Rich Man's Panic
Investors should expect the Dow Jones Industrial Average to fall below 10,000 points, as the current credit crisis is a repeat of the 'Rich Man's Panic' of 1907, Tom Hougaard, chief market strategist from City Index, told CNBC.
A bit of forgotten financial history:
"We've been here before … About one hundred years ago we had an identical credit crunch," Hougaard said, adding that the Dow lost nearly 50 percent in over two years due to the 1907 crisis, which indicates further downside yet to come for today's markets.
The 'Rich Man's Panic' was caused by a severe lack of liquidity as banks pulled back lending and led to numerous bank runs and eventually the creation of the Federal Reserve in 1913.
"It's most likely to get worse before it's going to get better … I don't think we're really seeing this capitulation just yet, but we're close," Hougaard said, adding that the S&P 500 could take out the low of the 2002 bear market, which was 944.
I think this is acutally worse than the 1907 panic, even though there are more safty measure in place now than at that time. And I don't see any J.P. Morgan's looming on the horizon...
See also: 5 Lessons About What Happened To The Economy You Didn't Learn From CNBC.
2 comments:
Let's face it Voodoo Economics has been practiced for so long now that nobody can even understand the basics. This shell game has been going on for decades, unmonitored, and now the chickens have come home to roost.
The saddest part is that the 'Investment Bankers' will start all over again as soon as they cash their cheques.
Are you all ready for the Palin-Biden debate. Ooooh I have such high hopes for confrontational calamity..as long as Biden doesn't put her into somnambulistic shock when he goes on and on and on and on ..
and we can only hope that Caribou Barbie will says
"I can see Russia from my House!"
I've got a really nice bottle of merlot chillin' in the fridge so I can enjoy this silliness known as a "debate". The gawds know I love a good train wreck!
Post a Comment