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REMEMBERING BLACK THURSDAY

Posted by Tim Bryce on October 24, 2012

BRYCE ON THE ECONOMY

– And the lessons it provides pertaining to today’s economy.

(Click for AUDIO VERSION)

To use this segment in a Radio broadcast or Podcast, send TIM a request.

Today we commemorate an important day in history, namely “Black Thursday,” which occurred on October 24, 1929, just 83 years ago.

Today, the world is still reeling from “The Great Recession,” which put our global economy into a tailspin thereby affecting not just the United States, but all of the countries of the world. Blame can be placed on a compendium of variables, such as the credit boom, bad banking policies, bursting the real estate bubble, etc. This led to a global tsunami of unemployment, and a significant drop in international trade. There were few people who were unaffected by the recession. Business as we knew it, was gone, and remains so. As devastating as it was though, it paled in comparison to the grand daddy of economic meltdowns, “The Great Depression.”

On October 24th, the stock market lost 11% of its value at the opening bell on very heavy trading. Nothing this dramatic had happened before thereby earning the nickname “Black Thursday.” Wall Street bankers sought a way to stop the slide and opted to buy U.S. Steel and several other Blue Chip stocks well above their current market value, a trick used to stop the panic of 1907. Indeed, it halted the slide, at least until the following Monday (“Black Monday”) when investors opted out of the market in record numbers. Despite additional attempts to prop up stock prices, the market plummeted thereby triggering a worldwide depression.

The Great Depression lasted for over ten years. Companies closed their doors, unemployment was rampant, soup lines grew, and investors committed suicide by jumping out of buildings financially ruined. Our lifestyle changed radically, from prosperous to desperate. In the average household, all members of the family were expected to cut costs and chip in to pay bills, regardless of their age. No job was considered insignificant or taken for granted. A High School diploma was a prized possession as many people had to drop out of school to earn a wage to support their family. A lot of people were lucky to earn nothing more than a Junior High School diploma (8th grade). The Great Depression sent shock waves through our very sinew, leaving nobody unaffected. You learned to improvise, adapt, and hustle in order to survive.

Because of its scope and dramatic human impact, The Great Depression made The Great Recession seem like child’s play. There was little government support, certainly nothing like the entitlements known today, such as Food Stamps which weren’t offered until the 1960’s. Soup kitchens sprung up to feed the needy, sponsored by churches and other institutions.

Despite numerous attempts by the government to snap the country out of the depression, it was the industrialization of World War II that brought us out of it. Since then, safeguards have been installed in the stock markets to help avoid another major crash, but they are certainly not foolproof as we have seen with many slippages over the years, most recently:

DATE DROPPED PERCENT
2011-08-08 -634.76 -5.55%
2011-08-10 -519.83 -4.62%
2011-08-04 -512.76 -4.31%

Others within the last 25 years:

DATE DROPPED PERCENT
1987-10-19 -508.00 -22.61%
2008-10-15 -733.08 -7.87%
2008-12-01 -679.95 -7.70%
2008-10-09 -678.91 -7.33%
1997-10-27 -554.26 -7.18%
2001-09-17 -684.81 -7.13%
2008-09-29 -777.68 -6.98%

The big question though is whether it is possible to experience another depression on the scale of the 1920’s. The answer obviously is, Yes, although politicians and economists will resist the use of the word as it is considered political suicide. If the country’s debt rises above the Gross Domestic Product, as it obviously will, the dollar will weaken, as will stocks, thereby triggering a collapse. Another variable is the weakened European economy which affects our own. If Europe collapses, there is a good chance they will drag us down with them.

And when the money is gone, businesses will close, unemployment will rise to record levels, and our lifestyles will once again be dramatically altered. Some would argue this is just the tonic America needs to mend its economic recklessness.

The Great Depression may seem like a distant memory, particularly to young people voting in the upcoming elections for the first time, but we should all pay heed to the lessons it conveys. If you had trouble surviving the recent Great Recession, try to remember the Great Depression dwarfed it. We are by no means out of the woods yet.

Keep the Faith!

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim’s columns, see:
timbryce.com

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Copyright © 2012 by Tim Bryce. All rights reserved.

 

NEXT UP:  WHERE DOES YOUR TIME GO? – How it adds up.

Listen to Tim on WJTN-AM (News Talk 1240) “The Town Square” with host John Siggins (Mondays, Wednesdays, Fridays, (12:30-3:00pm).

