WAKE UP NOW!

URGENT - You Need To Know This Before It’s Too Late . . .

If you had known that housing was about to crash before it did, would your life be better today?

If another, even bigger crisis were coming, would you want to know in time to prepare for it?

The next Financial Crisis is at your doorstep NOW!

Urgent! This is an urgent call to action for everyone across the planet to take notice of this warning. The 2012 depression we are going to have beyond all doubt, according to an exponentially increasing number of economists, is on course to arrive before Christmas. Financial crisis round 2 is officially here, gathering momentum as it arrives. You need to take action now before it is too late.

For a few years now, an increasing number of economists have been predicting all sorts of problems, from economic hardship, to another great depression in the very near future. Some very famous people have written books about the next great depression, and the events leading up to it. Alarmingly, most of those events are playing out, and the next item on the agenda from the financial crisis round 2, is the next great depression.

There are a number of reasons why we, as a world, have ended up in this predicament. A growing number of people believe it is a crisis engineered right from the beginning, however whatever the reason for it, the point is that it’s about to wipe out anyone who is ignorant to the warnings, and takes no action.

The warning signs are all around us, if you just look. The banks that needed bailing out a few years ago, are still dropping off one by one at an alarming rate. The Europe bailout from a few years ago is still ongoing, and shows no signs of going away. In fact the statistics show that Europe is in worse shape than ever, and the constant bailouts are unsustainable. The US triple A rating has been downgraded, and the unemployment is getting worse. Most people aren’t aware that the unemployment figures announced to the general public aren’t the true figures. A couple of weeks after that announcement, a more accurate number is released, and then a coupe of weeks after that, an even more accurate unemployment figure is released. Neither of these last two more accurate numbers are ever announced to the general public, but for the past few years, the number has been worse than the original announcement every single time.

The US cannot sustain their current debt position. They have only delayed the inevitable so far by printing more and more money, and giving it to the big banks. But that has come to a head, it could never go on forever. The world’s economic problems have come to crisis point, and this is the beginning of the end.

With financial crisis round 2 looming, at this point in time, you have two options. Option one is to completely ignore what is going on around you, and suffer the consequences when the going gets tough, and it is going to get very tough. Option two is to wake up to what is really going on, and take immediate steps to get your financial affairs in order.

You need to look at where any money you have invested for your retirement is, and make sure you move it to somewhere safe. Beware of any investments you have in the stock market – lots of economists are saying it’s going to be a “bloodbath” on the markets.

Make sure you are not holding any risky investments, as these will be the most likely to fail first. And finally, just being aware of what is happening in the world and around you will help you with any decisions you need to make along the way.

Whilst you may not be able to avoid the next great depression dead ahead, you can gain some valuable knowledge about what is going on in the world at www.financialcrisisround2.com. You can discover ways to keep you and your loved ones as safe as possible through the rough years ahead. Don’t delay. Go right now to www.financialcrisisround2.com.

Article Source: http://EzineArticles.com/6542688

August 4, 2008

It’s a recession…but so far not a big one.   Today’s economic data shows that real consumer spending was down a bit from the prior month. So Washington’s economic subsidy was mostly consumed in inflation and in saving. So far this is a slow-down…but the Great Depression it is not.Real consumer spending is UP (that’s right…UP!) 1.2% from a year ago. That’s anemic…but it’s not negative.Prices are up 4.1% on an annualized basis. Inflation numbers are always suspect, but that’s the worst we’ve seen in 17 years. That’s got to be all about petroleum and the commodities bubble. But still we aren’t experiencing runaway inflation. 4.1% on an annualized basis is not 10%, yet. This is going to damage bonds but also create buying opportunities in the balanced funds if longer Treasuries get hammered.The savings rate is up 4.9% in May and 2.9% in June. So that’s where the tax rebate checks went. Fear is making us save, which is what we should have been doing all along.Tomorrow the Federal Reserve is meeting to discuss the situation. Let’s see what they do. Meanwhile…this is not yet a catastrophe. It just feels like it.

