Crash Course in Historic Market Crashes: Today.. looks eerily similar to...1929, 1930, 1987, & 2007

[marmar]

from Minyanville:



A Crash Course in Historic Market Crashes
By Ron Coby Mar 01, 2010

Today's market peak looks eerily similar to the ones in 1929, 1930, 1987, and 2007.


Talking head after talking head appear on the TV daily telling everyone who will listen “the worst is behind” and excellent returns are still ahead for investors. These well-intentioned gurus and famous politicians are like shepherds leading a flock of gullible investors right to a financial slaughter house. From both a fundamental and technical perspective, it would appear that multiple market crashes are setting up all across the globe. I don’t hear anyone on TV mentioning that even as a remote possibility. Yet, an ominous chart pattern is now slowly developing in US equity markets similar to ones that preceded some of the most famous of market crashes. Let’s take a quick crash course on past market crashes so you can clearly see today’s market peak looks eerily similar to the ones in 1929, 1930, 1987, and 2007.

First, last week was a wild ride on Wall Street as volatility surged and then it retreated to where all the US markets essentially closed flat on Friday. Often times increased volatility like this is an indication of a trend change, or in this case, the sign of a top. Friday’s quiet market session felt like the calm before a coming market storm. On a recent Minyanville video, I talked about the powerful forces of deflation that are being strongly combated by the unlimited power of Ben Bernanke to print money and manage the prices of multiple (probably all) asset classes. Two weeks ago I did a video discussing how the Greek fiscal crisis looks to be building into a full-fledged European debt crisis, with many foreign markets building giant tops and possible “black cross” crashes. The biggest concern today is the rising prospect for a global fiscal debt crisis; a growing panic feeding into a crisis that could make its way to US shores the way the Asian crisis did in 1997 or the Russian crisis in 1998. As we all know, the US government is aggressively piling up enormous debts and deficits leading America down a very dangerous path of fiscal financial ruin. This could be coming sooner than anyone thinks, especially if the European contagion intensifies and spreads.

Here's why we could soon set up for a market crash here in America when looking at the US economic fundamentals. The plunging consumer confidence numbers last week must be a concern even for the pompom-waiving bulls on TV because consumer spending accounts for 70% of the US economy. There's the real possibility of a double-dip recession as Main Street continues struggling to stay solvent. Also, the Current Conditions Sub-Index fell to a 27-year low, which is further reason the markets could soon price in the risk of a further-weakening economy. Right now the market is pricing in the prospects of a coming Fed-induced liquidity-driven boom. Finally, the real estate market is still in very bad shape. Mortgage applications, new-homes sales, and existing-home sales are all weakening again. This is happening in spite of the fact that mortgage payments are at incredibly low levels. These are some serious signs that deflation is spreading in the real economy even as the Federal Reserve continues to spread monetary inflation into the paper economy (the stock market). ..........(more)

The complete piece is at: http://www.minyanville.com/businessmarkets/articles/Coby-crashes-markets-bernanke-economy-money/3/1/2010/id/27060

[xchrom]

1. Recommend

[Tierra_y_Libertad]

2. Yep. A consumer economy without consumers is not going to end well. K&R

[Warpy]

3. What scares the hell out of me is knowing just how bad it will have to get

before the culture in Congress breaks down completely and those old boys start to do what they need to be doing right now to forestall it: cutting the Pentagon budget and raising revenues by bringing back a progressive income tax structure. There will be no chance at any recovery until and unless these two things are done.

[Demeter]

11. They Will All Have to Die, Retire or Be Fired by the Voters

These slags aren't about to do anything constructive. They are in the Extraction business.

[OhioChick]

4. K&R n/t

[FreakinDJ]

5. This "Dr Doom Shit" is the worst advice possible - STOCK MARKET for MORONS

Go ahead flame away - but I made a TON of Money since Obama took office and the market was a 6700 - over $4000 just today

Ya - thats right I took all my money out of the market in 2008. When the market hit 6700 and Obama said "there were some really good values" I put 50% of my nest egg back in. When the market went up to 7200, I put the other 50% back in. Shit I even put money into Morgan Stanly Funds - AND GUESS WHAT - THEY GAINED OVER 25% PER QUARTER

The guy is a hack no one will give the time of day in a couple of months

[eridani]

7. Making money from bubbles is easy if you get out in time

How good are you at predicting them?

[TheWatcher]

8. Not sure what Ignored said but it sounds like one of the bobble heads

Who only seems to care about the personal gain he can get from Bubblenomics.

The "I've got mine and fuck what happens to everyone else" crowd would be advised to stay quiet as mice if this whole thing collapses.