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9 Responses to “REMEMBERING BLACK THURSDAY”

  1. Tim Bryce said

    A J.S. of Skidway Lake, Michigan wrote…

    “I was raised by parents who lived through the depression. Both of my parents’ families were luckier than most as both grandfathers had jobs. They shared food and coal with other families, fixed things and became hoarders. I wonder if we will handle a Depression as well as they did? I’ve already got the hoarding thing down. I heard the words “Keep that. You never know when someone might need it. We paid good money for that.” IS there bad money?

    Tim, I worry that we’re too spoiled to learn generosity. Crime is already on the increase, but I worry that some folks would rather rob or steal than work for a meal.”

    Like

  2. Tim Bryce said

    An A.M. of Indiana wrote…

    ” Wow I was feeling great till I read your article. You see I voted yesterday and the power of one vote should have solved the outstanding problem? Now guess Ill wait and hear what Donald Trump has to say to remedy your doom n gloom of 10.24.12.?.

    We are a nation of sheep and its unrealistic to see any light for the future with one’s head up their glut amass maximums.”

    Like

  3. Tim Bryce said

    An O.B. of Macon, Georgia wrote…

    “Although true, I am afraid this is a warning that few will heed. Many of our young during the great depression were aware of the politics and the problem although not in a position to do anything about it. Today I would venture that a full 80% of our young folks of voting age know little if anything of the politics of the day and even more have not a clue. According to a reporter that covered both the riots in Detroit and London. The young seek,,Where is my next meal coming from, when do I get my next sex and who is going to be my entertainment. clearly in that order. Even those who have just joined the work force have little if any loyalty, or business ethics in regards to the company they work for,

    Acting as a HR for a friend of mine I interviewed 4 people today all below age of 25, Not a one had any idea of an eight hour work day, How long smoke breaks should be or the use of a cell phone on the job, 3 of the 4 said if they had to turn their cell phones off while on the job, they did not need to work there. Two of them thought the company should tailor the working hour to suit their schedules.

    Got 3 tomorrow to do, I am not sure I want to hear the answers to my questions. and all I am looking for is somebody that is willing to be trained and had some sense of working without direct supervision. Wish me luck.”

    Like

  4. Tim Bryce said

    A K.E. of Sacramento, California wrote…

    “Yes, we are not out of the woods… Great post Tim!”

    Like

  5. Tim Bryce said

    An L.M. of Philadelphia, Pennsylvania wrote…

    “My Dad lost all his savings in his bank account, no FDIC. Men were selling apples on street corners. They like to give credit to FDR for bring us out of this depression but the reality is it was WWII. We were it after the war, we had “No competition” Europe was in ruins, Japan etc. Today we can’t compete China is slices us up into little pieces!”

    Like

  6. Tim Bryce said

    An S.S. of Palm Harbor, Florida wrote…

    “Powerful.”

    Like

  7. Tim Bryce said

    A U.V. of Largo, Florida wrote…

    “Terrific article. So much for globalization – now we all so much depend on the other economies, that it’ll be like dominoes. I sincerely hope not.”

    Like

  8. crabbitat said

    Great post as always. What worries me is that between 1929 and 1939, when the war economy started to be felt in the US there were 10 years, compounded by droubt in the dust belt that only began to be truly felt years into the depression.

    The laisez faire political solutions of Coolage and Hoover were swept aside in favour of the teachings of J. M. Kaynes, which would inform the New Deal and subsequent administrations up to Reagan.

    We are only five years into this recession and just as it took the outside teachings of a british economist to inform the Roosevelt response so it took a European war to inform the American recovery.

    With potentially five years to go in the great recession, with europe struggling beneith the weight of the debt of its southern nations and the chinese economic engine of globalism stuttering in responce to the decline in European Consumerism (there are twice as many European consumers as Americans), there remains the real possibility of further decline in the world economy.

    I like to stay optomistic, but the US elections may not even be important in this regard.

    Three years ago I met an elderly gent whose politics had been affected by the Depression and his own fathers need to leave home and work felling trees in a neighbouring State for three years. His live long response to his fathers indignity, had been to become a Roosevelt Democrat.

    There is no way of telling how American Politics will be affected by an unevenly burdensome recession, especially if it gets worse between 2012 and 2016. Especially when the politics in your great country are so polarised.

    Like

  9. Tim Bryce said

    A J.D. of Columbus, Ohio wrote…

    “Excellent Post– My Grandmother tells me stories of the Great Depression and her generation, more than subsequent ones, learned to live within their means. “

    Like

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