1929 Deja Vu

To the Talking Heads on Financial TV who are “looking for a bottom” in this bottomless market I suggest this book on Amazon.

Extracted from “The Great Crash: 1929″, John Kenneth Galbraith, 1955

In the autumn of 1929 the New York Stock Exchange, under roughly its present constitution, was 112 years old. During this lifetime it had seen some difficult days.

On 18 September 1873, the firm of Jay Cooke and Company failed, and, as a more or less direct result, so did fifty-seven other Stock Exchange firms in the next few weeks.

On 23 October 1907, call money rates reached one hundred and twenty-five per cent in the panic of that year.

On 16 September 1922 – the autumn months are the off-season in Wall Street – a bomb exploded in front of Morgan’s next door, killing thirty people and injuring a hundred more.

A common feature of all these earlier troubles was that, having happened, they were over. The worst was reasonably recognizable as such.

The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune.

The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.

The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. (Not only were a recorded 12,894,650 shares sold on 24 October; precisely the same number were bought.) The bargains then suffered a ruiness fall.

Even the man who waited out all of October and all of November, who saw the volumne of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenonmemon.

The ruthlessness of its liquidation was, in its own way, equally remarkable.

We’re already one year into this meltdown: History of the Meltdown…

◊◊◊◊ Now: Gold @ $888.80, Silver @ $11.57, USDX @ 81.13 ◊◊◊◊
◊◊◊◊ Now: DJIA 9,447.11

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