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To: Bill Ulrich who wrote (597)	7/2/1997 7:05:00 PM
From: Iceberg	of 1894

>do you think that if a crash were to happen today, and it was on a similar order of magnitude as '29, that we would see the drastic experiences of those days, i.e. soup lines, stacks of dollars for a loaf of bread? MrB, Good question. I can dig out some references on this if your are really interested. My understanding is that - the scenario you describe is extremely unlikely to happen. It almost can't happen, at least not in the way it did back then. One reason is that the level of sophistocation in today's financial markets (GM alluded to this in his post #598) is substantially more advanced than it was decades ago. No 10% margin requirements, as GM mentioned. Another factor that would cushion any shock to the financial markets is today's widespread use of credit cards. People can absorb transitory financial shocks by using credit their credit cards in an emergency. This would cushion the effect of any disruption in the markets that might otherwise lead to a panic. There are also derivatives and hedges of all descriptions that would counteract shocks to the system. Another factor that would cushion any shock to the financial markets is our current communications technology. Money moves around the world at the speed of light today (don't quote me on the exact speed). Reaction time to adverse developments is potentially instantaneous. Safeguards are also now built into the markets to shut down trading in the event of any major disruption. I could go on and on about the vast differences between today and the '29 crash, but just let me say, I agree with GM's obversations. I wouldn't lose any sleep over some potentially gigantic crash sending us into an irrecoverable tailspin. I think it would take an extraordinary set of highly-unlikely simultaneous events to trigger panic sufficient to re-create what caused investors to jump out of tall buildings in the late 20's. And if it did happen, I think it would be a "slow burn", not something that would happen overnight. All IMHO. Ice

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