Economic Depression Lurks
Let’s be honest, Economic Depression is on the minds if not on the lips of people everywhere. The past twenty-two days in the US stock markets has been nothing short of dizzying, as major indexes swooned from very lofty levels.
The S&P index has fallen 30% in record time. Faster than during the Great Economic Depression of the 1930s. Faster than it took to fall 30% in 1929, itself.
“This is not good company for 2020,” research strategist for Bank of America told CNBC Monday.
During that economic depression, the market didn’t just fall 30% one time and level off or rebound from there. As we know from our history books, things like beggar-thy-neighbor policies around the world – such as tariffs, and policy makers too worried about deficits or taking care of their crony pals – than implementing sufficiently large stimulus, dragged out what could have been a deep yet brief economic depression into deep and very long one.
The Dow itself closed down today 37% off from its all-time high reached just this February, and the Dow is on pace for its worst month since 1931. That’s another ominous marker.
Probably the single biggest item weighing on the minds of markets in the United States ans virtually everywhere outside of, perhaps, if they are to be believed, China and Russia, is how soon will the government begin locking people down to stop the seeming endless spread of the very deadly coronavirus.
Perhaps secondarily, is the historic slide in the price of oil, which despite everyone’s love-hate relationship with it, acts as a stabilizing force in the global economy, except when it doesn’t.
A lot of jobs are tied to oil. Watch that space.
Twenty-two days. That’s all it took for the S&P 500 to fall 30% from its record high, the fastest drop of this magnitude in history. The second, third and fourth quickest 30% pullbacks all occurred during the Great Depression era in 1934, 1931 and 1929, respectively, according to data from Bank of America Securities. […]