great points

Paying bank trillions may b impossible

Anon 2

Yeah ok

Where were u two yeas later in '37/38? You would have ended up right near the lows again.

Anonymous said...

Jeff, you're missing the point. One needs to be a pragmatist not a dogmatist to make money in the market. A 70% rally in 2 years is nothing to sneeze at and don't forget the dow had a div yield of over 5% so even though markets went back down to the 1934 lows in 1938 you still made 5% per year compounding which was better than sitting in cash or bonds complaining about the government.

Jeff said...


Not so sure. Depended on what you owned. Divedendsare nowhere near that at this point without taking large risks.

Cash is still the place to be IMO..

How do you know this collapse ends in the same way? I think we this one may be worse.

YOur arguement is a fair one.