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Wed Sep 23, 2020, 04:43 PM

Looking at the financial collapse of 2008...

which got started by the fall of Bear Stearns in March 2008:

In March 2008, the Federal Reserve Bank of New York provided an emergency loan to try to avert a sudden collapse of the company. The company could not be saved, however, and was sold to JPMorgan Chase for $10 per share,[2] a price far below its pre-crisis 52-week high of $133.20 per share, but not as low as the $2 per share originally agreed upon by Bear Stearns and JPMorgan Chase.[3]

The collapse of the company was a prelude to the risk management meltdown of the investment banking industry in the United States and elsewhere that culminated in September 2008, and the subsequent global financial crisis of 20082009.


I am struck by the fact that the markets didn't truly bottom until March 6, 2009:


If we're on the same trajectory, that means that we won't hit bottom until March 2021.

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Reply Looking at the financial collapse of 2008... (Original post)
Yavin4 Sep 23 OP
blueinredohio Sep 23 #1
ProfessorGAC Sep 23 #2
Yavin4 Sep 23 #3
ProfessorGAC Sep 23 #4
Yavin4 Sep 23 #5

Response to Yavin4 (Original post)

Wed Sep 23, 2020, 05:54 PM

1. I think were well on our way to a collapse.

And if Trump gets back in we are screwed.

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Response to blueinredohio (Reply #1)

Wed Sep 23, 2020, 06:27 PM

2. Why?

Over 80% of GDP has been operating at normal capacity for 6 months, despite the pandemic.
The closer we get to therapeutics or vaccines, the more the other 20% moves to normal, and they're not at zero now.
Consumer confidence is about where it was the year after Obama got the economy out of recession.
What makes you feel that collapse is imminent? Don't understand your basis.

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Response to ProfessorGAC (Reply #2)

Wed Sep 23, 2020, 07:14 PM

3. We don't have a firm handle on the virus, neither therapeutics or vaccines.

The world is bracing for a 2nd outbreak which will lead to lockdowns in Europe and possibly Canada. More relief funding for the unemployed and the states are currently stalled in congress. There will be additional layoffs in the travel and leisure industries as people stay inside more.

When Bear fell in March 2008, life proceeded as normal. Look at the charts. No one thought that the financial system would collapse. If anything, the thinking at the time was that there were mechanisms in place to ameliorate a complete meltdown. That's similar to this virus. Everyone is thinking that everything is normal when it's far from it.

When the stark reality finally hit, it was a year later in March 2009. That's when the markets bottomed.

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Response to Yavin4 (Reply #3)

Wed Sep 23, 2020, 07:55 PM

4. Seems You're Ignoring A Big Difference

The markets got jittery, the cratered after the recovery package was applied because the very action cemented how tenuous the financial industry was.
If an entire industrial segment, especially finance, has been proven to be in jeopardy it affects all financial instruments. Hence equity markets took a beating as investor confidence cratered
No such major industrial segment, aside from food service & hospitality, is in the kind of shape the financial industry was in 2008.
We differ on therapeutic & vaccine potential. The markets, after all, are bets on the future. Vaccines & therapeutics are not 10 years away.
So, the virus isn't going to have the impact on equity markets you propose.
And, you're comparison to the financial crisis conveniently ignores that you're talking about the entire financial industry.. That's an omission that's illogical.

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Response to ProfessorGAC (Reply #4)

Wed Sep 23, 2020, 09:08 PM

5. We just have to disagree.

We'll see how things play out over the next 6 to 12 mos. Frankly, I hope that you're right and everything comes back rather quickly. I just don't see it that way.

I see this as having a bigger, more negative effect than the financial meltdown.

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