-The say there is a safety net in place

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Is There A Comparison Between 2008 to 1930��s?
The end of 2007 and throughout 2008 has seen a terrifying ��flattening�� experience for millions. Banks, stocks and real estate have crashed . Assets are being sold off in an attempt to reduce debt on balance sheets . Time and again there have been tales} reported of hundreds of millions of dollars being wiped out. Many all over the global village wait with bated breath waiting for the ��axe�� to descend on them.
��The economy is headed for a liquidity trap,�� says Colin Twigg of IG Markets. ��Interest rates will be lowered to such a rate they will fail to attract investors. When banks are compelled to liquidate assets and call in loans, it could set off a downward spiral, with echoes of the 1930��s.��
The only other alternative would be for nations to print more money. However, this could end up with the same {[effect}} as Zimbabwe with its 100,000 p.a. rate of inflation.
Many people are questioning: ��Are there things that are the same between the 1930��s and 2008?�� The financial melt �C down in the early 1930��s took three years, while the financial down-turn in 2008 has taken only one year.
In the 1930��s:
?1929 investors had a currency that was backed by gold
?Preceded by a housing boom, plus cheap credit
?Financial system was less sophisticated �C records with pen and paper
?In 1929 millions were left ignorant because communication was snail-mail.
?Communications were altered through ��indian whispers��
?Information was hard to get
?Relatively US Federal bank was new and made regular mistakes
?The government and big spending programs were mistrusted by the voters
?People caused runs on the banks as they panicked and withdrew money
?Some say the government of the 1930��s was more capable of handling a financial melt down
?No safety net had been created
?The people were industrious and hard working, growing their own vegetables etc.
90% of jobs were rural:
?Credit was hard to gain for most people
?There was a surplus in trade as people were more able to produce trade items
?National borrowing on a large scale was unheard of
?People lived more locally and went without or made do
?40% of the nation��s wealth in America was owned by 1% of the population
?The richest 0.1% controlled 11.5% of income in the US
In 2008:
?In 2008 the dollars are backed by IOUs from the world��s biggest debtor, the US
?A housing boom and cheap credit preceded the melt down
?Today we have sophisticated financial models which we believed in implicitly �C until they failed
?2008��s communication is global, immediate interaction, measured in milliseconds
?Information is instantly transferred and more easily checked for accuracy
?Information pours around the world daily
?In 2008 the Fed patrols financial markets, dousing flare-ups with highly flammable material
?Today the government is the big spender saying it is ��rescuing�� the economy
?Large groups of people have a choice of losing their money by selling their shares or waiting in hope of a better future
?Many people question the ability of the governments of the world to handle the melt down
?The say there is a safety net in place (?)
?In 2008 only supermarkets ��grow�� vegetables for the vast majority of the population
?In 2008 there is a more urban population
?There is huge public and private indebtedness
?We see a massive trade indebtedness with little or no ability to produce trade items
?Millions of dollars are borrowed every day by most nations
?2008 has a world village which is highly consumer orientated
?In 2008 the wealth is more widely spread so the top 1% have less influence
on the nation
?The richest 0.1% controls 11.6% of income in the US.
Conclusion:
While the financial plunge in 2008 has been much steeper than the four year plunge of the 1930��s, will we recover any quicker in 2009? We continue to borrow simply to pay back on what we have already borrowed. The ��house of cards�� of 2008 is hundreds of times larger than it was in the 1930��s.
��Comparing 1929 to 2008 is a bit like comparing a Model T to a 2008 Chevy,�� said Sung Won Sohn, an economist at California State University Channel Islands. ��They��re both cars, but that doesn��t mean they��re both the same.��
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