1929 MovieTone News on Stock Market Crash
The Country is Fundamentally Sound; 'Don't Panic, Stocks are Safe!'
Economist Professor Irving Fischer explains that the stock market crashed due to high expectations- not high stock prices. Too many speculators were playing the stocks with borrowed money, resulting in a run on the banks. 80 years later, the banks are speculating with borrowed money and investors are running away from them.
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Did You Ever Lose a Million Bucks?
Take a tip from Margaret Shotwell who dispenses advice after losing 1 million dollars in the Wall Street stock market crash on Black Friday, October 28, 1929. Her only possessions are her piano and chinchilla fur
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Regulation Will Destroy Capitalism
Richard Whitney, President of the New York Stock Exchange, warns of the risks both to country and to capitalism posed by government regulators in the form of the the National Securities Exchange Act. This almost four full years before he was sent to Sing Sing Prison for embezzlement
Monday, October 13, 2008 | 12:30 AM | Permalink
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Why don't you post some old movies of Yeltsin and Gorbachev going at it before the collapse of the Soviet Union to really drive home your point, Barry? And how about a clip of the Reichstag on fire for a vfx, with "We're in the Money" overdub?
http://www.imeem.com/eduardo8leao/music/9aYTOIzu/bobby_mcferrin_big_topwere_in_the_money/
Posted by: Bobby McMuffin | Oct 13, 2008 12:37:24 AM
Wow. Losing 1 million in 1929 is like losing a little less than 100 million dollars today. Do we have any well known dilletantes in the stock market today?. Probably not -they like to lose their money to hedgies these days.
Posted by: Dsylexic | Oct 13, 2008 12:50:41 AM
yep, it was them there Maserati-drivin' 29-year-olds, those vampiric 'flippers', and J6P day-tradin' D-rivitives..yep, right there, that's what done it..
BR, maybe I'm dense, but what's your point w/ these clips?
Posted by: Mark E Hoffer | Oct 13, 2008 12:57:40 AM
Nice parallel b/w to yesterday's twenties and today's noughties.
Posted by: jfp | Oct 13, 2008 1:09:02 AM
While Prof. Fisher explained why stocks crashed (excessive use of margin), he conveniently forgot to mention that the stocks went up dramatically because of excessive use of margin. So when speculators were forced to deleverage, stocks fell sharply.
We should always remember that leverage causes stock prices to go up and deleveraging causes them to go down. If the lower prices are unreal, so were the higher prices.
Posted by: rational | Oct 13, 2008 1:24:11 AM
Nice old film. But what's the point?
Are you thinking Barry, that you could beat the S%P500, timing the market?
Probably you have a crystal ball, but only 0.0003% of american investors have done it consistently during 30 years, and only 0.00002% of investors during the last 50 years.
Good luck with your strategy!
Posted by: Fortunatti | Oct 13, 2008 1:31:12 AM
This is gold, Barry! Gold!
Posted by: Carlos | Oct 13, 2008 2:05:54 AM
The only difference from today is the type of film used. Barry, I didn't now they had youtube back then... Very cool.
Andrew
Posted by: Andrew Horowitz | Oct 13, 2008 2:18:48 AM
Fortunatti & Mark E Hoffer:
The point is that the powers that be last time were spouting the same nonsense as the powers that be today.
Posted by: Joe Klein's conscience | Oct 13, 2008 2:34:48 AM
Human nature never changes, only time changes.
PS: watch out. The sharks are meeting in Dubai!
AIG Knew of Possible Problems with CDS (credit derivative swaps)
Posted by: mira | Oct 13, 2008 2:38:42 AM
Wow, they even had a Fox News, and it was still a platform for fear mongering 'leaders' with their fingers in the till.
The parallels are pretty amazing, I was reading a document about the depression the other day, and the first half read like a description of the current crisis.
Going by that last video, at least we may see a few crooks in jail before this is over.
Posted by: debreuil | Oct 13, 2008 2:47:34 AM
JKC,
Thanks, then no wonder Whitney got rung up, he was telling the Truth. FDR was (did) fixin' to tear up the Economy--all to 'protect the little guy'--leaving in place, of course, the greatest system ever devised to vacuum Wealth from the Bottom to the Top--a Private Central Bank, here known as The Federal Reserve.
A bit like O'Neill getting kicked out for hewing to his own counsel--earlier in Bush 43..
Something tells me we aren't going to see the likes of a, latter-day, Whitney, again, that lesson's been well learned..
Posted by: Mark E Hoffer | Oct 13, 2008 2:58:05 AM
1 million... pfft! even if it is like 100million today
Abramovich lost 230 BILLION!!
http://www.bloomberg.com/apps/news?pid=20601109&sid=aIAWDrA4RSTQ&refer=exclusive
Putin must have laughed himself silly.
Also some of the big FX players were loosing $1B per day betting against the USD.
Posted by: steve from asia | Oct 13, 2008 3:56:35 AM
Movietone should do a story on how the Manhattan Debt Clock can't handle the numbers and broke.
http://www.cnn.com/2008/US/10/12/national.debt.clock.ap/index.html
I'd like to see a black and white real with interviews of "supply side" economists explaining that tax cuts pay for themselves.
