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No CONFIDENCE in the people as many have fallen by the deception as well as leaders. Obviously we are living in age filled with greed and power.

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http://tinyurl.com/6pwkll

Trust, yet verify
Commentary: Eight decades after great crash, confidence still the issue

By David Andelman, World Policy Journal
Last update: 1:59 p.m. EDT Oct. 28, 2008
(David A. Andelman is editor of the World Policy Journal. The opinions expressed are his own.)
NEW YORK (MarketWatch) -- On


Black Thursday, Oct. 24, 1929, Richard Whitney, chief floor broker for J. Pierpont Morgan, strode onto the trading floor of the New York Stock Exchange, where he would later serve as president, headed to the post where United States Steel was trading -- which, like virtually every stock on the exchange, was in all but total freefall. He proclaimed in a stentorian voice: "I bid 205 for 10,000 steel."
A gasp spread across the trading floor, especially as Whitney made the rounds of other posts, spreading the largesse -- AT&T (T
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GE) -- a total of $130 million ($1.6 billion today) raised from a private pool of bankers who'd gathered in Morgan's offices after the crash that followed the opening bell.

Trust is the foundation on which the global economic system is based. I'm not persuaded that we've come very far in that respect since 1929.


For a moment, the market stabilized. The Dow Jones Industrial Average (INDU
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INDU) , which had plunged to 272 from 381, rebounded to close at 299. Still, it was just a brief pause. By the next Tuesday -- known as Black Tuesday and regarded as the real day of the 1929 crash -- the Dow was back down to 230, bottoming at 41.22 on July 8, 1932. It was still in double digits when World War II began nearly a decade later. It took us nearly 22 years -- to Sept. 5, 1951 -- to return to the very 272 where the Dow had plunged on Black Thursday.

Much, of course, is different now -- far different, from that catastrophic moment. Black Thursday itself took place, after all, in those long ago days before market circuit breakers, before big government bailouts. Richard Whitney's action back then was a dramatic gesture. And it worked ... for a nanosecond.
It failed to work, I would contend, because of the lack of a simple, yet fundamental commodity -- trust. Alas, that's the same commodity that seems to be so lacking today.

By the time Black Thursday rolled around, America -- indeed much of the world -- had lost trust in the system, its mechanisms and especially its players. In 1928, 491 U.S. banks had already failed. In 1929, another 642 closed their doors. By the time the banking system began to stabilize, some 9,000 banks had gone bust, wiping out the life savings of millions of Americans.
Runs on these banks, and the lack of a federal deposit insurance system, had evaporated depositors' trust in the system. Without trust that their deposits would be safe and their jobs secure, people stopped spending. Layoffs multiplied as companies found fewer customers to buy their products here. And worse was in store.

The same crisis was spreading across the globe. Countries, like banks, began pulling into protective shells. Rather than seek cross-border cooperation that might help companies find customers abroad, governments began to erect ever higher and more protective barriers, like the catastrophic Smoot-Hawley Tariff. Signed into law June 17, 1930, it only intensified misery around the globe as America's trading partners retaliated. America's exports and imports plunged by more than half.

Trust is the foundation on which the global economic system is based. I'm not persuaded that we've come very far in that respect since then. What's different? This time, the government jumped in at the outset. Before a host of banks could fail, precipitating a cascading run on the remaining, solvent institutions, governments in the U.S., Europe and Asia stepped up with big bailouts. Still, we can't see or feel the bailouts -- not yet, at least. So for the moment we behave as though they don't exist. Trying to buy a house? Well, it is still difficult, if not impossible, to get a mortgage.

At the same time, companies have begun contracting, rather than expanding. A friend who is a senior partner in a large, multi-national law firm tells me that not only has merger activity dried up in its offices around the world from London to Moscow, but capital finance as well -- a critical lubricant of the international financial system.

With companies unable or unwilling to raise new funds to expand, with little or no confidence there will be customers there if they do grow and create jobs, then we are indeed in for a long freeze.

Still, other elements of the equation of trust could help bail us out. Certainly, we've become a cynical bunch -- "show, don't tell" is the watchword today. Show us there's liquidity in the system, don't tell us. Show us there are bargains in the stock market, don't tell us. Today, we are also far better, and more instantly, informed than any of our forebears were three-quarters of a century ago.

While better, quicker information means that misery can spread more quickly around the globe, it may also mean that relief could spread more quickly as well

Cycles may well turn out to be sharper, yet shorter, then before. As we monitor daily, weekly, monthly and quarterly the profits and prospects of our corporations, our job losses (and gains), our shopping habits and patterns, rebuilding the trust that we lost so rapidly in the age of Google (GOOG
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GOOG) may also be easier and faster -- more global as well -- than ever before.
It may also be the only real hope we have.