It’s Another Rocky August in the Markets. Does It Look Like 1998, or 2007?

Mr. Trump has created a false economy that is vulnerable to the storm his trade wars are causing. Lowering the interest rate, lowering the tax rate has combined to leave us unsheltered from the calamity that could befall us in the next few months.

The real situation; Over a $ trillion debt in student loans, might be closer to one and a half. Huge amount of car loan dept. Huge amount of credit card dept. If I am not mistaken both are greater than 2007. The intelligent take, after the holiday spending spree regular Americans will be way underwater. Gracing the top of an unsustainable situation we have total incompetents running the show, not only that, we have an electorate more interested in expressing spite than solving the issues that impact our country and the entire world. I fervently hope our nation will not fail from flat out stupidity, but with every passing day it appears more likely.

Wrong. With Trump, it’ll be Deja Vu, all over again: as in 1929. A stable genius, with multiple bankruptcies to prove it. Seriously.

Are you kidding me? August 2019 looks like neither 1998 or 2007. Back then, we had political leadership with at least a rudimentary understanding of economics and business. Today, we have a low-information president whose grasp of basic economics is, at best, primitive. Trump's background is almost entirely a litany of business failure. He only got his start with gifts and loans from his family. He was a serial bankrupt in the casino and development business. He lost hundreds of millions of dollars in real estate, airlines, hotels and many other businesses. Trump's only success was in PR and reality TV. When you have this kind of idiot in charge, we are doomed.

66 years old have lived on permanet disabilty for 20 years with a fairly low social security income savings long gone to medical costs and i have 87,000 dollars of credit card available and a week never goes bye without more offers in the mail what could possibly go wrong not one thing they could touch makes no sensr

There will be a recession for sure in the US. Germany, England, Brazil, Argentina, Turkey and other countries are already in an industrial one. What shape it is going to take in terms of capital devaluation and destruction and the damage to the livelihood of people is unknown though. Its form will be different than previous ones. Its consequences the same: the 99% will be poorer and the 1% richer as a consequence of concentration and consolidation of capitals. That is nothing new

The market goes up, the market goes down. But, in general, it goes up. Put your money in low-cost Vanguard index funds. Leave it there for 10, 20, 30 or more years. Ignore “timing” type articles like this one (except, enjoy them for their “entertainment value,” as I do). Instead, spend your time with family/friends and enjoying your life.

Is it looking like 1998 or 2007? More like 1929. Have you looked at the P/E of some of these companies?

Or fall 1987?

With respect to Irwin, whom I admire greatly, it seems to me that today's situation has almost nothing in common with either 1998 or 2007. In both those cases the problems were in the financial sector; today the problems are -- I don't know -- Trump's trade war slowing down the real economy in many countries, and even more the uncertainty and the very possible unforeseeable additional stupid moves by Trump, who sees the world as a short-term, zero-sum game. Worse, it's a game he's trying to win without understanding how it works, and according to criteria which are in part psychotic. When I sold most of the equities I manage last August and September, and bought gold with a not-very-big part of the proceeds, my broker was more critical than he has ever been with me -- about the gold. But it's up about 16% in the 10 months since then. Why? UNCERTAINTY. Markets all over the world just hate it, and Trump has unleashed it like nobody else in our lifetimes. Lowering the cost of capital won't lead to more investment or consumption in this situation, and conversely raising interest rates in some country won't stop capital flight if investors there fear that there may be no limit to the downside there (see Asia crisis of the late 1980s ? on the latter). "Fasten your seat belts, it's going to be a bumpy night."

A generation who is gaining nothing from this administration should stop paying student loans back, let’s see what happens then.

“...despite a generally solid economy..Bond markets are increasingly pricing in lower growth...” [op cit] — But have, “the markets,” priced in Donald J. Trump [“DJT”]? — DJT is a famously unknown quantity. He is opaque and unpredictable. He also wields incredible influence, over it seems, just about everything! — Nobody knows what DJT will do about anything, from one day to the next. The only true gauge of what he might do next? Is: 1. How it influences his base. 2. And how it influences his reelection bid. And that’s basically it! — Footnote: Before DJT came along, I had no idea how powerful, and potentially dangerous an American President could be. Now I know, and it scares me! And in my opinion, DJT is the most dangerous man in the World.

On the verge of a potential recession, we’ve got the self-proclaimed King of Debt, who’s presided over multiple bankruptcies, running the country. What could possibly go wrong? 11/3/20. VOTE.