July 12, 2008

Today the stocks of the big government-backed mortgage clearing houses Fanny Mae and Freddie Mac were slammed down at least 20%. Investors panicked at the thought that they might not have enough liquidity to continue business. Both stocks are down at least 80% from their highs.

Check out Table 9 at http://www.fanniemae.com/ir/pdf/monthly/2008/053108.pdf. As you can see, delinquencies have increased dramatically, but as far as we know, not catastrophically. Where is the data supporting the idea that these institutions will fail?

It might be argued that they have already failed. In the past two weeks I have met with two individual investors who are about to lose their homes because of negative amortizing adjustable rate mortgages. This kind of mortgage is essentially constructed to allow someone who cannot pay a mortgage to buy a home. In other words, these mortgages are made to fail.  They are guaranteed disasters in the making. Somewhere out there are mortgage brokers who pocketed giant fees from selling these rancid contracts to these home buyers. Fannie Mae, Freddy Mac, and the entire mortgage industry should have made these illegal years ago. Where were they then?

Unless you own the stocks of these two behemoths, this will not affect you directly.  Our value mutual funds are sure to be involved but to a very limited degree.  Diversification is a good thing.

Meanwhile, everybody is terrified. The Dow Jones Industrial Average is bumping around 11,000. Dire predictions abound. And I’m hearing from investors who are betting it all on energy. To my contrarian mind, that means that energy will at some point become overpriced, and the stock market will eventually recover. When? I don’t know. I DO know that I am happy to be in mutual funds to enlist proven professional investors in this very difficult stock picking environment. Beyond that, I don’t know what will happen, and neither does anyone else. But history tells us that we’ll get through this. I’m staying the course.

On November 24, the first held in guangzhou car than Tokyo motor show. As a local good-famed auto, this also is the first in more than five on the scale of international auto show in Tokyo, domestic car enterprises are confident. Can say, the guangzhou car has the meaning of landmark.

Audience, especially the 2009 China market structure of the year: in 2009, positive support policy, China’s market out of a proud positive line, And in the coming 2010, China’s car more consistent high executives, Chinese market will continue to rise, reached between 10-15%.

Senior automobile industry insiders even assert that can be defined as 2009 second-round growth in China market.

However, both in 2009, by 2010 in 2009, whether is the last point in a busy JiuHanErRe car, now this calm thinking, how to measure not the layout, the future?

To a certain extent, the car is a map, gorgeous, China is behind the industry layout and future market trends.

Guangzhou motor car branch committee secretary, WangXia secretary tells a reporter, “Japan is relatively large financial crisis, many European manufacturers are not in Tokyo motor show, show guangzhou. But manufacturers are almost all fronts.” WangXia thinks, this mainly because of China’s automobile market performance of huge market potential.

Guangzhou car, as this will start on the eve of one of the big winners in the market, dongfeng nissan RenYong deputy general manager to reporters here hold wine, 2009, we can be defined as a second growth in China market.

Data by 2009, oct. 20, China new car sales reached 10 million vehicles in ZhongQi association, deputy secretary-general DongYang point of view, there may be more than 12 million vehicles.

This reminds one of another Chinese market glorious years – 2003. This year, China has become the world’s fourth-largest automobile market, in December, the world 111.48% soared to stare. But soon, and in April, car sales began to appear, “negative”, may sit in a blowout immediately after a decline.

That is the second round by industry of China’s market growth in 2009, will be on the scene of similar?

However, capital market, the characteristics of each chakra is won’t repeat the bull market. Market growth. China’s auto big bull market in the round, and the Chinese market since 2003 first-round blowout, many new features.

After the financial crisis, the global automotive market hot from Europe, America and Japan to the traditional market in China, India and other emerging markets.

