Not-So-Great Depression vs. Great Recession
Alan Abelson offers the phrase “Not-So-Great Depression” to describe the current economic syndrome — but I much I prefer Doug Kass‘ phrase — the “Great Recession.”
Hey, if we are going to be in the crapper, can’t it at least be a for an enormo clusterfuck? Wouldn’t we want to be in a really bad recession over a merely mediocre depression?
The Not-So-Great Depression moniker is a backhanded jab at the remnants of the now departed Bush administration. Its as if Barron’s is saying that the most fitting legacy for one of the nation’s least popular presidents was that even his greatest screw up was only mediocre at best.
Abelson:
“With jobs vanishing at an alarming rate, consumer confidence is dwindling apace. The latest Conference Board reading sank to 25, the poorest showing in the four decades since the survey was started. Moreover, as Goldman Sachs’ Seamus Smyth points out, the real shocker in the dismal data is consumer’s expectations, which are as close to nil as we hope and pray they’ll every get: an unprecedented 27.5, sharply below the previous low of 45.2 set back in December 1973, when the economy and the stock market were going big-time into the tank.
If nothing else, the consumer’s sour, even forlorn, sentiment makes a mockery of the notion that the good old boy will come riding to the rescue, brandishing his wand of plastic. Not a chance; the poor guy lacks both the will and, more important, the wherewithal, to go charging off on a spending binge.
As MacroMaven’s savvy Stephanie Pomboy puts it in her usual understated style: “The U.S. consumer’s legendary lust for credit died with the housing bust. As he vows to live within his means — or even (children, cover your ears) reduce his debt — all of Ben’s horses and Nancy’s men cannot get consumers to borrow and spend.”
Stephanie goes on to warn that if, as she suspects, households attempt to live the way they did before assets were confused with income, consumer spending is destined to be restrained for a long, long stretch. That means, she logically infers, that corporate profits “will be depressed for years (not just quarters) to come.” A dire prospect, she allows, that has not exactly gone unnoticed by investors, as evident in the pathetic performance of equities.
In sum, nothing in the cruel hard data or the more ephemeral mood of the citizenry persuades us that we’ve seen even the beginnings of the end of the Not-So-Great Depression. So do yourself a favor: In viewing the stock market, no matter how tempting the occasional upticks, stay skeptical.”
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Source:
The Not-So-Great Depression
ALAN ABLESON
FEBRUARY 28, 2009
UP AND DOWN WALL STREET
http://online.barrons.com/article/SB123577868892297665.html
February 28th, 2009 at 11:51 am
http://nymag.com/daily/intel/2009/02/we_are_all_vultures_now.html
Talking Shop With a ‘Vulture’ Investor
Got this from Paul K this morning…
Going to get to introduce some friends to the opera tonight..La Boheme in Chattanooga…this is the fellow who had a manufacturing concern making rubber products for trucks…as I mentioned to you, they did finally go BK, so we are going to try to cheer him up a tad tonight…
February 28th, 2009 at 11:57 am
I agree, at least let it be a “great” something. It would be unfortunate to have to go through this ‘thing’ and it not have a really great name. But seriously folks… I have the very same feeling about the economy and market — “… households attempt to live the way they did before assets were confused with income, consumer spending is destined to be restrained for a long, long stretch. That means, she logically infers, that corporate profits “will be depressed for years (not just quarters) to come.” “So do yourself a favor: In viewing the stock market, no matter how tempting the occasional upticks, stay skeptical.”
It’s hard for me to see another scenario. I cut back on equities some time ago (wish I had gone further with that…) based on this reasoning. When it comes down to it, equity prices and earnings have to be correlated. If corporate earnings have to be on a new lower trajectory, any sustained big reecovery in stock prices has to be a long ways off.
February 28th, 2009 at 12:04 pm
By the way, I promised I would try to keep up with possible protectionist tendencies..well, they are coming…
http://mpettis.com/
Can Smoot-Hawley only happen in the US?
Back tomorrow…good luck investing.
February 28th, 2009 at 12:07 pm
“consumer confidence is dwindling” is the understatement of the year. How about “has fallen off a cliff?”
