Wharton Professor Jeremy Siegel: “Well, it’s a worldwide crisis, and there’s going to be a worldwide recession.”
Oct 17th, 2008 | By Sören Kupke | Category: Credit Crisis, Economic Theory, LeadstoryKnowledge@Wharton has published interviews with Richard Marston and Jeremy Siegel according to the topic “Will the Bank Plan Revive Global Markets?”
Professor Marston points out that…
“The initial plan was to buy up the debt. [...] The new plan focuses on equity. I think there’s a greater chance for success for two reasons. First of all, it focuses directly on injecting equity into the banks, rather than doing it indirectly through purchases of debt. And secondly, it’s a coordinated intervention. In that the British have already started buying equity in the banks, bolstering the banks. The European — your area has come up with a plan for doing the same thing. There’s an awful lot of effort on the part of the authorities in the industrial countries to try to get control over the situation as quickly as possible. And I think the prospects for success are just much greater than they were last week.”
Bull markets vs. bear market? Professor Siegel answers…
“There’s going to be a lot of ups and downs. You get a lot of volatility at the bottom of a bear market. It rallies strongly, and then it falls back. Usually after a month or two, it will tend to fall back traditions the initial low point of the sell-off, but not quite that low. And then starts upward. And then we get a nice movement upward in the market. Now, that could be a one-month, two months. It can sometimes be four, five months between that. So my feeling is, is we’re in the bottoming phase of this bear market.”
He explains that…
“Well, it’s a worldwide crisis, and there’s going to be a worldwide recession.”
He also add that…
“There’s not going to be a depression, because all governments are coming to rescue the banks. We’re not going to have failures of banks. We’re not going to have lost depositors, such as we had in the 1930′s. And that’s very comforting.”
[...] News wrote an interesting post today onHere’s a quick excerpt Knowledge@Wharton has published interviews with Richard Marston and Jeremy Siegel according to the topic “Will the Bank Plan Revive Global Markets?” Professor Marston points out that… “The initial plan was to buy up the debt. […] The new plan focuses on equity. I think there’s a greater chance for success for two reasons. First of all, it focuses directly on injecting equity into the banks, rather than doing it indirectly through purchases of debt. And secondly, it’s a coordinated intervent [...]