I just realized we have a sudden, pressing need to talk to more people like this, and ask them the question above, “what did you do for survival?” It took gDepression 1.0 a few years to ramp up. We are again witnessing something very like, but also in some ways worse, that very ramp up. The very same interventionist monetary policies that didn’t work very well back then aren’t working very will right now. The ONLY defense for rather foolishly repeating the mistakes of the past is that the mistakes of the past weren’t made quickly and expansively enough to fix things the first time around.
My great grandma rented her basement to bootleggers in gD 1.0, and she siphoned some to sell on the side. Smart woman. Single mother of 5, Italian immigrant. She and her kids made it through but the scars were still VERY evident in her children (my grandfather and great aunts and uncles) until their deaths, as late as 2007. My grandpa, the youngest, was 12 when the market crashed, and they were already poor as church mice. Only a miracle and the fact that the 3 oldest were already out of highschool and able to work kept them in a house and out of a shanty town. Great grandma got $300 back out of the $3000 she had been saving to buy a house with, because it was more important to eat than leave the money in the bank for the possibility of getting it all back later.
Now, the government protects our money with FDIC guarantees, which just recently got authorization for up to $500 billion or so in loans from the .gov, even though last year they said everything was fine and bristled with anger when it was suggested they wouldn’t be able to cope with the coming crisis. Guess they were wrong, though they’re still trying to dance the line, say it’s “just in case” instead of scarily, completely fucking necessary.
If everyone tried to pull their dollars out of the banking system right now, the whole system would collapse overnight. There isn’t enough money available to cover everything Americans have on deposit (something like $6 trillion insured and uninsured)… banks only have a fraction of a trillion dollars available for that $6 trillion supposedly on-deposit. But that’s not the scary part, since only a few people have gone mattress hiding yet. No, the scarier part is the debt, something like $55 trillion dollars, more than the GDP now that that’s shrunk. That’s almost a 10:1 debt-to-cash leverage the American public is carrying. I’m not even sure that includes the national debt. And Merrill Lynch is guessing that American net worth is going to drop another $7 trillion with the already $13 trillion it’s dropped so far (from falling asset and stock prices).
There are two things going for us right now: the resilience of the human spirit and the advances of science that regularly turn science fiction into fact, and are exponentially accelerating. The poor of today have it much better than the poor of gD 1.0, as their complaints center around having to walk a mile to a convenience store to buy some water, and having to lie to their adult children during the phone calls on holidays. On the other hand, these newly homeless lining up for homeless shelters and charity kitchens are today’s soup lines.
We think it’s bad, with the foreclosures, but our market only really started tanking a year ago or so. In 1933, farms were still being foreclosed, eveything-must-be-sold style. Four years after the market had crashed, barely a year after the market hit bottom at -89% plus. We’re currently only a year and a half into the Great Millennial Fuckup, so look for another year and a half of faltering markets and probable 35% (that’s from on-peak, not from-today) drop in real asset prices and those markets. Dow 1000? S&P 100? Not just possible, very probable at this stage.
I hope I am wrong. I hoped I was wrong when I called for Dow 8000, 7000 at worst last April. Great Einstein, I’m starting to scare myself.
Tags: depression 2.0, gDepression 1.0