When the uptick in shipping rates is due to firms leasing ships for car, oil, etc storage, you have a real problem.
February 28th, 2009 at 12:23 pm
Well, depressions are normal in a modern, unregulated market. That’s what we had from the 1870s until 1930. The Great Depression was merely the greatest of the cyclical depressions that hit the US every 10 years or so.
What happened in the New Deal was that Americans got burned so deeply that we finally listened to those who had been telling us that depressions were avoidable for 50 years. And guess what? After we developed a regulatory scheme that recognized the fiction of free market fundamentalism, and that recognized the fact that government exists for the welfare of the people, we stopped having cyclical depressions.
Of course, what happened beginning in 1980 was that America got cocky. We listened to those on the Right who told us that the free market fundamentalism that we spurned 50 years before wasn’t so toxic after all. We slowly undid the reforms of the New Deal. And guess what?
Cyclical depressions have returned. Let’s hope we’re as smart now as our great-grandfathers were 70 years ago.
February 28th, 2009 at 12:48 pm
Plus this:
‘Great Depression Cooking With Clara’ videos are a YouTube sensation
—Renee Enna
February 28, 2009
One of the hottest video hits on YouTube features a saucy, dark-haired Italian who knows her way around a kitchen.
Is it a sign of the times that it’s neither Rachael Ray nor Giada De Laurentiis, but rather a 93-year-old great-grandmother named Clara Cannucciari who cooks in a kitchen that looks like it was last redecorated when Richard Nixon was president?
“Great Depression Cooking with Clara,” a series of 10 videos shot by her filmmaker grandson Christopher, shows her skillfully preparing the humble Italian-American fare she remembers from that other cash-crunched era—pasta with peas and potatoes, egg drop soup, pepper and egg sandwiches.
http://www.chicagotribune.com/news/nationworld/chi-talk-clarafeb28,0,6228523.story
February 28th, 2009 at 12:52 pm
Factor in the presently moving over the far edge of the bell curve shoulder oil production situation and it will be neither the ‘not so great depression’ or ‘the great recession’ but ‘the greatest depression’.
Did I mention the IEA Nov. 2008 report that stated that aggregate production from the worlds 800 largest conventional oil fields is CURRENTLY declining at 6% annually? And that rate of decline is accellerating?
What do you suppose happens when declining oil supplies catch up with the economic crash demand destruction for those suppplies?
February 28th, 2009 at 1:04 pm
I’m still of the mind that we’re undergoing a Structural Economic Transformation, on par with the nasty shift, 1973-1982, that gave birth to the service economy and ‘Knowledge Jobs’. I think we did a quicker job, while events unfolded, that 1973-1982 was not assorted business cycles as usual, but was a structural change to our economy.
It was tough to see at first, we saw all the trees but not the forest, where the trees were roughly, in order, Vietnam War-generated wage-n-price inflation lingering from the 1960s, S&P500 swoon that began in Jan 1973, Oct 1973 Oil Embargo, ’73-’75 recession, bouts of stagnation/stagflation, bouts of double-digit inflation and unemployment (especially in urban areas), mass migration of job seekers t Sun Belt, ’79 energy crisis from Iran hostages, ’79-80 recession, ’80-81 recession.
I think we’re more emotionally reluctant today to make the connection that a 300+ million nation can not run 70% of its GDP via debt-fueled consumer spending without ever-increasing debt loads. And when/if global finance markets recover and prove reluctant or face sustained regulatory prohibitions against blowing credit bubbles?
will keep entire career paths, headcounts and payrolls, involving tens and tens of millions of US workers particularly in FIRE & retail, on the dole, or with vastly reduced ‘spending’ power.
And we’ve yet to even discuss funding mass re-training of those ‘knowledge workers’ folks…let alone answering, ‘retraining for what?”.
Fixing bridges? Gerentology for the againg? Get serious.
And please no more lame feel-good NYT Tom Friedman-esque ‘human ingenuity in a magic box’ tales of techno-savior ideas for America.
February 28th, 2009 at 1:13 pm
FT’s Gillian Tett is right about the fallacy of a Goldilocks “perfect size” credit bubble ever being blown ‘just right’ to keep retail & FIRE humming but not bubbling.
