Why I Believe This Is Different Than 2008

Here are a list of reasons that I believe the current situation is different from 2008:

  • Credit spreads for corporations are relatively tight now. In 2008 spreads blew out to historic levels.

  • In 2008 companies were raising capital every chance they had. Today corporations are buying back stock.

  • In 2008 there were systemic issues after Lehman Brothers collapsed. The ECB seems to have Europe under control for the time being. There has yet to be  a Lehman Brothers.

  • Corporations are wildly profitable right now. In late 2008, when the collapse occurred profits had already imploded.

  • There are far fewer over leveraged corporations today.

  • While it certainly feels like there are forced liquidations occurring it does not seem like it is on the same scale as 2008.

I don't rule out that we could be headed for the Great Depression II, but we are not there yet. As such, I believe this is likely a liquidation that will pass rather than something more sinister. This too shall pass. Have a good night.


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