President Hoover: “Prosperity is just around the corner.” (not)
Stiglitz: “It was Hoover’s politics allowed the great recession to get as big as it was.”
“A country faces an economic and political abyss: the government is on the brink of bankruptcy and pursues fierce austerity policies; public employees take huge pay cuts and taxes are drastically increased; the economy slumps and unemployment rates explode; people fight each other on the street while banks collapse and international capital flees the country. Greece in 2011? No, Germany in 1931.” (src The Guardian)
“What is particularly fatal is that an ever-growing number of young people have no possibility and no hope of finding employment and earning their livelihood. Despair and the political radicalization of the youthful section of the population are the consequences of this state of things…”
(speech by von Papen, German Chancellor, to the Lausanne Conference of 16 June-9 July 1932. Printed in Documents on British Foreign Policy, Second series, vol. 3 197-201.)
“25% loss on wall street in one day, they kept falling 21 day, afterwards they regained 30%.”
“A crash of 50% is apocalypse.” 1929 80% was lost.
More and more Banks crashed – which resulted into a Bank-run.
Downward spiral: “Suddenly the banks are not able to lend money – the people are not able to buy houses – thats what is leading into recession.”
Workers are fired because companies do not get loans to pay the workers.
Companies get closed and even more people get fired.
People try to save money because of fear of joblessness – even more companies close down.
Until the whole economy collapses – it takes some time.
From today to tomorrow people lose trust into the system.
End of a dream.