Trump fiddles while the economy burns. And the majority of Americans, who have little awareness of the investment markets, party like it's 1999.

A "senior" economist claims the 2008 crisis was caused by people defaulting on their mortgages. Unbelievable! I know we've been told this lie and it's often repeated. The truth is worthless securities were sold from bank to bank, with A ratings (based on nothing) in the uS and then all over the world. When it was discovered that their value and backing were unclear the system collapsed. Today the amount of such securities is possibly higher than the world GDP and rating agencies are again putting As on them because they can't rate how risky they are. The author of the world is flat (a top economist) said in his book that even if all mortgage owners in difficulty had defaulted the losses would have been absorbed by banks in a matter of months (from memory) and went on explaining the real cause of the 2008 financial crisis as I did above.

In 2008 and in 2001 there was a lot of fraud in financial markets with the fog a mirror mortgages and the silly dot-com company IPOs. That is a crucial distinction. It seems recessions caused by such activities are worse and longer. The same was true with the S&L crisis related recession in the early 1980s.

The yield curve has been sending a warning signal for a while now. The yield on the 10-year notes is below the yield on the 1-year notes.

1998 and 2007 have one thing in common: Wall Street wanted to precipitate a change in the White House. In 1998 (more to the point, in 2000 when the Fed began raising interest rates, and coincidentally when Republicans began a campaign against a poor economy; why do you raise rates in a poor economy?), Wall Street was tiring of the Clinton-Lewinsky soap opera and wanted to wash its hands of the whole sordid spectacle by electing a Republican. Again in 2008, when Wall Street began tiring of the seemingly endless wars in Iraq and Afghanistan, the markets nose-dived again. Could it be that Wall Street wants another change in 2020?

The bigger the bubble, the bigger the bust. 10 years of ZIRP and QE has created the biggest bubble in history. The past 10 years have been the roaring 20s on steroids. All the Bears have been wiped out. There is nobody left who is willing to put their career on the line and call the top. Everybody is Irving Fisher who famously said 9 days before the 1929 crash "the stock market has reached what looks like a permanently high plateau".

lots of pessimistic comments here. And with good reason. But Warren Buffet says "never bet against the American economy". And he has the best record. Bottom line - be cautious, but don't panic.

Seems like October's when the stock market typically harvests the suckers. August's when the scythe-wielders start getting excited.

The cause of the 2008 market crash was lending 110% (I was in the industry, and yes, it was 110% or more) of the value of homes to buyers whose only qualification was having a pulse. As soon as the teaser rate went up a couple of points, they walked away because they couldn't afford the monthly payment. No loss to them, their credit was already terrible. Big loss to the lenders and the gamblers (AIG), which brought down the world economy. No matter how bad it is today, it is not close to being 2007.

The DJIA is the lagging indicator of a bad economic outlook. It reacts violently when it recognizes what the rest of us have known for a while—overpriced real estate, a 25 trillion dollar deficit, an over burden middle class, a losing trade war, autocrats with A bombs and an inverted interest curve.

Two other ways that 1998 and 2007 are different than 2019, but not in a good way. Fed Funds Rate was >5% in 1998 and 2007, which meant the Fed could cut interest rates. FFR is at 2.25% now. Federal deficit was around 1% to 2% of GDP in 1998 and 2007, which meant fiscal policy could lossen. It is about 4% now. In other words, both monetary and fiscal policies already appear spent in 2019.

One of J.K. Galbraith’s favourite lines when writing about the run-up to the latest crash was “This Time It’s Different.” But it never is, is it?

"If President Trump starts to see evidence that it is about to cause a recession..." That's a big IF. We're talking about a guy who doesn't just ignore facts so much as he slanders them viciously while also spreading conspiracy theories on a daily basis. We're talking about a guy who inherited the best US economy in modern times, and is still managing to cause instability in the world's economies with policies that are borderline insanity. Add to that the massive corporate debt, personal debt, and governmental debt we are all burdened with, and I'm amazed that the economy has remained as good as it has. Any number of factors in the world -- a no-deal Brexit, a major war in the middle-east, North Korea missile launches, are just some examples --could trigger a market panic in a New York minute, and the Fed will be powerless to react now that they've already cut rates. I don't know, I hope you're right and we're more solid than in 2007. But I seriously doubt it.

The real estate market is going down the dumper again... Book it. The million dollar suburban McMansions just aren't going for the GOP profit. Back to the financial computer markets to make up for the loss of your home.

