When you think of the stock market crash of 1929 you tend to visualize a DJIA chart - in a straight line - pointing straight downward. That is certainly what happened on the streets - a straight line pointing down - into economic dispair.
But - if you look at the actual stock market charts of that event you see something a little different - peaks and valleys - including one larger peak that is referred to as the 'Sucker's Rally of 1930'
From early September 1929 to mid-November, the Dow lost almost 50% of its value. Then, the market rebounded until mid-April 1930, as the Dow jumped over 50% and recovered more than half of its previous losses. Only then did the worst of the fall begin, as the Dow plunged an astounding 85% before bottoming in 1932.
Now look at today's charts using 2007's peak and 2008's 58% drop as a starting point - and look at where we are today.
Look familiar?
does anyone really believe that the stock market rally of 2010 is (was) real? 9.9% unemployment that everyone knows is much higher. fiat money being printed on demand. euopean nations teetering on collapse.
Of course - what happened in 1929 in no way predetermines what will happen today. There was a stock market recovery after the 1987 crash as well - but that rally did not collapse and was not a suckers rally.
but - i think we all know that something smells a little different this time around.
but many many things are different. perhaps there are more things different than there are the same. the current situation in Europe more closely resembles the economic turmoil that precipitated World War 1. - not work war 2 - and - in 1929 the U.S. federal government did not intervene. there were no stimulus packages or federal bailouts. there was no fiat money being printed and used to support america's ailing industrial sectors.
on the other hand - i bet a single one million Zimbabwe dollar bill (approximately worth a bag of potato chips) - that this will only make things worse - and will result in not only a worldwide economic collapse - but unlike 1929 - this COULD result in the bankrupting of the US federal government - and a devaluing of the dollar akin to post WW1 germany.
we all go down to zero.
that was what they said in Fight Club - right? Tyler Durden stood at what he described as 'ground zero' and watched the controlled demolition of the world's financial centers.
Flash:
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