RenYong tells a reporter, “in fact, the multinational companies in China’s strategy is same, expand. Grab market share. But the reporter discovery, 2009, major automobile company in finance are more robust growth in pursuit, including investment decisions, also said goodbye to the past, blind expansion pouring new factory. Big

China’s President and chief executive of Volkswagen van ender tells a reporter, in this release of 2018 strategy, to the 2018, mass production in China will reach 200 million vehicles. “Further optimization of nanjing and chengdu plant capacity, in order to achieve this goal.” capacity, But before the market in China, Shanghai Volkswagen heavily to building a new factory, he said, this is just speculation, not confirmed.

Expansion in China for Volkswagen, why so cautious attitude of fan, “underwood told Shanghai current global economy worst polluters out economic lows, yet still exist many uncertain factors. These we must consider to grasp the market demand, the comprehensive. Of course, I believe that China’s market is still in 2012 will increase.”

Not only public attitudes conservative, Toyota China gm and Mr. Kato told reporters, “2011 to build a new factory in Shanghai, the first thing, Toyota has no plans, is not fact. About production capacity, currently in the north and the south AnQi respectively faw group and group, in hopes of existing production capacity of ascension based on”.

China’s car market in this round of high growth, finally said goodbye to yield no income “, “the embarrassing situation. According to access for automobile industry researcher securities industry operation index data such as investigation, “by August, China’s automotive industry profit growth more than 10%. If it does not include commercial and spare parts industry, China’s passenger car enterprise’s profit growth is expected to reach year-on-year, 20-30%, the present situation of rapid growth of.”

After the worst week in US stock market history, there are numerous people, including some of the media touting this as the next Great Depression. Even before the market dropped 25% this last week, CNN had a viewer poll in which 60% said the US is headed towards another Great Depression. Here are several reason why they are all wrong.

#1 Monetary PolicyThe FED has so many tools at their disposal that they did not back in 1929. During the depression instead of trying to ease credit markets the FED instead did the exact opposite, this caused panic which caused a run on the banks, and with the fractional reserve system, banks only keep 10% of their depositers money on hand.

#2 Unemployment rate. The current unemployment rate is about 6.5%. Back in 1933 the unemployment rate reached 25%. Just as recently as 1980, the unemployment rate was at 11%. Unemployment is the main factor that leads to depression, and we are barely over the average of the last 100 years. Sure unemployment could increase, but it would be amazing if it ever got to even half of the 1933 numbers in terms of percentages.

#3 Stock Market dips are normal.The average bear market over the last 100 years had stock prices decrease approximately 35% from previous highs. In this downturn the DOW has fallen about 40%, which is in range of the usual bear market pattern.

#4 Fuel PricesJust as the market begins it’s downturn and the economy enters recession, the price of gas decreases nearly 25% off of highs. The price of oil should continue to go down, and the average American household, as long as they are employed, will have more money this year then they did last to spend and keep the economy chugging along.

#5 Innovation and Technology are FlourishingAmerica continues to be the nation of innovators. From Google, to Apple, to GE, to wind and solar power, the US is leading on all fronts. Innovation creates jobs, spending, and a stable economy.

Of course everyone needs to make their own decisions, however I am willing to bet some will look back in two to three years and say…. “The DOW was at 8100? Man I wish I bought in back then.” When dividend yields of drug manufacturers such as Bristol Myers Squibb, and Pfizer are at 8%, you know the market is undervalued. Even if we go into one of the worst recessions sicne the Great depression, these companies are still going to be selling prescription drugs. Everyone needs to relax and stop panicking.

Each day, the news contains story after story about business closures, job losses, and rising unemployment. Jobs that were once thought to be careers are now threatened. The credit crunch has not only eradicated investment portfolios and retirement dreams, it has decimated job security – and in the midst of all this is YOU.

Did you once feel comfortable in the job you had? Did you once look at your investment portfolio and dream about a lazy retirement? Do you now go into work, hoping that today isn’t the day of another round of lay-offs?

In this age of belt-tightening and “what-now?” investing, it can be tempting to focus on the darkness, the unknown. After all, economists and politicians – the “experts” – seem to be scratching their heads in wonderment with each new day of bad news.

