Monday, May 11, 2015

Magnetic Reversals

Scientists tell us that our magnetic poles have reversed in the past, and that they will again. The last one occurred 780,000 years ago. The average time period between reversals is 450,000 years, but there isn’t really any pattern, it is random. We are overdue by average only.
Scientists don’t really know how the process works, and are unable to predict the next reversal. They have been telling us that the process takes hundreds or thousands of years. Recent studies have shown that it can happen in the space of weeks or months, and I suggest it can happen overnight. Perhaps rapid reversals don’t leave much evidence – perhaps rapid reversals are quite common! For example, if it was normal for a double reversal to happen quickly – where the poles return to their original position – we wouldn’t know about any historical instances.
If a reversal involves a dramatic lessening of our geomagnetic field’s strength, then basically our shields are down, and cosmic rays reaching ground-level will greatly increase. Forget about navigational problems – we could be fried.

Pigeons

Studies have shown that pigeons have receptors in their brains that are sensitive to magnetic fields, and presumably those are a reason for their great navigation skills. It is possible that many other animals also have such receptors, but they don’t utilize them as obviously. So during a reversal, the chaos in the animal world could be significant – and of course humans are animals.

Possible Triggers

Scientists have not yet worked out what causes a magnetic reversal, but recent studies of Mercury suggest that the solar wind and particles from the Sun have an effect on planetary cores. My interpretation is that a massive solar storm could be thestraw that breaks the camel’s back and trigger a reversal if the Earth is ready for one. The Electric Universe folk have also suggested that a highly-charged comet passing by could also do the trick. Or perhaps ocean currents, after being affected by climate change, are the trigger? And if climate change is caused by the Sun, then that ties in nicely with the first theory.
Another theory comes from  Rich Muller:
where “lighter components, like oxygen, sulfur, and silicon . . . rise toward the core-mantle boundary (CMB).” Accumulating like sediment on the floor of the ocean, these “fall” upward from the core onto the surface of the mantle, which is uneven like the topography of the Earth’s surface. When enough sediment collects, it tumbles like an avalanche, into the outer core, thereby cooling it.
Rare events could trigger really big avalanches at the CMB, however. When a massive asteroid or comet slammed into Earth’s surface at an oblique angle, the lower mantle would jerk sideways, shearing off whole mountains of sediment. As the sediments slide up, a downward-sinking mass of cool iron could completely disrupt large convection cells. Although variously oriented local fields within the core would remain strong, at the surface Earth’s dipole magnetic field would collapse.
And according to Gary Glatzmaier reversals are rooted in chaos theory:
The resulting three-dimensional numerical simulation of the geodynamo, run on parallel supercomputers at the Pittsburgh Supercomputing Center and the Los Alamos National Laboratory, now spans more than 300,000 years.
Our solution shows how convection in the fluid outer core is continually trying to reverse the field but that the solid inner core inhibits magnetic reversals because the field in the inner core can only change on the much longer time scale of diffusion. Only once in many attempts is a reversal successful, which is probably the reason why the times between reversals of the Earth’s field are long and randomly distributed.

Rapid Magnetic Changes

NASA loves telling is that a magnetic reversal takes thousands of years, and that we have nothing to fear. I suggest that NASA should pay more attention to scientific studies that suggest otherwise:
…a new study of ancient copper mines in southern Israel found that the strength of the magnetic field could double and then fall back down in less than 20 years. [Wired]

This lava, Bogue says, initially started to cool and then was heated again within a year as a fresh lava flow buried it. The fresh lava re-magnetized the crystals within the rock below, causing them to reorient themselves a whopping 53 degrees. At the rate the lava would have cooled, says Bogue, that would mean the magnetic field was changing direction at approximately 1 degree per week. [Wired]

