Wig,
I agree with you on the stock market. I there's a fair chance that the market could head low enough to really devastate some people. For me it's as simple as a ludicrous bubble should be followed by a horrendous bust. Whether that means the market must trend mostly sideways for a few years or go straight down tomorrow or whether people are insane ;-) and act in such a way as to create another bull run and an even more precipitious drop I would not dare venture to say.
Whatever method one uses, when company stock grows three times faster than the companies they represent ownership in there is probably going to trouble.
As far as the effect such an additional correction would or will have on the economy probably depends on much more than just it's occurence and it's magnitude. I would think the length of the bear market, the severity of the current break, and a number of other variables many more than that including monetary policy, health of foreign economies, intergovernment relations, global stability and even luck.
One depression in the twentieth century. That gives some kind of baseline probability. Less than once a lifetime. I think we learned a lot from the depression and that has decreased the probability of such events dramatically. You don't see skyrocketing income taxes or balanced budgets during recessions anymore which would be a killer like they were in the 1930s. If the twentieth century is not completely misleading, world wars seem to be at least as frequent than depressions and about the same length of time since either.
Last edited by Colin at Jul 3 2003, 11:31 AM
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