posted on Nov, 11 2012 @ 03:19 AM
I would not rule out a market crash in 2012 at all, although by no means is it inevitable in my opinion. Looking back on the crash of 29', there was
not just one cause, but several. Increased tariffs on imported goods caused some to lose their jobs as trade was slowed significantly. Britain leaving
the gold standard around that time also scared some people. Around this time there was also a mass rise in "consumerism," as new inventions found
their way to the market. What were sometimes considered "luxury" goods at the time are things we take for granted today.
This rise in consumers purchasing goods led to many instances of credit being extended. People were investing relatively heavily in the stock market,
mainly due to the ingenuity, or cruelty, of investment bankers, depending on how you view the issue. Investors were allowed to buy on what is called
the margin. Effectively people were only paying something on the order of 10 or 15% of the full value of a stock. And this enticed people.
These tactics used all over the nation caused market values to soar, but these figures were inflated, very much like the recent mortgage values,
although I do not think that bankers back then were taking it to the extreme that we saw with the collapse of the housing bubble, with the derivatives
and all, selling debt like it was a sure-fire asset; but knowing that they were highly overvalued.
So there were all these people investing in the stock market, and many of them were borrowing money to turn around and invest. It is obvious what
problems this can lead to if the market takes a downward turn, which it did. Also, many firms were borrowing money themselves, either to invest, or to
lend to small-time investors, who then would turn around and invest in the market.
What you have to realize is that at the time the market was not viewed in the same way as today. Before the crash occurred, the stock market was
viewed as almost a sure thing. This is why people invested so confidently. And then when things started turning south, all of these investors started
selling in an attempt to cut their losses. It really was like the new gold rush at that time. And this optimism is what caused the speculative bubble
in a way, because no one thought anything truly bad was going to happen. But this optimism also caused the market to be based on speculation, instead
of real market economics. So the stock values were not really what they were listed, but rather much lower.
There were other causes as well, such as the agriculture business downturn, the difference between production and consumption, etc., but the things I
listed are what is important, because these "bubbles" were not limited to the crash of 1929. There have been others as well, such as the tech
bubble, or dot com bubble, the real estate bubble, which happened recently, plus others. Based on this analysis of the huge crash that occurred back
in the day, and comparing it to what is going on now, I do not think that there are all that many similarities.
This doesn't mean a crash will not occur this year, but the entire viewpoint of people now and people then towards the market is quite different. But
the main similarity is the greed of brokerage firms and large corporations, such as banks, and this greed is what is more prevalent in our day, and
this greed is what causes lobbyists and economic shills within the government to pass laws that favor big business. Wall Street has basically been the
wild west, with no real law preventing average people from being taken advantage of.
Also, nowadays it seems that there are more of these people driven by money who also have more knowledge when it comes to "controlling" the market
in their favor. For instance, the soaring prices of derivatives from mortgage loans that made so many people even richer, despite the fact they were
virtually worthless by comparison. So all in all, I think that "greed" exhibited by those who are major players in business and government, the
people who should be the most responsible since some of them know what is really going on behind the scenes, are likely to trigger another crash. I do
not know if it will be this year, but it is very possible. When the economic arm of the government is passing laws and taking steps to benefit firms
like Goldman Sachs, instead of the American people, what else can happen in the end except a huge crash?