http://www.bloomberg.com/news/2011-06-08/depression-regression-echoes-book-of-the-week.html
SS says
I v read this book and it is just superb.
I would recommend everybody to understand what happened in 1929 and see how closely some of the things resemble even now.
This is because markets are a manifestation of human mood swings.
May it be 1929 or 2007 - people react in same way - mood swings between optimism and pessimism - and that creates booms and busts.
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"If the gov't continues its spending etc. it means ultimate inflation and crash. If the gov't stops spending, balances the budget, it means bad business during the period of adjustment but ultimately a sound recovery. Either way the outlook is not promising." That sounds like a pundit commenting on Federal Reserve Chairman Ben Bernanke's speech yesterday.
It was actually written on Nov. 22, 1937, in the diary of Benjamin Roth, a lawyer from Youngstown, Ohio.
Roth's diary is also valuable as a cautionary tale: predicting the economic future isn't easy, he shows, and historical comparisons can be misleading. Roth made predictions about the economy in general and about particular stocks. In January 1937 he declared, "It seems to me that the time has come where we can formally and officially announce that the depression of 1929 has ended." The Dow fell 32.5 percent that year.
In the same entry, he observed: "If you can once definitely place the new depression in its proper historical background then the rest is easy. History will repeat itself and the chart of the old depression will foretell pretty accurately the course of the new."
Roth believed that the depression of the 1930s would follow the course of the depression of 1873. He thus concluded that the Great Depression had finally ended in early 1937 -- and he was blindsided by the "Roosevelt Recession."
Historical comparisons can often be illuminating. But they can also distract us from what's at hand.
SS says
I v read this book and it is just superb.
I would recommend everybody to understand what happened in 1929 and see how closely some of the things resemble even now.
This is because markets are a manifestation of human mood swings.
May it be 1929 or 2007 - people react in same way - mood swings between optimism and pessimism - and that creates booms and busts.
-----------
"If the gov't continues its spending etc. it means ultimate inflation and crash. If the gov't stops spending, balances the budget, it means bad business during the period of adjustment but ultimately a sound recovery. Either way the outlook is not promising." That sounds like a pundit commenting on Federal Reserve Chairman Ben Bernanke's speech yesterday.
It was actually written on Nov. 22, 1937, in the diary of Benjamin Roth, a lawyer from Youngstown, Ohio.
Roth's diary is also valuable as a cautionary tale: predicting the economic future isn't easy, he shows, and historical comparisons can be misleading. Roth made predictions about the economy in general and about particular stocks. In January 1937 he declared, "It seems to me that the time has come where we can formally and officially announce that the depression of 1929 has ended." The Dow fell 32.5 percent that year.
In the same entry, he observed: "If you can once definitely place the new depression in its proper historical background then the rest is easy. History will repeat itself and the chart of the old depression will foretell pretty accurately the course of the new."
Roth believed that the depression of the 1930s would follow the course of the depression of 1873. He thus concluded that the Great Depression had finally ended in early 1937 -- and he was blindsided by the "Roosevelt Recession."
Historical comparisons can often be illuminating. But they can also distract us from what's at hand.
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