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Feb 1, 2010 8:47 pm

It’s Not the 1930s Again


 


Since the financial turmoil began, many analysts, investors and pundits have fretted about a repeat of the Great Depression.  They worry that the pain is not over yet and fear other shoes – like foreclosures or commercial real estate – will drop, causing another leg down for the economy.  They worry that when government stimulus winds down, the economy will fall again.The opposite view is also in play.  Many fear excess government activity.  They worry that government has become too big and too much of a burden.  Even if healthcare, or cap and trade, are no longer a threat, it’s the “uncertainty” of all this government activity that is holding back business decisions, undermining job growth and threatening to cause further declines in economic activity.  This is the key fear of many conservative pundits.However, it’s important to put things in perspective.  Real GDP fell for four consecutive years (and by a total of more than 25%) between 1929 and 1933.  Unemployment reached 25%.  Nothing today even comes close.  GDP is now rising and we expect unemployment has peaked.The reason the Great Depression became so great was because government policies were outrageously bad.  The Federal Reserve, which was less than two decades old at the time, made huge mistakes, and allowed the money supply to decline by a third between 1929 and 1933.  At the same time, President Herbert Hoover increased the top marginal income tax rate from 25% to 63% in 1932 – a more than 50% reduction in the incentive to work and invest. Then, President Franklin Delano Roosevelt raised the top rate again to 79%, cutting the incentive to produce even more.  Add the Smoot-Hawley increase in tariffs on international trade, and it is easy to understand that the Great Depression was a made-in-Washington crisis.  Moreover, while it is true that uncertainty played a big role in holding back economic activity, especially later in the 1930s, it is clear that there were actual policies (not just threats of policies) that had an impact.This puts today in a different light.  While tax rates are scheduled to rise in 2011, this is still not a certainty and the tax rate hikes themselves are nothing on the order of Hoover-Roosevelt.  Moreover, national health care and cap and trade legislation are clearly in critical condition.No matter how big of a drift toward populism it appears the country has taken, it is also clear that President Obama is losing ground with his agenda.  The Democratic majority is shrinking and should shrink more in the months to come.  As a result, the odds of repeating anything like the Great Depression are low and shrinking by the day.  It’s not the 1930s, it’s not even close.


Your welcome 
Feb 1, 2010 8:56 pm

Where did you copy and paste that from

Feb 1, 2010 8:58 pm

C'mon Shoeshine,

At least give Brian Wesbury proper credit for this.

Feb 1, 2010 9:03 pm

He copied and pasted it from Brian Wesbury's Monday Morning Outlook. Good stuff!

Feb 1, 2010 9:30 pm
mlgone:

Dude....your Bipolar.....weren't you leaving? I get it......upset your SDS got whacked today.   



130k a year net producer and I'm listening to him.....lol die jerkoff

 
NOT producer retard!! re-read the post
Feb 1, 2010 9:36 pm
2much:

C'mon Shoeshine,
At least give Brian Wesbury proper credit for this.

 
2much-I wasn't taking credit I just thought you would like it.
 

630-517-7756


www.ftportfolios.com


Feb 1, 2010 Monday Morning Outlook Brian S. Wesbury - Chief Economist


Robert Stein, CFA - Senior Economist


It’s Not the 1930s Again


Since the financial turmoil began, many analysts, investors


and pundits have fretted about a repeat of the Great Depression.


They worry that the pain is not over yet and fear other shoes –


like foreclosures or commercial real estate – will drop, causing


another leg down for the economy. They worry that when


government stimulus winds down, the economy will fall again.


The opposite view is also in play. Many fear excess


government activity. They worry that government has become


too big and too much of a burden. Even if healthcare, or cap


and trade, are no longer a threat, it’s the “uncertainty” of all this


government activity that is holding back business decisions,


undermining job growth and threatening to cause further


declines in economic activity. This is the key fear of many


conservative pundits.


However, it’s important to put things in perspective. Real


GDP fell for four consecutive years (and by a total of more than


25%) between 1929 and 1933. Unemployment reached 25%.


Nothing today even comes close. GDP is now rising and we


expect unemployment has peaked.


The reason the Great Depression became so great was


because government policies were outrageously bad. The


Federal Reserve, which was less than two decades old at the


time, made huge mistakes, and allowed the money supply to


decline by a third between 1929 and 1933. At the same time,


President Herbert Hoover increased the top marginal income


tax rate from 25% to 63% in 1932 – a more than 50% reduction


in the incentive to work and invest.


Then, President Franklin Delano Roosevelt raised the top


rate again to 79%, cutting the incentive to produce even more.


