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We are certainly living in historic times with almost everyone clueless. I fail to understand why we are not going to have a depression 2.0. It will hurt in a different way, if it happens. Different times. Just becoz the govts around the world are working together in tackling this beast does not mean we will avoid depression. It only means we will not have the exact pain of 1932 when savings were lost suddenly with bank failures.

Much of the developed world's economy has been based on consumer credit and I think that is now going to change in a big way with consumers potentially changing their spending habits in a big manner. To expect that normalcy will reign again with consumers getting back into debt as earlier is unreasonable. We are likely to see a sea change in spending habits with people trying to live withing their means for the next few decades (after which the history shall repeat itself). I feel that those who invested when DOW was in 10-14K range have suffered a permanent loss of some of their capital. DOW at current levels is far more reasonable and a growth of 4% per annum over the next decade from the current levels would be quite reasonable. It is entirely possible that DOW bottoms at 6K and reaches 10-12K in next 10 years. From a 6K level 10K would appear far more impressive than from the current level.

Let us see what happens.

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