Palaeomagnetic results from lava flows recording a geomagnetic polarity reversal at Steens Mountain, Oregon suggest the occurrence of brief episodes of astonishingly rapid field change ofsix degrees per day. The evidence is large, systematic variations in the direction of remanent magnetization as a function of the temperature of thermal demagnetization and of vertical position within a single flow, which are most simply explained by the hypothesis that the field was changing direction as the flow cooled. [Nature]

the spacing in time between successive flows erupted during a transition cannot be determined accurately because the errors associated with radiometric ages are typically much greater than the duration of a polarity transition. [The Magnetic Field of the Earth: Paleomagnetism, the Core, and the Deep Mantlepage 205]
The final quote suggests that we are not able to detect rapid transitions, and that estimates of durations lasting thousands of years are are a consequence of measurement limitations.

Accelerating

This is indisputable – the speed at which the magnetic north pole is moving (not necessarily in the same direction) has recently become much faster. Because this is the entirety of our studies, we don’t know what was normal prior to the 1500s…
Not only are the poles moving rapidly – the strength of our magnetic field is diminishing as well:
Rapid changes in the churning movement of Earth’s liquid outer core are weakening the magnetic field in some regions of the planet’s surface, a new study says.
“What is so surprising is that rapid, almost sudden, changes take place in the Earth’s magnetic field,” said study co-author Nils Olsen, a geophysicist at the Danish National Space Center in Copenhagen.
…The changes “may suggest the possibility of an upcoming reversal of the geomagnetic field,” said study co-author Mioara Mandea, a scientist at the German Research Centre for Geosciences in Potsdam. [National Geographic]

The Navigational Danger

Without our magnetic shield, technology will be more at risk from solar storms. The most at risk will be satellites – they are not designed to withstand solar storms in the absence of the magnetic field. So if our GPS satellites are knocked out, planes would be grounded.
Of course planes have old-school compasses as a backup, but these certainly will not be accurate during a magnetic pole shift. So even the possibility of GPS satellites failing would be enough to ground planes – otherwise they could lose navigation mid-flight.
Ships would face the same problems of course.

The Ozone Danger

It is expected that the Ozone Layer would disappear completely during a magnetic reversal (and return afterwards). See this NASA paper, Particle Events as a Possible Source of Large Ozone Loss during Magnetic Polarity Transitions.
Major solar storms during a reversal could cause ozone depletion. According toWikipedia, humans would see at least 3x more incidences of skin cancer. The effects on all living things combined is hard to predict, but could be catastrophic when everything is added together.

The Power Grid Danger

One study has nominated massive solar storms as the trigger for a magnetic reversal. Another suggests global warming is the culprit – and global warming can be caused by increased solar activity. During a reversal our shields are down, and if there is a concurrent solar storm, the situation becomes worse again. Life on Earth won’t be affected in general, and societies that don’t rely on technology will be OK as well. The most modern societies would suffer terribly if the reversal is rapid. Power grids would fail (a major solar storm can wreck them, and a magnetic reversal would be much worse). With no electricity there is no water, no sewage being pumped, no gas stations operating, no deliveries of food. Emergency services will be compromised and unable to make much of a difference. Certainly millions would die, and a billion people would face great difficulties. Only those who have sensibly prepared by storing food and water will be able to cope.

The Cosmic Ray Danger

Detailed calculations confirm that, if the Earth’s dipole field disappeared entirely (leaving the quadrupole and higher components), most of the atmosphere could be reached by high energy particles. However, the atmosphere would stop them. Instead there would be secondary radiation of 10Be or 36Cl from collisions of cosmic rays with the atmosphere. There is evidence that this occurs both during secular variation and during reversals. [Wikipedia]
Our geomagnetic field is responsible for blocking out roughly 50% of cosmic rays [Nature]… so if our “shields are down”, cosmic radiation would double. While this would lead to increased mutations, double the current rate is nothing to worry about. However, two of the possible triggers for a magnetic pole shift are a result of increases in solar activity. This could result in an increased in charged particles from the Sun reaching Earth as well. And that could spell trouble.