But there are opportunities out there. While many companies’ stock prices are sliding into the sewer, there are investments that are on the rise. Hard to believe, but true. And the same goes for jobs, too. While many people have been hit hard with job loss (or the fear of job loss), there are still jobs that are in demand. Not only that, there are jobs available right now that can provide a pre-recession income.

One of those jobs is a career in telecom sales. For the right person, telecom sales can be the opportunity to enjoy financial security again – even financial freedom and job security – during the credit crunch. There are three reasons that a telecom sales job is the right job in this economy.

1. Telecom solutions are ALWAYS in demand so you have the job security that others do not enjoy. People might cut back on paying for entertainment; they might buy fewer clothes; they might take fewer trips; they might buy lower quality food; but they will continue to use mobile phones. You know it’s true for consumers. It’s also true for businesses. Organisations that want to get their sales staff into the marketplace might save money by scaling down office expenses; they might stop the so called perks; but they need their sales staff to be connected. And that requires telecom solutions.

As a telecom sales consultant, your job would be to meet in-demand needs from businesses that know they require telecom solutions to survive and thrive. You would be the expert, guiding them in their decision-making to help them discover the best plan for their needs. Unlike other sales positions, like many retail positions, this is an opportunity for trusted, respected business-to-business (B2B) solution selling. With every interaction, you build job security as business clients come to trust you to help them succeed.

2. Telecom sales are commission-based, so you’re not stuck earning a salary that puts a cap on your earning potential. Along with job security from the increasing trust you generate, you can also enjoy financial success. Financial success is one of those common phrases that job-seekers hear so frequently it becomes laughable. Sadly, many of those claims come out of low-paying call centre jobs that demand a pound of flesh from their employees and provide little respect or actual remuneration in return.

Telecom sales, though, can offer real financial success. That’s because it’s not a call centre job or a retail job in which your pay depends on who answers the phone or who comes into the store. If you want ten customers, you secure ten customers. If you want a hundred customers, you secure a hundred customers. There’s no income cap or ceiling – the commission you earn from your efforts is yours and if you want a lot of money you can get it.

This isn’t a get-rich-quick scheme. As a commission-based sales consultant, the only limit you place on your income is yourself. If you think you’ll fail, it becomes a distinct possibility. But if you are confident that you’ll succeed, and earn the money you deserve by actively going into the marketplace and finding those customers, you can succeed – even far more than you imagine.

 3. Telecom sales can fit into your life. Sometimes you hear about people having to take on a low-paying part-time job to supplement their current full-time one. It might be the right choice for some people who have lost the job security they once had; or perhaps a spouse has lost a job and the income needs to be made up somehow. This is where a telecom sales position is beneficial. Unlike directing traffic or restocking shelves, telecom sales can be the perfect part time solution. Because you are commission based, your time is virtually your own, which means your success is also.

It simply doesn’t make sense to get stuck in a minimum wage second job (a “just-in-case” job) when your second job can help you earn as much or more than your normal position. In fact, if that were the case, you wouldn’t care about job security in your first job, would you!?!

  

Sales is not a job for everyone. It requires hard work, dedication, and a positive, outgoing attitude. It can be demanding. At times it can be frustrating – and if anyone tells you differently, they’re lying.

But, sales is the perfect job for many people; and that’s even truer in today’s financial situation when people need job security and financial security more than ever. For the person who likes interacting with others, and who wants to enjoy a role as a trusted provider of business telecom solutions and who wants the commensurate reward of uncapped potential, then telecom sales is the right job.

Are you ready to enjoy greater job security? Are you ready to enjoy uncapped earning potential? And do you want job security and financial security that fits your lifestyle?

