Lets set the facts. August of 29 the DOW peaked at about 380. From there it went down in a classic lower lows, and lower highs series of cyclical patterns until it bottomed out in July of 1932 at 41. So about a 92% loss. Now, you cannot find any retracement in that secular decline from August of 29 to July of 1932 a retracement that exceeded much more then 22%. Nothing at all.
Now it is true that up until our March lows the Dow was exhibiting a very similar pattern to the depression behavior. However we have blown that out of the water and the retracement we have seen has blown through the retracements seen in 1929, 1930, 1931, and 1932.
In fact the retracement we have seen since March of 2009 looks EXACTLY like the retracement seen in July of 1932. Not a little bit like it, but just like it.
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Now can we go back down? Of course. You are right the old way of doing business is done. The old way had to do with free markets and we are steering away from that. However that changes nothing about the rich getting richer. Nor does it change the fact that perception is much more important then reality and as long as government manipulation is alive and well, perceptions of our markets will be maintained. I am not saying our economy is healthy by any means. I am saying it doesnt really matter.
