Yogidad

Great Depression Not Imminent, But Inevitable

The author is saying that valuations of equities and other investments (this would include real estate) are heavily inflated because of the false notion that derivatives hedged extremely speculative bets. As this notion fades, valuations will continue to plummet and less money will be thrown into markets as a more objective notion of risk takes hold. Therefore, there is still a very long way down on this basis alone. (Obviously there are a number of other reasons to predict valuation losses in the future.) The author is noting both a dramatic difference from the Great depression and how it could lead to the same place. I think this answers your question.


On Dec 17 07:49 AM Maya_ wrote:

> Silly article. One has to acknowledge that derivatives have serious
> destructive potential. But policy response is likely to contain the
> damage. As far as whether "no insurance" will cause a great depression;
> I wonder why the great depression ever got over; after all derivatives
> in its present day form are a very recent phenomenon.