Capitol Hill Blue Forums Political Issues Finance, the economy & Economics How will the financial crisis develop?

I make no prediction on stock prices. I do note a couple of contrary augments.

The fact that "Investors worldwide are betting more than $1 trillion on a collapse in stock prices" could indicate that stocks are over-sold. The fact is that these "investments will already have had their price impact. Additional selling will be required to drive prices down. And should prices start rising, then the investors who have sold stocks will have to start buying, which will drive prices higher and faster.


IMO, we are potentially on the edged of an inflationary spiral. If this happens, then all real assets (including some stocks) will likely rise.


Recent action by the Fed and other central banks indicates that they will work very hard at preventing a stock collapse. This is distinctly different for previous collapses where the central banks stayed out of the issue. Central bank intervention will also be an impediment to collapse. Doesn't mean it will not happen, just that it is less likely.

I personally think we will escape without the dramatic collapse that so many have predicted. However I think it will be very hard to return to aggressive growth we are accustomed to. I imagine this country as having a financial flu for many years to come.