Arizona, Florida, California, and Virginia have seen precipitous drops in sales. By any measure it is in far worse shape than in and the unraveling of the housing bubble is clearly at hand.
But what did happen? It is my contention that a global financial crisis began during the second half ofand it threatens to greatly accelerate as we enter During the last six months of the year that just ended, financial markets all over the planet crashed, trillions of dollars of global wealth was wiped out, and some of the largest economies in the world plunged into recession.
This is what the early stages of a financial crisis look like, and the worst is yet to come. If we were entering another style crisis, we would expect to see junk bonds crashing.
Instead, it usually starts percolating on the periphery. And right now bonds of firms that are considered to be on the risky side of things are rapidly losing value. In the chart below, you can see that a high yield bond ETF that I track very closely known as JNK started crashing in the middle of This crash began to unfold before the horrific crash of stocks in the fall.
Investors that saw junk bonds crashing in advance and pulled their money out of stocks in time saved an enormous amount of money. Now, for the very first time since the last financial crisis, we are seeing junk bonds crash again. In December, there was finally a sustained crash through the psychologically-important If junk bonds continue to crash, this will just be the beginning of the carnage.
One of the big reasons why junk bonds are crashing is because of the crash in the price of oil. There has only been one other time in all of history when we have ever seen an oil price crash of this magnitude.
Unlikethe price of oil is not expected to rapidly rebound any time soon. Most oil experts believe prices will bounce back in latebut they expect more pain first.
Meanwhile, the prices of industrial commodities have been crashing as well. For example, the chart below shows that the price of copper started crashing hard just before the great financial crisis ofand the exact same thing is happening once again right before our very eyes… Things are unfolding just as we would expect they would during the initial stages of a new global financial crisis.
And we have already seen a full blown stock market crash in many of the largest economies around the planet. For instance, just look at what has been happening in Brazil.
Canada has the 11th largest economy on the entire planet, and I recently wrote a lengthy article about the economic difficulties that the Canadians are now facing.
The Chinese have the second largest economy on the globe, and news about their economic slowdown in making headlines almost every single day now. Last summer, Chinese stocks crashed about 40 percent, and they did manage to bounce back just a bit since then.
But they are still down about 30 percent from the peak of the market… And there is plenty more that we could talk about.
European stocks just had their second worst December everand Japanese stocks are down about points in early trading as I write this article. How would you feel if you lost 7. The truth, of course, is that signs of financial chaos are erupting all around us.
Corporate profits are plungingthe bond distress ratio just hit the highest level that we have seen since the last financial crisisand corporate debt defaults have risen to the highest level that we have seen in about seven years.
If you run a business, you may have noticed that fewer people are coming in and it seems like those that do come in have less money to spend. Economic activity is slowing down, and inventories are piling up.JustMe: You can stash Yuan in plastic bags and PVC pipe if you like; or another Emerging Market BRIC fiat.
Then of course there is the Rouble, now 70 to one to the dollar. The purpose of Peter Temin's `Did Monetary Forces Cause the Great Depression' is to compare and synthesis the monetarist "Money Hypothesis" of Friedman and Schwartz with the "Spending Hypothesis" of Keynesian economists.
The stock market crash of occurred on September 29, The Dow Jones Industrial Average fell points in intra-day trading. Until , it was the largest point drop in history. It plummeted because Congress rejected the bank bailout metin2sell.com the stresses that led to the crash .
People gather on the subtreasury building steps across from the New York Stock Exchange in New York on “Black Thursday” on Oct.
24, The Great Depression followed thereafter. Stock Market Crash Causes - information on the events surrounding the Stock Market Crash. Events in the Depression - brief look at the events during the Great Depression. Financial Markets and the Depression - article showing how the financial industry was effected during the Great Depression.
The stock market crash of – considered the worst economic event in world history – began on Thursday, October 24, , with skittish investors trading a record million shares.