What is it with all the doomsday predictions

[Eugene]

[quote=patientrenter]It’s way too early for a sustained rebound, esmith. We are just 2-3 years beyond the real estate peak, and the stock market was at a peak just a year ago. [/quote]

How long would you expect the bear market in equities to last?

2000 recession: 29 months (prolonged by inadequate government response and 9/11)
1991 recession: 3 months
1981 recession: 21 months
1973 recession: 21 months
1962 recession: 6 months

We’re 14 months into the bear market, I’d argue that the correction has been helped along by the collapse of Lehman. So, what could’ve been a slow decline ended up a V-shaped market crash.

[4plexowner]

The markets crashed in 1929 after a decade of credit pumping into the economy

The markets bottomed and recovered with a rally into 1930

Many of the people who lost money in 1929 piled back into the 1930 rally and then rode there “investments” down to the ultimate bottom – I think the Dow actually bottomed at 42 points

~

The markets crashed in 2008 after 6 or more years of credit pumping into the economy

The markets bottomed and recovered with a rally into 2009 (according to esmith)

People who stayed in the markets during 2008 are down 30 to 50% on their “investments” and hoping for a recovery rally

A replay of 1929 / 1930 would have the Dow back to 11K or maybe even 12K before it breaks down and heads for its real bottom which will be below 1000 points sometime in the 2014 / 2015 timeframe

~

Smart money didn’t stay in equities during 2008 so this advice only applies to people who still have “investments” in the equity markets

When the Dow rallies back over 11K in 2009, get the f*ck out of the markets or you’ll be very sorry!!!

[4plexowner]

The markets crashed in 1929 after a decade of credit pumping into the economy

The markets bottomed and recovered with a rally into 1930

Many of the people who lost money in 1929 piled back into the 1930 rally and then rode there “investments” down to the ultimate bottom – I think the Dow actually bottomed at 42 points

~

The markets crashed in 2008 after 6 or more years of credit pumping into the economy

The markets bottomed and recovered with a rally into 2009 (according to esmith)

People who stayed in the markets during 2008 are down 30 to 50% on their “investments” and hoping for a recovery rally

A replay of 1929 / 1930 would have the Dow back to 11K or maybe even 12K before it breaks down and heads for its real bottom which will be below 1000 points sometime in the 2014 / 2015 timeframe

~

Smart money didn’t stay in equities during 2008 so this advice only applies to people who still have “investments” in the equity markets

When the Dow rallies back over 11K in 2009, get the f*ck out of the markets or you’ll be very sorry!!!

[4plexowner]

The markets crashed in 1929 after a decade of credit pumping into the economy

The markets bottomed and recovered with a rally into 1930

Many of the people who lost money in 1929 piled back into the 1930 rally and then rode there “investments” down to the ultimate bottom – I think the Dow actually bottomed at 42 points

~

The markets crashed in 2008 after 6 or more years of credit pumping into the economy

The markets bottomed and recovered with a rally into 2009 (according to esmith)

People who stayed in the markets during 2008 are down 30 to 50% on their “investments” and hoping for a recovery rally

A replay of 1929 / 1930 would have the Dow back to 11K or maybe even 12K before it breaks down and heads for its real bottom which will be below 1000 points sometime in the 2014 / 2015 timeframe

~

Smart money didn’t stay in equities during 2008 so this advice only applies to people who still have “investments” in the equity markets

When the Dow rallies back over 11K in 2009, get the f*ck out of the markets or you’ll be very sorry!!!

[4plexowner]

The markets crashed in 1929 after a decade of credit pumping into the economy

The markets bottomed and recovered with a rally into 1930

Many of the people who lost money in 1929 piled back into the 1930 rally and then rode there “investments” down to the ultimate bottom – I think the Dow actually bottomed at 42 points

~

The markets crashed in 2008 after 6 or more years of credit pumping into the economy

The markets bottomed and recovered with a rally into 2009 (according to esmith)

People who stayed in the markets during 2008 are down 30 to 50% on their “investments” and hoping for a recovery rally

A replay of 1929 / 1930 would have the Dow back to 11K or maybe even 12K before it breaks down and heads for its real bottom which will be below 1000 points sometime in the 2014 / 2015 timeframe

~

Smart money didn’t stay in equities during 2008 so this advice only applies to people who still have “investments” in the equity markets

When the Dow rallies back over 11K in 2009, get the f*ck out of the markets or you’ll be very sorry!!!

