Some thoughts...

1. The crash of 1929 caused many people to panic, take their money not only out of the stock market, but also out of banks. They took it home and put it in their mattress, in coffee cans, etc. Since the currency was still "gold"-based back then, everyone assumed that the money could be redeemed for gold. People really panicked, jumping out of buildings and such.

2. Our banks are insured by the U.S. government, but we're not on the gold standard anymore. Kind of a double-edged sword. In the oil crisis/recession of 1973/1974 (after we were off the gold standard), inflation soared, the dollar was devalued, and the price of gold soared. My parents bought around 250 and should have sold around $900 an ounce about 1979. Instead they waited 5 more years and sold for about $300 an oz. Gold was as low as $200 an oz, but lately, it's pushing $315.

3. It depends on what you believe is fundamentally causing our recession, whether we are in the same boat as Japan or not. One theory, already explained is that Japanese banks are allowed to keep investments on the books that are huge losses. In the U.S., we write down the losses, liquidate the banks. It can make things really bad in the short term, but it also allows people to buy assets on the cheap and build really great companies. IBM was founded in 1933, the heart of the depression.

4. Another theory, one that I'm starting to buy into is that the abundance of information about markets and competition (and lack of trade secrets being kept, patents enforced, IP right preserved ) means that as soon as something is invented, you have competition. Any opportunity you have to make a "profit" funding further inventions is gone. I think some of this is true in our marketplace today. Competition is so intense that noone makes money and people take stupid risks and price their product below real cost, creating unhealthy products and markets. A recession removes the non-money makers from the market, and ultimately the market is restored to equilibrium. Basically, the Internet is making everyone an expert on everything, allowing people who aren't really qualified to enter the marketplace as your competitors because they can "appear" to be qualified.

5. We decide whether this is a real panic or just a "correction". If we all stop buying, put our money into gold, and leave the stock market for years, then the economy will be depressed a lot longer, than if we all decide to take our lumps, keep our money in the bank, and buy some stocks now that are bargains. We bought some SBC a few days ago.

Glen Austin