In today’s world, there are a majority of people who are suffering from great depression. There are several reasons behind the depression including work load at office or home, exam stress, tough competition in professional fields, business decline etc. To say in one word, the word ‘depression’ is present all over the world. Depression is a chronic disorder that not only affects a person’s mind but also his body. Sometimes depression leads the person to some extreme measures towards life like suicide. Life during the great depression is like a complete blackout of mind and heart. A person stops believing in his capabilities to achieve the desired success in life. He is not only distracted from himself but from his surroundings also. He entirely blames on himself about whatever wrong happens in his life. His mind is just switched over to the negative thoughts and ignores the beauty of life.Depression can be cured easily if the symptoms behind its occurrence are rectified at the right time. There are several types of depression from which a person can suffer from. It includes major depression, atypical depression, psychotic depression, dysthymia depression and manic depression. At such point of time, he should be treated with love, care and sympathy with his near and dear ones. Sometimes, yoga, meditation and therapies are helpful to fight off the depression. It is a healthy advice to every person that God has given a beautiful life to live. Live your life like you lead the whole world with positive thoughts.

Every time there is some good news, bad news comes along. Congressmen and women are probably not going to have a very good August summer vacation as they’re already getting an ear-full of the displeasure of their electorate. The latest spate of bad news is headlined by REVENUES- or lack thereof. 

The Obama administration and Timothy Geithner keep telling the Chinese that all is well with the US$, but they aren’t buying it. Today, the US$ tanked into the $0.77 level. How low can you go? How much more can the Obama administration keep spending: in a DEFICIT way? Healthcare is on the ropes.

Can we add another TRILLION to the debt?

What’s the options here folks? TAX MORE! Ops, that word just got out and the White House had to rush in and say that’s not necessarily so, which means it’s a certainty! That’s politics. The big SPLASH in the financial pond though came in record low TAX revenues!

The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab. The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Since the GREAT DEPRESSION!

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government’s revenues were this bleak, the year was 1932 in the Depression. And you think TAXES won’t be raised? Get real!

