I fear the fact that people don't think we will have 1929 style depression, is what make the risks more likely. The world will not blow up, because we all eat corn and rice for 5 years. But it will suck What is the tipping point between self-healing and needing a complete kidney, heart and lung transplat because you bled too much and damged the organs beyond repair. The biggest problem is that you can have a solid balance sheet, but it will detoriate if the tough times last too long. I don't think the market has still priced in the actual duration of this downturn and what 15 or 20% or 25% unemployemnt can do in terms of economic destruction. Particulary when our economy is built around the 2 income earner. Most household cannot afford to survive on single income. How many great companies will survive with year after year of declining revenues, layoffs, inability to reinvest earnings. Any company that does not manufacture at least some basic goods or fufill some fundemental need is in serious danger. What about the pension commitments. In addition, many Western countries are seeing massive demographic shifts to ageing populations, that will strain healthcare resources and literally suck growth out of the economy. The U.S, Japan, UK are entering their prime retirement years. Buy some candles, dark times ahead.
Completely agree that the planet earth is in the midst of a complete economic reformation, and it will be an incredibly painful, wrenching and profound one, and we can't possibly imagine what will soon be reality. We are already seeing bizarre events as the psyche of BSDs and the masses are being affected to the extreme, and the biggest unknown is how far businesses and consumers will retrench and cut spending - if they really pull their head into their shells, we could face an economic winter the likes of which we've rarely experienced, at a time when so many other incredible and unprecedented events are merging. We are entering a new 'age,' and despite the oft-repeated claim that no one should try to be a market timer, only those who hunker down now and know approximately when to re-emerge and deploy capital may survive, let alone grow wealthier.
There are only $1.4 or $1.5 Trillion US Dollars in existence. Have a look at the Fed's M1 numbers. So how can anyone pay anyone else such huge sums of money?
lrm21 asked "What about pensions?" I think pensions and health care for company retirees will break many companies. http://finance.yahoo.com/news/US-companies-face-409-billion-rb-13997269.html
only ones who lost in real estate are the ones who overleveraged on the real estate. people who own their homes and mortgge paid off haven't lost a a dime. those are paper losses. any pro would tell you most of the money entering into the market as borrowed money from hedge funds. no more leveraging that is how the real estate burst. and it's affected the entire economy. real estate is even bigger than the stock market.
the assets were never worth 60 trillion and nobody actually paid 60 trillion for them so how can you lose 10 trillion. DUMBO. if you lose 60 trillion somebody must have profited by 60 trillion. thee isn't 60 trillion dollars CASH in any bank.