When I was 12 years old, I think it was my first time I’ve heard about Great Depression.
That depression happened on Black Thursday in October 1929. October is being known as a month that happened and every stock trader has certainly heard the word October 1929.
There have been three record declines in the history of Dow Jones since the 20th century:
1) October 18th, 1987 – 22.61%
2) Today March 16th, 2020 - 12.93%
3) October 28th, 1929 – 12.82%
When you hear the word Great Depression, it sounds scary because you remember a lot of movies with lot of poverty, unemployment, etc.
I haven’t lived those times at least in this life. Only our grandfathers or their fathers have known about it. That crisis spread across many western countries. What I remember from my grandfather, that having shoes back then was a luxury and they barely could afford 1 pair if they were lucky. The Great Depression was even worse than WWII economics.
The depression was a real economic disaster for many citizens. Middle class was almost wiped out of surface, a lot of people lost jobs and homes. President Roosevelt solved the crisis by New Deal Plan and by Manufacturing Warfare production. Yes, believe it or not, during WW2 the economic crisis wasn’t already issue for US. Althought we may recall the Depression periods only for western countries, there was also a terrible economic crisis going on in Soviet Union.
During the Depression – great infrastructure has been built such as Hover Damm which is located in Nevada, very close to sin city Las Vegas. I went there, it’s a really amazing piece of architecture.
Black Thursday occurred exactly on October 24th, 1929 when Dow plunged 11%. Today it just came to my mind, could something happen the same day of this year? October 24th, 2019?
When I pronounce the word Great Depression, it sounds scary and a lot of us may think we are still not that doomed.
But the numbers related to stock plunge are mean and cold. Today’s market drop was almost 13% and it was only this number because the stocks were halt. Wall Street implemented certain measures to stop the stock’s operation when there is an excessive plunge.
What has happened in the last days?
Corona Virus – I don’t deny its contribution. It has already crippled economic activities of China (second world’s economy), Italy and Spain (third and fourth economies of European Union), South Korea and US. It has disrupted supply chain’s activities and fear started to rule in many countries, while citizen started to do panic shopping. Yes it’s hard to find Lysol, junk food, chicken, cans or detergent. I still haven’t got how toilet paper would save us from Corona’s virus. But people started to hoard it.
But is it only the Corona Virus?
In my opinion, not at all. Mass media sold us the version that corona virus panic did it. But that’s a very convenient version for masses.
Is it only that?
There are other factors. Since the beginning of this century, lot of western and emergent economies started to depend on loans. Remember there happened 2 big crisis, one started in 2001 and finished 2004, and the other was Great Recession.
How did they solve these crisis?
By inefficient patches made by Central Banks.
Loans and debt that troubled so many countries, which only bailed out banks and big companies but left behind small and medium businesses.
Countries with the highest % debts are: Greece, Italy, Spain, UK and Japan; and of course US. Last time I saw that number around 110% vs its GDP. The % of debt is measured against its Gross Domestic Product which is measured every Quarter and every year.
The first country which started to show how this chaos would look like was Greece, which defaulted in the payment. This country has had one of the worst decades in its history, and you could have witness all the mess that happened there.
But what has been happening in the last years?
Not a good positive stuff for economy. More and more debts has been issued. The safe % of debt is below 80%.
China has become the engine for the economic growth however this country also created a very big credit bubble as well. If you wanna a hot growth, you need cash for it, as well; so China did so.
The debt ratio has become a real trouble for Italy which started to grow no more than 1.5%. This small GDP growth is also due to harsh restrictive prescription on behalf of FMI which just haven’t worked out for that country.
Before the corona’s virus problem, FED already started quantitative easings – that means to bring more cash to US market which started to affect other countries as well, that means generating more and more debt every single day.
World GDP started to slowdown in 2019. Some countries have entered to recession or they are at the brink of recession such as: Germany or Mexico.
What else happened?
- Pension crisis: Many countries have started to realize that they weren’t capable to provide full pensions to its elderly. Mexican government cut down its pension by 65% to people who started to work before 1997 and who are about to retire.
- Student’s loans – American universities are expensive and it has become a real problem for many students to pay the tuition.
- AI, robotics – started to steal man’s labour which isn’t a good factor for employment.
- Trade wars – Since 2016, there has been increasing number of trade wars which started to affect global trade and world economic GDP.
- Political Instability in many countries – A lot of populist and extreme rightist or leftist parties have taken over in many countries.
- Climate change – some people probably don’t know this fact, but it was due to climate change that certain uprising have happened in Middle East.