I think this civilization has had about enough of their parasitic bullshit.

Oh, but I KNOW, it's all part of the "Free Market."

:eyes:

[FreakinDJ]

10. Yep - just like before when people said they were "Book-marking" the thread

when I said I was going to place my money back in the market

Well here it is some 40-50% gain later and these Bozoos are still telling me "The Crash is coming, the crash is coming". Point is it came and went.

This writer based his predictions primarily on Home prices which is a BIG mistake. In communities that had Zero growth policies, they didn't experience the devaluation in home prices. In 2011 the media will be talking about a "Housing Shortage"

[truedelphi]

16. Your one comment there at the end

In communities that had Zero growth policies, they didn't experience the devaluation in home prices. In 2011 the media will be talking about a "Housing Shortage" pretty much tells us where you live.

Yep in communities that tend to be either college towns or else bedroom communities for the huge financial centers like NYC or San Francisco, there are places where the zero growth initiatives kept the markets more stable. (Somewhat. Not totally.)

But the fact remains - in any generation, most people are not allowed to play the markets. They are living paycheck to paycheck. If they do have money in the stock market, it is on account of payroll deductions for their retirement, and they have no control over how or where the money managers at the top handle those funds.

And what is unique about this era of history is that the Globalization people, from Reagan on, have moved the job base away from the USA. So how can the masses of people expect to see an economic recovery? Since the Powers that Be are not allowing for credit to flow out to the average small business person, the small business sector will probably continue to fare poorly.

This doesn't make your ability to understand market forces and to benefit from carefully speculating on said market an evil or immoral one.

But at this point in time, the market is again expected to implode - maybe not next week or next month, but at some point it must.

And the reason for that expected implosion is that 70% of the base of our country's economic framework comes from the small business people. As they are being bled dry, they cannot hire new people, they cannot buy supplies or equipment, or pay taxes.

Thus probably in 24 months or sooner, the economic band aids such as Food Stamps and Unemployment checks will no longer be available. Then What?

[FreakinDJ]

20. 1.4 Million Housing units annually

1.4 Million Housing units annually - that is the current demand for housing in the United States given growth and attrition. For 2009 and 2010 (so far) each only has approx 1/2Million New Housing units constructed. It doesn't matter how many homes have been foreclosed, people still need a place to live and they can only bunch up with friends and family for so long.

As for small business - and you are correct in the positive effects they have on the US economy. Barny Frank's Bill (which RATpubliCONs plan to obstruct) would go a very long way to correct many of the credit problems they are facing today. Not by offering them a government subsidized hand-out, but rather by limiting the amount of money and ways Wall St Banks speculate on the markets with that money. Once these shenanigans are reeled in, it will limit the "ways" in which banks make money. Which in turn will mean they will need to make loans to make money.

So far it looks as if the RATpubliCONs are attacking provisions of the bill to break up the entities deemed "Too Big To Fail", and should the remaining provisions make it into law it will be a very good day for small businesses across the country

What is happening now is perhaps the Darkest Side of Trickle Down Economics where large MultiNational Corps. and Conglomerates use the these manipulated market forces to "Buy Up" profitable small businesses for pennies on the dollar

<on edit>

yes it is my "Self Directed" pension plan paid for by pay roll deductions. The Fucking Fund Manager couldn't do as good a job as I do managing my money so I fired him and enrolled in "Self Direct" And ya, I made a killing last year. Now if only I can hang onto my job

[truedelphi]

24. Here is hoping that you hold on to the

Job thing-ee. Especially if it is doing something you like.

BTW, if you are getting good at this second job of managing your own portfolio, maybe you could take classes in being a financial adviser. It's my understanding that there is not much involved in becoming a "Certified Financial Planner." Certainly you don't need an MBA or any of that. It does help to be living in an area where there are wealthy people in your neighborhood, or to be open to doing things they do - play golf, hang at the local gym, etc.

The cream of the crop have good people skills and bedside manner. (As well of course, in understanding all the complexities of things like probate, the bond markets and on and on.) Over the years, I have had several wealthy friends whose advisers were snotty and condescending - not a wise way to act when the people that you have as clients are bright, college educated people who just happened to also have inherited big bucks. Those advisers were eventually fired.

It is especially important to not have snotty attitudes about elderly people. One of my elder care clients was the managing force of his mega million dollar company.

His business card read, "Retired." But the "kids," who on the surface had the titles and seemed to be acting as though they ran the company, actually relied on his advise for many if not all of the decisions.

