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martes, 7 de agosto de 2012

Parallels between the crisis of 1929 and 2007 (9 min.)

Parallels between the crisis of 1929 and 2007 (9 min.)


John B Lorenzo d Membiela
PhD from the University of Valencia

"The decline of the West", Spengler explains the cyclical character of civilizations and their destruction as the last phase. This inevitable end generates in the tragedy of circumstances, an unconditional resignation. Resignation, which often served to soportad fatalities. Today also to uncertain of day to day and afraid to lift the gaze to scrutinize to the more immediate future? Nothing can object to the rulers of today because nothing objected to the rulers of yesterday. Only that the yesterday and today have been blurred tomorrow.

The crisis of 1929 has been studied as a manifestation of a cyclic economy in both the concurrence of similar financial and economic behaviors. Especially the exhaustion of opportunities due to an overexpansion of consumer demand and investment, the so-called localiser (2009: 308 Kindleberguer).

Their effects during subsequent years show us aspects currently contributing but not all. In essence, remain emotions that are unalterable, whatever of the historical moment, because they belong to the nature of the man who has remained unchanged. And to them it must seek to explain behaviors that may appear to be erratic.

The cycle that repeats itself is composed of the liquidity crisis, by extravagant public budgets by decreases in prices that break the monetary system, by a gross investment of close to zero and, finally, by a banking Apocalypse (Rostow, 1971: 84).

Get to know circumstances of 1929 and subsequent years can help us avoid falling more deeply because knowing how to swim in the "forms" of communication prevents that "funds" is more immerse into the abyss. The emotional economic has operated in positive and negative. Notable examples:

(a) the fear of investors perceptions or negative news about the financial solvency of a country. It is not its authenticity, only proof of a rumor wrong, futile. Generated panic and anxiety of liquidity which led to the sale of securities and currencies.

This occurred after a statement from Hoover in Des Moines (Iowa, USA) on October 4, 1932, when he mentioned "how close to us had been leaving the pattern gold (...)". This comment sparked a global wave of financial speculation against the dollar.

Another example, the cancellation of deposits in New York in 1929 by foreign investors, banks and corporate America foreign without any reason. It generated losses to individual investors. These, in turn, to compensate their losses, made their mortgages, resulting in the majority of cases, mass evictions.

The housing prices quickly fell along with raw materials and automobiles. In August 1929 contracted sales of vehicles, from 440,000 to 319.000 in October; to 169.500 in November and December 92.500 (Butler, 1969).

(b) recovery of confidence. Britain regained the confidence of international markets in the pound in January 1932.

The British Government announced that the Bank of England would meet the payments of credits in the summer of 1931 without affecting their stock of gold. Also reported the advance and voluntary payment of the income tax in January when it should be in March (see the study of Einzing, p., "The Comedy of the Pound", 1933, p. 56).

The purpose to be achieved was to stabilize the pound to the gold value but also restore to London as a global financial centre (Einzing, 1935), which today, in the 21st century aims to the detriment of Germany.

Financial subtlety not married the abrupt reality of facts. And this it can be concluded that the financial market is sensitive to the suspicion, without more. Marketing on financial corrections "policies" made by leaders have been able to provide a picture of economic strength that the dessert has yielded positive results, at least in the short term. We live in lies, in the virtual, but in the end and after even dying.

Claim attention to unnoticed fact, that it has not deserved any comment. An organic law of budgetary stability for all administrations was published in 2001. This rule allowed the autonomous communities to take the necessary measures to achieve the zero deficit with an increase in public revenue policy, either through reduction of costs, and without that can resort to a higher debt as a way of financing production.

The purpose of it was truncated in 2006 to amend substantially the 2001 Act and participate all of a new regulatory framework which invited walk in any way in full bubble that enriched via tax administrations.

Today the architecture of the time invites reflection on the decadence embodied by Gongora in their "solitudes". Relentless suffocation of an economy whose internal structure is misunderstood. Denaturation of the human context. The ethics of diffuse towards an evocative narcissism of the bucolic lived traffic. From national to the Empire and the Empire to the village as a catalyst for the vileness of men and the decline of abandonment and loneliness. His verses are:

Those little trees
Cease to be towers today (...)
The stars night lights
They were of their battlements (...).
They lie now, and its bare stones
They dress pious Ivy:
That havoc and ruins
Know the time making green praise (...).