To me this seems more like 2007, but for slightly different reasons. Trump's fake economy has been overstimulated for his own POLITICAL reasons by massive public debt. Add to that innumerable Trump-induced areas of financial crises and impending failure due to poor long-term calculations by businesses expecting Trump's lies to materialize and we have a MASSIVE, OVERALL ECONOMIC CRISIS pending. The Fed did not pack away enough reserves during the "good times" of the post-Obama expansion and hence will have limited weapons to attenuate a systemic failure and Trump's fake Trade Wars are a lose-lose crisis. ANYTHING that unbalances the global status quo, like a war (which Trump has also encouraged on many fronts) and domestic conflict (SO obvious) can tip the globe into a massive recession - it's already beginning overseas where central bank rate are NEGATIVE already and GDP is markedly down. WE have no more money to flush down the toilet with fake tax cuts for the rich - that ship has sailed, even for the Republican thieves. Buckle up, and woe betide anyone needing to liquidate retirement funds when Trump is messing around.

2007. Stock market bubble? Check. Wild deficit spending? Check. Republican president? Check.

I would add that we happen to be in the longest expansion in history, so we are due. There is also the implied coordination between nations to help each other out which is no longer available to us. Oh, and maybe the biggest difference, we have a mentally challenged, narcissist who is running the largest economy in the world as if it were one of his casinos. And we all know how well they prospered. Nothing good can come of this and it shouldn't. The recession is coming, it's just a matter of intensity.

For all the stupidity and greed that led up to the 2007 financial crisis -- and admitting that the financial industry largely escaped accountability for its crimes -- we can at least say that the world's leaders largely worked together to contain the damage. It was a very close call, but they managed to avoid a total collapse of the global economic system that would have led to a massive and lengthy depression. As bad as it was, it could have been *way* worse. Can anyone say they will work together next time? Or that Donald J. Trump is who you want in charge of the United States when that next time comes, as it certainly will?

How about August 2020, when the nation is gearing up for possibly the most consequential election in our history? We can stop this spiral into kleptocracy and totalitarianism or lose everything we haven't already lost to greed, republican tax-cutting and deregulation amd who knows what other fraud, money-laundering and corruption? Not to mention our very democracy. This analysis, like too many others after 2008, does not mention the enormous loopholes that allowed banks to play roulette with people's lives. People didn't just default on their mortgages through choice but because banks raised their interest rates to usurious levels while being able to recoup thier losses by having their bets covered through default insurance and taxpayer bailouts. I believe that this should have been investigated and prosecuted as fraud against the American people who were then required to bail out the banks, insurance companies and banks with no one going to jail who were behind the mess and profited from it.

Using past scenarios to find a suitable analogy for today's financial shaky foundation is only mildly helpful. There is a special witches brew being stirred by a childish bully experimenting as president. In terms of intellect, patience, strategic skill and experience, Trump is outmatched. Putin and Xi are light years ahead of him and yank his chain quite easily. No mention of the cov lite CLOs floating around that support zombie companies. No mention of Chinese shadow debt and the empty highways built to serve the empty apartments used to maintain Chinese employment. As growth slows, funds to support these houses of cards will dry up. Add the chaos and suffering of Brexit to spice the brew. Throw in an accidental explosion or conflict in Kasmir or Korea or Iran or Venezuela and this time will be different. Don't look to Twitter for calming reassurance from our dear leader. He'll be blaming the whole problem on the Clintons.

If China has the economic clout to cause a serious downturn in our economy, they hold a very powerful card in terms of the 2020 election. Other than continuation of the strong economy he inherited from the Obama administration, what real accomplishments can Candidate Trump point to? He loves to brag. What will DT brag about next fall? Trump’s chances for a second term are already shaky. What chance has he got if he runs during a downturn or a full recession? It just might be that President Trump will abandon his “tough guy” recklessness and approach the Chinese hat in hand. Come to think of it, what genuine presidential skills DOES Mr. Trump actually have firmly in hand?!?

Greed on the part of the .1%, the GOP, and Plain old Joe IRA-holders allows many Americans to turn a blind eye to the wrecking ball in the White House. And greed might be our deliverance. When the Big Men see their portfolios shrinking they might just start seeing that they have promoted and served the man with with the worst noxious personality disorder. So we get a sane president in 2020. Maybe a rout of the GOP. Does that mean the freaks and furies will go quietly back into the box? I don't think so, but it's worth a try.

