What is Really to Stop History From Repeating It'self and Having Another 1929 Type Market Meltdown?

Almost no one believes that the stock market and financial systems will totally fail as they did in 1929.
Most people seem to think that this is a great time to buy stocks.
But if a lot of companies go bankrupt and the banks do begin to fail in large numbers, I don't see what will stop a meltdown.
The FDIC can't begin to cover the deposit in banks should another bank run happen and this would collapse the banks.
Why do most people seem more optimistic about this than I?
Am I missing something?

PS. After the 1929 Crash, it took 25 years for the market to climb back to it't highs.

A market meltdown might be possibe, but the 1929 stock market crash are not what caused markets to stay down for 25 years before they recovered. The stock market crash triggered a lot fo events that caused the Great Depression, but the crash wasn't he reason the Depression was so long and wasn't the reason it took so long to revocer.

Here are the reasons a meltdown won't effect us as bad as it did back them. Reason's the Great Depression was so prolonged and severe:

#1 The Run on the Banks: The stock market crash caused a couple of banks to go bankrupt, which caused panic in society becuase when a bank went bankrupt, people lost all thier money in that bank. This caused the run on the banks where everyone went to their bank and withdrew all their money in there causing more banks to go bankrupt. In total more than 9,000 went bankrupt during the Great Depression. Shortly after the Great Depression the US introduced the Federal Deposit Insurance Corp. The FDIC insures all deposits in banks up to $100,000 (temporarily increased to $250,000 until the end of 2009). Basically, if a bankgoes bankrupt now your money is safe and you will still get your money. Most countries followed suit and created their own deposit insurance corporations (CDIC in Canada, DIDGC in India, etc). Deposit insurance is there to prevent a run on the banks becuase peoples money is insured to be safe.

#2 - Political policy - During the G.D. governements restricted international trade/imports, resticted the money supply (The Federal Reserve stopped putting new money into circulation, ete) and raised income tax. This put a HUGE squeze on not only main street, but on the business in the USA as well.

#3 - Social Programs - During the G.D. there was no such thing as Welfare (social Security, etc), Unemployment insurance, or medicaid. IF someone lost thier job or fell on hard times there was no safety net to help make sure they were ok until they found new work or whatever. All these social programs act as stablizers on society.

#4 Increased Globalization - During the G.D. it was a lot tougher to trade with other countries even before the government ban on it. IT was touhger to let someone else help bail out a country. IT was tougher for an investor to invest in another country, so if the US tanked an investor couldn't go elsewhere where the markets might be ok (Keep in mind, this isn't a completely global issue..The US economy has a big impact on other countries, but other companies are not 100% reliant on the USA). Also, if you lose your job now, it's a lot easier to hop on the internet, apply for 400 jobs anywhere in the world and then hop on a plane and move somewhere else if need be (obviously not the top choice for a family man, but it beats living in a cardboard box!).

Yes, the markets will be rough for a few years, but not likely 25 years since the economy will not slip to the lows it hit during the G.D. IT's the low economy that caused the stock market to remain low (people weren't able to recover as quickly as one would be able to today), not the stock market crash of 1929.

Right now is a great time to buy if you have a long term outlook and don't plan on withdrawing the money in the next 5-10 years. The markets will come back up, they always do.

The best advice I can give you is turn off your TV and don't worry about what the negative nancy's on FOX or CNN are preaching.

This is a very different situation than in 1929. First, the stock market situation is simply an expression of the credit crisis. The stock market is the tail -- the credit crisis is the dog. Yes, this is a great time to buy stock IF we've reached the bottom -- but nobody knows for sure that we have. Second, 10,000 banks failed in the Great Depression. There aren't even that many banks in existence today, and only a few have failed -- all of them caught up in the housing bubble. Also, unlike 1929, bank deposits are insured up to $250,000. Currency was in short supply then. There simply wasn't enough money around. Today, there's too much currency, if anything. etc. etc.

The causes of the 1929 crash and Great Depression were much different.

In 1929, there was no FDIC, thus the run on the banks. As long as the government has a printing press, I guarantee you the FDIC has enough money.
And I say this as someone who has/had money in Washington Mutual. Today I am a customer of JP Morgan. If Washington Mutual hadn't been in the news, I would never had known the difference.

This is a different scenario to the 1929 crash. If you want to compare it to anything, look up the Panic of 1873. There are parallels that are uncanny.

Yes, it does look like history is about to repeat itself.
Which is has done almost every 7 to 10 years. With the exception of the 40's because we had World War II and were too busy smashing each others heads in.

There is one fundamental difference between the 1929 (1932) crash and this one: The last one was a crash that only involved the U.S.
Because Europe was still recuperating from World War I and didn't get into a Housing Bubble... they had their own unique misery to content with.

This time it spreads over the globe. We didn't just have a housing bubble here we had it everywhere and even countries that didn't participate ended up buying those mortgage backed securities as investments... and we all know what they are worth now.

If you want to see what we might be headed for look to Japan.
Remember that history repeats itself. Japan had their housing bubble burst in the 1990's... They are now stuck in the rut of Deflation.
Not pretty... but at least it is not a Depression.
But we could learn a lot... especially of what not do... from Japan.

Government intervention- especially in an election year. They will print money to get us out of it- which could be highly inflationary in the future. If that happens, inflated stocks may be worth more than deflated dollars. You could buy gold, if you are that pessimistic. Politicians today (contrary to 1929) will do the popular thing rather than the right thing. They all care more about their jobs than the country. No statesmen left.

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