There have been some good posts and links since the OP. Why not make your case that shows why 2016 is like 1932.2000 and 2008 don't count...right ?
There have been some good posts and links since the OP. Why not make your case that shows why 2016 is like 1932.2000 and 2008 don't count...right ?
Is the decline in commodity prices deflation or just a return to long term trend price?Maybe, but would oil, gold, copper, steel, iron, etc. all have the same deflationary spiral at the same time?
2000 and 2008 don't count...right ?
2000 and 2008 don't count...right ?
Is the decline in commodity prices deflation or just a return to long term trend price?
The tech bubble was not a financial panic, so no 2000 doesn't count.
A financial panic includes a run on the financial system, so 2008 counts but a garden variety bubble popping (tech stocks, gold, oil, etc) does not.
The difference is important because a financial panic has the capacity to cause a Great Depression, whereas some other market collapse that doesn't endanger the banking system does not.
What about the S&L crisis of the 80s and 90s? Or the Asian financial crisis.
https://en.wikipedia.org/wiki/Savings_and_loan_crisis
There will always be one crisis or another. Running for the hills might seem like a great idea, but is likely the incorrect response.
There have been some good posts and links since the OP. Why not make your case that shows why 2016 is like 1932.
I'm on his mailing list. I agree, this is an excellent, well balanced article.Can I add this post here too for market perspective? I originally posted this on the More Worried About Markets Now Than Any Time Since 2009 thread.
Here is an article I think gives a good perspective on how to look at markets. It is a far more nuanced view than that pushed by the traditional panting finance media, and IMO far more accurate.
What Does the Market Know? by Howard Marks of Oaktree
Who knows about gold, but the other things you mention all have experienced a lot of new mine development to try to meet Chinese demand surging. Now we have those quality mines, and China has slowed down. Mines once built tend to be kept in production. Since mothballing a mine is a very big deal, a good mine will normally produce even if it is not quite making variable costs.Maybe, but would oil, gold, copper, steel, iron, etc. all have the same deflationary spiral at the same time?
Very good article. Thank you for that. The article seems to capture reality as I see it.Can I add this post here too for market perspective? I originally posted this on the More Worried About Markets Now Than Any Time Since 2009 thread.
Here is an article I think gives a good perspective on how to look at markets. It is a far more nuanced view than that pushed by the traditional panting finance media, and IMO far more accurate.
What Does the Market Know? by Howard Marks of Oaktree
Benjamin Roth was an investor and an astute observer. Also some discussion about real estate.When the stock market crashed in 1929, Benjamin Roth was a young lawyer in Youngstown, Ohio. After he began to grasp the magnitude of what had happened to American economic life, he decided to set down his impressions in his diary.
There have been some good posts and links since the OP. Why not make your case that shows why 2016 is like 1932.
Fed overly priming the pump causing asset bubble and then raising rates too quickly while rest of world falters resulting in prematurely choking out global recovery and growth resulting in not reaching collective economic escape velocity for a couple of decades.
That was also 2008-2014.... And now 2015-2016 YTD
I think the fed rate raises [plural?] will be a big killer.
Perhaps part of the confusion is that the title of your post should have been "Is this Market Like 1937." That makes more sense to me, keeping in mind that the aftermath of 2008/2009 was nothing like that of 1928/29 because the response by government's world wide was much, much better.
We do, surprisingly enough, learn from history (well, at least institutions like the Fed do.)
Which also leads us to the reasonable possibility that the Fed will not blindly keep tightening monetary policy in the face of all evidence in 2016 and beyond. Thus far they've raised rates by 0.0025 and are not honor bound to raise any more. Futures markets have dramatically cut the odds of another Fed increase.
If inflation continues to be a no-show and the labor market softens, I'd say the Fed tightening will be "one and done."
Volatility was incrediblly high in 1932, nothing like we have seen in today's markets.I am not suggesting a parallel here either, but 1932 was the time to buy stocks. The market put in it's lowest mark in the last 100 years. Sentiment is generally an inverse indicator.
Just a couple of points.After long and protracted market fall of greater than 50 percent, global growth and equity returns recover and then fall again and for the ensuing following decade remain anemic growing just at the rate of inflation or less. Fed overly priming the pump causing asset bubble and then raising rates too quickly while rest of world falters resulting in prematurely choking out global recovery and growth resulting in not reaching collective economic escape velocity for a couple of decades.
That was 1929-1932. And then 1932-1940...
That was also 2008-2014.... And now 2015-2016 YTD
The 1932 playbook will call for political and economic turmoil caused by election and protectionist measures. Real wages will stagnate or move negative. Commodities will crash. Deflation will reign supreme for a decade. Some economies will totally collapse.
I'm not a market historian. I can draw parallels but I suppose anyone can do that and make it feels like the third or fourth inning of the same playbook.
Seeking perspectives.
Volatility was incrediblly high in 1932, nothing like we have seen in today's markets.
I could show some data if anyone requests it.
I couldn't disagree more. Fed monetary action in 2008 prevented that banking collapse from turning into something more similar to the 1930's. It has been quite effective.Michael B. Good post. You forgot to mention the incompetent fed ... Oh wait. That's both then and now ... Strike that.
I couldn't disagree more. Fed monetary action in 2008 prevented that banking collapse from turning into something more similar to the 1930's. It has been quite effective.
Is this a serious discussion? It seems a bit trollish...