In the year 2000, the NASDAQ stock market topped out at a little over 5000. The NASDAQ market was a huge speculative bubble without "earnings or profits" to support its unprecedented P/E valuations. As a source of funding for the overall economy, NASDAQ's P/E ratio, averaging in excess of 50, was uplifting but ephemeral. "Irrational Exuberance" prevailed as described by Yale's Nobel winning behavioral economist Robert Shiller, and animal spirits ran amok. Based on P/E ratios, Dr. Shiller pressed the case very early that such high P/E ratios enjoyed by these IT firms could not hold. Whereas, the Great Recession resulted from a real estate bubble, and growth in "average wages" simply could not support the overvalued housing market's growth. Near the end of the housing boom, 40% of new jobs created in the US were in housing. Many banks and financial institutions had debt/equity ratios well in excess of 40. And, unlike the IT crash in 2000, since these financial institutions funded the overall economy instead of a specific segment, like IT, the consequences of their negative real net worths were longer lasting and much more disruptive economically. [8/12/2019 M 1:27 p Greenville NC]

If "prayer" is one of the options, that pretty much guarantees you should do whatever else you can.

Bottom line is it is hard to predict the timing and degree of a big financial downturn. What is easier to predict is the warning signs leading up to it ie massive spending by everybody, big deficits, Wall Street running wild, insane trade wars etc. etc. It took at least 10 yrs for the two biggest economic disasters in modern history in 1929 and 2008 to happen. The next crash will almost certainly happen. The only unknowns are timing and degree.

How much of the current boom has been fueled by debt? Basic economic factors still have not shown the strength that strong growth in personal wealth bring. Savings rates are still deep in negative territory for most Americans, which forces the banking sector to look to investors for money. Investors want returns, whereas savers are looking for stability. Investment into areas that promote long-term growth, such as infrastructure, has been paltry, mostly driven by reaction to failures. Instead, profits have been squandered on enriching the wealthiest of the population, deferring spending on improving means of production or worker compensation. The wealth that has been created is ephemeral, subject to market forces. Real wealth does not evaporate overnight. Bridges, roads, schools, and libraries do not suddenly disappear because of a downturn in stock prices. Debt creates the illusion of prosperity, when in fact money is being destroyed by poor investment and useless consumption. Having a big-screen TV does not make a homeowner less likely to become insolvent if the water heater breaks down. Investment in public transit provides a back stop for people who cannot afford to repair their automobile, but that is not the kind of spending that people seem inclined to do. We are giving ourselves fewer and fewer options for when things go wrong.

"Or, at a minimum, if those kinds of financial contagions and dangerous feedback loops were to re-emerge, they would probably come from somewhere different than they did in that crisis. " That's the problem. Financial folks are endlessly innovative and resourceful. Each recession has its own cause, often including illegal activities. We don't find out about this stuff until after the crash. It would be interesting to find out why.

"If President Trump starts to see evidence that it is about to cause a recession in an election year, he will presumably look for ways to de-escalate the tension and calm things." That would require Trump to back down on one of the key issues he as been selling to his base. The only way he could do that would be to "declare victory" even if the Chinese didn't give him anything. And that would only embolden the Chinese to press him further and seek that he make concessions to them. Couple that with all of the other crises that may occur (no deal Brexit, for example) and the appropriate year to look to may not be 1998 or 2007, but rather 1929.

With Britain poised to crash out of the EU on October 31, this is shaping up as much worse than 1998, but not yet as catastrophic as 2007. It has been estimated that a no-deal Brexit will cost the UK economy nine percentage points. I've already reduced exposure to equities (this past June, when the S&P was at 2880), and I will reduce further in early September, when the S&P recovers a bit back up to 3025. After that, it will be look out below. I expect the S&P500 to go as low as 2150 before it finds support, and if it breaks that, it may go as low as 1900 or lower. At that point (2nd quarter of 2020), all of Europe will be in recession and the rest of the world--US, Japan, China, etc.--will be dragged in as well. Also, the problem this time will not be bank-related debt as it was in 2007. This go-round the debt bomb is corporate debt, $ 41 trillion, held by corporations here and around the world. Low interest rates have saved them so far (but also cursed them by allowing them to rack up even more); that will cause defaults when growth and sales tumble. The trade war and a looming currency war will add fuel, but the fire is in worldwide corporate debt. And individuals have added to their personal debt since 2007; that will be difficult to service when jobs disappear. The United States in the past two years has abrogated its role as world economic leader; increasingly, financial crises will be harder and harder for the US to solve. Think about that when you go to vote.