11 months since Oct 2007 peak - 20% drop
last month - additional 20% drop
That's a rapid acceleration of the crisis.
Combined with the lack of credit between banks, this decline mirrors those in the winter of 1930-31, which continued in extreme until the end of 1931. Then, bank panics riddled the country and the Dow dropped 70%. It's not going to be that bad this time. But the 40-50% decline that we are likely to witness is comparative. So far, this is the worst drop since the 1937 crash. (It will take the Dow dropping below 7500 for it to be the worse since the beginning of the Great Depression. Between Sept 1930 and July 1932, the Dow fell 81.25%, an Armageddon percentage if it were to occur today.)
The past month doesn't compare easily to 1929, because it wasn't as sudden of a purge. But the rate of loss is as bad as October of that year. In no time since then has the market fallen as quickly and consistently as it has in the past 10 days. If the speed and overall panic compares to 1929, the overall negative economic environment and the one year trend of the market decline mirrors the decrease between Sept 1930 and Sept 1931. During that period, the Dow "broke" 42%. So far this year, the market is down almost 29%. If it goes below 34%, it will become the 3rd worst year ever behind 1907 (panic year) and 1931. I'd call it a crash if the market drops below 9000 in the next week or if the market is below 8000 at the end of the year.
9000 would be 20% drop in one month
8000 would be 40% decline for the year
But that's all trivia -- empiricism lagging behind a general atmosphere of discontent.
