David another three major differences between now and 1929 is that then, margin requirements were 10%(check this one, since I see some people are saying margins were at 40%, the mandated margin, I believe was much lower), for the fully margined, a 10% decline was a catastrophe. A second difference, the flattening of the economy followed by the crash produced a contraction of the economy with major contraction of final demand, today we have a cushion to end demand through the "security blanket". A third difference is that money is now being "created" on a world wide basis, then the feds stood aside on the monetary front, now they have shown time and again that they will bring in the "crash brigades" to avoid major disruptions in the financial markets.
Last but not least, another parallel, the government was running budget suprluses before the decline, this mean that money was being drained from the economy. Contrary to widely held opinions, surpluses are not good for the market. Balanced budgets or just marginal surpluses seems to be ideal.
Zeev |
