You can’t do Monte Carlo simulations on history because you don’t know the laws of evolution, so anything anyone says is simply unsubstantiated theory.
Nevertheless, here’s mine. The S&P 500 has now fallen from 1580 to the high 600s, down 57% and counting, despite intervention and cheerleading. If, instead, we’d let the market have its way with companies it didn’t like, more than a year ago, without government bailouts or interference or attempts to restore an unsustainable status quo, I am skeptical that we’d be much worse off now.
We would perhaps have had a fierce forest fire and now be looking at fresh growth on the forest floor. Instead, the flames keep finding fresh fuel.
Originally published at Wilmott.com and reproduced here with the author’s permission.