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Financial recessions are worse

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April 23, 2009 – Comments (3)

Here's a link to a report that looked at the difference in recessions in terms of the cause.

it's important to keep in mind that this is no "average" financial crisis. It's the most severe financial crisis to hit the global economy since the Great Depression.

 It seems to me this is going to be years before the market returns to old highs.  One of the things that you do not see in the report is taking into account population demographics.  Current population demographics, imho, means this is going to take even longer to recover from.

3 Comments – Post Your Own

#1) On April 23, 2009 at 4:24 PM, stockcommander (99.19) wrote:

Right, expecting the market to return to previous highs anytime soon is probably overly optimistic.

Especially since all the effort has been made to save the grease (banks) and not the machinery (companies, and other investments, that actually generate wealth).

You can't run a machine at full speed without the grease, but without the machine you have no need for the grease ...

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#2) On April 24, 2009 at 5:44 AM, DemonDoug (90.12) wrote:

deb, i was just talking about demographics on one of deej's posts, and referenced your assertions about demographics.  It's an issue that not many people are talking about, but only the people with the widest look at the macroeconomic future are seeing.

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#3) On April 24, 2009 at 9:44 AM, dwot (97.30) wrote:

Doug,

I have consistently found that most people evaluating what's happening look at too narrow of a range of variables.  Human population has been increasing rapidly through the entire period that market data has been gathered and that rapid growth is over.  Essentially we've had 500 years of pyramid population growth that we've based all our beliefs in the market on.  I think we are in the place where we see what happens when the population pyramid stops and I just don't see it being good for the markets.  Japan is probably the first micro economy to face this issue, which I think is going global. 

I say micro relative to the world economy, they were the first to deal with an aging population where the population isn't growing as in the past and you have to have a truly economically sustainable economy, not one based on unsustainable growth forever.  They do not look like they have achieved a sustainable economy.  Because they were first they were able for a period to exploit the ability to increase exports and essentially tapped into the rest of the world's population growth.

Will be interesting to see how the rest of the world deals with this when everyone wants to increase exports...

 

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