In the year 20xx, I’d love to see US, UK, Eurozone, China, Japan, Oil-oligarchs all blowing synchronized bubbles of the ‘perfect size’, ala Dancing Rockettes kicking in unison across the world stage.
February 28th, 2009 at 1:26 pm
I really like ‘The Great Recession’, and I hope that’s all it is.
I will repeat an earlier obseration, though: Before World Ward II, they called World War I ‘The Great War’. I can see how we might be setting up to eventually call this GD II. What a fascinating epic to watch from here in the cheap seats.
February 28th, 2009 at 1:30 pm
Avl Dao,
I agree on the structural transformation, but I think it almost all came from mechanization and automation. Up to the 1940s or so, it seemed like a fairly linear process, but now we see the curve is going exponential: entire classes of jobs can now vanish within a decade, replaced with computer-assisted down-skilled employees.
I saw a ton of cleric workers get axed in the 1980s: computers had made their jobs obsolete.
The early nineties saw the dumping of huge numbers of middle management: email and networks killed them off.
By 2000, I was having diner with a lawyer, and she confessed she was basically billing $300/hr for doing Google searches. Internet search had killed off most of the professional support staff.
2009? Wall St’s biggest cost is now IT: entire desks are now a few traders/sales + software. The concept of working your way up from the mailroom is long dead.
Japan is a few years ahead of us with robot pets and assistants. On-line game economies are already bigger than those of the poorer nations (Chinese goldfarmer is now a real job!) The intellectual community has switched from traditional media to blogs, facebook, etc (we still have trading floor TVs, but they lags so far behind the net that they are usually switched to sports.)
Things are only going to get weirder.
February 28th, 2009 at 1:45 pm
The Great Acceptance of Finality.
Five Stages Of Grief:
1. Denial and Isolation. (We will decouple from the world, or they from us)
2. Anger. (Can’t you smell that smell?)
3. Bargaining. (Obama: Okay, I’ll increase bailouts and cut taxes)
4. Depression. (I think I’ll pull the covers over my head and stay in bed until I die)
5. Acceptance. (Bread and soup is better than nothing – Remember when we used to eat at Mortons?)
~~~
BR:
This was from January 2008
http://www.ritholtz.com/blog/2008/01/5-stages-of-market-grief/
Ahh, good times.
February 28th, 2009 at 1:53 pm
Could we call it The Fantabulous De-Monification- the other ones seem too dour.
Avl Dao- I read up on Basins of Attraction – thank you, and yes, that scenario has much to speak for it.
MA- quoting Ronnie Van Zant is cool.
February 28th, 2009 at 2:20 pm
In the same issue Tom Donlan has an editorial titled “Needed: Brainpower Not Shovels”, subtitled “Use free markets to transform the American economy into a job-creating wonder”. It ends with the advice that Obama should seek out free market economists to counsel him on applying free market theory to education, energy, and health care. If ideology were the answer wouldn’t we be in Donlan’s nirvana after the last 8 years? Maybe he wrote this in Roswell, NM but it sure has an other world feel to it.
February 28th, 2009 at 2:26 pm
I still claim first usage of the term “Lesser Depression” as well as “Placebo Economics”.
Corporate profits will return but just to different companies than before. Retailing is shrinking. But financial services, old-fashioned savings – not new and complex ways to borrow, will blossom. I like E-Trade over Goldman Sachs and regional banks over money-center banks.
February 28th, 2009 at 3:00 pm
This event won’t be properly named till maybe 2030, in hindsight. Until then, I’m with pmorrison… watching from the cheap seats, fully invested in QID and sleeping very well. My guess is that it might be described as the “Near Downfall of Capitalism.”
“You’re welcome America” – Sir Alan Greenspan
February 28th, 2009 at 3:16 pm
Anybody want to buy an apple? (not a computer – a real honest-to-god apple).
C’mon – buy an apple.
SB – I think capitalism might just be kaput (it’s in bed w/the covers over its head – see above). I’m wondering if America will survive.
