https://www.yahoo.com/finance/m/be7869b ... %3A-a.html
Listen To The Bond Markets: A Recession Is Just Round The Corner
Really? You're telling me the stock market can induce a recession? It seems like historically, at least since the 50s, the only thing that could induce a recession was a critical resource shortage, like food, oil or mortages.
The DJIA could plummet to the ends of the earth (Like during the 70s), but unemployment still remained below 7%.
What's different this time?
I suppose the inequality of wealth is at its highest, thanks to the QEs putting lots of funny money in the hands of the .0001% and boosting the stock market significantly, making all other rich large shareholders even that much wealthier than the average folk, as of now anyway.
So, I wondered... what caused the great depression? Was widespread "dust bowl" crop failures? The stock market crash of 1929?
It is far too simplistic to view the stock market crash as the single cause of the Great Depression. A healthy economy can recover from such a contraction. Long-term underlying causes sent the nation into a downward spiral of despair. First, American firms earned record profits during the 1920s and reinvested much of these funds into expansion. By 1929, companies had expanded to the bubble point. Workers could no longer continue to fuel further expansion, so a slowdown was inevitable. While corporate profits, skyrocketed, wages increased incrementally, which widened the distribution of wealth.
The richest one percent of Americans owned over a third of all American assets. Such wealth concentrated in the hands of a few limits economic growth. The wealthy tended to save money that might have been put back into the economy if it were spread among the middle and lower classes. Middle class Americans had already stretched their debt capacities by purchasing automobiles and household appliances on installment plans.
Well, look... they're talking about that inequality of wealth and "middle class americans" who have stretched their debt capacities. Aren't those the problems I've been hearing of recently in the news?
Even more parallels.
-Corporate profits soared.
-Worker wages increased only incrementally.
-Wealth concentrated into the hands of wealthy, who don't spend money, instead saving it or investing. (me in other words, lol.)
-Debt capacities stretched to the limit.
Well, I guess it's plausible a stock market crash could induce a recession since we do have precedent from the 30s.
As to "stretching their debt capacities", I wonder why they just didn't default.
Seems to me, based on the morgage meltdown, people have no problems defaulting.
If debt is really the main instigator in this (in robbing one of discretionary income, the stuff that powers the economy), then it would almost seem to me the main cause of the Great Depression is misplaced guilt and a sense of slavishness to the wall street banks.
The same banks I cursed off for having been mainly responsible for the morgage crisis.
Simply, by avoiding the risk of the loan by selling them to investors thru CDOs, they were motivated to push as much debt as they possibly could, inflating housing prices far beyond they would otherwise, especially with the speculators. This made the crash that much more severe when it did happen, shutting down industries, like construction and mortgage making, large components in the economy, which further plunged it into darkness.
If only banks had fully accepted the risk of the loan, like they normally do and /should do/, they wouldn't have been so liberal and risky with their loan making. The last thing you want is for the banks, especially the "too big to fail" wall street types, to be making risky loans with reckless abandon that could sink the bank.
Ironically by avoiding risk by pushing debt off to investors, they created systemic risk, inadvertently putting themselves at risk from the severity of the resulting crash due to all that speculative capital (People buying homes and flipping them) deepening the price crash, leading to widespread defaults that sunk the banks.
This crash is incomparable to the Japanese real estate crash in the early 90s, because the nature of limited space due to the island's geography, meant there was a wide disbalance between supply and demand, creating higher volatility. I guess the affect was much the same in terms of price volatility being high, them due to limited space, in America, due to the banks avoiding risky loans by pushing it off to investors. I guess maybe they're more similar than I'd think.
Ok, well, if we do have a stock market induced lowly paid over-debted americans depression on our hands, I wonder what assets are the best to invest in.
Surely there's lessons from the 30s on this.
Will the stock market continue its boom-bust cycles?
Or will it just smolder...
Let's see if we can find charts.
https://leduc998.wordpress.com/2008/05/ ... 1930-1939/
Well, looks like it will continue to follow the same trend.
Looks like it took 2 years to crash (Usually takes 1-2 years for the djia to crash, so that's normal), then 5 years to peak after the trough.
So loading up on triple etfs after this crash looks like it'd be a great strategy.
Seems like 5-9 years is the going amount time to peak after trough. Look for consistent volatility (VIX) signaling the beginning of a plausible crash. The DJIA crashes slowly, giving more than enough time to identify a plausible peak. (7-9 years peak to peak is the normal trend, I don't think it has EVER exceeded 9 years.)
And interesting, we see the Smoot hawley tariff being created right before the crash.
Isn't that what Trump's been doing recently? Creating tariffs.
Expensive solar panels now, fudge.
Interestingly, many pages online draw parallels between herbert hoover and trump.
https://www.google.com/search?ei=lmWFWt ... dZkLiCbOIo
So, appears we're at high risk of a modern "Great Depression".
And I purposely recession proofed my life, granted... I'm getting the hell out of this mexican hellhole! Wouldn't want to be here during a great depression, lol.
https://www.washingtonpost.com/opinions ... ee4917ac39
Hoover took over in a time of general prosperity but stagnant wages and vast income inequality. Populists in Congress proposed dramatic increases in tariffs to help the struggling agricultural sector, the equivalent of today’s beleaguered blue-collar workers.
Interesting, again, doesn't that sound familiar...
It seems like between /that/ great depression and /this/ possible one, the living standards are a bit higher and food /shouldn't/ be as much of an issue. I'm not even sure if it was much of an issue during the Great Depression.
Dang, from nearly 300 to 40. Wow, that implies the current stock market would reach as low as 4000, assuming no fed intervention. Doesn't seem like they would... banks aren't at risk of failing... I think... But if the feds do decide to intervene, that's the time to BUUUY!!!