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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Return to Sender who wrote (53247)	8/14/2011 11:12:57 PM
From: Sam	1 Recommendation Respond to of 95546

OT-- . It is pathetic. We are talking 1930's and 1970's kind of growth, which should be no surprise since we are promulgating 1930's and 1970's style economic policies. Having just read an interesting article on this, I have to reply here, as the view of the 1930s in the popular mind is woefully uninformed. It was actually as volatile as the stock market was last week--up and down, although obviously the ups and downs lasted for years rather than hours. Here is an excerpt from the article: By 1937 an economic recovery seemed to be in full swing, giving policy makers every reason to believe the economy was strong enough to withdraw government stimulus. Growth from 1933 to 1936 averaged a booming 9 percent a year (rivaling modern-day China’s), albeit from a very low base. The federal debt had swelled to 40 percent of gross domestic product in 1936 (from 16 percent in 1929.). Faced with strident calls from both Republicans and members of his own party to balance the federal budget, President Franklin D. Roosevelt and Congress raised income taxes, levied a Social Security tax (which preceded by several years any payments of benefits) and slashed federal spending in an effort to balance the federal budget. Income-tax revenue grew by 66 percent between 1936 and 1937 and the marginal tax rate on incomes over $4,000 nearly doubled, to 11.6 percent from an average marginal rate of 6.4 percent. (The marginal tax rate on the rich — those making over $1 million — went to 75 percent, from 59 percent.) The Federal Reserve did its part to throw the economy back into recession by tightening credit. Wholesale prices were rising in 1936, setting off inflation fears. There was concern that the Fed’s accommodative monetary policies of the 1920s had led to asset speculation that precipitated the 1929 crash and ensuing Depression. The Fed responded by increasing banks’ reserve requirements in several stages, leading to a drop in the money supply. The possible causes of the ensuing stock market plunge and steep contraction in the economy provide fodder for just about everyone in the current political debate. Republicans can point to the Roosevelt tax increases. Democrats have the spending reductions, which coincides with Mr. McElvaine’s view. “It appears clear to me that the cause was policies put into effect in 1936-37, mainly cutting spending when F.D.R. believed his re-election was secured,” he said. The Nobel-prize winning economist Milton Friedman blamed the Fed and the contraction in the money supply in his epic “Monetary History of the U.S.” And the stock market itself may have been a culprit, falling so steeply that it wiped out the wealth effect of rising prices, undermined confidence and brought back painful memories of the crash. But taken together, they suggest that policy makers moved too quickly to withdraw government support for the economy. In the current context, it’s hard to blame the Fed for being too restrictive in its monetary policy, as the Fed was in 1937. If anything, critics fault it for being too accommodating, raising many of the same issues that led the Fed to tighten in 1937. Ben S. Bernanke, the Fed chairman, is a student of Depression history and is well aware of Mr. Friedman’s monetary analysis. “He won’t make the same mistake,” Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania, said. nytimes.com