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The Eye of the Storm?
Old 11-04-2009, 01:40 PM   #1
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The Eye of the Storm?

Sen. Ron Paul's take on the "recovery." He makes some excellent, though disturbing, points.

"A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble."

Be Prepared for the Worst - Forbes.com
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Old 11-04-2009, 02:46 PM   #2
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I like Ron Paul, but I don't think he has any way to know it's currently a "false recovery" or like 1930. For all we know it could be more like 1938. The difference is that we don't have a world war (we hope) to pull us out of it and provide three decades of unsustainable growth.

He may be right, and he was one of the few people willing to tell the emperor he was naked years ago.

And although his comment about the DJIA is nominally true, he makes the same mistake of not factoring in reinvested dividends, which would have returned the Dow to 1929 levels by 1944, not 1954.
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Old 11-04-2009, 02:55 PM   #3
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Ron Paul always strikes me as a little bit off his rocker. In this case, I don't think his facts are exactly straight either. The money supply actually shrunk by one third between 1929 and 1932 as the central bank tried to defend the dollar (something those from Mr. Paul's school of thought are arguing for today). Large institutions were allowed to fail, like the NY Bank of the United States in 1930, that touched off a widespread run on the financial system. Meanwhile, Keynes' "General Theory of Employment, Interest and Money", which provides the theoretical underpinnings for "the stimulus" wasn't even published until 1936. Roosevelt's "New Deal" didn't start until the middle of 1933.

If anything I'd say the Great Depression is a bit more of a refutation of Ron Paul's prescription than it is a reflection of what's going on now.

Here's Wikipedia's summary of the early response to the depression . . .

Quote:
Hoover made attempts to stop "the downward spiral" of the Great Depression by hoping that the private sector would recover largely through its own volition. His policies, however, had little or no effect. As the economy quickly deteriorated in the early years of the Great Depression, Hoover declined to pursue legislative relief, believing that it would make people dependent on the federal government. Instead, he organized a number of voluntary measures with businesses, encouraged state and local government responses, and accelerated federal building projects. Only toward the end of his term [in 1932] did he support a series of legislative solutions.
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Old 11-04-2009, 03:07 PM   #4
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Originally Posted by ziggy29 View Post

And although his comment about the DJIA is nominally true, he makes the same mistake of not factoring in reinvested dividends, which would have returned the Dow to 1929 levels by 1944, not 1954.
Even better than that according to this:

Important to draw right lessons from 1929 crash MarketWatch First Take - MarketWatch
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Old 11-04-2009, 03:28 PM   #5
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Yes, yes, its all true! Stockpile ammunition, hide your kids, eat your pets and vote for Ron Paul!!!




Guy has more than a few screws loose. He is in good company on Capitol Hill.
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Old 11-04-2009, 04:12 PM   #6
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Yes, yes, its all true! Stockpile ammunition, hide your kids, eat your pets and vote for Ron Paul!!!




Guy has more than a few screws loose. He is in good company on Capitol Hill.
I'm not eating my new buddy.



But I am much more conservative in my investments. So a good signal for everyone else to be more aggressive.
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Old 11-04-2009, 04:16 PM   #7
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Hyperbole, of course. Any Ron Paul True Believer probably has a few years of food already stockpiled for the Tribulations.

Beautiful pooch, Dawg. And he probably leaves behind stuff on the sidewalk that is more realistic than ol' Ron.
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Old 11-04-2009, 04:26 PM   #8
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Don't hold back on us now brewer....btw, my cats are too old and tough...even for tamales.
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Old 11-04-2009, 05:58 PM   #9
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Anything gets soft if you boil it long enough.
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