Add the Smoot-Hawley increase in tariffs on international


trade, and it is easy to understand that the Great Depression was


a made-in-Washington crisis. Moreover, while it is true that


uncertainty played a big role in holding back economic activity,


especially later in the 1930s, it is clear that there were actual


policies (not just threats of policies) that had an impact.


This puts today in a different light. While tax rates are


scheduled to rise in 2011, this is still not a certainty and the tax


rate hikes themselves are nothing on the order of Hoover-


Roosevelt. Moreover, national health care and cap and trade


legislation are clearly in critical condition.


No matter how big of a drift toward populism it appears the


country has taken, it is also clear that President Obama is losing


ground with his agenda. The Democratic majority is shrinking


and should shrink more in the months to come. As a result, the


odds of repeating anything like the Great Depression are low


and shrinking by the day. It’s not the 1930s, it’s not even close.


Date/Time (CST) U.S. Economic Data Consensus First Trust Actual Previous


2-1 / 7:30 am Personal Income - Dec +0.3% +0.5% +0.4% +0.4%


7:30 am Personal Spending - Dec +0.3% +0.6% +0.2% +0.5%


9:00 am ISM Index - Jan 55.5 56.1 58.4 55.9


9:00 am Construction Spending - Dec -0.5% -0.3% -1.2% -0.6%


2-2 / sometime Domestic Auto Sales - Jan 4.0 Mil 4.0 Mil 4.1 Mil


during the day Domestic Truck Sales - Jan 4.3 Mil 4.5 Mil 4.4 Mil


2-3 / 9:00 am ISM Non-Man. - Jan 51.0 50.5 50.1


2-4 / 7:30 am Q4 Non-Farm Productivity +6.0% +7.6% +8.1%


7:30 am Q4 Unit Labor Costs -2.6% -5.7% -2.5%


7:30 am Initial Claims - Jan 30 455K 452K 470K


9:00 am Factory Orders - Dec +0.5% 0.0% +1.1%


2-5 / 7:30 am Non-Farm Payrolls - Jan +8K +45K -85K


7:30 am Manufacturing Payrolls - Jan -20K -20K -27K


7:30 am Unemployment Rate - Jan 10.0% 9.9% 10.0%


7:30 am Average Hourly Earnings - Jan +0.2% +0.2% +0.2%


7:30 am Average Weekly Hours - Jan 33.2 33.2 33.2


2:00 pm Consumer Credit – Dec -$9.5 Bil -$8.4 Bil -$17.5 Bil




Brian S. Wesbury - Chief Economist


Robert Stein, CFA - Senior Economist


 


Approved for Public Use


#1f497d"> 


#1f497d; FONT-FAMILY: 'Sylfaen', 'serif'">Nicholas Kokonas
UIT Inside Wholesaler for Virginia
& North Carolina 
#000; BORDER-BOTTOM: #0066cc 1px dashed; : #dceeff">First Trust Portfolios L.P.
#0066cc 1px dashed">(800) 621-9533
Fax #0066cc 1px dashed">(630) 517-7527
<SPAN =yshortcuts id=lw1265078342_16>www.ftportfolios.com


#1f497d; FONT-FAMILY: 'Arial', 'sans-serif'"> 


First Trust Portfolios L.P. new address is:#1f497d; FONT-FAMILY: 'Times New Roman', 'serif'">


 #1f497d; FONT-FAMILY: 'Times New Roman', 'serif'">


120 E. Liberty Drive#1f497d; FONT-FAMILY: 'Times New Roman', 'serif'">


Suite 400#1f497d; FONT-FAMILY: 'Times New Roman', 'serif'">


Wheaton, IL  60187#1f497d; FONT-FAMILY: 'Times New Roman', 'serif'">


#1f497d; FONT-FAMILY: 'Times New Roman', 'serif'"> Hear ya go

Feb 1, 2010 9:38 pm
mlgone:

"NOT producer retard!!"

Your right you aren't. This is a registered rep forum.....leave

 
You are quite possibly the dumbest person I have ever......wait you are definitely the dumbest
Feb 1, 2010 9:40 pm
mlgone:

Thought you lived in CA genius???? You are a complete fool. Posting your wholesaler's info? WTFF?? Damn dude you would f*ck your own abortion or at least I wish you did.

 
Unlike you LOSER I have friends and clients all over the country. Where did I say I was from???? Boy are you stupid!
Feb 1, 2010 9:44 pm
howboutshoeshine:
mlgone:

Thought you lived in CA genius???? You are a complete fool. Posting your wholesaler's info? WTFF?? Damn dude you would f*ck your own abortion or at least I wish you did.