Source : - http://poleshift.com/magnetic-reversals

Saturday, May 9, 2015

Japan National Debt Rises To ¥1,053,357,200,000,000

What's the point of even commenting on this unambiguous Keynesian nirvana?

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Wednesday, May 6, 2015

US Economic Confidence Crashes Most Since July To Lowest Since December

US Economic Confidence Crashes Most Since July To Lowest Since December

Tyler Durden's picture



 
Despite record-er stock prices, weather excuses for current economic weakness, and The Fed promising that growth is here and everything will be awesome, it appears the message has not reached the US Consumer. Gallup's U.S. Economic Confidence Index plunged 9 points last week (the largest week-to-week drop since last July) to its lowest weekly score since December. The main driver was a collapse of hope as 'outlook' fell to November lows.


Americans' Ratings of Current Conditions, Economic Outlook Both Down
Gallup's Economic Confidence Index is the average of two components: Americans' ratings of current economic conditions and their views of whether the economy is improving or getting worse. The theoretical maximum of the index is +100, if all Americans say the economy is "excellent" or "good" and "getting better." The theoretical minimum is -100, if all Americans say the economy is "poor" and "getting worse."


For the week ending May 3, 24% of Americans said the economy is excellent or good while 29% said it is poor, resulting in a current conditions score of -5 -- down four points from the previous week and the lowest current conditions score since December. The economic outlook score saw a sharper drop of eight points, to -12 -- its lowest reading since November. The latest outlook score is the result of 42% of Americans saying the economy is getting better, and 54% saying it is getting worse.
The recent dip in Americans' economic confidence -- which is being dragged down largely by the lower economic outlook component -- is likely the culmination of a variety of economic factors.
Though stocks rebounded by last Friday, the previous week had been fraught with market losses in the Dow Jones industrial average and Standard & Poor's 500 market indexes. Meanwhile, the prices Americans were paying for gas increased in the latter half of April, with the U.S. Energy Information Administration reporting an increase of 17 cents per gallon over two weeks. Gallup has found that Americans' confidence in the economy is related to how much they pay at the pump. Additionally, the recent report that the nation's GDP grew a lackluster 0.2% in the first quarter -- a disappointing figure compared with previous quarterly growth -- may have dampened consumers' economic hopes.

Thursday, April 30, 2015

The Black Swan Your Broker Won’t Tell You About

The US Dollar as we know it, derives its value based on where it trades against a basket of other currencies. Some 56% of this basket is comprised of Euros. Because of this, moves in the Dollar and the Euro tend to be closely correlated.
So, when the ECB cut interest rates to negative in June 2014, capital began to flow aggressively away from the EU and into the US Dollar. This in turn kicked off a strong US Dollar rally.
Which in turn began to implode the $9 trillion global US Dollar carry trade.
Globally, the world is awash in borrowed money… most of it in US Dollars. The US Dollar carry trade is north of $9 trillion… literally than the economies of Germany and Japan COMBINED.
When you BORROW in US Dollars you are effectively SHORTING the US Dollar. So when the US Dollar rallies… you have to cover your SHORT or you blow up.
Below is a chart showing the inverse US Dollar (meaning that when the Dollar strengthens, the black line falls) and the Euro (blue line). Note that the two move almost lockstep together:
This situation is not over. The US Dollar carry trade did not clean itself out in the space of six months. Again, there are over $9 trillion in borrowed Dollars floating around the financial system. If the US Dollar continues to strengthen at a bare minimum 50% of this will need to be unwound.
If you’re looking for actionable investment strategies to profit from the coming collapse, we highly recommend you take out a trial subscription to our paid premium investment newsletter Private Wealth Advisory.
Private Wealth Advisory is a WEEKLY investment newsletter that tells you what stocks to buy, and what stocks to avoid to insure you see consistent gains. Our track record is rock solid with recent positions closed out with gains of 26%, 29%, and 37%… all held for six months.
In fact, we just closed two new winners of 20% and 52% last week!!!
And we’ve only closed ONE loser in the last 7 months!
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The Fed is Twice As Leveraged As Lehman Was


