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The Atlantic – The Greek Stock Market Has Now Fallen Over 88%

Here’s a phrase you never want to hear: “worse than the Great Depression.” Unfortunately, as Evan Soltas pointed out, that’s the reality in Greece nowadays. At least when it comes to stock prices. The Athens Stock Exchange has fallen over 88 percent from its November 2007 high. By comparison, the S&P 500 fell roughly 85 percent during the Great Depression. The below (slightly tweaked) chart from Soltas compares the two indices in the months following their cyclical highs. It turns out that hard money and austerity are a disaster whether it’s 1932 or 2012. There’s really no silver lining for Greece here. It doesn’t have quite the same escape valve that the U.S. did in 1933. Consider the sharp divergence between the above indices around month 45. The S&P 500 rallied then because FDR devalued against gold. Like that, the deflationary spiral stopped. But Greece can’t exactly devalue yet. If it leaves the euro, it will face a choice between hyperausterity and hyperinflation. In other words, the barbarous relic that was the gold standard was much easier to get rid of than is the barbarous relic that is the euro. I would say that this might be a good buying opportunity, except that Greek stock prices are at the same level they were back in November 1992.

Source: Bianco Research

Category: Think Tank

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3 Responses to “Greek Stock Market Falls 88% From 2007 High”

  1. denim says:

    Of course, if China decided to support a new drachma for Greece, that would be astounding news. And a financial coup that even the robber baron capitalists would have admired.

  2. VennData says:

    Funny how Greece’s Supply Side tax policies (the job creators avoid most tax) ALSO didn’t pay for themselves.

  3. Simon says:

    This price is almost certainly discounted in Euros to allow for the Drachma when it returns. Buy now in Euros and you will make a lot of money. No question.