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Title: Ghost Of 1929 Re-Appears - Pay Attention To The Signals
Source:
zerohedge
URL Source: http://www.zerohedge.com/news/2013- ... -appears-pay-attention-signals
Published: Dec 7, 2013
Author: Tyler Durden
Post Date: 2013-12-07 23:05:01 by X-15
Keywords: None
Views: 327
Comments: 3
They say those who forget the lessons of history are doomed to repeat them. As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different. It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t. The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle. So no, this time isn’t different. The specifics may have changed, but the themes remain the same. In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below. Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure. On a pure price-analogue basis, it’s time to start worrying. Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine. All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts. The Fed knows it. But they’re trapped between these risks and giving the market — the one bright spot in the post-2009 recovery — serious liquidity withdrawals. But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now. The Bernanke-led Fed’s enthusiasm for avoiding the mistakes that worsened the Great Depression—- a mistimed tightening of monetary conditions — has led him to repeat the mistakes that caused it in the first place: Namely, continuing to lower interest rates via Treasury bond purchases well into an economic expansion and bull market justified by low-to-no inflation. (Side note here: As economist Murray Rothbard of the Austrian School wrote in America’s Great Depression, prices dropped then, as now, because of gains in productivity and efficiency.) Here’s the kicker: The Fed (mainly the New York Fed under Benjamin Strong) was knee deep in quantitative easing in the late 1920s, expanding the money supply and lowering interest rates via direct bond purchases. Wall Street then, as now, was euphoric. It ended badly. Fed policymakers felt like heroes as they violated that central tenant of central banking as outlined in 1873 by Economist editor Walter Bagehot in his famous Lombard Street: That they should lend freely to solvent banks, at a punitive interest rate in exchange for good quality collateral. Central-bank stimulus should only be a stopgap measure used to stem panics, a lender of last resort; not act as a vehicle of economic deliverance via the printing press. It’s being violated again now as the mistakes of history are repeated once more. Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working. Strong died in 1928, missing the hangover his obsession with low interest rates and credit expansion caused after bragging, in 1927, that his policies would give “a little coup de whisky to the stock market.” 
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#1. To: X-15 (#0)
(Edited)
I dont know if they have the exact day right but I do believe the economic theory may have some merit. Radio and tv were coming into their own in the 26 through 30s too ... industrial revolutions drive enterprise corruption ;) ______________________________________ Suspect all media / resist bad propaganda/Learn NLP everyday everyway ;) If you don't control your mind someone else will.
Graphs are pretty, informative, and portray where WE HAVE BEEN. Greed is the driving force that injects volatility into the variability of the graph. Greed is from the few that must live off the many. The sharks MUST HAVE MILLIONS OF MINNOWS IN ORDER TO PLAY THE GAME. Fairyland tells us everyone profits, no one loses.
FDR SCANDAL PAGE at whatreallyhappened.com After plundering America for a decade, the Great Depression is then allowed to end about the time that Roosevelt agreed to fund the research. S-1 Uranium Committee - Wikipedia Pic: S-1 Committee at the Bohemian Grove, September 13, 1942. World War II began with the German invasion of Poland on September 1, 1939, prompting Albert Einstein and Leó Szilárd to complete a [My note: cover?] letter to U.S. President Franklin Delano Roosevelt they had been working on over the summer. This letter was signed by Einstein on August 2, and it was hand-delivered to Roosevelt by the economist Alexander Sachs on October 11, 1939. The letter advised Roosevelt of the existence of the German nuclear energy project and warned that it was likely the Germans were working on an atomic bomb using uranium, and that the U.S. should be concerned about locating sources of uranium and researching nuclear weapon technology. At this time the U.S. policy was neutral in the war. Experiments with the fission of uranium were already going on at universities and research institutes in the United States. Alfred Lee Loomis was supporting Ernest Lawrence at Berkeley Radiation Laboratory and Enrico Fermi at Columbia. Vannevar Bush was also doing similar research at Washington, D.C.-based Carnegie Institution. After the April 29, 1940 spring meeting of the American Physical Society, the New York Times reported that conferees argued "the probability of some scientist blowing up a sizable portion of the earth with a tiny bit of uranium." As a result of the letter Roosevelt asked Lyman James Briggs, director of the National Bureau of Standards, secretly to organize the Briggs Advisory Committee on Uranium. The committee's first meeting was on October 21, 1939, in Washington, D.C.; $6,000 was budgeted for conducting neutron experiments conducted by Fermi and Szilárd at Columbia. In England, Otto Frisch and Rudolf Peierls, two researchers at Birmingham University, issued the Frisch–Peierls memorandum in March 1940. The memorandum contradicted the common thinking of the time that many tons of uranium-235 would be needed to make a bomb On April 14, 1941 [My note: soon before the Pearl Harbor Attack], Lyman Briggs received a note from Eugene Wigner, stating: In the meantime, the NDRC under the leadership of Vannevar Bush was also exploring the possibility of using nuclear power for peaceful energy. A favorable report by Arthur Compton and the National Academy of Sciences was issued May 17, 1941, and after consultation with Roosevelt, Bush created the Office of Scientific Research and Development. On July 1, 1941, Bush assumed responsibility for all fission research and the Advisory Committee became the S-1 project of the NDRC. with Lyman Briggs reporting to Bush. Marcus Oliphant came to the United States from England in August 1941 to find out why Briggs and his committee were apparently ignoring the MAUD Report. Oliphant discovered to his dismay that the reports and other documents sent directly to Briggs had not been shared with the Advisory Committee. Oliphant then met with the Uranium Committee and his colleagues Ernest Lawrence, James Conant and Enrico Fermi to explain the urgency. In these meetings Oliphant spoke of a "bomb" with certainty and explained that Britain did not have the resources to undertake the project so it was up to the United States. Edited the comment line after first two linked sections + for spacing, highlighting and bracketed note inserts. ------- "They're on our left, they're on our right, they're in front of us, they're behind us...they can't get away this time." -- Col. Puller, USMC
#2. To: X-15 (#0)
The cycle swings fear back to greed.
#3. To: X-15, 4 (#0)
(Edited)
But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now.
1928 FDR became Governor of New York by means of massive vote fraud in Buffalo. The seeds of the Great Depression were first sown in New York State when FDR was governor.
Legendary financier, philanthropist, and society figure Alfred Lee Loomis gathered the most visionary scientific minds of the twentieth century -- Albert Einstein, Werner Heisenberg, Niels Bohr, Enrico Fermi, and others -- at his state-of-the-art laboratory in Tuxedo Park, New York, in the late 1930s. He established a top-secret defense laboratory at MIT and personally bankrolled pioneering research into new, high-powered radar detection systems that helped defeat the German Air Force and U-boats. With Ernest Lawrence, the Nobel Prize-winning physicist, he pushed Franklin Delano Roosevelt to fund research in nuclear fission, which led to the development of the atomic bomb.
The S-1 Uranium Committee was a Committee of the National Defense Research Committee [My note: NDRC] that succeeded the Briggs Advisory Committee on Uranium and later evolved into the Manhattan Project.
It may interest you that a colleague of mine who arrived from Berlin via Lisbon a few days ago, brought the following message: a reliable colleague who is working at a technical research laboratory asked him to let us know that a large number of German physicists are working intensively on the problem of the uranium bomb under direction of Heisenberg, that Heisenberg himself tries to delay the work as much as possible, fearing catastrophic results of a success. But he cannot help fulfilling the orders given to him, and if the problem can be solved, it will be solved probably in the near future. So he gave the advice to us to hurry up if U.S.A will not come too late.
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