The Dow and FTSE 100 yesterday both threatened a secondary correction — on the 80th anniversary of the great crash of 1929. Today the Shanghai Composite fell below 3000 and the Nikkei 225 below 10000, both warning of another down-swing. The Australian All Ordinaries index closed below 4600, signaling a correction, but final confirmation will come from the Dow.
We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand. The result is that our possibilities of wealth may run to waste for a time — perhaps for a long time.
~ John Maynard Keynes: The Great Slump of 1930
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An alternative lesson from the double dip the economy took in 1938 is that the GDP created by massive fiscal stimulus is artificial. So whenever it is eventually removed, there will be significant economic fall out.
~ David Einhorn - Greenlight Capital
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