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Wednesday, November 19, 2008

Stock Market Crashes, This One Will Be Worse

[ Chart via Calculated Risk ]

This is where the comparisons will end. This one will be worse. Far worse.

How much worse? Nobody honestly knows. The Japanese had the most similar experience when their credit and asset price bubbles burst sending their equity prices down 80% from peak to trough. Their financial firms imploded and became 'zombie' banks kept alive by the Bank of Japan. The economy stagnated for over ten years in what became known as the 'Lost Decade'. No amount of stimulus helped.

These charts should make it absolutely crystal clear that things will be absolutely horrible and that this crash will eclipse all prior crashes.


Adam said...

100% agree.

"there is no stopping what cannot be stopped."

Anonymous said...

Meh. 20 years from now and we'll all be the better for it.

Anonymous said...

I think this chart is probably as important as updating the St Louis Fed charts. Please work with Calculated risk to keep it handy and up to date.

Just curious, has anyone seen Cramer/Kudlow et al recently? I don't have cable and always "enjoy" seeing (or I guess its more hearing) them when reality strikes.

I also agree with 20 years from now we'll be the better for it. At least I am 42 now and in good health. I know WWII was the real antidote for GDI and I know the pre GDI was called the roaring 20s (maybe we've had the roaring oughts?), but does anyone know if after GDI the people became more sensible with what really mattered in life? And can that happen again?

Brant, Atlanta, GA

Anonymous said...

This chart is quite forboding. Was just curious where you pulled your data from as I might be intersted in recreating this chart and monitoring as we drag forward from here

Anonymous said...

"20 years from now and we'll all be the better for it."
What makes you think we;ll be better in 20 years. Probably looking at more than 2 decades.
"Japan lost decade"= more like 2 decades.

Nikkei is back to where it was in the early 80's. Soon it'll be in he 70's

Anonymous said...

Calculated risk just added a new version of this chart, this time with GD1 added. Scary that we're still in the minor leagues.

Anonymous said...

Which costs more: long term optimism or long term pessimism? Granted, long term realism/reality will set the actual price...I guess it is all a question of "when", sometimes...

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