The Dow reached 14,000 in record time from 13,000 only to drop back to 13,000 even faster and spent all of August 2007 springing back and forth coming to rest at the end of the month around 13,250. I'm not much of predictor, yet I did feel the March 2000 drop coming about six month prior and the October 1987 about a year prior. It was like an uneasiness inside. I felt the same as the Dow ran up to 13,000, but it didn't stop there, then suddenly after hitting 14,000 it dropped. I don't know if another October 1929 is around the corner, but below is reasons I believe it could be.
The wage gap between the rich and the poor and middle class hasn't been as high since 1929 according to the Milwaukee Sentential Journal, the difference between the minimum wage and congressional pay is nearly as high as it was in the 1930s when minimum wage was created and there's a major event the collapse can be blamed on.
In 1929 the crash was blamed by many on the way Americans dealt with foreign trade. We used tariffs to protect American companies from foreign competition. Unfortunately American companies abused the tariffs knowing that if they raised their prices, the government would automatically raise the tariffs to compensate. As greed increased with profits, companies “forgot” or “overlooked” raising the workers pay. Once purchasing power was reduced and Americans couldn't afford to live, the bubble burst. While trade and tariffs were not the real reason for the collapse, they led to it via greed. This is nothing new. The blame game has been around since the beginning of time when Adam blamed Eve for eating the forbidden fruit. Eve blamed the serpent. The civil war was blamed on slavery when it was actually about State's Rights vs the Federal Government. Currently, if the subprime mortgage bubble pops, it will get the blame for the new stock market crash. See the article: The Subprime Mortgage Disaster for more about that topic.
The mortgage ordeal will not have been the real reason for the new crash, rather the lack of purchasing power will be the cause, by not paying workers enough to live in the society in which we exist. When incomes don't keep up with the cost of living, a society collapses Take the human body for example, each part of society is like a part of the body and when one part is missing, the whole body suffers. The investors are like the heart, they pump money into the company as the heart does the blood, CEOs are like the eyes, they see the company's vision, lawyers and accounts are like the brain, they keep the body functioning, workers are the body parts: arms, legs, hands and feet, without which the company can not move. If the less skilled are not valued for their input and viewed as disposable, it is like thinking we can do without a foot or hand. While we can survive, we will be less efficient. If we continue to remove “body parts” in order to cut costs, eventually we become useless. The investor and CEO, the heart and vision of a company, can't accomplish anything without a brain, hands and feet.
If we look at the facts, we can only conclude another crash is on the way. This one will be worse than 1929 because the whole world is interwoven economically. America, whether you love it or hate it, is a major purchasing power and that power is being removed. Wages are not in touch with costs, jobs are being moved overseas and a large segment of the population is preparing to retire with much of their retirement invested in the market. Since wages are down and jobs are exiting the country, how will this and the next generation buy stock as the retirees sell it? As the lack of buyers hit the market with retirees selling, the market will drop due to the lack of demand.
The speed and intensity of the drop will depend on how soon and how much the retirees take out. If they take it slow, the market will initially drop slower than if they try to remove their funds fast. Either way, without paying the new and existing workers enough to invest, the market will collapse. Based on a USA Today's article that the average wage in the USA is only 29,544 a year, there's not much hope for future investing. A wage of $30,000 merely allows one to exist in this country and according to 1962's income standards, $30,000 is just over the poorest paid 20% of the nation. See Americans Don't Save, Why? and The Wage Gap for more details.
The scariest part won't be the crash, it will be the people's response. Back in 1929 the public wasn't as spoil as we are today. It's much harder to do without after having than it is to be without the whole time. Society was different in a number of ways. They were more spiritual as a whole, they were used to a slowing pace and those were the days of barn raising etc.; a sense of community was more the norm than today. Additionally, WWI was a recent thing of the past, within about ten years, whereas now, WWII was 60 years ago, we're more individualistic now. It will be interesting to say the least.

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