The Great Depression of 1929

[diamond lil]

How did the 1929 crash happen ? Are there comparisons to now ? Obviously you're all going to say "oh but it was different, we didnt have internet /credit cards blahblahblah"- but there is nothing new under the sun!! What we can take from it, learn from it. and where can we learn about it?

[the-gnole]

http://americanhistory.about.com/od/gre ... ession.htm

1. Stock Market Crash of 1929
Many believe erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929 is one and the same with the Great Depression. In fact, it was one of the major causes that led to the Great Depression. Two months after the original crash in October, stockholders had lost more than $40 billion dollars. Even though the stock market began to regain some of its losses, by the end of 1930, it just was not enough and America truly entered what is called the Great Depression.

2. Bank Failures
Throughout the 1930s over 9,000 banks failed. Bank deposits were uninsured and thus as banks failed people simply lost their savings. Surviving banks, unsure of the economic situation and concerned for their own survival, stopped being as willing to create new loans. This exacerbated the situation leading to less and less expenditures.

3. Reduction in Purchasing Across the Board
With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This then led to a reduction in the number of items produced and thus a reduction in the workforce. As people lost their jobs, they were unable to keep up with paying for items they had bought through installment plans and their items were repossessed. More and more inventory began to accumulate. The unemployment rate rose above 25% which meant, of course, even less spending to help alleviate the economic situation.

4. American Economic Policy with Europe
As businesses began failing, the government created the Smoot-Hawley Tariff in 1930 to help protect American companies. This charged a high tax for imports thereby leading to less trade between America and foreign countries along with some economic retaliation.

5. Drought Conditions
While not a direct cause of the Great Depression, the drought that occurred in the Mississippi Valley in 1930 was of such proportions that many could not even pay their taxes or other debts and had to sell their farms for no profit to themselves. This was the topic of John Steinbeck's The Grapes of Wrath.

[diamond lil]

Yes but instead of just copying & pasting, can we discuss this ? What was the same as now/what was different ? why this happened and why that didnt happen ? ... What was the effect on ordinary working people ? We could learn an awful lot about this which might help if something similar happens again.

[the-gnole]

It is useful to have the points to make discussions from though, the list copied and pasted above gives the five main causes, so now we have points to discuss.

We are heading for a drought this summer, we have had a lot less water so far this year than previous years, something like 80% less in places, see item 5 on the above list.

Crop failures, leading to more expensive everyday necessities, arable farmers not getting sufficient crop growth to be able to pay for their needs.

Livestock farmers needing to pay more for their feedstuffs and lack of water to give the livestock will lead to problems as well.

So food will be heading upwards whilst disposable income will be squeezes to pay the higher prices, meaning less to buy "luxury goods" and essentials when they breakdown.

[Dutchie Delta]

Well yes, that about sums it up.
Plus the monetary systems having become truly global, makes us more vulnerable imo. Traditionally countries could starve to death without anyone noticing. Now nearly every society is interwoven and has interests in all parts of the world.
So no food produced locally + importing stuff that becomes scarce = prices that may exceed the general publics wallet.

[diamond lil]

Is too early and I haven't had my 9 pots of tea yet, but how many comparisons are there to today's situation ? Can you see a similar pattern ? And the biggest worry for me is that it took a world war to end that one, after ten years of misery

[Dutchie Delta]

Not being a financial guru, I cannot have a real insight in the state of the banks. I only have the information that is available to everybody.
So if we break it down to bite sized chunks:

How are the banks and the economy doing?
Do we see improvement (more jobs, better pay)?
How does our income compare to our spendings?
On personal level and national level?
How many global companies dictate political events and streams?
Do you think that working towards the EU and being in the EU, has contributed to 70 years of no wars in Europe? An unprecedented time of peace in this part of the world.
Would the weakest economies in the EU (and that's not always the same as countries) drag the entire lot down or do we insist on keeping them together?

I don´t have all the answers but do know that peace comes at a high price. To anyone that lost a loved one in the last WW, there is no price too high probably.
Being of an age where my parents got the full brunt of WII, I may not like the system as it is now but appreciate the benefits of having peace in our countries.
Would the powers that are, do anything to keep the EU a valid economic force to be reckoned with?
So, what would this be worth to governments, companies and individuals who have to deal with a changing world?

[diamond lil]

Yes I see that things are a bit more complicated today, many different sweeties in the jar now compared to 1929 America. I suppose that's why nobody, not even the "experts", can see what the hell is going to happen here.
I don't like being in the EU at all, but maybe it has stopped wars breaking out or at least damped them down to minor squabbles instead of conflict. I think that given human nature sooner or later it will break up.
But if it falls apart, will it will take us all down with it ? And if we are so poor that we have to take £50 off pensioners winter fuel money and tell blind people that if they can hear then they can work - then should we be handing over billions to other countries just because the EU tells us to ??? Mad world.