I will post a graph or image for the day related to capital markets, and add content on it throughout the day as the spirit moves. You can comment on that or post whatever you want concerning the world of money.
I will begin with this graph of the Dow Jones Industrial Index at the onset of the Great Depression, as Depression imagery seems to have seized hold of the chattering classes.
The main point of this graph is to illustrate that the slide into the Great Depression took two YEARS. The popular mythology is that the crash of Oct 29 1929 caused the terrible symptoms of the Depression by November 1. The 4th quarter of 1929 was simply a bear market following the frothy, speculative market of the late 1920's. It was a severe correction, but no one anticipated what was to follow. If they did, the market could never have produced a return of 15% in the first quarter of 1930.
The Depression was the perfect storm. Bad decisions and late decisions by governments across the industrialized world contributed to an accelerating loss of confidence that did not reach bottom until 1931.
The world is not going to end now just because we went through a stressed credit market and bear market in Sep-Oct 2008. The powers-that-be have to work hard to create another depression. The tools- protectionism and tight money. There is no sign of that. Yet.
Update
The graph shows that the recover of 1Q 1930 was undone by the 21% decline of the following quarter. Not coincidentally, on June 17, 1930 Congress passed the now infamous Hoot-Smawley tariff, which raised import duties sharply. Other countries reacted with a wave of retaliatory tariffs, launching an all-out trade war.