On September 19, the SEC suspended short selling for 799 financial companies to “protect the integrity and quality of the securities market and strengthen investor confidence“. Since then the Dow has lost 165 points. The ban ends tomorrow.Eric Roseman says the legislation targets the wrong traders. Short sellers make the market more transparent. By blocking them, the SEC is violating the free market.The ban has so far failed to stabilize the markets. Don’t be surprised if the government now moves to target other safe havens such as gold and offshore accounts. Eric recommends investors move quickly to secure their assets in European strongholds like Switzerland and Liechtenstein.This from The Sovereign Society: By targeting and banning short-sellers, the SEC is barking up the wrong tree and removing one of the last market-based sanctuaries in a dreadful year for financial assets. This legislation won’t help the markets. In fact, it will ultimately create a new round of broad-based selling when the SEC finally lifts the bans. This isn’t the first time a country has banned short selling. Recently in June 2007, Pakistan banned short-selling practices. Now, just 15 months later, the market in Karachi is down by another third, so that obviously didn’t work. England also banned short-selling in the 17th century following the collapse of the Dutch tulip mania. That effort also failed to calm the markets. The SEC’s ban on financial stock short-selling is primarily why global stocks posted huge gains last Thursday and Friday. Short-sellers scrambled to cover their bearish bets or were forced to buy back the same stocks they were betting would continue declining. This classic “short squeeze” won’t help alleviate market sentiment and points blame to the wrong segment of the market. If a company or sector should be valued at a lower multiple, then the government shouldn’t interfere in a free market. This response will only delay another day of reckoning as banks face mounting losses on traditional lending practices, including credit cards, auto loans, and other facets of lending. We Short Because It Makes the System More Honest Short-selling means you’re borrowing shares because you anticipate selling them in the future at a lower price. It allows you to be bearish on stocks that you don’t own. From a practical standpoint, short-selling also creates truth in an otherwise corrupt marketplace where some companies dodge accounting rules and fudge their books to hide losses. The latest salvo fired at short-sellers this month targets the wrong group of traders. These short-sellers actually help to create liquidity in the markets and stem market bubbles. Short-sellers try to honestly target aggressive accounting practices. And more often than not, these traders help create balance in an otherwise heavily manipulated market. Short-sellers are also racking up the best returns in 2008 among diversified hedge fund strategies. By some accounts, short-sellers have gained more than 10% this year through August and they’re up 12.5% over the last 12 months. In September, estimates point to another 5% gain for this group, while traditional equity benchmarks have crashed by about a quarter. One of the more respected short-selling specialist firms – Kynikos Associates in the United States – was one of the first firms to isolate questionable accounting at Enron. As I’m sure you heard, Enron CEOs were either prosecuted or heavily fined and will never be allowed to manage a public company again. SEC Downgraded to Junk – Thanks to Chris Cox SEC Chairman Christopher Cox has finally awakened from a deep sleep that lasted 13 months. Presidential candidate, John McCain, publicly denounced Cox last week claiming the first thing he would do if elected this fall is fire Chris Cox. I agree. The SEC was literally asleep at the wheel until July. They were doing absolutely nothing to police aggressive accounting by financial company CEOs. And they did nothing to warn investors about suspicious accounting, aggressive sales practices involving mortgage-backed securities, or the bubble that inflated among mortgage offerings. The other high-risk, dangerous securities, including collateralized debt obligations (CDOs), credit default swaps (CDSs), and other credit derivatives are not even regulated, let alone scrutinized by the SEC. What was the SEC doing all this time as financial markets were hemorrhaging? Instead of doing its job ensuring that U.S. capital markets are properly regulated, the SEC is now pointing fingers to short-sellers and blaming this highly skilled group of traders and analysts for the markets’ crash earlier last week. Yet Cox, in a public statement earlier in his tenure claimed, “We need the shorts in the market for balance so we don’t have bubbles.” Shorting Is American as Apple Pie By banning short selling the government is effectively saying that it’s trying to determine where stock prices should settle. That’s not what a free market is about. This response damages the credibility of the free market system and ultimately suppresses the true value of an entity. If the SEC and other governments can ban short-selling, then one has to wonder which segment of the market is next to face regulation or restrictions… Is Gold Next? In 1933, under Executive Order 6102, FDR confiscated gold ownership. Under extreme market circumstances governments can impose extraordinary measures that usually do not benefit the poor, unsuspecting investor. The current financial crisis in the United States is the worst since the Great Depression and might warrant other measures that confiscate foreign currencies, precious metals, or other international assets and securities. Anything is possible. As this crisis eventually fades or possibly gets worse, investors should use the offshore private bank account window before it closes. It’s still legal to move money to Europe. The best destinations for asset protection remain Switzerland, Liechtenstein, and Austria. Having some gold stored in these European countries is a powerful safe-haven strategy amid extreme economic circumstances. It will give you the high margin of safety you’ll need to protect yourself from the next financial debacle.PS: If you want to learn more about the threats to your deposits or how to move your money offshore, read on here.

