Remember the 2008 Recession?

THE PROFITS💸

• 2008 Recession

• History Repeating Itself Again

• The Daily Advantage:

Read Time: 5 mins

THE BIG PROFITS💸
Remember the 2008 Recession?
Why did it happen?

History Repeating Itself Again
How did history repeat itself?

The Daily Advantage
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Remember the 2008 Recession?

American residents lost a total of 7 trillion dollars from the crash of 2008 but why did this happen in the first place?

Picture a complex network of financial assets that are continually traded, repackaged, and resold to the point where their original components become untraceable. Gary Gorton compares this situation to a scenario where a grocer tries to determine the reliability of your bank before accepting your check—it’s an impossible task.

Now, think about the repo market, an essential component of the financial system where institutions temporarily place their funds overnight. This market depends on collateral such as mortgage-backed securities to operate, effectively turning these securities into a form of currency. But unlike regular money backed by federal guarantees, these were often based on shaky subprime mortgages. This meant that, without much scrutiny, risky subprime mortgage debt had crept into the money supply.

This situation harkened back to the 19th century when the economy relied on bank-issued money that lacked federal guarantees and appeared more stable than it truly was. However, this time, the fragility of the system went unnoticed until it was too late.

The turning point occurred when housing prices suddenly fell, leading to the collapse of the subprime mortgage market. This sparked panic among repo market "depositors" who, despite knowing some collateral was still sound, couldn't be sure if their own assets were secure. In 2007, this fear set off a rush to pull money from the repo system, similar to a bank run.

To meet these withdrawals, repo depositories began selling off assets at low prices, which only worsened the situation by driving down collateral values even more, creating a downward spiral. The crisis reached its peak in September of the previous year when Lehman Brothers, a giant investment bank, failed. This event shattered confidence, convincing investors that no one was safe. The repo market, as Gorton describes, "virtually disappeared," leading to a crash in the money supply and choking the economy.

Evidence of History Repeating Itself

Nvidia's recent price surge parallels the exuberance seen during the 'Roaring Twenties,' akin to the bull market of the late 1920s, reminiscent of Radio Corporation of America's rapid ascent during the emergence of the radio industry.

According to a recent analysis by Bryan Taylor, chief economist at Global Financial Data, RCA's shares surged 200-fold during the 1920s. However, by late 1929, RCA's shares peaked and subsequently plummeted by 98% by early 1932.

At this point anything goes. Within 23 days, Nvidia achieved a $3 Trillion market cap.

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A Closer Look in Music and whats next:

Like Jim Morrison of the Doors in an interview with Rolling Stone Magazine predicting the fate of music and how EDM will come into existence. Not even 10 years later, 1970s German band Kraftwerk, popularizes the genre which will go on to be called robot pop. Speaking of robot pop, a duo called Daft Punk Skyrocketed the genre and the rest is history, for now.

As far as music goes, AI goes even further. I think instead of IRL bands, we will see an uptick in animated bands like the Gorillaz cause everything is becoming more and more digital. There will be a large amount of people in a room working on everything from the studio session to the back stories of each band and members. Remember Travis Scott and Post Malone being cast as an attraction in FortNite, and now as far as today, Monday, July 8th, 2024, the Weeknd will be performing too. They are dipping their toes into a new world of available content to be entertained by. If you see the birth of a small animated band, don’t be afraid to put money into it. You could be one of the front runners for a new forecast of music production and outcomes.

I don’t know about you but I want more than one notable animated band with the style of an amazing artist, the direction and tone like all of “A24’s” directors and amazing catchy music that hits, smacks, and K.O.’s the soul. Its bound and on the horizon.

The Daily Advantage:
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