Where will it end?

We could see the selling intensify in the next few weeks. Sure the market has been selling off for awhile, but we still lack that capitulation spike that signals a temporary end to the pain. Here is one indication from the DOW chart:




This is no final bottom though. Sure "The news is always the worst at the bottom". However, I think the worst is yet to come. The credit market, which is 10x as large as the stock market, has only just started contracting.

We have yet to clear the world's debt off the table. Just in the U.S. the aggregate of national, corporate and consumer debt is near 400% of GDP. Prior to 1929 it got as high as 270%. Western European countries are likewise awash in debt. Britain, Ireland, Spain, Greece, Italy are all seeing leveraged bets into emerging markets unwind. Austria alone lent 70% of it's GDP to the Eastern European real estate bubble. This is no mere recession. The post-1929 chart shows the tenacity and ferocity of a full blown credit contraction. In that period the stock market corrected a full 89% of it's former high. The only difference between now and then is the causative measures this time are much worse.