It's kinda weird when reading the WSJ is like reading HP, complete with references to our bible "Manias, Panics and Crashes". First time I've seen the book cited in the MSM. Too bad, people could have really benefited if they had just known, like HP'ers.
Man, this is getting really scary really quick now. Feels like everything HP'ers have predicted is happening, and it's all coming to a boil in real time.
So, are you all ready? Time is running out.
The Panic Stage
In his book "Manias, Panics and Crashes," the economic historian Charles Kindleberger describes the stages of financial boom and bust. Students of the good professor will recognize where we now are in the current credit crisis: the panic stage.
It isn't a pretty sight, but a crash is far from inevitable if political and economic leaders keep their wits about them and focus on the proper remedies.
Amid the daily market turmoil, and to help prevent a crash, it helps to step back and remember how we got here. With the benefit of hindsight, everyone can see that the U.S. economy built up an enormous credit bubble that has now popped. Our own view -- which we warned about going back to 2003 -- is that this bubble was created principally by a Federal Reserve that kept real interest rates too low for too long.
Enter the panic stage. The desire for debt has turned into a stampede to quality, especially Treasury bills.
The danger now is that this panic becomes a self-fulfilling prophesy and talks us into a crash.