Yesterday, Barry Ritholtz flagged an intriguing report from Merrill's Chief North American Economist David Rosenberg. It's a comparison of present financial/economic/market conditions with those of the late 1980s. Featuring some truly excellent charts, the entire report is worth reading. Here's a representative caption, from Chart 9:
This cycle is also hauntingly similar to the 1980s because of what happened to the housing market. Years of massive credit extension, overbuilding and "new paradigm" thinking of housing as an asset class ultimately morphed into a massive excess inventory overhang, eroding credit quality and house price deflation. We are reliving that today, except the deflation is much broader and the credit issues far more complex and global in nature.
David Rosenberg and Neil Dutta, "1980s Redux?" Economic Commentary, Merrill Lynch, October 22, 2007