They attended a weekend financial advise seminar. One of the hard sell guys who was trying to get this company as his major client talked down to "Granpa" and ignored his comments. Needless to say, that adviser was not the one that the company brought on board.

[Donnachaidh]

12. you nailed it -- an *I'm patting myself on the back because I'm playing Masters of the Universe*

posting. Translated -- fuck y'all, I got mine.

[FreakinDJ]

13. Gee - - you got that completely backwards

Translated - I'm sick of seeing RATpubliCON propaganda claiming "The Sky is Falling because a Blackman is in the White House"

That and it is really bad advice

[AllentownJake]

18. The key is to know when to pull back

I don't see a downside correction till may, when the zombie like state of black hole American banks are better exposed by lack of lending.

[FreakinDJ]

21. Lets just hope Frank's bill makes it through

Barney Frank's Bill will go a long way to force Banks back into the business of lending money as opposed to speculating/manipulating the markets.

Yes if enacted there will be a correction on Wall St but nothing like the "Sky is Falling" crap the Doom and Gloom experts are trying too peddle

[AllentownJake]

23. If the rule for offsheet transactions went into effect

There would be no sky to fall. The too big to fail are all efectively bankrupt banks propped up by a low fed funds rate and trading. That changes. I can easily see a re-run of 2008 and no political will for a second TARP to temporarily save them.

[closeupready]

6. My lady friend and I were talking today about this.

She was laid off from her job last year. As she put it, this really is a depression, but none of the talking heads wants to put that out there, it's too scary. I have to agree with her. I don't see the employment stats changing at all. It will be a very slow uptick.

[TheWatcher]

9. There never was a Recovery to begin with. There have been NO FUNDAMENTAL CHANGES IN THE REAL ECONOMY

What you have seen the past 11 Months is an artificially inflated asset Bubble in the Market, Banks pretending they are profitable by hiding most of their losses off the books, Monetization and out of control Printing by Helo Ben, Quantitative Easing, a Relentless Propaganda Blitz by The White House and the Media to paint and perpetuate a false reality that doesn't exist, and about every ridiculous machination that could be conjured up to reflate the same Ponzi Model that caused the collapse in 2008.

Technicals, Fundamentals, and Real, Sustainable Growth Have been replaced with "Hopes", Innuendo, Happy Talk, Ridiculously Out Of Touch With Reality Rhetoric, Proclamation, Speculation, and Exaggeration.

All the while everything else that has not fit neatly into this False Paradigm, This Shell Game of a "Recovery" has been completely ignored, Papered Over, and claimed to not exist.

It amazes me that people are so desperate to feel good and believe that this could all actually be fixed so quickly, that they have forgotten that RIGHT UP UNTIL THE DAY OF THE COLLAPSE, we were told that the Economy, was "Robust", "Strong and Getting Stronger."

Stammerin' Hank himself said the summer before the collapse, that this was the "Greatest Global Economy He Had Ever Seen"

http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134937/index.htm

How did that work out?

WHY Do The American People keep FALLING for this shit.

When are the words of George Carlin finally going to sink in, and people start thinking for THEMSELVES?

"THEY. DON'T. CARE. ABOUT. YOU."

"It's A Big Club. And You Ain't In It."

"That's Why They Call It The American Dream. Because You Have To Be Asleep To Believe It."

[FreakinDJ]

14. Pretty asleep at the Wheel type analogy

8 straight months of Manufacturing Gains
Durable Goods Orders up
Businesses begining to place orders to replace depleted inventories

AND......

The really BIG ONE - there will be a Housing shortage of 2Million units by 2011

Of course if YOUR economy is the Bush "Paper Economy" then not so well

But you keep at it Buddy

[truedelphi]

15. Plus One for your statements. And I wonder if you have seen

Lewis Black's routine about politics in the USA?

"So first the Republicans get in, and they don't know what to do, so they all take a step forward and take a HUGE DUMP, and that makes the voters angry.

"So then comes an election, and the voters put the Democrats in, and the Dems look at that mile high stinking piece of shit, and they don't know what to do -- so they move the shit around!"

Carlin and Black sum up American politics far better than most people would guess. When the playing field is owned by the Corporations, only the Court Jesters can speak the truth.

[aungsungsuchi2]

17. when the house at first rejected the bank bailout, stocks fell 777 ptsl...

...

[AllentownJake]

19. The banking sector is propped up by accounting tricks and free fed money

Once they continue to not lend because they are desperately trying to put real assets in their debt holes. The problem appears too big, the zombies eventually will blow up.

[yourout]

22. Just like a car sputtering while running out of gas.