The 2008 Crisis was caused by too much debt/ leverage, particularly in the form of illiquid derivatives (mortgage backed securities get the most attention, but the derivatives market was well over $800 trillion at the time of the crisis).
To combat the financial crisis, the Fed did three things:
1)   Cut rates to zero.
2)   Abandon accounting standards.
3)   Engage in Quantitative Easing/ QE.
None of these policies represented “solutions” to the crisis. In fact, you couldn’t even accurately argue that they represented “containment.” What the Fed did was permit the very cancerous securities that nearly imploded the Wall Street banks to spread beyond from the private sector onto the public’s balance sheet.
You cannot cure cancer by letting it spread from one area of the body to the next. You cannot solve a termite problem by letting the termites move somewhere else in a house. So how could one argue that you could solve a financial crisis by letting the problems spread elsewhere in the financial system?
Consider mere leverage levels. Going into the 2008 crisis, the investment banks sported leverage levels in the 30-40s. Lehman was leveraged at 31 to 1. Morgan Stanley was leveraged at 30 to 1. Merrill Lynch peaked out in the low 40s.
Today, the Fed’s has $57.6 billion in capital and $4. 4 TRILLION in assets. That represents a leverage level of 75 to 1.
The Fed will argue that this leverage does not matter because it can print money to increase its leverage levels. This is technically true, but doesn’t alter the fact that the Fed has backed itself into a corner by buying up over $3.5 trillion worth of stuff… which the Fed has no idea how to exit.
Indeed, we know that Janet Yellen was “somewhat concerned about exit strategies”back in 2009 when the Fed’s balance sheet was $2 trillion or so. Today it’s more than TWICE that. One wonders just how “concerned” she is today, with the Fed’s balance sheet larger in size than the GDP foremost developed countries.
Even more absurd is the Fed’s ongoing issue with interest rates. Never before in history has the Fed kept rates at zero for 5+ years. But then again, never before has the Fed’s real taskmasters, the TBTFs, been sitting on over $180 trillion in interest rate based derivatives.
Those who shrug off these issues are overlooking the fact that the treasury dept. has ordered survival kits for employees at the TBTFs… while the New York Fed, has been boosting its satellite office in Chicago in preparation for potential market dislocations when the inevitable interest rate hike hits.
Indeed, nothing exposes the fallacies of the Fed’s policies of the last five years like its horror at the prospect of raising rates even a little bit. Rates have been effectively zero for five years. Today, the Fed is so concerned about what even ONE rate hike would do that it is actively preparing for potential systemic risk.
A second round of the great crisis is coming. The Fed didn’t fix 2008.; it simply set the stage for something even worse.
Smart investors are preparing now.
If you’re looking for actionable investment strategies to profit from the coming collapse, we highly recommend you take out a trial subscription to our paid premium investment newsletter Private Wealth Advisory.
Private Wealth Advisory is a WEEKLY investment newsletter that tells you what stocks to buy, and what stocks to avoid to insure you see consistent gains. Our track record is rock solid with recent positions closed out with gains of 26%, 29%, and 37%… all held for six months.
In fact, we just closed two new winners of 20% and 52% last week!!!
And we’ve only closed ONE loser in the last 7 months!
You can try Private Wealth Advisory for 30 days (1 month) for just $0.98 cents
If you don’t like it… just drop us a line and you won’t be charged again. Everything you received during your 30 day trial (the reports, investment ideas, etc.) are yours to keep…
To take out a $0.98 trial subscription to Private Wealth Advisory…