February 28th, 2009 at 3:58 pm
The sooner we get past blaming everything on Bush, the sooner we can fix this country’s problems. Let’s not forget the democrats controlled Congress for 5 terms and the republicans controlled congress for 5 terms since 1987. In 2001 the house and senate were split. The last two years of the Bush administration had a Congress (both House & Senate) controlled by democrats and what did the democrats accomplish in those two years? Nothing. It is time to look forward and get this economy back on track.
February 28th, 2009 at 4:16 pm
“The sooner we get past blaming everything on Bush, the sooner we can fix this country’s problems. It is time to look forward….etc etc”
Discipl investor-
i hate to break it to you, but Bush was a total fuckup, his mal-admin over TWO terms, a catastrophe for the Nation. ok?
so far, Obama is providing continuity from that reign of clusterfucketry.
Lock limit down on Monday.
February 28th, 2009 at 4:17 pm
we maybe in that structural change but it stems from many things and it may take that ten years (like previously mentioned 1973-1982). This time its in at least 2 parts. part 1 is that our leaders have been systematically driving wages down as much as possible, which leads to the average consumer (AKA worker) isn’t as well of as they were in the 70s. this has major consequences ion our economy as it made consumers (AKA workers) dig into to credit to keep their standard of living in sync with the US economy (plus it kept to working when you have a consumer based economy you desperately need them or the economy tanks. sort of like now). the other part is the eminent and on going retirement of the baby boomers (AKA the biggest consumers). they are starting on the retrenchment in spending (which would have happened no matter what). and none of the other generations in the US can replace them. in part because of part 1 impact. there used to be a great concern that their wouldn’t be enough workers to replace them when they retired, but not a lot was made of their spending going away also. well we sort of fixed the lack of workers (off shoring, outsourcing etc). but we never addressed the other part. now we have reduced the likely hood that the baby boomers will retire on any where near their expected schedule. but they are still cutting back on their spending. in hopes of getting to retire. some day. but wages have fallen so far they won’t be able to keep spending and retire. and this will reduce the economy in a major way.
February 28th, 2009 at 4:34 pm
Let’s hope this fad doesn’t spread. I don’t think they were doing this in the first Depression:
Arsonists Torch Berlin Porsches, BMWs on Economic Woe
http://www.bloomberg.com/apps/news?pid=20601109&sid=auZeM63nrgzo&refer=home
February 28th, 2009 at 4:47 pm
DisciplinedInvesting :
“The last two years of the Bush administration had a Congress (both House & Senate) controlled by democrats and what did the democrats accomplish in those two years?
_________
You won’t find people stupid enough to fall for that crap in here. Not that the Dems are great, but they didn’t “control” Congress for any of Bush’s two terms. A numerical majority is not a legislative majority. Maybe you don’t understand this, maybe you do, and think no one else does. In either case, peddling intellectual dishonesty to those burned by right-wing priorities like gay bashing, terrorists behind every corner, and the late “murdered by her husband”, Teri Schiavo (pretty much everyone in the lower 99% was burned by the Republicans, BTW), will not be a profitable venture.
What did the Republican Congresses you cite accomplish? Debt, big government, dishonesty as policy, and the trashing of America’s reputation.
February 28th, 2009 at 4:48 pm
I think that historical precedent must be honored …
“The Depression to End All Depressions”
And it will come be named that sometime after it passes 2050 and is still going, in the wake of WWIII and IV, and at a point where the individual nations of the world are coalescing into One World Government, as all the coastal/sea-level cities are washed away by the rising sea level as the last ice finally melts from the polar ice-caps.
There — that should be the topper to this exercise.
February 28th, 2009 at 4:57 pm
I still have a lot of confidence that W didn’t screw it up. We have a lot farther down to go.
February 28th, 2009 at 5:14 pm
barron’s kopin tan takes note of the market decline and quotes some savant saying bear markets retrace 100% of their advance so the double from 750 on Oct ‘02, voila we’re there! and now we can resume advance! unfortunately he got the previous low wrong. we’re going to retrace 100% of the move from 450 in Dec ‘94. that was the bull market move. the bull from ‘02 was just the biggest lamest last-gasp band-aid of all time.
