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Time To Ask: What Happens After the Stock Market Crashes?

A stock market "correction" is on a lot of people's minds. That implies what it has meant for the last 30 years- stocks "correct" then they go back up again- a buying opportunity.

BUT.

Stocks are higher not because their prospects and sales are good but because of QE, sovereign fund buying and companies buying back their own shares at a record pace.

Indeed S&P companies themselves are the biggest purchasers of shares.

If the market crashes the economy will be even weaker with people becoming "poor" and having less money to spend.

Think the fed will rush to the rescue? Will it work this time?
What will you do?

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So you come here

and push Silver and Gold posts and guide people to your own Blog site...be careful my friend...we are watching...this is a good reason to be kicked off this site just using the DP as an advertising tool. I don't like it.

QE To Infinity

In my opinion, if and when the stock market crashes, the Fed will respond with more QE. They have gone down a path that there is no turning back from. As Peter Schiff said earlier this year, "The economy that lives by QE, dies by QE."

In the event that the economy/markets tank again, you can rest assured the Fed will respond with even bigger QE packages (150 billion a month?) in response. The number is irrelevant. All that matters is that they will respond with more money printing (in my opinion).

Ultimately, this will cause the stock market to go higher. Stock markets usually go higher when countries devalue their currencies, as companies are able to adjust accordingly to higher inflation by increasing the prices they charge customers, etc.

However, I would rather own real assets such as gold, oil, and other natural resource ETFs that will probably perform better than stocks in the event of an even bigger money printing 'experiment.'

Just my opinion, don't take it as scripture

I am seeking to learn the way things ACTUALLY are, not the way someone tells me they are

ecorob's picture

Its got a 6k point buffer...

built into it now.

I look for it to go down there anytime.

its 'cos I owe ya, my young friend...
Rockin' the FREE world in Tennessee since 1957!
9/11 Truth.

The Sun Will Still Rise, Birds Will Still Sing, You Will Survive

Wall Street is predominantly a traders' market. Once a company offers shares of stock to the public in exchange for investment capital, everything after that occurs between stock owners and prospective stock buyers. If the company is able to sell to the demand for their goods or services in their respective market(s) they will continue on and so will their employees.

If you are worried the national economy will collapse and result in a severe depression similar to what happened in 1929 (see: http://www.themoneyalert.com/stockmarketcrashof1929.html) I would say that as long as banks remain solvent and have capital to loan the loss of stock market valuation will only hurt large trading firms and individual traders looking to make a quick buck.

An excerpt from that article can be read here:

"The Stock Market Crash’s Effect on the U.S. Economy"

The stock market crash devastated the American economy because not only had individual investors put their money into stocks, so did businesses. When the stock market crashed, businesses lost their
money. Consumers lost their money too, because many banks had invested their money without their permission or knowledge.

The Great Depression soon followed. Even though the stock market crash of 1929 was one of the contributors to The Depression, it was not the only cause.

Factories had begun to overproduce consumer goods, but demand for those goods didn’t increase at the same rate.

Prices of those goods began to fall, but once the stock market crashed, few people could afford to purchase goods.

A similar situation happened with farm crops as farmers planted more wheat than was demanded on the market.

Banks had little to no government regulations to abide by and lost many of their customers’ life savings in the stock market crash.

Hundreds of banks failed over the course of the Great Depression, worsening the situation as many consumers were left with no money.

Herbert Hoover, who was President from 1929 to 1933, believed the government shouldn’t intervene with the economy. Rather, he said, families could turn the economy around if they continue to work hard and rely on themselves.

In 1930, Hoover signed the Smoot-Hawley Tariff, which increased the tariff rates on imported goods. Foreign nations responded by boycotting American products. This severely hurt American producers who were in dire need of sales.

Hoover had the right idea but capitulated to political party dogma and Congress's failure to comprehend the cause of the problem and the right solution.

However if people, businesses and money lenders (i.e. banking) repeat the same high risk mistakes as before by buying too much in the stock market then yes, it could happen again. Diversification in wealth (precious metals, real estate, etc,) and not speculation will prevent this.

We are already half way

We are already half way there.

To climb the mountain, you must believe you can.

Any or All

Continued corporate monopolization of our lives, or a chance to shrug off the chains and pick up the pieces.

Marshal Law and Violence in the name of your safety ,or a return to Balance and Renewal.

Hopefully we end up somewhere betwixt the extremes.

Unfortunately the whole economy is based on the stock market

The Fed has placed all its chips there (and the housing market- not as much luck there). When the market crashes there will be no real value left.

Companies did not invest in their businesses, buy capital equipment, hire workers -they bought stock!

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Stock Buybacks are at all

Stock Buybacks are at all time highs while capital expenditures are still in the dust. And that my friends is how you fake an economic recovery. As long as the stock market goes up from simply buying more stocks it appears everything is ok.