Best Regards
Graham Summers
Phoenix Capital Researc

Wednesday, April 29, 2015

Stock-Market Crashes Through the Ages – Part III – Early 20th Century


The 20th century could be categorized as THE century when communications took off and we started living in each other’s pockets. Lives had been ruined by war, trouble and strife. Wealth had been redistributed beyond belief. There were no longer just a few that were making the profits, but there were growing classes of people that wanted recognition.
They might not have got it until the second half of the 20th century, but the way things unraveled in the first half meant that people were not prepared to sit back and let things go into the hands of the rich landlords and the factory owners.
Rights had been acquired and they were being demanded. Women, workers, whoever they were, everybody wanted a piece of the cake. It wasn’t until the second half of the twentieth century that dabbling and buying shares, thinking you could strike it lucky and make a million, was going to become part and parcel of most people’s lives. Maybe that’s the whole problem. People betting on investments as if that was nothing more than a couple of whippets running round the race track on a Saturday afternoon, bag of chips in one hand and a pint of ale in the other. Flat cap and everything.
The markets don’t act like that. But, we allowed people to think that they could make a quick million bucks by investing what they had hidden under the mattresses for decades. Why did they need to worry anyhow, social security had been invented, we were looking after the destitute and not locking them behind the gates of Victorian workhouses and mental asylums. There was a safety net that had been created in society by the advent of the National Health Services (1948 in the UK) that we pride ourselves for inventing or the retirement schemes that we say will make pensioners’ lives better (Dankeschön, Mr. Bismarck).
As time went on in the 19th century the number of stock-market crashes increased.
That number increased even more in the 20th century. Information was accessible. Telecommunication technology was entering our lives as a daily piece of equipment. I could start to be absent and yet present at the same time. I didn’t have to be literally somewhere physically; I could be there almost in person via the transmission of my voice or an image. It was reserved for the elite at the start, but as the century progressed, it became more and more democratized. Later in the century, it would be possible to be completely present, and yet physically absent and I would be able to do it from the comfort of my own living room. Education was becoming more and more widespread. Newspapers were being read even by those that had not been able to read in the previous century (total circulation was at over 27 million in 1920 and households had papers delivered both in the morning and in the evening). Access to information meant the learning of events almost in real-time.
Stock Markets: Interconnected
Stock Markets: Interconnected
The 20th century saw an explosion in the number of stock market crashes. Here are a few of them. The ones that bit us from behind as we scrambled out of the markets sometimes to be left without a cent. One thing about it all was that the dream of the self-made man, the entrepreneur, the idea of striking it rich had really come into its own in this century! This is just the first half of the 20th century!
1. Panic of 1901
We entered the 20th century with a panic. The turn of the century has always been equated with great change, either good or bad. The Panic of 1901 was due to some extent to the fight for the control of the Northern Pacific Railway.
Stock Market: Edward Henry Harriman
Stock Market: Edward Henry Harriman
  • The Northern Pacific was a transcontinental railway (1864-1970).
  • Edward Henry Harriman who was the Chairman of Union Pacific attempted at all costs to monopolize the railway sector.
  • He attempted to buy stock en masse belonging to Northern Pacific Railway to take control of the company.
  • The NYSE was said to look more like a football field as the panic started and prices began to fall as people started to sell in sheer panic.
  • The market crashed and brought down with it the majority of US railway companies (Burlington and Missouri Pacific, for example).
  • The only one that was left still standing was the Northern Pacific. The run on their shares by Harriman had meant that people were selling all other shares like they were going out of fashion and attempting to buy into Northern Pacific.
  • One company’s loss became another companies gain and Northern Pacific increased by 16.5 points.
The crash spread to other companies. It brought the country into recession and was the first stock-market crash of the 20th century.
2. Panic of 1907
The Panic of 1907, is the Bankers’ Panic. The NYSE dropped by 50%. The reasons? Lack of confidence in the market and retraction of market liquidity by NY banks. The banks had lent out too much money in an attempt to purchase the United Copper Company and this caused loss of confidence and bank runs ensued.
  • The US had no central bank that would act as a lender of last resort at the time. President Andrew Jackson had let the charter of the Second Bank of the United States lapse in 1836. Money supplies fluctuated only in line with agricultural cycles. Money left NY in the autumn to purchase harvests and the only thing that made that money come back was a raise in interest rates.
  • J.P. Morgan shored up the banks and bailed them out; otherwise there might have been an even worse situation.
  • There was an attempt to corner United Copper, by purchasing large quantities of the stock of the company in a bid to be able to manipulate the price of copper afterwards.
  • Shares rose in the beginning from $39 to $52 per share. They reached $60 before they began to collapse.
  • Within just a few days, they ended up at $10.
J.P. Morgan had managed to shore up the banks for a while as they were suffering from lack of liquidity, but he was unable to do so indefinitely. The bankers tried to call a press meeting to persuade the papers that they were controlling everything. Even the city of New York needed $20 million otherwise it would go bankrupt.
Morgan said “if people will keep their money in the banks, everything will be all right”.