February 28th, 2009 at 5:27 pm
Marcus Aurelius
I think the republicans and democrats screwed it up. The republicans spent like drunken sailors in the early years of the Bush term. I think I can count on one hand (don’t even need any fingers) how many spending bills “W” vetoed. My point is Bush is gone, Republicans are gone so lets get over the past and look forward. You won’t make the next putt if you constantly think about the three footer you missed.
I get the sense Congress is trying to pass “every piece of legislation/program they have wanted to pass in the last 20 years but did not get a chance to do it until. In this economic environment, this will take all of us over the cliff. A nearly $4 trillion budget is absolutely insane!
February 28th, 2009 at 5:58 pm
I’m not sure how I would ever put a metric on it, but I think the American consumer is going through a major cultural–call it “secular”– shift: He and she are moving from spend thrift to ol’ fashion thrift.
The impact on a recover could be huge, delaying it for months if not years and weakening it when it resumes.
We could be in for a Japanese style “lost decade” no matter what ambitious fiscal and monetary policies we pursue. And the rest of the world will just drag along with us.
February 28th, 2009 at 6:15 pm
WilliD3: Good observations and they’re compatible with mine on wages, size of national headcount, spending by national headcount, and the economy.
We could super-simplify these variables to where the first three are on the left and = the consumer spending side of GDP (70%) on the right side of the equation.
So how to fix this: to stop the shrinkage on the left side from shrinking the right side given that credit bubbles are now unreliable and the US likely will not obtain the global synchronization of inter-locked markets that are a requisite for mega-bubbles.
Hmm, well if I ruled America as Emperor AvlDao:
1. I’d reduce the ability of the globe’s lower mfg wages from reducing my nation’s mfg wages. I’d do this by promoting local production across all 50 states, depending on their competitive advantages, and promote regional economic networks internally.
2. I’d incentivize more domestic delivery of services.
3. I’d accept that FIRE & retail will not return to their pre-imminence in payroll, wages or headcount, respectively. No use trying to reinflate housing values, the new lower home prices are better for workers anyway, given that I’d move closer to also requiring 10-20% down for home and car purchases.
4. By not trying to revive retailing and consumer spending, I’d accept the lost purchasing power of boomers. They will trade-in their dreams of golden retirements for a simpler ‘dignified retirement’ with no fears of resorting to cat food.
5. Step #1 will add to GDP to partially compensate for larger GDP losses from #3 and #4.
In some ways, this would resemble America circa 1972 prior to the rise of shopping malls, credit cards and multi-car households, and prior to the 70s energy shocks, but without that period’s heavy unions and federal wage-n-price controls.
As Emperor, I’d try to keep this in equilibrium for maybe 7-10 years while technology shifts away from belching out consumer gadgetry and instead produces badly needed advances in energy & transport systems which the market implements across platforms. Also use the 7-10 years to retro-fit (Green) our current car-oriented (mis) built urban and suburban environments.
I think my subjects would appreciate these 7-10 quiet years after enduring today’s economic upheavals for XX years.
February 28th, 2009 at 6:36 pm
Gorobei: I don’t disagree that the digital age has accelerated information flow, but we tend to under-estimate how the debt/credit bubbles enabled this magnitude of R&D and subsequent global roll-out and distribution of tech gadgets as well as things like GPS satellites and under-water optic cable upgrades. All of this relied on the use of debt & credit and are not immune to their bubbles and collapses. Not at all. There’s no decoupling between debt and technology.
Were it not for the excessive bubbles in the imaginary (ephemeral) wealth of households, much much less money would have trickled down to school kids and to 20-somethings from their parents for supporting mind-boggling sales of cellphones, Ipods, iMacs, GPS devices, Wiis, X-boxes, web and music downloads, etc, etc. MEWs and HELOCs paid for a lot of gadgets!
If the bubble-inflated buying power of those young consumer groups had stayed within the nation’s historic norm (think 1972), those markets would be a fraction of their current size and there would have been that much less bubble $s from sales to plow back into consumer gadget R&D and other tech areas. Without $$ bubble-spillover to the young-uns, we’d not be agog over Apple. And even Goggle would be a fraction of itself if consumer spending had stayed at the much lower historic norm because ad spending never would have bubbled up and thus neither would internet ad spending.
