Lecture Thurs 4/21/11

StudyBlue printing of Lecture Thurs 4/21/11 html, body, div, span, applet, object, iframe, h1, h2, h3, h4, h5, h6, p, blockquote, pre, a, abbr, acronym, address, big, cite, code, del, dfn, em, font, img, ins, kbd, q, s, samp, small, strike, strong, sub, sup, tt, var, b, u, i, center, fieldset, form, label, legend, table, caption, tbody, tfoot, thead, tr, th, td { margin: 0; padding: 0; border: 0; outline: 0; font-size: 100%; background: transparent; } body { line-height: 1; } blockquote, q { quotes: none; } blockquote:before, blockquote:after, q:before, q:after { content: ''; content: none; } /* remember to define focus styles! */ :focus { outline: 0; } /* remember to highlight inserts somehow! */ ins { text-decoration: none; } del { text-decoration: line-through; } /* tables still need 'cellspacing="0"' in the markup */ table { border-collapse: collapse; border-spacing: 0; } /* end RESET */ .header { min-width:800px; } .logo { padding:6px 20px 2px 20px; margin:0; font-size:25px; font-weight:bold; color:#808285; position:relative; border-bottom: 1px solid #c5c5c5; } .logo-blue { color:#70adc4; } .logo-desc { font-weight:normal; font-size:19px; color:#cccccc; margin-top:50px; position:absolute; display: none; } .back-button { position:absolute; top:20px; right:20px; font-size:13px; line-height:25px; color:rgb(0,175,225); font-weight:normal; } .back-button a { color:rgb(0,175,225); } .instructions { padding:0; margin:0; width:100%; position:relative; color:rgb(100,100,100); } .step-holder { border-left:1px solid #ededed; margin-left:20px; } .steps { padding:15px 0; float:left; width:24%; border-right:1px solid #ededed; text-align:center; } .steps-01 { } .steps-02 { } .steps-03 { } .steps-04 { } .label { padding:5px 10px; } .print-button { } .print-button a { background-color:rgb(0,175,225); color:white; line-height: 19px; padding:9px 8px 5px 30px; font-size:14px; text-decoration:none; background-image: url(images/printer.png); background-repeat: no-repeat; background-position: 7px 50%; -moz-border-radius: 5px; -webkit-border-radius: 5px; } .print-button a:hover { background-color:black; } .theNote .content { width: 8.0in !important; margin: 5px auto; padding:20px; background-color:white; } .theNote .header { border-bottom: 1px dashed #C8C8C8; font-size: 17px; padding: 0 0 10px; line-height: 19px; color: #00ADE1; min-width:500px; } .theNote .body { font-size: 14px; line-height: 19px; padding: 10px 0; } .theNote{ padding:6px 0; clear:both; background-color: rgb(200,200,200); } .theNote h3{ color: rgb(100,100,100); } .theNote h1, .theNote h3{ background-color:white; padding:2px 20px; width:8.0in !important; margin: 0 auto; font-size: 15px; } .theNote h1{ padding-top: 10px; font-size: 15px; } .theNote h1:first-child{ font-size: 20px; } .theNote h3 { font-size: 14px; font-weight: normal; } #options { border: 3px double #ccc; padding: 5px 12px; margin: 10px 50px 10px 20px; float: left; } #info { border-top: 1px solid #ccc; padding-top: 5px; font-style: italic; } li { margin: 5px 10px 5px 25px; } ul li { list-style: disc; } ol li { list-style: decimal; } img { border: 0; } table { clear: both; width: 100%; border: 1px solid #c5c5c5; border-width: 1px 0; margin: 0; page-break-after: always; } table#page { page-break-after: auto; } td { text-align: center; font-size: 12px; border-bottom: 1px dashed #c5c5c5; height: 1.75in; width: 50%; padding-left: 15px; } .leftside { border-right: 1px solid #cccccc; padding: 0 15px 0 0; } .bottom td { border-bottom: none; } .clearfix { clear:both; line-height:1px; height:1px; } img { max-width:80%; max-height:150px; margin:20px; } @media print {.header { display: none; } .content .header{ display:inherit; } table { border: 1px dashed #bbb; border-width: 1px 0; } .theNote{ background-color:white; } } Lecture Thurs 4/21/11 The Great Depression Causes and Initial Response Herbert Hoover inaugural address in 1929. He ran against and beat Aldfred Smith of triangle Fire fame. The Costs of the Depression: Some Stats By 1933 more than 9000 banks had shut their doors (No FDIC yet) Depositors lost more than 6.5 billion GDP fell, unemployment skyrocketed, prices deflated (deflation), durable good output plummeted, children starved. Why was the depression so great? World economy: house of cards unequal distrib. of wealth agriculture: the long depression the stock market secular trend: too slow transition to high income spending economy the housing boom the federal reserve World Economy House of Cards: A vengeful peace: the Versailles Treaty (WW1) transfer of important coal iron and steel properties from Germany to France Reparations Germany acknowledges sole responsibility for the war (Article 231 "guilt clause") US Response: force allies to payback loans: withhold credit as leverage result? Expanded US gold supply and low interest rates help fuel US boom. US Trade policy Tariffs Attempting to solve the problem: The Dawes Plan (1925) The extension of credit to Germany Income Inequality: the long term story Unequal distrib. of wealth and under consumption Problem? Lots of productivity increases but less growth in demand. Summer 1929: excess inventories, layoffs, recession Agriculture: The Long Depression Pre-WW1 land boom and long term farm debt Increased sales and productivity during WW1 Decreased demand abroad after WW1 as European agriculture recovers. 1920s agriculture: falling farm values, falling agricultural prices, and falling farm incomes proportional decrease in demand for agricultural products at homes the result: overproduction with no remedy The stock market: an economic miracle? easy credit and leverage buying insider dealings the "Greater Fool" theory The bubble - Hoover and others recognized that stock market seemed flawed, initial reaction to stock market drop was welcomed by those who saw skyrocketing stocks as unsustainable October 1929 - Black Thursday (10/24/29) and attempt at organized support from NY financiers Black Monday and Tuesday, slide continues New Era, New Capitalism?: The psychological impact of the crash This time is not different