The banks were not willing to make loans (short-term) to brokers to carry out daily trading, worried that the stock would fall even more. Prices fell as a consequence on October 24th 1907. The President of the NYSE requested that the stock exchange be closed early to halt more losses. Closing the NYSE would mean even greater loss of confidence. So, J. P. Morgan decided to call the banks to a meeting. He requested $25 million and it was raised in 10 minutes flat! Not bad, really! But, it didn’t stop the free-fall.
  • 1907 caused the highest number of bankruptcies to that date in the US.
  • Production was estimated to have fallen by 11%.
  • Imports were down by 26%.
  • Even immigration dropped. The US was no longer the land of plenty (fall from 1.2 million immigrants to just ¾ of a million in one year).
  • Unemployment rose to over 8%, whereas it had been at under 3%.
3. Wall Street Crash 1929
Probably the most famous stock market crash of the entire history of the economy (apart from the one that we are living right now). The Wall Street Crash is also known as Black Tuesday. Since this date we have used Black days throughout our stock market crashes (Black Monday in 1987, orBlack Wednesday in 1992, for example).
Just like in the period that preceded the stock-market crash of 2008, there was a time of wealth, success, making money, sandwiched in between World War I and just before World War II. The roaring twenties. Innovation, dynamism, liberation, freedom.
Motion pictures abounded, the automobile became commonplace, electricity entered the homes of the middle-classes. Culture and lifestyles changed drastically. Everything became possible. Modernity had arrived. It’s strange that the period that preceded the stock market crashes of the 21st century was also a time of great change. We had invented and democratized communications to a point where we could carry it around in our pockets. We had changed the way we accessed information and we had it at our finger tips like no other generation had had before via Internet.
Speculation became the order of the day in 1929. The world investors were on a roll and it wasn’t going to end. Money could be had and it was short-time financial gain that was important. Making money and making it fast. But, even though we might not always apply the same knowledge today, what goes up must come down.
  • On March 25th 1929, it began with a mini-crash. This was only an omen of what was to come.
  • The National City Bank tried to shore up the losses by injecting $25 million into the market, stopping is descent into hell. But, it was all temporary.
  • The USA was showing signs of waning economically. The steel market was on the slippery slope and construction wasn’t anything more than just sluggish. The peak had been reached.
  • There were already 20 million cars on the roads, for example in 1929 in the US. Automakers sold4.5 million cars in the US market alone in that year before the crash.
  • General Motors had a net profit of $248 million. But, the peak had been reached, 1929 saw a dramatic drop. It was only selling 1/3 of the cars it had been selling prior to the crash on the domestic market. It took ten years to come back to the same level of profit and the number of car sales as in the period before the crash of 1929.
  • Although, it has to be said, even then, it was the shareholders that counted. The shareholders got dividends every single year from GM between 1929 and 1939.
The roaring twenties had roared on from 1920 until 1929. The Dow Jones Industrial Average had been multiplied by ten. Some even said that it was a “permanently high plateau” in September 1929. Very few are able to predict what the market will do, but nobody today, at least, would suggest for a second that we are going to be on a permanent high. That lesson has been heard loud and clear. The Dow jones reached its peak at 38.17 on September 3rd 1929.
The London Stock Exchanged collapsed when a British investor (Clarence Hatry) became the most hated man in the UK when he was jailed for fraud. Hatry was a London insurance clerk that had amassed immense wealth by profiteering during WWI. He was about to merge his companies into a $40-million affair called the United Steel Companies. But, the Stock Exchange Committee discovered that he had been borrowing ($1 million) without anything to back it up.
  • It was on October 24th 1929 that Black Thursday occurred. The NYSE plummeted 11%. Bankers managed to stop the landslide and purchase large quantities of stock well above the market price in blue-chip companies. It halted the free-fall. But, temporarily. The NYSE closed at -6.38 points.
  • The newspapers managed to report the news and Monday 28th became known as Black Monday.
  • Black Monday saw the DJIA spiral out of control. The US market lost 12.8% as trading opened up on the NYSE. It plummeted 38.33 points and closed at 260.64.
  • Black Tuesday, October 29th had 16 million shares being traded. The DJIA fell 30.57 points, to just 23.07. It lost 11.7%. In three days of trading the DJIA had lost over 30%.
What went horribly wrong? Speculation and certainly the belief that things would never end. Brokers were lending 2/3 of the face value of stocks that they were purchasing and that meant that in 1929 there was more money that was on loan than the entire currency in circulation in the USA ($8.5 billion). That smacks of something familiar when we think about the sub-prime crisis. The belief that housing prices could never fall and that we would always be on an upper, lending money left, right and center.
One other thing that we learned is that our worlds were interconnected. Falls in London, Tokyo and New York happened at the speed of light in 1929. What one did the other followed suit with. Only 16% of the US population had money invested in the stock market in 1929, but it was probably those that had the companies that employed the people that worked. The knock-on effect was enormous.
But people like Joseph Schumpeter and Nikolai Kondratieff believed through their economic-cycle theories looking at the way the market reacted that the 1929 crash was just acceleration in the cycle and it enabled moving towards the next one.
Stock Market: Nikolai Kondratieff
Stock Market: Nikolai Kondratieff
Stock Market: Joseph Schumpeter
Stock Market: Joseph Schumpeter