[4plexowner]

The markets crashed in 1929 after a decade of credit pumping into the economy

The markets bottomed and recovered with a rally into 1930

Many of the people who lost money in 1929 piled back into the 1930 rally and then rode there “investments” down to the ultimate bottom – I think the Dow actually bottomed at 42 points

~

The markets crashed in 2008 after 6 or more years of credit pumping into the economy

The markets bottomed and recovered with a rally into 2009 (according to esmith)

People who stayed in the markets during 2008 are down 30 to 50% on their “investments” and hoping for a recovery rally

A replay of 1929 / 1930 would have the Dow back to 11K or maybe even 12K before it breaks down and heads for its real bottom which will be below 1000 points sometime in the 2014 / 2015 timeframe

~

Smart money didn’t stay in equities during 2008 so this advice only applies to people who still have “investments” in the equity markets

When the Dow rallies back over 11K in 2009, get the f*ck out of the markets or you’ll be very sorry!!!

[peterb]

I cant resist coming back to this one as well. It was said about the great depression that the smart money was lost in 1930. As in, they jumped into the sucker rally after the October 1929 crash and got slaughtered on the next leg down. This bear market started in Oct 2007. So we’re in about a year or so. All recent data suggests at least another year. Especially since non of the govt stimulus seems to be doing anything except loading up banks balance sheets. The multiplier effect is not gaining it’s declining.Demand destruction is gaining as well, not declining.
But, by the govt allowing the banking system to survive and not mark to reality, this is looking a lot like Japan in 1990’s. And I agree that the govt needs to do this as that injecting reality in our banking system would be fatal. IMO. It’s that bad and systemic. But repairing this type of damage does not happen in a year or two. That’s why the delay tactic by our govt. They’re giving the banks time to syphon off the garbage and start to restore their solvency. But this is the hardest time to do this. If they pull it off, it will be a long time in coming.

To think that we can somehow magically get rid of these huge problems is rather short-sighted. This is not like the last few contractions we’ve experienced. It’s global and deep. Banks around the world are insolvent, auto industry sales down 30% or more, global housing values cratering, Stock market losses at $30T. And who knows exactly how bad the whole CDS,CDO’s etc really are. Even the guys that invented them cant say!!
I see no way that this is subsiding in 2009. And to think that the new administration can somehow change all this….well, rebuilding bridges and roads will not put Humpty back together again. Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

[peterb]

I cant resist coming back to this one as well. It was said about the great depression that the smart money was lost in 1930. As in, they jumped into the sucker rally after the October 1929 crash and got slaughtered on the next leg down. This bear market started in Oct 2007. So we’re in about a year or so. All recent data suggests at least another year. Especially since non of the govt stimulus seems to be doing anything except loading up banks balance sheets. The multiplier effect is not gaining it’s declining.Demand destruction is gaining as well, not declining.
But, by the govt allowing the banking system to survive and not mark to reality, this is looking a lot like Japan in 1990’s. And I agree that the govt needs to do this as that injecting reality in our banking system would be fatal. IMO. It’s that bad and systemic. But repairing this type of damage does not happen in a year or two. That’s why the delay tactic by our govt. They’re giving the banks time to syphon off the garbage and start to restore their solvency. But this is the hardest time to do this. If they pull it off, it will be a long time in coming.

