Tuesday, October 7, 2008

Worst Financial Crisis In History

OK, so I admit we're in a crisis: S&P 500 Drop Makes Decade Worst; Granville Sees Crash.

Oct. 7 (Bloomberg) -- Even the 1930s are looking better for U.S. stock investors after the credit crisis wiped out more than $7 trillion from equities in the past year.

The Standard & Poor's 500 Index lost 22 percent since the start of 2000 after sinking 15 percent this month, total return data compiled by Bloomberg show. The decline would be the first for a decade in 70 years and exceeds the 8.9 percent plunge in the 1930s, following the stock market crash of 1929, data compiled by New York University's Stern School of Business show.

``This is the worst financial experience in world history,'' said Joseph Granville, 85, a technical analyst who has been publishing the Granville Market Letter from Kansas City, Missouri for 45 years. ``We're in October, and the market is crashing. What we're seeing right now is complete demoralization.''


Quantum_Flux said...

Money Myths

The gist of that is banks make money out of debt by virtue of the fact that people take out loans that have interest rates in them.... more specifically, our government's money is currently backed by 90% debts that can never possibly be paid off (IOUs) and 10% gold, and that ratio just gets adjusted as necessary. That's good if you own gold but bad if you're invested in anything else.

Although, maybe that is oversimplified. There are obviously other commodities that are investworthy.

OilIsMastery said...

No commodity is immune. Gold is down from it's high and hasn't moved at all.

Quantum_Flux said...

Gold is the central backing of money though because of its rarity. If gold goes down then nothing else goes up. Relatively, at least, unless people agree on another value system. Or is that thought incorrect?

OilIsMastery said...

U.S. currency isn't backed by gold. That's the problem.

Quantum_Flux said...

If it crashes, it might be and gold might go up by 20x, unless that gets distributed among all the other commodities. But then demand for those commodities might skyrocket causing the demand to go down.... hmmm.

Quantum_Flux said...

I'll be watching the market closely.

Quantum_Flux said...

Fractals explain Wall Street

Anaconda said...



If commodities are going down across the board, then its a defaltionary financial crisis.

Particularly if gold is going down.

That means there are no safe havens.

Deflation, on a runaway basis, is far worse than inflation because it means the economy is freezing up. This is a far worse situation than an inflationary financial "bubble" because with an inflationary "bubble" which is a result of hyper-activity, it can be moderated.

With deflation, and a "freeze up" it's much harder to "gets the wheels turning" on the economy.

But, to OilIsMastery, time will tell if this is the worst financial crisis in history.

Let's hope not.

If oil immediately dropped to $75 a barrel that might serve to "lubricate" the system.

Will the "powers that be" understand that imperative?

Because as I commented yesterday, if they don't use oil to help the economy bounce back, now, it could end up driving oil to below $50 a barrel, later, which would then start to imperil "inked" oil exploration & development contracts.

Causing severe long term damage to the oil industry.

Anaconda said...


It's true my comments are largely limited to Abiotic Oil, but occasionally, I dip into forcasting oil prices or suggesting policy.

A pretty good track record, too, although, I'll admit to "no skin in the game."

Reading the paid prognosticators, it seems my statements are being echoed.

A cut in OPEC oil production to maintain current prices will likely cause prices to drop even further.

That seems now to be the going concensus from various analysts.

You read it here first.

john bailo said...

Great! What it means is that almost everything is a commodity -- that is cheap and abundant. Cars are commodities. India is soon to make them for $2500. Operating systems are commodities. Linux is better than Windows or OSX and can be downloaded from the net. Chemicals can be created by anyone.

And we all know about oil. It's everywhere and constantly replenishing.

This is just a readjustment to a reality of our economic abundance.