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To: Ilaine who wrote (113444)	7/19/2001 1:16:27 PM
From: PMG	Respond to of 436258

In psychology you have phases of so called progression and regression. Phases of regression come up when you have to take a breath to integrate what you have learned. People are more tired then and feel a little blue or slightly "depressed" to use that word. Otherwise the psychic system would sort of disintegrate. So maybe there is counterpart in society and thus economy. The Internet and globalisation has changed so much that 99% don't really understand anymore what all the change expresses. E. g. don't really know what the future of their business should be. So also economy needs step back and re-think where it should be heading... PMG

To: Ilaine who wrote (113444)	7/19/2001 1:24:22 PM
From: pater tenebrarum	Read Replies (3) \| Respond to of 436258

well, first of all, it did NOT happen concurrently worldwide, as Japans K-wave is for instance removed from that of the US by approximately 10 years. Japan's depression began in 1919. Germany's depression began in the early 20's too, the Weimar Republic hyperinflation reached its peak in '23. the explanation for the depression is this: during the disinflationary boom of the 1920's, the Fed left monetary policy too loose for too long a time. this led to over- and malinvestment on a grand scale, and the speculative bubble in the stock market. the financial economy became divorced from the real economy, as the proportion of fresh credit being diverted to paper speculation became ever larger compared to business loans (almost exactly what happened during the 90's too). another reason was the displacement of rural industries through new technologies. for instance, everything to do with the horse went down the drain (a HUGE industry before the advent of the automobile). the deflation of the k-winter hit agricultural commodities first, so the rural areas were in recession already a while before the stock market peak. but the main reason remains the credit cycle - then as now, hot money flows destabilized first emerging markets (Peru & Argentina went into crisis mode (i.e. default) in the '20's before the US economic downturn began too, for example) and then the industrialized nations. both the Fed and the Bank of England can be blamed, as both engaged in massive monetary inflation during the boom. it was not needed by commerce, and so financed speculation. from '22 to '29, data from reporting banks show that holdings of govt. securities increased by 26%, 'other securities' by 42%, and loans against securities by 59%. commercial loans increased by only 21%. similar to today, mortgage loans also increased vastly, by about 550% between 1918 and '27. in a nutshell, it was the combination of failed central bank policies during the boom, and the advent of the K-winter that are responsible for the depression. in addition to that, policies enacted when the depression was already underway deepened and lengthened it...e.g. the infamous Smooth-Hawley tariff act and the failed public works policies by FDR. the Fed had of course no chance to avert the winter season of the K-wave, but it would not have turned into as bad a depression had it not financed the extreme speculative boom during the disinflationary autumn season. as for today, we have once again Japan's K-cycle about ten years ahead of the US K-cycle, and basically have all the very same pre-conditions in place that could be found at the advent of the 30's K-winter. the curb market (Nasdaq) has already collapsed, just as in the 20's shortly before the BK...the disparity between financial and real economy is even larger, somewhat balanced out though with a more sophisticated system of checks and balances and better economic intelligence (although we can probably exclude data emanating from the BLS from this). and we just had the biggest malinvestment bonanza in history in the tech and telecom sectors. we even have a stand-in for Hoover, it's eerie...