To think that we can somehow magically get rid of these huge problems is rather short-sighted. This is not like the last few contractions we’ve experienced. It’s global and deep. Banks around the world are insolvent, auto industry sales down 30% or more, global housing values cratering, Stock market losses at $30T. And who knows exactly how bad the whole CDS,CDO’s etc really are. Even the guys that invented them cant say!!
I see no way that this is subsiding in 2009. And to think that the new administration can somehow change all this….well, rebuilding bridges and roads will not put Humpty back together again. Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

[peterb]

I cant resist coming back to this one as well. It was said about the great depression that the smart money was lost in 1930. As in, they jumped into the sucker rally after the October 1929 crash and got slaughtered on the next leg down. This bear market started in Oct 2007. So we’re in about a year or so. All recent data suggests at least another year. Especially since non of the govt stimulus seems to be doing anything except loading up banks balance sheets. The multiplier effect is not gaining it’s declining.Demand destruction is gaining as well, not declining.
But, by the govt allowing the banking system to survive and not mark to reality, this is looking a lot like Japan in 1990’s. And I agree that the govt needs to do this as that injecting reality in our banking system would be fatal. IMO. It’s that bad and systemic. But repairing this type of damage does not happen in a year or two. That’s why the delay tactic by our govt. They’re giving the banks time to syphon off the garbage and start to restore their solvency. But this is the hardest time to do this. If they pull it off, it will be a long time in coming.

To think that we can somehow magically get rid of these huge problems is rather short-sighted. This is not like the last few contractions we’ve experienced. It’s global and deep. Banks around the world are insolvent, auto industry sales down 30% or more, global housing values cratering, Stock market losses at $30T. And who knows exactly how bad the whole CDS,CDO’s etc really are. Even the guys that invented them cant say!!
I see no way that this is subsiding in 2009. And to think that the new administration can somehow change all this….well, rebuilding bridges and roads will not put Humpty back together again. Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

[peterb]

I cant resist coming back to this one as well. It was said about the great depression that the smart money was lost in 1930. As in, they jumped into the sucker rally after the October 1929 crash and got slaughtered on the next leg down. This bear market started in Oct 2007. So we’re in about a year or so. All recent data suggests at least another year. Especially since non of the govt stimulus seems to be doing anything except loading up banks balance sheets. The multiplier effect is not gaining it’s declining.Demand destruction is gaining as well, not declining.
But, by the govt allowing the banking system to survive and not mark to reality, this is looking a lot like Japan in 1990’s. And I agree that the govt needs to do this as that injecting reality in our banking system would be fatal. IMO. It’s that bad and systemic. But repairing this type of damage does not happen in a year or two. That’s why the delay tactic by our govt. They’re giving the banks time to syphon off the garbage and start to restore their solvency. But this is the hardest time to do this. If they pull it off, it will be a long time in coming.

To think that we can somehow magically get rid of these huge problems is rather short-sighted. This is not like the last few contractions we’ve experienced. It’s global and deep. Banks around the world are insolvent, auto industry sales down 30% or more, global housing values cratering, Stock market losses at $30T. And who knows exactly how bad the whole CDS,CDO’s etc really are. Even the guys that invented them cant say!!
I see no way that this is subsiding in 2009. And to think that the new administration can somehow change all this….well, rebuilding bridges and roads will not put Humpty back together again. Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

[peterb]

I cant resist coming back to this one as well. It was said about the great depression that the smart money was lost in 1930. As in, they jumped into the sucker rally after the October 1929 crash and got slaughtered on the next leg down. This bear market started in Oct 2007. So we’re in about a year or so. All recent data suggests at least another year. Especially since non of the govt stimulus seems to be doing anything except loading up banks balance sheets. The multiplier effect is not gaining it’s declining.Demand destruction is gaining as well, not declining.
But, by the govt allowing the banking system to survive and not mark to reality, this is looking a lot like Japan in 1990’s. And I agree that the govt needs to do this as that injecting reality in our banking system would be fatal. IMO. It’s that bad and systemic. But repairing this type of damage does not happen in a year or two. That’s why the delay tactic by our govt. They’re giving the banks time to syphon off the garbage and start to restore their solvency. But this is the hardest time to do this. If they pull it off, it will be a long time in coming.

