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View Full Version : A credit crater too big to fill?



mick silver
5th November 2008, 17:33
the movement of money across borders comes to a grinding halt, governments can only manage the decline. Don't be surprised to see markets roll back to 1995 levels -- or lower.

It's as if a set of asteroids hit Manhattan, London and Tokyo, carving a massive hole in the architecture of finance. The initial buildings in the impact crater, Lehman Bros. (LEHMQ, news, msgs), Bear Stearns and Northern Rock, were quickly incinerated. But now the toxic rain and tsunamis that were kicked up are rolling onto the survivors in waves and cutting off their air supply.

New data from world money centers suggest the movement of money around the globe has simply ground to a halt, as institutions in the United States, Europe and Asia that are receiving taxpayer dollars from governments are socking it away to shore up their balance sheets, reserve against liabilities expected in the near future and sustain their unprofitable operations

mick silver
5th November 2008, 17:33
http://articles.moneycentral.msn.com/Investing/SuperModels/a-credit-crater-too-big-to-fill.aspx

mick silver
5th November 2008, 17:35
How low will it go?
As a result, once the current rally interlude is over, it's not hard to see the Dow Jones Industrial Average ($INDU) sinking to around 4,000 -- a level it last hit in 1995, before debt started to play such a large role in corporate and personal finance.

That would entail a decline of 70% from its 2007 peak, or about the same amount the Japanese stock market has fallen since 1990 in the wake of its own debt unwinding. Or the amount the Nasdaq Composite Index ($COMPX) dropped from 2000 to 2002. Or the amount the Russian market has plunged since June

mick silver
5th November 2008, 17:39
http://stockcharts.com/charts/historical/djia19201940.html