The Great Panic of 2008

Wow, the last couple of weeks were quite something to watch. Sure it was unpleasant for most of us with money in the markets, but the interaction of the crowd's emotion with the markets is as magnificent as a Beethoven symphony.

Tension rose to crescendo when the finale began last Friday. The Dow Jones Industrial Average entered into a steep decent. It plunged some 800 points. This is the always the point where the public investors – those who thought themselves geniuses during the prior bull market – dump their shares.

The market promptly reversed and closed with a relatively small loss of 140 points. Today, the symphony's finale is concluding with a terrific rally to heights that seemed out of reach just a few days ago.

Despite numerous claims to the contrary, nobody knows how the finale will conclude. It is quite possible that market action will swiftly turn the fear of those who dumped their shares at the bottom to greed. They will re-enter the market with abandon, convinced they can make up their losses in a few days. That is the point at which the ursine beast will turn on them, and from there it will lead the market into a plunge to new depths.

Taking advantage of the wave of fear, Hanky Panky scared the US Congress into action. They passed a $700 billion banker enrichment bill. Granted the first attempt failed in the House, but it passed nevertheless on the second attempt after the bill was loaded up $150 billion worth of goodies for the law makers' buddies. At the same time Congress passed a $615 billion dollar defence spending bill. There was no mention of the defense spending in the mainstream media, of course.

The mainstream media is focusing instead on misleading the public as to the causes of the global financial crisis. They are showing the politicians blaming deregulation, backing of Fannie and Freddie and other red herrings.

But what is the real reasons behind the turmoil in the financial markets? I believe that the culprit is the profligate spending and reckless money creation politicians and bankers have engaged in over the preceding decades. I believe that monetary mayhem are to blame. I order to support my position, I call history to take the witness stand on my behalf.

Here is the list of historic events that will provide a perspective on what is happening today:

Panic of 1837
Panic of 1873
Depression of 1893
Panic of 1907
The Great Depression 1929 – 1942
The Bear Market of 1973 – 1974
The Bear Market of 1968 - 1970
The Crash of 1987
The Dotcom Bust 2000 - 2002

Let's examine these events one by one over the next few weeks.