THE GREAT DEPRESSION VS THE GREAT FINANCIAL CRISIS Compared

If you were to compare the great depression with the lastest credit crisis, you would see that this crisis has much more legroom to fall:

1. TGD lasted a total of 46months before managing a successful pull back...TFC has so far only lasted (from its oct 2008 high of 14000) 19 months.

2. TGD was marked by up to 7 (>20%) drops in the DOW before finally hitting its Bottom at DOW 44 (an 85% drop from its Peak) ; Comparatively, the March 2009 Low of 6500 is only 53% from the Peak of the DOW.

3. So far the Dow has only managed about 3 (~20%) drops since its oct 2007 Peak.....this in comparison to TGD is still way off the mark.....AND if the macro economic picture is anything to go by, there will be MORE 20% drops to come before we hit the true bottom.

Finally, I postulate a drop of 20-30% from this Bear market rally; from a high of 8500 to test the lows of 6000 probably by the end of June 2009.

As a word of caution, do not be tricked into this rally.....even after the bottom in 1933 of TGD, it took the market almost 8 years to get back past its peak....

We are only about 19 months into this current recession, based on the width and depth of the recession, only the Great depression can be considered its rival. There will likely be at least 12 more months of severe dips before the bottom will be even visible.

Look for DOW at <3500>

19 Months into the Greatest Credit Crisis---> and a MINI BULL-RUN !

The following events have happened since this ridiculous credit-fuelled , commodities and Housing boom went BUST in the DEC of 2007. 

A quick re-cap of the time line would show:

1. January 2008 was an especially volatile month in world stock markets, with a surge in implied volatility measurements of the US-based S&P 500 index, and a sharp decrease in non-U.S.stock market prices on Monday, January 21, 2008 

2. 2008 01 15 Citi writes down $18Billion

3. 2008 03 03 HSBC in $17 Billion Credit crisis loss

4. 2008 09 15 Lehman Files Biggest Bankruptcy After Suitors Balk

5. 2008 09 16 Fed to lend $85 billion to AIG, take 80 percent stake

6. 2008 09 25 WaMu Seized by U.S., Assets Sold to JPMorgan in Record Failure

7. 2008 09 29 Iceland Nationalizes Glitner Bank

8. 2008 10 07 Uk makes massive rescue plan for Banks

9. 2008 10 13  Germany Pledges EU500 Billion in Bank Rescue.

10. 2008 10 15 European central banks pump $250bn liquidity
11. 2008 10 15 EU backs emergency accounting changes

12. 2008 11 24 Citigroup Gets U.S. Rescue From Losses, Cash Infusion

13. 2008 12 15 AIG sells $39.3 billion in assets to NY Fed’s fund

14.2009 01 20 Roubini Predicts U.S. Losses May Reach $3.6 Trillion

OK.....to cut a long story short.....we've had a long commodities, housing and credit Boom over the last 5-7 years from 2001-2007....Somewhere along 2007....things started going astray....

By 2008 oct...the Biggest event was the Total Collapse of Lehman Brothers which jacked the market downwards 27%

Subsequent to that AIG was found to be technically insolvent and was given a massive infusion of Tarp money.

The market had a brief bounce in dec 2008 of almost 20%. Then, from Jan 2009-march 2009....a slow steady collapse to a low of 6500, almost 28%.

Recently however, we have seen a rise from the Ashes from Dow 6500 ->8500. Is this the last and final upswing before the next Bull Run?

I think NOT!!!!!!
People, ........Based on my analysis, there has been NO, and I mean NO, previous recessions which can even come close to mimicking the Depth, Severity or Broadness of this Credit Crisis.

There have been world wide declines in ALL major stock market indices since the peak of the DOW at 14000.

The Entire World is in a recession and approaching Depression levels.

Europe, or should we say central europe and iceland, is technically INSOLVANT.

China's growth is slowing to a snail's pace which will create even or problems as deflation hits it.

The write-downs continue to emerge and the Bankruptcies continue to grow in the US.

Whilst the US and European and Asian central banks have kept pumping Billions of dollars into the system, this will be like pouring dead money into a dying man's pocket. Nothing will come out of it.

The recent technical bounce from 6500-8500 has many people cheering that this is the end of the Bear. Well, Look again.

Here I post two charts which will show that there is much scope for more and greater drops in the DOW. If the Great Depression IS the only reliable recession we have to compare with this particular crisis, then it is by FAR, NOT OVER... Yet.....