Great Depression Online Archive Issue:

The Panic of 2010?

Great Depression Online
Long Beach, CA
September 03, 2010

Inside This Issue You Will Discover…

*** Turn Over a New Leaf
*** Summer of Recovery, We Hardly Knew Ye
*** The Panic of 2010?
*** And More

Turn Over a New Leaf

Down one day and up the next.  That silly stock market can’t seem to make up its mind as it wanders aimlessly to the right.  Buy, sell.  Sell, buy.  Perhaps it’ll find its footing.  Or perhaps it’ll slip and fall off a cliff.

Some days we think we’ll get an answer on the economy’s trajectory.  Some days we don’t.  Regardless, we’re always watching intently for clues, hints, and suggestions.

Like this bit of good news reported yesterday by AP…

“The feeble economy exhibited a smidgen of strength Thursday, with mildly positive reports on jobs, store sales and housing.

~~~~~~Should You Buy Stocks?~~~~~~

Sometimes the investment weather forces you to 'buy a coat,' says Robert Prechter
By Elliott Wave International

When it’s sunny, you head outside without a thought, but when it’s rainy, you look for your umbrella. When the markets are trending up, you don’t worry about your investments much, but when the markets turn bearish ... what do you do?

Read more

~~~~~~~~~~~~~~~~~~~~~~~~~

“Figures released on unemployment claims, store sales and home-buying contracts all trend in the right direction, tempering fears that the economy is on the brink of another downturn.  Still, growth remains anemic, and a report Friday is forecast to show that employers have yet to step up hiring.

“For now, companies aren’t resorting to widespread layoffs.  New applications for unemployment benefits declined for the second straight week after rising in the previous three to above the half-million mark.”

By the time you read this, the August jobs report will be making headlines.  Now that fall is nearly here, maybe the economy will turn over a new leaf…particularly after the disappointing summer of recovery…

Summer of Recovery, We Hardly Knew Ye

Several months ago the good times were just one season away.  And if they weren’t…it at least seemed they were.  In fact, in mid-June, Ron Sims, Deputy Secretary of Housing and Urban Development, predicted “A Summer of Economic Recovery.”

“As the summer heats up, it is becoming clear that it could quite possibly be the most active season yet when it comes to recovering our economy,” declared Sims from the White House blog.  “There are Recovery Act-funded projects breaking ground across the country that are creating quality jobs for Americans and economic growth for businesses, large and small.

“This summer is sure to be a Summer of Economic Recovery.”

Alas, it wasn’t so.  The recovery flared out with the last of the 4th of July fireworks.  Since then it has been the summer of our discontent.  So we’ll bid a farewell…

Summer of recovery…we hardly knew ye.  Welcome fall, at least for now…

The Panic of 2010?

The period between Labor Day and Halloween has been notoriously bad for financial markets.

Here’s an impartial review of fall flounderings…

One September day, just several years ago, Lehman Brothers disappeared from the face of the earth.  Don’t forget the 1998 financial crisis where what had been hailed as the most impressive hedge fund in history – Long Term Capital Management – lost $4.6 billon in the fall of that year.  Remember, too, Black Monday, October 19, 1987, when the DOW crashed 22 percent. 

Of course, there was the great crash of October 1929.  Yet, the worst month of the Great Depression didn’t come until nearly two years later…September, 1931, when the DOW dropped about 30 percent. 

But that’s not all…

The great panic of 1907, when J.P. Morgan himself had to bailout the entire banking system, just so happened in October.  And, if you can believe it, the great crash of 1873 took place in September.

Could there be a Panic of 2010?

We’re confident we’ll have an answer by Halloween.  Tis the season…fall is upon us.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  In an interview with Jeff Sommer of The New York Times in July 2010, Robert Prechter said that he is convinced that a “market decline of staggering proportions” is on its way, and that individual investors should get out of the market and into cash and cash equivalents, such as Treasury bills.

“I’m saying: ‘Winter is coming.  Buy a coat,’” Prechter said. “Other people are advising people to stay naked.  If I’m wrong, you’re not hurt.  If they're wrong, you’re dead.  It’s pretty benign advice to opt for safety for a while.”

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