I think few people truly appreciate what is going on in the global economy today. Many people think that what we are going through is just a short-term recession, like those of the last decade. They think that after a short period of contraction, our economy will bounce back quickly. They think that the stock market will start rising soon and that the housing market will recover soon.

But very few people alive today have lived through an economic deterioration of today’s proportions. Very few people alive today will ever live through another economic downturn of today’s proportions. What we are looking at is a downturn of unprecedented proportions, unseen since the Great Depression of the 1930s. But don’t take my word for it. Take it from Alan Greenspan, take it from the IMF Chief, take it from investment heavyweights like Marc Faber.

My first quote comes from the IMF Chief, who warned earlier in January that the world faces a global crisis:

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Ever since the beginning of the credit crunch, stock markets have plummeted. The STI has crashed as well. The STI, once approaching 4000, now languishes at a mere 2364 (Oct 2nd, 2008). Meanwhile, several previously high flying stocks have now crashed to earth. Stocks like Yangzijiang, SGX, Capitaland and Raffles Education, once market favourites, have had their stock prices seriously deflated. They have all lost at least 50% of their market cap from their highs, and up to 80% of their market cap.

The following series of stock charts is just a selection of many stocks which have crashed. They demonstrate how inflated the stock market was a year ago.

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