Here are some 52-week returns on investment for share indices from Bloomberg. They show how much you would have lost in the last year if you had invested in each basket of shares.

  • FTSE 100: -30.93%
  • European 500: -39.84%
  • DJ Euro Stoxx: -37.19%
  • DAX: -35.67%
  • Dow Jones Industrial Average: -32.73%
  • S&P 500: -35.35%
  • NASDAQ Composite: -38.55%
  • S&P TSX: -30.94%
  • Brazil Bovespa: -39.77%
  • Nikkei 225: -46.07%
  • Hang Seng: -44.55% 

I blog this not to depress, but to emphasize the importance of determining the root cause of the crisis when we come to the clear up. At least this time around the authorities have behaved very differently, but that itself is not enough.

Economists should be put under considerable pressure to explain:

  • What has happened and why,
  • How to regain a new normality that preserves individual freedom,
  • And how that new normality will prevent this in future.

These explanations need to come out before the US presidential election: if, as it appears, the US Community Reinvestment Act was a central contributor, how each party behaved and intends to behave in future will be vital.

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