US Debt Crisis 2011 Causes Panic

In the year of 1929, the United States witnessed the most devastating stock crash in its history. The hopes and dreams of many investors were crushed on “Black Thursday”, October 24, 1929. Desperate citizens would spend a lifetime trying to offset the catastrophic losses. Unfortunately, some never did fully recover.

William C. Durant, a pioneer of General Motors and Chevrolet, was one of the players that lost a great deal in the stock crash. Durant had amassed a fortune from getting credit and creating investments that became very profitable. The stock crash of 1929 was the one gamble that Durant miscalculated severely. After making millions in the car industry and suddenly losing it, he would spend the remaining part of his life managing a bowling alley in Flint, Michigan.

The famous comedian Groucho Marx of the Marx Brothers lost virtually all of his savings in the following week after Black Thursday. Groucho was grieved by his financial losses. However, Groucho would always have a joke about it.

Roger Babson, a noted economist, had forewarned investors about the financial storm that was to come. On September 5, 1929, Babson gave a speech saying, “Sooner or later a crash is coming, and it may be terrific.” Babson was indeed correct. The Dow Jones Industrial Average plummeted as much as 12.82% in one day during the crash.

Stocks plunged 512 (4.31%) points on Thursday last week, and 634 points (5.55%) today. The stock drops are starting to resemble the crash of 1929. Economists are trying to refrain from total alarm, but the stock market earthquake is shaking  the ground in the United States, Europe, Asia, Latin America and elsewhere around the world.

The opinion is strongly shared in Europe that the political division in the United States is incurable. A writer of Der Spiegel summed it up: “The U.S. is a country where the system of government has fallen firmly into the hands of the elite.”

Noam Chomsky, emeritus professor at Massachusetts Institute of Technology in Cambridge, Mass. shared the same theme as can be read in Truthout: “Corporate power’s ascendancy over politics and society – by now mostly financial – has reached the point that both political organizations, which at this stage barely resemble traditional parties, are far to the right of the population on the major issues under debate.”

Chomsky’s expressed view is exactly what the majority of Americans have asserted, and they are very upset with the way government is being run in Washington. A recent Washington Post poll discovered that 80% of Americans are dissatisfied with the way federal government is being handled. After several weeks of wrangling over the debt ceiling, now the market has dropped precipitously. The carnage continues.

The motto that stockholders are now chanting is sell, sell, sell. The world has lost confidence in President Barack Obama and a dysfunctional government in Washington.

Has the panic of 2011 finally set in?  “Sooner or later a crash is coming, and it may be terrific.”

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