Perspective

I originally posted this on KOS yesterday as the market was melting...

"Prosperity, real prosperity has just begun." Brisbane also told his 25,000,000 reader that "stock gamblers may be worried, but the people at large feel cheerful."

- from A Nation in Torment: The Great American Depression, 1929-1939 by Edward Robb Ellis, 1970.

I just thought that a cheery quote was just the thing for everyone, given the events of the day.../snark

The quote, from p 69, is by Arthur Brisbane, then Hearst editorial writer. It is in response to events of Oct 1-3, 1929.

Continuing some pages later is another statement that is too familiar:

"Aware of the sickening crisis on the floor of the exchange, the six bankers decided to form a coalition to pump new life into the dying market. This they did by forming a pool, with each pledging $40 million for a total of $240 million. An additional $100 million was supplied by other financial firms...It was by far the largest concentration of pool buying power ever directed at the stock market. What they wanted to do was to indulge in a bold psychological gesture to end the panic - and to protect themselves."

This was on Thursday October 24, 1929.

On p. 81:

"in point of fact, the bankers' pool failed to save the market but did save the big boys themselves...They did give temporary support to such market leaders as United States Steel, then quietly fed back into the market nearly all the shares they had bought - at a fair profit to themselves."

"Then came Tuesday, October 29, 1929."

(sorry for so many quotes, I think that Ellis said it much better than I could paraphrase)

As neither an economist nor a "seer," I have no idea what today will mean in history. However, if we spent a bit more time understanding history, we might not be at a place again where bail-outs are needed for entities too big to fail. It's not a problem that can be solved in a day or two; it required vigilance and (real) grown-ups to keep an eye on things. We are seeing the culmination of years of deregulation and the mess that is created when no one cares who is making how much money and certainly no one cares how it was made.

Anyone looking to dump their Social Security into the market right now, raise their hand...