"A common feature of all these earlier troubles [panics such as 1907 and 1914] was that having happened they were over. The worst was reasonably recognizable as such. The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning.
Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost.
The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months.
The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable."
John Kenneth Galbraith, The Great Crash of 1929
"The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revivial, but finally giving up in the final collapse."
Charles Kindleberger,
Manias, Panics, and Crashes: A History of Financial Crises, 1978
The hallmark of forecasting a crash is a
'trigger event' that causes
the rally that fails.
If there is no trigger event the usual market interventions by the fiscal and monetary authorities can turn the markets back up, and prolong the putative financial asset bubble until the real economy catches up to its valuations, or an event of sufficient magnitude finally occurs and a severe correction ensues.
Like snow building for an avalanche, at some point in an extended bubble it may take an event of much lesser magnitude than one might expect to set off the slide. Of late, however, the Fed and the Exchange Stabilization Fund have become so determined to support markets that the events tend to be of a greater magnitude. So what has happened in the past may not happened now.
Stocks continued their decline today. Goldilocks seems to have the vapours.
Gold and silver took a pause most likely with an eye to the stock market option expiration on Friday.
The Dollar slipped off the 106 handle.
VIX marked time at an elevated level.
It would be hard for me to remember a time when so many masks fell off the powerful, who increasingly drop all pretense to the rule of law, and any sort of morality other than 'do what thou will is the whole of the law.'
But God has a way of standing before the nations with judgement.
This is going to end badly, and many innocent people will be caught up in their wickedness.
It would be better for many of these criminals and their enablers if they had never been born.
Have a pleasant evening.