To think that we can somehow magically get rid of these huge problems is rather short-sighted. This is not like the last few contractions we’ve experienced. It’s global and deep. Banks around the world are insolvent, auto industry sales down 30% or more, global housing values cratering, Stock market losses at $30T. And who knows exactly how bad the whole CDS,CDO’s etc really are. Even the guys that invented them cant say!!
I see no way that this is subsiding in 2009. And to think that the new administration can somehow change all this….well, rebuilding bridges and roads will not put Humpty back together again. Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

[Eugene]

We’re not going to have the replay of 1929, because we didn’t have Keynesianism, we didn’t have FDIC, we didn’t have unemployment insurance. Some people say that what made the Great Depression so bad was really the chain of bank failures in 1931-32. That had the effect of destroying vast amounts of wealth and scaring people away from keeping money in banks. And then deflation led to double-digit unemployment, and Hoover basically sat and watched Rome burn.

If anything, you can draw a parallel between January 2009 and March 1933.

FDR came into office in March 1933. On the day before his inauguration, Dow closed at 54. By the end of June, Dow passed 100.

Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

They will be more than adequate. That FIRE economy you’re talking about was nothing more than borrowing money from the Chinese, giving many little pieces to guys on Wall Street, and giving the rest to an unemployed Hispanic homeowner in Chula Vista. If we replace THAT with shovel jobs paid for by borrowing more money from the Chinese, aggregate output of our society will increase.

[Eugene]

We’re not going to have the replay of 1929, because we didn’t have Keynesianism, we didn’t have FDIC, we didn’t have unemployment insurance. Some people say that what made the Great Depression so bad was really the chain of bank failures in 1931-32. That had the effect of destroying vast amounts of wealth and scaring people away from keeping money in banks. And then deflation led to double-digit unemployment, and Hoover basically sat and watched Rome burn.

If anything, you can draw a parallel between January 2009 and March 1933.

FDR came into office in March 1933. On the day before his inauguration, Dow closed at 54. By the end of June, Dow passed 100.

Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

They will be more than adequate. That FIRE economy you’re talking about was nothing more than borrowing money from the Chinese, giving many little pieces to guys on Wall Street, and giving the rest to an unemployed Hispanic homeowner in Chula Vista. If we replace THAT with shovel jobs paid for by borrowing more money from the Chinese, aggregate output of our society will increase.

[Eugene]

We’re not going to have the replay of 1929, because we didn’t have Keynesianism, we didn’t have FDIC, we didn’t have unemployment insurance. Some people say that what made the Great Depression so bad was really the chain of bank failures in 1931-32. That had the effect of destroying vast amounts of wealth and scaring people away from keeping money in banks. And then deflation led to double-digit unemployment, and Hoover basically sat and watched Rome burn.

If anything, you can draw a parallel between January 2009 and March 1933.

FDR came into office in March 1933. On the day before his inauguration, Dow closed at 54. By the end of June, Dow passed 100.

Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

They will be more than adequate. That FIRE economy you’re talking about was nothing more than borrowing money from the Chinese, giving many little pieces to guys on Wall Street, and giving the rest to an unemployed Hispanic homeowner in Chula Vista. If we replace THAT with shovel jobs paid for by borrowing more money from the Chinese, aggregate output of our society will increase.

[Eugene]

We’re not going to have the replay of 1929, because we didn’t have Keynesianism, we didn’t have FDIC, we didn’t have unemployment insurance. Some people say that what made the Great Depression so bad was really the chain of bank failures in 1931-32. That had the effect of destroying vast amounts of wealth and scaring people away from keeping money in banks. And then deflation led to double-digit unemployment, and Hoover basically sat and watched Rome burn.

If anything, you can draw a parallel between January 2009 and March 1933.

FDR came into office in March 1933. On the day before his inauguration, Dow closed at 54. By the end of June, Dow passed 100.

Shovel jobs will not be an adequate replacement for the FIRE economy that we’re now losing.

They will be more than adequate. That FIRE economy you’re talking about was nothing more than borrowing money from the Chinese, giving many little pieces to guys on Wall Street, and giving the rest to an unemployed Hispanic homeowner in Chula Vista. If we replace THAT with shovel jobs paid for by borrowing more money from the Chinese, aggregate output of our society will increase.

[Author]

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