Source: Escape Financial Meltdown By Moving Assets Offshore Now

Starting in 1929, the world would witness one of the greatest economic downturns ever recorded. Originating in the United States, the Great Depression began in late October with an unprecedented stock market crash. How could a twentieth century economy nearly collapse? The Great Depression provides an example of falling markets and widespread poverty. However, one significant outlier existed in the market at the time: gold price. Exemplified through a brief analysis of Homestake Mining, gold industry stocks experienced extraordinary gains in share price and dividend payouts. During the 1920s, the United States experienced a remarkably bullish equity market. However, gold stocks, in general, were not participants; instead, they underwent a downward trend. Gold companies had been afflicted by a bearish market since the late 1880s. This would all change with the onset of the Great Depression. Gold price stocks would prove to thrive during this global economic slowdown. Our central illustration will focus on the Homestake Mining Company, one of the world’s largest gold producers in the early twentieth century. Homestake’s main operation was in the heartland of the United States, mining gold from the hills of South Dakota. Most gold sector historians agree that Homestake serves as a fair representation for the entire gold mining industry at the time. One must note that the U.S. government passed the Gold Standard Act in 1900 which placed the entire country on the gold standard, creating a fixed exchange rate with all other countries whose currencies were fixed to the gold price. With a fixed gold price, gold stocks fluctuated around production levels, growth rates, cash costs, and net asset value. Changes in the gold price were unable to affect the stock price when the country entered the Great Depression. Homestake stock sold for about $65 per share in 1929. By 1933, the average stock price for Homestake was around $370. This represents a gain of more than 450% over the course of four years. The Dow Jones Industrial Average fell 89% over the three years between its 1929 peak to its 1932 bottom. Not only did stock prices increase for Homestake, but dividends also skyrocketed. In 1929, Homestake paid dividends of about $7 per share. By 1935, dividends had increased to $56, a staggering rate of 800% over six years. During these deflationary times, gold stocks not only retained their values but provided significant returns for investors. Deflation, the underlying crisis during the Great Depression, results in heightened gold stock prices. The reason why is that deflation diluted the value of the U.S. dollar while the price of gold was fixed by the government. While some would argue that this fixed gold price ensured the rise for gold stock prices, this fallacy is simple to debunk by examining the positive effects on gold stocks after the removal of the gold standard in 1971. Even though the gold price was no longer fixed, gold stocks performed normally. Interestingly, Congress passed the Gold Reserve Act of 1934 and gave the government permanent title to all gold assets. Most importantly, it increased the gold price to $35 and further devalued the dollar. This certainly contributed to the spike in Homestake’s share price from 1934 to 1935. Looking forward, gold stocks are very promising under the current market as deflation is likely. Should deflation enter the 2009 economic crisis, gold stocks will be set to perform at record highs. Gold prices would cross the $1000 barrier and further elevate gold company shares. The magnitude could be far greater than what was witnessed during the Great Depression when Homestake had annualized gains of more than 100%. Gold will no longer be seen as a placeholder for value, but as an investment for an uncertain future.

The Great Depression was the result of numerous factors that affected severely both the domestic and worldwide conditions. Rooting in the failure of the world economy to build up a sustained economic recovery after the end of World War I in 1918, the Great Depression shivered confidence in the stability of capitalist economic systems.

Capitalist systems had undergone periodic panic and depressions throughout the 19th century. In imperfect markets, periodic unanticipated crises and deficient economic policies and practices, both governmental and private, often led to market reversals. Often, capitalist market mechanisms used these reversals in order to force required correction of errors.

However, the automatic corrective authorities of the markets failed on Tuesday, October 29, 1929. The ruthless forcing of massive price and policy adjustments could not be reversed by any new policy or liquidation of overextended positions that would establish new equilibriums, reinstate stability and construct the conditions for recovery. The severe decline of Dow Jones by 13% on that Black Tuesday was the beginning of Great Depression. Two months later, investors had lost more than $40 billion. Even though Wall Street exposed some signs of slight recovery, still by the end of 1930, conditions hadn’t changed much and the United States entered officially to the Great Depression era.

During 1930, over 9,000 banks failed. Banking system collapsed and as bank deposits were uninsured people lost their savings. The few banks that survived the economic recession, being unsure of the economic situation and concerned for their future survival, ceased providing new loans to consumers, causing a severe decline in consumer spending.

Consumer spending was also affected by the reduction in purchasing across the board. Being concerned with the stock market crash and the fear of further economic recession, consumers from all social classes stopped purchasing items. This caused a severe decline in the number of items produced and a consequent reduction in the workforce. By being unemployed, consumers could not afford paying for goods they had bought through instalment plans and therefore these items were repossessed. As a result, inventories began to accumulate, unemployment rate rose above 25% and consumer spending declined even further.

Economic problems were compounded in 1930 when the U.S. Congress passed the Smoot-Hawley Tariff. As U.S. businesses began defaulting, the government introduced the Hawley-Smoot Tariff to help protect U.S. companies. Aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products, the Smoot-Hawley Act erected an enormous wall of tariff barriers. A particularly odd aspect of the Smoot-Hawley Tariff was that the United States was running a balance of payment surplus at the time and it was the world’s largest creditor nation. However, the trade barriers led to high tax charges for imports and had a damaging effect on employment abroad. Other countries reacted to the U.S. action by raising their own tariff barriers, thus leading to less trade between the United States and foreign countries along with some economic retaliation. U.S. exports tumbled in response and the world slid further into the Great Depression.