"... We think this recession could be longer and deeper than average, but we do NOT think we are headed into anything like the Great Depression. Not only are we much stronger economically, but, currently, many more safeguards are in place to prevent a further downward spiral. Among them: FDIC insurance (which insures bank deposits for consumers who ultimately drive the economy), globalization (which provides a market for U.S. exports), and more proactive countercyclical fiscal and monetary policy. As Ben Bernanke stated recently, "We didn't wait for three-and-a-half years as the financial market collapsed to take strong action."
" ... the market appears to have priced in a fairly deep recession. And barring a significant near-term rise in interest rates (which we don't foresee unless there is a disorderly decline in the dollar) or depression (which we also consider unlikely), current market valuations may increasingly become a compelling offset to the ongoing liquidation by hedge funds and the like."
"... Watch for a sustained stabilization in the dollar (or more likely weakness) to reflect a return to risk taking and funds flowing back into international equity markets."
Source: Schwab Market Perspective: Global (Credit) Warming? by Liz Ann Sonders and David Kastner - October 31, 2008
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