{"id":21382,"date":"2016-07-05T18:59:20","date_gmt":"2016-07-05T23:59:20","guid":{"rendered":"http:\/\/olduvai.ca\/?p=21382"},"modified":"2016-07-05T18:59:20","modified_gmt":"2016-07-05T23:59:20","slug":"here-we-go-again-august-2007-redux","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=21382","title":{"rendered":"Here We Go Again\u2014\u2014August 2007 Redux"},"content":{"rendered":"
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Here We Go Again\u2014\u2014August 2007 Redux<\/a><\/h3>\n<\/header>\n
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Nearly everywhere on the planet the giant financial bubbles created by the central banks during the last two decades are fracturing. The latest examples are the crashing bank stocks in Italy and elsewhere in Europe and the sudden trading suspensions by three UK commercial property funds.<\/p>\n

If this is beginning to sound like August 2007 that\u2019s\u00a0because it is.\u00a0And the denials from the casino operators\u00a0are coming in\u00a0just as thick and fast.<\/p>\n

Back then, the perma-bulls were\u00a0out in full force\u00a0peddling what can be called the\u00a0\u201cone-off\u201d bromide. That is, evidence of a brewing storm\u00a0was spun as\u00a0just a few isolated mistakes that had no bearing on the broad market trends because the\u00a0\u201cgoldilocks\u201d economy was purportedly rock solid.<\/p>\n

Thus, the unexpected collapse of Countrywide Financial was blamed on the empire building excesses of the\u00a0Orange Man (Angelo Mozillo)\u00a0 and the collapse of the Bear Stearns mortgage funds was purportedly owing to a lapse in supervision.<\/p>\n

So it boiled down to an injunction of\u00a0\u201cnothing to see here\u201d.\u00a0 Just move along and keep buying.<\/p>\n

In fact, after\u00a0reaching a\u00a0peak of 1550\u00a0on July 18, 2007, the S&P 500 stumbled by about 9% during the August crisis,\u00a0but the dip-buyers kept coming back in force on the one-off assurances of the\u00a0sell-side \u201cexperts\u201d.\u00a0By October 9\u00a0the\u00a0index\u00a0was\u00a0back up to the pre-crisis peak at 1565 and then drifted lower in\u00a0sideways fashion\u00a0until\u00a0September 2008.<\/p>\n

The bromides were false, of\u00a0 course. Upon the\u00a0Lehman event the fractures exploded, and the hammer dropped on the stock market in\u00a0violent fashion.<\/p>\n

During the next 160 days, the\u00a0S&P 500 plunged by a further 50%.\u00a0Altogether, more than $10 trillion of market cap was ionized.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Here We Go Again\u2014\u2014August 2007 Redux Nearly everywhere on the planet the giant financial bubbles created by the central banks during the last two decades are fracturing. The latest examples are the crashing bank stocks in Italy and elsewhere in Europe and the sudden trading suspensions by three UK commercial property funds. If this is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[10661,124,3598,14165,2120,281,820],"class_list":["post-21382","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bear-stearns","tag-central-banks","tag-contra-corner","tag-countrywide-financial","tag-david-stockman","tag-europe","tag-uk"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21382","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21382"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21382\/revisions"}],"predecessor-version":[{"id":21383,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/21382\/revisions\/21383"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21382"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21382"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}