Scary echoes of history


“The nation is marching along a permanently high plateau of prosperity.” October 1929, Yale University economist Irving Fisher. Five days later, the bottom dropped out of the stock market and ushered in the Great Depression, the worst economic downturn in American history.

“”Our economy, I think, is still — the fundamentals of our economy are strong.” September 2008, Republican Presidential hopeful John McCain.


Historians refer to October 24, 1929 as “Black Thursday.” On this day, people began dumping their stocks as quickly as they could. Sell orders inundated market exchanges and the bull market suddenly shifted to a bear market. By that evening, J.P. Morgan and other financiers bought up stock to stop the panic and keep the market afloat. On Friday, October 25, the House of Morgan continued to keep the market stable and it seemed that the panic was over. Yet, many investors began to worry during the weekend.

September 24, 2008: Warren Buffett announces he would pour $6 billion into investment bank Goldman Sachs.


1929: Between October 29 and November 13, the day when stock prices hit their lowest point, over $30 billion disappeared from the American economy.  This amount was comparable to the total amount of money that the federal government had spent to fight the First World War.

2008: The $700 billion taxpayer bailout would exceed the $600 billion that has been spent on the war in Iraq

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One Reply to “Scary echoes of history”

  1. I am not sure what you were going for. To me your “Echo’s” ring false.

    In example one you site an economist, compared to a politician. If you wanted a current economist you could site “The Great Depression should not be the reference point,” — Erik Hurst, an economics professor at the University of Chicago’s Graduate School of Business. I do not think that fits your echo premise though.

    So a politician before the depression. “It has been twelve months of unprecedented advance, of wonderful prosperity. If there is any way of judging the future by the past, this new year will be one of felicitation and hopefulness.” – Herbert Hoover

    In example two, JP Morgan & Company (JP died in 1913) during that time in history the “House of Morgan” acted as the Central Bank and Federal Reserve in the United States. Mr. Buffett is a private investor, taking advantage of panic to secure a sweet deal. This is public stock yet he is getting a non-public 10% interest a year forever, with options to buy another $5 billion at a guaranteed price of $115 for the next five years. (Next day that stock was at $130.00). This is not a real “echo of the past” when you drill down.

    The third example has you comparing the fiscal costs of WW I with the $700 billion guess of Paulson. I am reading both Trillions of dollars will be expended, followed by others saying the Paulson figure is outrageously high. At a minimum you would have to restate that after some kind of a bailout would occur.

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