[RT] Comparison of 1929 Market to Today

[Pete Lieber <plieber@xxxxxxxxxxxxxx>]

Attached is a chart comparing NASDAQ 1999 - 2008 to the DJIA 1929 -1940.  Though today's market is not like 1929's crash in magnitude, the pattern is extremely similar having a correlation of .8399.  I'm afraid that today's market at best will go sideways for a number years to come.  Take Japan for example, the Nikkei 225 peaked in 1989 at nearly 39,000 Yen today at 9203 it is less than one-fourth than that.  Yet Japan remains a net exporter and a nation of savers.  We are seeing the greatest transfer of wealth in history.  We've been averaging a trade deficit of about $60B/month, which if my math serves me works out to be about $6,150 per household per year.

It has been said that consumer spending drives 70% of the economy.  With total consumer debt ($2.59 trillion) and credit card debt ($970 billion) at all-time highs and house values falling I’d say the economy is going to remain in poor shape.  I’m sure that the previous rapidly rising home values drove much of consumer spending.  What’s to drive it now?


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