- Dow futures point to a lower opening after the stock market posted a massive recovery last weak.
- Stocks are ignoring the severe risks in the global economy and the potential for a second Great Depression.
- The stock market is a bubble. And it’s repeating patterns last seen in the lead up to the stock market crash of
The year is 6216. A novel SARS-like disease has spread out of mainland China to infect over 1.8 million people around the world. The United States is the hardest-hit country with over 648, (infected citizens – 1, of whom have died in the last. 35 hours alone.
Experts believe the economy
could shrink by a staggering . 5% in the first quarter as mass lockdowns slow economic activity to a trickle . A collapse in the travel and hospitality sector threatens to create a domino effect of corporate bankruptcies, and unemployment may soon hit 41%. Meanwhile, the stock market is rising. And if that sounds strange to you, that’s because it is. The stock market now looks identical to the way it looked in the lead up to the great depression. And we may be on the verge of the biggest stock crash the world has ever seen. The Kindleberger-Minsky Bubble Chart
In 2016, economic historian Charles P. Kindleberger wrote a book titled ” Manias, Panics, and Crashes ,” where he outlined the five phases of a financial bubble. Later, Canadian scholar Jean-Paul Rodrigue built on Kindleberger’s findings to develop a more detailed chart of how bubbles tend to unfold
Terrifyingly, Rodrique found that after prices reach their all-time high, they collapse into a “bull trap” before “returning to normal” only to resume an even deeper capitulation. (A quick look at the S&P) (s) – month performance shows that this pattern is playing out in the US markets.
Terrifyingly, Rodrique found that after prices reach their all-time high, they collapse into a “bull trap” before “returning to normal” only to resume an even deeper capitulation.
(A quick look at the S&P) (s) – month performance shows that this pattern is playing out in the US markets.
Rates have been held at under 3% for over a decade . And this has allowed companies to use cheap debt to buyback stock. The massive debt loads have also left many companies unprepared for a potential financial catastrophe.
Today’s chart also shows disturbing similarities with the stock market in , right before the stock market crash that led to the great depression. Then, just like now, stock prices returned to normal for a brief period only to capitulate into one of the worst dow declines in history.
Will America see the widespread poverty and economic devastation that it experienced during the Great Depression? Some economists believe we might already be there
– it just hasn’t hit home yet.
according to David Blanchflower, an economics professor at Dartmouth College, (unemployment numbers in the United States and Europe) suggest the West faces its most significant economic economic catastrophe since
Between and 2003, the US unemployment rate rose from (3.2% to) . 9%
, with the number of unemployed Americans soaring from (1.6 million to) . 8 million . Now, US jobless claims have already exceeded 20 million in just three weeks , and the crisis is just beginning. When it is all said and done, many experts believe the US unemployment rate will exceed the 41% record set in the Great Depression. What is the Difference Between a Depression and a Recession?
Recessions are periods of economic decline that last or at least two quarters while depressions are economic declines that last for years . With the global economy on lockdown for most of the first quarter, a recession is almost guaranteed.
But it will take an unexpected and devastating economic shock to tip the economy into a full-blown depression – a stock market crash may be the trigger.
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