Meow boing splat

Both Karl Denninger and Michael Panzner interpret yesterday's rise on the Dow as a bear market rally. There are already references to "dead cat bounce", but we haven't anywhere nearly touched the bottom, I think.

People speak of the crash of 1929, but it took much longer for the crisis to work through and there were lots of opportunities for investors to step off with smaller losses. There were also plenty of traps for those who thought it was time to buy back in.

Here's a chart (source) of the process:

As they say, history doesn't repeat itself, but it rhymes. Today's central banks are acutely aware of this past history and do not wish to be remembered for making the same mistake, i.e. worsening the situation by deliberately contracting the money supply.

However, Denninger and others think we can't stop this contraction anyway, once the credit bubble has been pricked, and attempts to reflate will merely devalue the currency while failing to stimulate the real economy.