This gels with what Marc Faber was saying quite some times back, that the market had further to drop than many people thought. Equities may seem to be fair value in terms of multiples of their earnings, but when the earnings fall, valuations have to be reassessed.
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Talking of the depression, Sackers, here's a paper I stumbled across about the episode known in Europe as The American Default. American debt was often written with protection against inflation or devaluation by agreeing that the creditor could demand payment in gold. FDR got legislation passed (retrospective and therefore unconstitutional, but we know that the Supreme Court ignores the Constitution when things are Important) that screwed the creditors; those in Britain and the Continent were deeply pissed off. Don't forget it when next an American claims that his government has never defaulted.
http://faculty.chicagogsb.edu/randall.kroszner/research/repudiation4.pdf
I've been wondering some time about a (possibly selective) default on US bonds.
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