Sjeltur

Stock markets responded well earlier this week after leaders of several governments agreed on a rescue plan to curb the crisis. The Dow Jones gained almost 11.1% on Monday, or 936 points. The surge was the largest points increase ever, we see unprecedented things happening almost on a daily basis. But it seems this wave of optimism is short-lived. European markets show a decline today of several percent points, as fear is spreading that a recession, or worse, is looming.

Some analysts are still optimistic and think we are near a bottom, then the markets should go up again considerably in the near future. Others are a lot less optimistic.

They point out there was a similar short-lived wave of optimism right after the 1929 crash. A day after that crash the Dow Jones gained more than 12%, followed by a gain of almost 6% a day later. But it didn’t prevent the Great Depression, soon the Dow Jones fell more and more and hit bottom in the summer of 1932.

These analysts think we’re probably going to see something similar. It’s hard to predict how much the Dow Jones can down again, but given what we’ve seen the last month or so, it could be very well on a unprecedented scale.

Perhaps these analysts are very pessimistic. But we can’t rule out the possibility it’s just a realistic view on the current situation and things might be worse than the general public seems to think right now.