Remember, consumer debt is 350% of GDP which is far above the nation’s sustainable norm.
The consequences to us of the encroaching credit-bubble-free world will be enormous.
February 28th, 2009 at 8:02 pm
“The Not-So-Great Depression moniker is a backhanded jab at the remnants of the now departed Bush administration. Its as if Barron’s is saying that the most fitting legacy for one of the nation’s least popular presidents was that even his greatest screw up was only mediocre at best.”
But Al Gore, John Kerry, and Barack Obama are worse. The popular choice in 2000 and 2004 was W. Most popular, least popular. I wonder who will be most popular next year. Maybe Barron’s should give a big “backhanded jab” to the populace?
Your comment is juvenile, Barry. Adults don’t really care about popularity so much. Don’t you think it might be more constructive to criticise Barry Obama, since he’s the one currently making a bad situation worse?
February 28th, 2009 at 8:09 pm
Avl Dao,
Largely agree. Tech is not about consumer products as much as providing a huge multiplier to certain types of businesses, and the ones that got the biggest multiplier were in finance and credit.
I was explaining the impeding doom and gloom of CDSs and CDOs to my dad last year, and he asked how we could get into this mess. Easy, I said, guys like him started it back in the late 1970s — they did US wide mortgages based on “objective” measures like credit scores, default models, and MBSs issued on Wall St. They made billions in the industry, and patted themselves on the head for all the social good they were doing. Where did they think it was going to end? Well, the S&L crisis was the first wake-up call, and it took a generation before people would forget that lesson and really go for the major screw-up.
February 28th, 2009 at 8:37 pm
How about – “The Good Depression”.
February 28th, 2009 at 8:51 pm
Well, in honor of Dubya, how about:
Worst. Recession. Ever!
February 28th, 2009 at 9:11 pm
franklin 411 @12.23:
Are you really serious or is that goof?
Booms and Busts are a naturally occurring part of every economic cycle, whether the system is lightly regulated or highly regulated. Everything runs in cycles…conservative swings lead to liberal swings…greed to fear….credit expansions lead to deflationary collapses (see: now)
Maria B. interviewed Bob Prechter Friday….first time I’ve seen Precther during the day on CNBC in a long, long time. He’s telling people to close out shorts now in the stock market. I think he might be a little early on that one, but the man caught the “meat” of this move down. He’s still pretty bullish on the Dollar…making the point that I’ve been making for awhile now…the Debt Bubble was so huge that it is deflating faster than the Fed can print money. There’s lots of people who believe we’re going to have rampant inflation. This will happen….but it will be a few years from now.
There’s a lot of people who believe we have a fiat system of currency here and that Fed controls it. I’m actually coming around to the concept that we actually have “credit money” system that creates the money. The “credit money” theory suggests that financial institutions who extend credit actually control the ‘money supply.’ It was a 60 Trillion credit bubble that must deflate quite a bit…I’ve read some analysis that the Fed would need to print 20-30 Trillion dollars in order to stop the debt spiral and trigger reflation….good luck with all that.
February 28th, 2009 at 10:28 pm
AT,
this: “I’ve read some analysis that the Fed would need to print 20-30 Trillion dollars in order to stop the debt spiral and trigger reflation….”
would be interesting to see..
also, saw the e|mail, sent returns..
February 28th, 2009 at 10:43 pm
@Andy:
Agree with many points…debt bubble is a black hole that will quickly swallow any money printing…inflation is a few years away (buy gold miners then)…Fed wll never be able to stop the spiral.
In reaction to the above, stay away from stocks. They are killed by deflation in many ways. Now the scary part…fed data as of 9/30/08 says total credit per GDP has not even defalted one iota yet…wait till it does, the pain will be a whole other level.
