Profit Margin On White Goods By Retail

Three large depressions

charts comparing the performance side of the market indices today with the two major historical precedents of depression that followed the collapse of stock market of 1929 which still underway in Japan, which followed the collapse of 1989.

In the first of two graphs, comparing the nominal values \u200b\u200bof the indices, we note that in both of the two previous indices have come to lose up to about 90% of their value before the crisis. In the case of 1929 it took 25 years to review the indices to fall on the previous highs. As for Japan, 20 years after the collapse of the Nikkei index is only about 20% of its value in 1989, making it likely recovery time even longer. The current crisis is completely in line with the previous two, having lost for the moment 50% of its value from highs in September 2007.

In the second graph the indexes are recalculated taking into account the change in the price of gold, one of the methods to take account of actual inflation recorded during the three periods. We can thus note two major differences with the first graph. First, the previous highs to the collapse of the present crisis does not match the ratings, but they date back to 1999, as we have often highlighted in some previous posts (see here and here and here ). Unlike the performance of the Nikkei that even after losing 50% from 1989 to 1997, he returned in 1999 almost on the level before the collapse, only to capitulate again. Taking into account these changes, the collapse of today (especially in the case of Japan) is already very close to nil in the case of 1929 when the index lost 90% of its value.

see also:
will be another Japan? (Pt. II)
Employment and GDP in recession
Preparing for the big reverse