The market devaluation of 36.2% this year was exceeded only by the drop in 1929, where the markets erased 40% of their value. As I wrote earlier, the market may bottom at 8200. What I wanted to add today, however, is that won't stop the depression.

Alot of what we see in America is , as they say in Vegas "betting on the come out" line. Alot of people put their investments up front for a quick bang out of the market - they bet on an active, buying public that essentially sheds their anxieties through the act of shopping. Absurdly huge shopping centers have resulted in part to this type of market analysis. Christmas had to be commercial in order for them to keep that kind of momentum (it really has to be relatively huge momentum to maintain these types of stores). Inventory taxes are steep for themed you-will-have-fun mega-shopping plexes if they can't shed their inventory before January 1st.

And they won't. The retailers have attempted a veronica, leaving the prices essentially unchanged or shallow markdown, in hopes that they can catch the post-christmas discount and gift card crowd. The Wal-Marts of the world are meanwhile pricing down a few key items that people can keep track of in their heads while keeping the retail prices of other items high, making their money through the backdoor.

Bubbles break at the top. Banks, meanwhile, are forced to play the game of eliminating anything that looks tenuous from their balance sheet. And they are not interested in the arbitrage necessary to keep markets fluid, simply to secure their own finite segment of the interbank market that protects them from having to fold their hand. They will send inventory to auction and that is where the buyers are lined up. Banks, like bubbles, are part illusion - they rarely have the money that is deposited within them. And the biggest illusions of all - the Lehman Brothers, and the High End Real Estate - have been shattered. And so too, the higher end retailers.

So the historical precedents - the crash of 1929, the south sea bubble - all point to an aftereffect, being the worst of it. The great depression actually occurred in 1932.

They called the two horse carts that drove around town, carrying items for barter - "Hoover Buggies" . People traded amongst themselves to keep things going. A farmer would slaughter a cow, and drive it to his neighbor , trading a flank for perhaps a bushel of corn, and so on. Maybe the 21st century version of that kind of thing is coming with a Bush something or another. Who knows.

That was 1931. Or the old guard. I would rather wish you instead a Happy New Year.

Happy Nine, Colorless Reader


M@ said…
Hmmm. Maybe I should keep my McJob for now. I want to move to Chicago though.