I channel Dow Jones Market Talk, which channels Brad DeLong, who channels Rogoff, Reinhart, and Krugman.
MARKET TALK: It’s 1931
DOW JONES NEWSWIRES5:20 (Dow Jones) “I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria,” Brad DeLong writes on his blog, “that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria. The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip.”
(paul.vigna@dowjones.com) (http://delong.typepad.com/sdj/2011/11/time-to-spread-foam-on-the-runway-the-federal-reserve-needs-to-act-now-to-firewall-off-the-eurocrisis.html)
I thought Mr. Market was finally coming to his senses in the third quarter, only to see him lose his mind again in October. Was that the last hurrah? The world is in too precarious a position to have equity markets rally as they did. And, we as contrarian value investors need Mr. Market to come back to reality (and perhaps get depressed again) before we can become net buyers. Today was a good day in that regard, but there is a long way to go.