March 1st, 2009 at 5:42 am
The only grain of hope I could imagine would be that now that everyone on TV and in the news seems to have finally thrown in the towel …everyone saying how horrible it is and not mentioning “Goldie Locks” every two seconds might mean we are getting a little closer to a bottom…….but seems like Jan and Feb have really gotten the downward train rolling.
http://financialrealityrevisited.blogspot.com/
March 1st, 2009 at 7:25 am
We are early in the process to truly label the current recession/depression. Part of the cure has been to paralyze the self-correcting mechanism of capitalism by maintaining as much overcapacity in the economy as possible. Add in protectionism, a couple trillion in indirect cap and trade taxes, and widespread government choosing of winners and losers, and my money is on the D word. All of these things are in play right now.
@Avl Dao: There was already something tried along the lines of “promoting local production across all 50 states, depending on their competitive advantages, and promote regional economic networks internally”. It was called the Great Leap Forward.
March 1st, 2009 at 9:10 am
I favor drecession. but we need to give it more time to see if we have wine or vinegar, I’m sure the Great Depression didn’t earn that label immediately. This economic event is already longer than any other post war recession and I think what will set it (farther) apart are the aftereffects of the Lehman credit “panic” (to use the pre GD terminology). The real estate meltdown and now job losses seem to be bottomless, haven’t heard anybody announce the inning lately!
Hyperinflation following hard on the heels of the drecession is what will put this in the Economic Hall of Fame.
March 1st, 2009 at 9:28 am
Common Man
Maybe it’s time to start necklacing our bankers
http://cronkite.files.wordpress.com/2008/06/south_africa_execution_by_necklacing_13.jpg
March 1st, 2009 at 9:31 am
Thanks for this one Barry. It finally got my wife laughing about this madness!
March 1st, 2009 at 9:43 am
AT: I did not see the interview w/ Prechter, I do know he advised closing S&P short positions, not as a mkt call but simply to take profits after a tremendous gain on the short side since Oct 07.
He maintains stocks are still very overvalued by all measures, and I believe him. However I believe his Wave count has us finishing up Primary wave 1 down, and if that is the case Primary wave 2 should provide an intermediate rally within an overall G.S. Bear.
Do you see this as a likely scenario as well AT?
SB? even if we do ultimately crash to 500 on the SPX?
I could see a sharp fierce rally up from anywhere between 670 and 720 lasting multiple mos, followed by another collapse once folks realize there is no recovery this yr or next.
March 1st, 2009 at 10:33 am
MexicaliBlues.
Whoa. If he thinks what we just saw was only initial Primary Wave 1 down, then it’s a dark forecast indeed! I’m really not sure what his exact count is, but I think he’s counting the move down starting in 2007 as the dramatic C wave down that connects the 2000-2002 (A Wave down) and the 2002-2007 (B Wave down).
On the DJIA, the whole pattern from the 2000 highs is an “expanded flat” or an “irregular correction.” I have a few targets for the move between 6800 and 5900. So, if I were trading a really large Spec book I would probably suggest covering 70-80% of the shorts as well. The risk/reward down here is now favoring some sort of severe snapback rally. We’re looking at probably another 10-15% down from here, but would you want to press that trade when you’re staring at the distinct possibility of a 30-40% snapback?
595 should really hold on the SP500. That is a MAJOR, MAJOR support level and clear support zone as the 61.8% retracement of the ENTIRE 1932-2000 Bull Market. If that level doesn’t hold, then I would have to strongly recommend stockpiling guns, bullets, canned foods, gasoline, etc….
March 1st, 2009 at 11:22 am
AT: excellent analysis as always, thank you.
It does feel like playing with fire to press the short side from here, or at least it seems there will be better levels to be short from going forward.
I cannot directly quote Prechter, however everything I have read on him suggests the view is that we are finishing primary 1 down in Cycle C. Perhaps others can confirm/expand on that.
The prospect of a 61.8 retrace of gains from 32 to 2000 is sobering! My basement is devoid of any sort of stockpile other than cobwebs and 1/2 empty paint cans…..
Thanks again A.T. for the market panoramic.
March 1st, 2009 at 10:40 pm
Gorobei; U blamed it all on ur dad’s profession/generation? Ouch.
Che Stadium: 1) Did the Leap Far? 2) At somepoint in the past, every place practiced local production if only because of the limitations of transport technology at that time. Logic tells us that.
March 1st, 2009 at 10:46 pm
meant to say, “1) Did They Leap Far? Or was it backwards?