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Hello everyone.
Here's a few charts to help us get a handle on where the economy sits from an historical perspective.
The total market is more over-valued that it has ever been in history.
A 40% decline in total market cap would only bring the level back to the historical average, but as we all know too well, markets dont just retrace to the average, they always overshoot by a long margin.
Expect the next decline to hit the 2009 valuation lows again before the depression is complete.
You can see that the recession in housing has already begun in the U.S.
Prices have been slowing for three years now, and the median sales price went negative last month, this chart should return below the zero line over the coming months as prices begin their long slide and the housing industry colapses again.
The private sector never really deleveraged during the last recession at all! They just stopped taking on new debt for a short period, and the economy went into a tailspin.
Thats what happens in a leverage based economy when debt accumulation stops.
The private sector debt acceleration has again topped out and is turning down, the very same outcome will occur as happened in 2008-09, except this time we are falling from higher levels, and with no safety net!
And there is no-one willing or able to save the banks this time.....................
I hope you are all as ready as you can be.
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