4. Recession 1937
Spring 1937 saw the US economy get back on its feet and the levels of economic activity were similar to pre-1929 ones. Unemployment was still relatively high, but that was nothing compared to the vertiginous heights of 1933 (25%!). In 1937 things went haywire for just over a year causing an economic recession in the US, with a knock-on effect in the rest of the world.
  • Unemployment was at 14.3% in 1937. It increased to 19%.
  • Manufacturing output fell by 37%.
  • Spending decreased and incomes fell by 15%.
  • GDP fell by 11%.
Economists fail to agree on the reasons (nothing surprising) as to the economic recession of 1937. Depends where you stand. If you are a Keynesian, you will believe that federal spending cuts brought about the recession, coupled with increased taxation. If you are a Milton-Friedman  man then it’s the money supply and the Federal Reserve’s tightening of it that is the instigator.
The 1937 recession was called the ‘Recession within the Depression’.

Conclusions

Some might say that the benefits of what we have gained over the past century are far better than the relatively few times that we had to wade through the nightmares on Wall Street and the Stock Market crashes that hit us full in the face at times.
Some might say that it was worth it as the market generated the wealth on which we prospered in the 20th century. But, they also resulted in depression, recessions and slumps. Recessions that brought about the rise to power of some of the worst dictators that the world had seen.
Recessions that brought about a fight for greed and a closing in upon ourselves in protectionist fear. But, the 1st half the of the century was nothing compared to the stock market crashes that were waiting in store for us once we would become really industrially connected and inter-connected. When we went global, when we reduced our barriers, when we travelled from point A to point B at supersonic speed, and when one push of a fat finger on a keyboard sent millions across the other side of the planet.
Stock markets were going to run in the second half of the 20th century at supersonic, virtual speed. We would enter the Big-Bang world of deregulation of the financial markets, abolishing fixed commission charges. But, behind the big bang was a black hole…