INVESTMENT COMMENT: It's Deja Vu All Over Again: US Markets At Risk Of 2008 Repeat

Lance Thayer

Professional Tax Planners of Texas

6 September 2013

Policymakers, bankers and investors are making the same errors that created the recent financial crisis, predicts financial industry luminary Lance Thayer, a regular broadcast pundit and figure in the Texas investment community.

Thayer, who hosts the nationally syndicated talk show, "Money Lessons with Lance", says: "There is no denying that a major financial event is coming, and not a positive one. Much of what is playing out today in the financial markets, as well as newly-released economic data, bears striking similarities to what we all saw transpire in the 2008-2009 disaster. And by 'striking,' I really mean `scary’”.

"It's like we're all standing on those same old tracks once again. Most of us seem to be watching, or even worse, waiting for the next disaster as if we're mesmerized by its approaching doom," said Thayer, who owns Professional Tax Planners of Texas, a firm that specializes in the needs of Baby Boomer middle class families.

"Even worse this time around is the fact that our leaders, the same ones who were sleeping at the wheel during the 2008 disaster, seem to be sleeping at the wheel once again. It's as if they are incapable of seeing, and let alone handling, the financial crash that is clearly headed our way," he said.

Thayer says there are nine similarities between the last crisis and today:

-- The Housing Bubble of 2008-09 burst, leaving millions of homeowners underwater in their mortgages. It's happening all over again, but this time in the global bond market where the bubble has already started exploding;

-- Mortgage delinquency rates spiked in 2008. Now they're on the rise again;

-- In 2008, banks began failing because they couldn't pay up on promises when derivatives and loans failed. It's happening all over again;

-- Wall Street investment bankers seem to have short memories about the collateralized debt obligations, or "CDOs," implosion that rocked the markets in 2008. They're at it again this year pouring nearly $37 billion into those derivatives;

-- The number of adjustable rate mortgages has skyrocketed to levels not seen since 2008. See where it's happening all over again;

-- Bank of America Merrill Lynch has seen large institutional clients exiting stock positions at a rate not seen since 2008;

-- Gold prices fell sharply in 2008 before the crisis began. Is this happening all over again?

-- Food stamp usage has soared since 2008 from 28 million to 46.7 million recipients;

-- Consumer Confidence in the economy continues to fall for the third straight month. 49 per cent of consumers believe that the US continues its economic recession.

(Editor’s note: This publication is pleased to share investment and economic commentaries from the industry; the editors do not, however, necessarily share the views expressed in this article.)