Posted by: VennData | Oct 13, 2008 5:05:34 AM
Great video's! As said above, human nature and greed never changes.
Speaking of margin, this in from the NY Times a short while ago:
==============================
October 14, 2008
Margin Calls Prompt Sales, and Drive Shares Even Lower
By ALEX BERENSON and GERALDINE FABRIKANT
For some big investors and corporate executives, Mr. Margin is calling.
In the last week, as the value of stock portfolios has plunged, executives and fund managers who had bought shares on margin — that is, using borrowed money — have been forced to sell millions of dollars worth of stock to settle those loans with banks.
Professional investors say that the margin calls probably added to the pressure on stock prices last week, when the average stock plunged nearly 18 percent.
Some analysts and investors are concerned about a situation in which margin calls occur in larger numbers, causing an even bigger wave of selling, even though most analysts say that stock prices are already historically low.
....
One firm’s senior wealth management executive said it was seeing people with $30 million in their brokerage account being completely wiped out within days (Oops!). Weekly margin call lists have started swelling, this executive added.
Wall Street bankers have been particularly hard hit. Many were given large amounts of their company’s stock in annual bonuses, only to see it disappear. Making matters worse, the wealth management executive said, many of those bankers borrowed against those shares to buy stocks of other financial companies that they thought might rebound more quickly. Those shares have since plummeted.
==================================
Posted by: Jojo | Oct 13, 2008 5:50:49 AM
Are there any clips out there about the positive effects of President Hoover's doubling of the top marginal tax rate?
Posted by: Phil Spector of Deflation | Oct 13, 2008 6:57:40 AM
Mornin' everybody,
To my friend MEF, with whom my agreement and disagreement is always passionate, one area where I am 110% libertarian is gun control. Don't blame the guns, but the gunners! So may I suggest, don't blame the central banks, but the central bankers! Honores mutant mores.
Uh, BIG suckas rally today. It might last weeks, or minutes at the open. Suckas. I wish you TBP trader compatriots well fleecin' them. And since Bar brought out his Depression reel, I thought I should point everyone to the theme of that age today. I posted this during the Summer Suckas Rally: http://cnbcsucks.wordpress.com/2008/07/18/celebrate-the-mini-suckers-rally-happy-days-are-here-again/
Posted by: CNBC Sucks | Oct 13, 2008 7:13:04 AM
Great clips, Barry.
Really enjoyed the one of Whitney. Read about him in Once in Golconda but never thought I would hear him. He's even snootier than portrayed.
Does anyone here think the person who left Margaret Shotwell that million bucks was simply a "patron of the arts?"
Posted by: Mike in NOLa | Oct 13, 2008 8:34:27 AM
Plus ça change, plus c'est la même chose...
Which is why Technical Analysis is so relevant b.t.w.
Posted by: Upandaway | Oct 13, 2008 8:58:41 AM
Hmmm -- these are all Fox Movietone News clips.
Even pre-Rupert, Fox was providing that "fair and balanced" viewpoint...
Posted by: MONGO | Oct 13, 2008 10:34:21 AM
One reason that Fox may have had for running these on its Movietone news segments is that William Fox (owner of the studio back then) himself was badly hurt by the crash. He was on the point of acquiring MGM studios when the crash happened and dashed his scheme.
Posted by: crossbuck | Oct 13, 2008 10:58:47 AM
I agree 100% "Rational"
Until those asset prices reflect reality, expect stagnation. We think we are so dynamic - we will be the Japan of the 1990's till we accept that it is a profit and LOSS system, not to pay people millions upon millions who bankrupt companies, and O, Ambac can't "insure" billions with... hmmm, $147.67 capital reserves.
Posted by: fresno dan | Oct 13, 2008 11:08:34 AM
Got this via email:
STOCK MARKET EXPLAINED IN ONE EASY LESSON
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as
supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20.
This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going
back to their farms.
The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man
now announced that he would buy monkeys at $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.
In the absence of the man, the assistant told the villagers. 'Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.'
The villagers rounded up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant ever again, only monkeys everywhere!
Now you have a better understanding of how the stock market works.
Posted by: DavidB | Oct 13, 2008 11:28:21 AM
Posted by: Mike in NOLa | Oct 13, 2008 8:34:27 AM
Mike,
He was a patron alright, just have to ask, yourself, which arts?
http://www.yourdictionary.com/patron
somebody should dig up the PSA Shari Lewis did w/ 'Lamb Chop' encouraging Peep, in 1965, to turn in their 'change' due to a 'shortage'--classic agitprop..would be apiece, with the above.
Posted by: Mark E Hoffer | Oct 13, 2008 11:32:37 AM
somebody should dig up the PSA Shari Lewis did w/ 'Lamb Chop' encouraging Peep, in 1965, to turn in their 'change' due to a 'shortage'--classic agitprop..would be apiece, with the above.
Oh, that's interesting. A little before my time to remember this directly, but given that the price of silver had surged and they had just stopped using it in the coinage, sounds like a scam to get the peeps to turn in the silver in "exchange" for the copper versions of things.
Posted by: Comrade Darkness | Oct 13, 2008 1:42:25 PM