 
Unlike you LOSER I have friends and clients all over the country. Where did I say I was from???? Boy are you stupid!
 
Friends and clients?  The internal wholesaler for a UIT firm just happens to be a "friend" that sends weekly market commentary to you for the he!! of it? 
Feb 1, 2010 9:54 pm
3rdyrp2:
howboutshoeshine:
mlgone:

Thought you lived in CA genius???? You are a complete fool. Posting your wholesaler's info? WTFF?? Damn dude you would f*ck your own abortion or at least I wish you did.

 
Unlike you LOSER I have friends and clients all over the country. Where did I say I was from???? Boy are you stupid!
 
Friends and clients?  The internal wholesaler for a UIT firm just happens to be a "friend" that sends weekly market commentary to you for the he!! of it? 
 
No. I have a friend that I started in the biz with that still lives there. We forward each other info. we find interesting.  I have Art Cashin's daily commentary to, but I assure you I don't work at UBS
Feb 1, 2010 9:57 pm

I have friends at every major firm that live all over this country. I am a well respected broker. Whether anyone here likes it or not. Funny thing is.......I have yet to be wrong. Not that I won't, but I haven't been yet.

Feb 1, 2010 10:19 pm

No acats-a-raining?



You getting bullish on us?



I understand.   You have been reading my stuff.



No shame.   



A lot of clients have fallin f.....I mean have accepted my brilliance.



if you have any questions on the capital markets, feel free to ask.   



remember, there are no dumb questions



Feb 1, 2010 10:23 pm
Shania Twain:

No acats-a-raining?

You getting bullish on us?

I understand.   You have been reading my stuff.

No shame.   

A lot of clients have fallin f.....I mean have accepted my brilliance.

if you have any questions on the capital markets, feel free to ask.   

remember, there are no dumb questions

 
NOPE. Not bullish, but I read everything. Just thought you guys might like this. I told you when I will get bullish. No ACAT's. That doesn't happen when you're making $$$$$$ my friend.
Feb 1, 2010 10:33 pm

Except for the sentence on Obama that article is almost a re-print of about 20 articles that "experts" were printing in October '08.  How many people do they really have to still talk off the ledge in February '10?

Feb 2, 2010 11:03 pm
3rdyrp2:

Except for the sentence on Obama that article is almost a re-print of about 20 articles that "experts" were printing in October '08.  How many people do they really have to still talk off the ledge in February '10?

 
Lots...... Shania just lost a client that he did well for. His only mistake is thinking that was an isolated incident. If 6% fall gets you out. What will a 30% fall do? People won't think about profit. They will think about loss. And that.......is the "new" norm. I don't like it, but I do accept it
Feb 3, 2010 12:16 am

I don't know what's more sad, the troll who stalks these boards or the idiots who respond defaming themselves to the public in the process

Feb 3, 2010 9:46 am
Mr.Blonde:

I don't know what's more sad, the troll who stalks these boards or the idiots who respond defaming themselves to the public in the process

 
Great point! I only got PM'd a dozen times thatnking me for posting this d*psh*t.
Feb 3, 2010 9:54 am
howboutshoeshine:
3rdyrp2:

Except for the sentence on Obama that article is almost a re-print of about 20 articles that "experts" were printing in October '08.  How many people do they really have to still talk off the ledge in February '10?

 
Lots...... Shania just lost a client that he did well for. His only mistake is thinking that was an isolated incident. If 6% fall gets you out. What will a 30% fall do? People won't think about profit. They will think about loss. And that.......is the "new" norm. I don't like it, but I do accept it



Shoe - people lose clients during bullish times.  In fact, I lost in bullish times.

Feb 3, 2010 9:58 am
Moraen:
howboutshoeshine:
3rdyrp2:

Except for the sentence on Obama that article is almost a re-print of about 20 articles that "experts" were printing in October '08.  How many people do they really have to still talk off the ledge in February '10?

 
Lots...... Shania just lost a client that he did well for. His only mistake is thinking that was an isolated incident. If 6% fall gets you out. What will a 30% fall do? People won't think about profit. They will think about loss. And that.......is the "new" norm. I don't like it, but I do accept it



Shoe - people lose clients during bullish times.  In fact, I lost in bullish times.

 
I know. However, as the econonmy continues to decline for the "average" american, they will not be concerned with how much they can "make" rather, ..........." I can't afford any loss."  You couple that with taxing the wealthy and people will become less interested in stocks. It's just the reverse thinking of a bull market.
Feb 3, 2010 10:57 am

[quote=

 
Great point! I only got PM'd a dozen times thatnking me for posting this d*psh*t.
 
{QUOTE]
 
A big cali earthquake is coming.