The day that Richard Withney (the president of the NY stock exchange) walked out of the offices of JP Morgan and walked across to disallowed with $250 million of bankers money in hand and started buying up blue chip stocks to stop the crash on the NY stock exchange. Watch the video from 29min 50sec. It worked (for a very short while) just like the Fed bailing out the investment grade bond market and everything else on the 24 March 2020, will work for a while. Problem was that in 1929 it didn't fix the problems the initial crash had created. Credit dried up and businesses started shutting and production in the real economy fell and that was without the externality of our current government reactions to stopping the spread of the corona virus by shutting down the economy. The same will happen again but from a worse starting point.
By 1931 the economy in the US was still flagging and over two thousand banks failed which eventually led to all banks in the US closing as people started running on them. Roosevelt (a democrat) won a landslide election in 1932 and started the task of fixing the system and restoring confidence calling the "bank holiday" while he recapitalised the banks. In his inauguration speech large crowds cheered these words "there must be strict supervision of all banking and credit and investments...there must be an end to speculation with others peoples money" (51 min:45 secs). We haven't reached that point yet but we will. When I read through posts on this site all I see is people who aren't seeing the bigger picture, haven't learnt from history and continue to speculate in what is still the biggest asset bubble in history, which still has a very long way to fall. The documentary below attempts to give faces to the multitudes of faceless people who lost everything by telling the stories of a few individuals who lost everything in the market crash and depression that started in 1929 and led to WW2.
As mentioned in previous posts the banks have only been stress tested with assumptions of a 5 to 7% GDP decline. We are going to see more than that so the next stage of the crisis comes when the bank failures come to light. They have clearly been failing since Sept last year when the Fed started bailing out the repo market so their strength going into the crisis wasn't there in the first place, despite what people in the financial media might write. Hopefully the trade and currency wars don't become to severe and we aren't led to another real war as the madness spreads from the markets to street and then to wildly extreme political ideas that can be fermented by megalomaniacs under the weight of increasing poverty and despair.
In 1929 just before the market crashed Hoover, the Republican president at the time, was claiming that America had reached its highest level of comfort and prosperity (22mins 48sec). What is real is not.
The real delight I found in the story was the fate of Richard Withney the man that had very temporarily restored confidence back into the stock market by taking the bankers money and buying up stocks. Withney lost all the money of his own and then started borrowing from his brother and when that didn't work he began stealing from costumers and ended up in jail doing time. That was the president of the NY stock exchange!! The more the system changes the more it stays the same. It has taken 88years to undo the work of Roosevelt and come full circle.Esh