So what triggered today’s almost record Dow Plunge?
- Very negative macroeconomic data coming from China, where retail sales show drop of over 20% in the first 2 months and there are other ugly indicators. That’s a very concerning data for this economy.
- Serious damage of Italian and Spanish economy which are countries 3 and 4 of Eurozone, so you can imagine, that will have a strong impact for the whole Europe. (I am still not talking about Germany or France).
- Global halt of tourism, travel industry and airlines. Recessions always start to show in this economic field.
- Late measures to halt corona virus pandemic on time on behalf of many countries.
- Oil price plunge – Last week oil price plunged, that doesn’t affect only Saudi Arabia or oil producing countries but also US itself which has a lot of industries in this field.
- Corona Virus affection.
This is the tough diagnosis of this new crisis.
How would we call it? Great Recession 2.0 or Great Depression 2.0.
But probably this is one of the most serious economic scenario which has appered since 1930’s.
How long will it last?
Downturns usually last from 18 months to 2 years, but Great Depression took around 4-5 years to begin a path to a new growth.
What am I supposed to do?
1) Don’t panic! I know this situation is serious but remember what crisis means in Chinese: Danger and Opportunity. Yes, there are opportunities within danger. It sounds crazy but it’s true.
It’s like the case of young boy who playing games and was earning some pennies – Bitcoins back then in 2010. Now he became one of the youngest millionaires.
2) Bring your finances under control – During economic hard times, it’s better to spend less, and avoid unnecessary spending. You can do a budget spreadsheet in Excel and plan your income and expenses. Try to procure at least 10% of saving on your income.
3) Earn crypto. Besides Dow Jones, Bitcoin and Altcoins have plunged a lot these days. But I would recommend you something safe: Earn free crypto.
Explore sites where you can earn free cryptos such as:
- Uptrennd – where you get rewarded for creating posts, making comments and sharing.
- Presearch – where you get rewarded for browsing online. You get paid in PRE for searching.
- BravoCoin – you can earn Bravos for doing reviews.
- Other crypto social media – the same content you upload to Uptrennd you can share it on other crypto social media, for me it worked: Publish0x and SteemLeo.
If you are gonna do cryptoblogging, take advantage and write about what you like.
- Tipping sites: you can earn free tips on Parachute Telegram.
- Writing review on Steemhunt.
All these free cryptos you can convert them into Ethereum, Bitcoin or USDT and wire them to your crypto ATM or your Bank debit card.
Remember there are also a lot of sites, where you can make cash by doing referrals.
4) Trading and Mining
There are days when I don’t do anything about crypto. But I have purchased 10 year contract on Eobot and it brings some free Doges every day. In 2 months I made around 100 Doges without doing anything. I also mine ETN on Electroneum in my mobile.
Both sites have paid me rewards, I didn’t experience any problems.
This is a risky one but it’s worth to start trading. Maybe you can trade small amounts at the beginning. But these small amounts can grow if you get on the right track. I had some disappointments but I also managed to convert 37 USD into 610 USD in Presearch, so what I mean it isn’t impossible. But I always recommend you these tips:
- Be willing to accept some losses
- Educate yourself, take courses, there is a lot of free education online or on Forex sites when you trade in Demo accounts.
- Do Your Research: Before any investment, do your research, investigate about the company.
6) Save in cryptos
Sometimes it can be hard to save fiat money but you can start saving in cryptos. Believe it or not you can start saving your 1UP tokens on Uptrennd or BAT on Publish0x.
I really prefer doing this because I trust much more to cryptos than to my falling pension fund which has had a very strange performance lately.
Maybe it’s a little, but doing it day by day, can make a huge difference on the long run.
7) Do what you love!
You can write, you can post videos, you can start company about what you like.
My wife has a cousin who studied in a prestigious private University but one day she quit and she began as an Arabic Dancer. Her mother got crazy but her company started to grow, now she brings spectacles from Egypt, Jordan and became a very successful business woman.
If you like gaming, write about games!
If you like cryptos, write about Bitcoin!
If you like nutrition, share your healthy recipes!
There are so many things you can be doing from the comfort of your home.
8) Have a balanced life!
Dedicate time to your family, to your spiritual life or religion, travel, eat healthy, practice some sports, do some exercise. Try to keep it balanced because life is not only a work.
9) Believe in God or practice any kind of Spiritual Discipline
This is also temporary in the mankind's history. Knowing there is something what protects and loves us is pretty comforting.