This Time Is Different ?

"THIS TIME IS DIFFERENT"
http://www.amazon.com/This-Time-Differen...

Chapter 14 - The Aftermath of Financial Crisis, is the most important to a stock trader; for it attempts to create benchmarks for the aftermath of the present crisis based upon past historical examples. Although other banking crisis are given coverage, particular emphasis is placed upon what the authors consider “The Big Five”...

1) Spain 1977
2) Norway 1987
3) Finland 1991
4) Sweden 1991
5) Japan 1992

The take away isn't very pleasant. On average, housing has declined in price for 6 years by 35.5%. Stocks declined for 3.4 years by 55.9%. Unemployment increased by 7 percent taking 4.8 years to bottom.

Note: the US started at 4% unemployment, so don't be surprised to see 11%. As we know, that is only the “official” rate.

GDP drops of 9.3% in 1.9 years. Public debt increases 86% mainly due to higher expenditures and lower tax income, and not due to bank bail-out costs.

So, if the start of the crisis is 2007; unemployment should bottom in 2012, and housing in 2013. Although, the vast majority of the pain has already been felt; except for the debt which will likely continue to soar.

That being said, the current crisis is not average. It is somewhere between “The Big Five” and “The Great Depression.” Maybe attempting to compare it to an average anything is wrong-headed. After all, Japan is one of the five and it has failed to conform to the average.