Quantcast

Sunday, July 28, 2013

Historic Ghosts Reappear



November 20, 2009 by · Leave a Comment 

By Roger Wiegand, Kitco

We are constantly reading and comparing current economic fundamentals and market action with similar historic experiences in the U.S. Today we discuss key points with eerie similarities to other troubled times. This discussion will get you thinking. As someone once said, “History never repeats exactly but certainly rhymes.” What we envision today as the result of these comparisons creates such a fright your hair will stand on end.

“There can never be any certainty that a debt crisis will not spiral out of control. Risks therefore, must increase until the financial pressure becomes intolerable and the financial authorities move to inject massive amounts of liquidity, reduce interest rates and bail out the large awaiting bankrupts that are about to collapse.” -The Bank Credit Analyst, September, 1982 from Golden Insights compiled by James U. Blanchard III.

That Bank Credit Analyst quote could easily be from last week’s newspaper not 1982. Let’s review a list of old era key points and see if you can determine the dates. The following data was experienced in another economic disruption.

The economy fell down after a prolonged and serious war. There seemed to be a series of never ending recessions and depressions despite a pattern of industrial growth, innovation, and invention.

Foreign capital was pouring into the U.S as Wall Street’s investment bankers and trading houses were booming. Expansion was amazing.

There transpired a physical shock to the land which proved horridly damaging and expensive beyond initial comprehension.

Financial pressures were growing on the national and private treasuries of most Americans. Demands became such that those in the private sector found themselves being “crowded out” by big government seizing credit.

Global capital demands were so extreme against the banks and other sources of credit and liquidity supply that analysts were very seriously concerned about the outcome.

The initial shock nearly paralyzed Wall Street and liquidity dried-up to the extent governments, banks and brokers were running everywhere in a serious panicky strain seeking liquidity and credit to cover debts and repay failing valuations. Shares tumbled, and fear escalated as leverage produced increasing pressures.

After some serious damage, the turbulence subsided and optimism returned. However, robust buying did not return except from those in privileged positions with extraordinary capital access.

Demands on gold had been fierce and even higher demands for this precious metal  were expected. No one could see the end or measure the depth of this catastrophe.

The American president was deeply disturbed about the financial system, out of control growth, the numbers and types of immigrants flooding into the nation and very poor living conditions for the masses. The president and others looked at Wall Street not with respect but great fear. Since the war, capitalists were judged to be “looters and self-dealing promoters.”

This president was very aggressive and took immediate steps to rein-in the companies and provide more advantage to labor. Lawsuits were filed against major industries and companies with some of them being arbitrarily resolved.

This president “sued nearly 40 corporations under the Sherman Anti-Trust Act.” This president “In a Memorial Day speech at Indianapolis, railed that the ‘predatory man of wealth’ was the primary threat to private property in the United States.” Later this president was judged to be a prime instigator creating the subsequent crash.

Liquidity strains expanded over the world spreading deeply into Europe setting-off sales of shares and other securities, coupled with a bitter angry rising of new regulations.

Events of this example were not as prolonged as our current debacle but nevertheless they were nasty enough to threaten the very foundations of stock trading and the entire financial system of the United States. What was prolonged were the economic, social and corporate abuses over years.

Read more….


Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!