Transport yourself back in time.  More specifically, transport yourself back to 1924-25, Wiemar Republic Germany.  As a result of the Treaty of Versailles, Germany was required to pay war reparations to the Allies for their role in instigating and fighting in World War I.  As a result of these reparations, the German economy was horrible - 25% unemployment.  In order to repay their reparations faster, Germany decided to print a whole slew of money, thereby creating a massive inflationary economy.  Hmm, not much unlike how our Treasury Department has printed a great deal of money over the last year.  This picture below illustrates what it was like to go to the store with wheelbarrow full of paper money just to get a loaf of bread.

The German economy crashed and sent shockwaves around the world, including the United States.  Before the Crash of 1929, there were already storm clouds gathering on the economic horizon.  Steel production was down, banks were failing, and there was a housing market busted - sound familiar?  People were heavily in debt, and $2 out of every $5 was borrowed (by rich and poor alike) on margin to invest in stocks on the stock market.  Today, governments have borrow massive amounts of money to fund union pension plans and we see this has had a detrimental effect on Illinois and other states' budgets.  Personal indebtedness stood at 100% of the 1929 US GDP equaling $103.6 billion .  Not much unlike when the market crashed last year - our personal debt equaled, if not exceeded US GDP.  Now, the real kicker is that in September 1929, two months before the Crash, the stock market was up 27% from the year prior.  When our current stock market hit 11,000, the increase was 68% since the low in March 2009.  Additionally, the S&P 500 is up almost 77% versus March 2009.  When the market crashed in 1929, investors lost $319 billion which was almost twice the amount of the federal budget at the time.  So why do I bring all this up?

Because Greece's debt has just been downgraded to "junk" status and Greece's problems are threatening to spread to Portugal and the rest of the European Union.  As a result, this development has sent shockwaves around the world just as Germany's economic collapse in the mid-1920s did as the market closed today (4/27/10) down 213.04 to finish below 11,000.  Complicating matters, the United States last month came close to losing its Triple A debt status (due to our government's uncontrollable spending) which if we did lose AAA status, it would make Greece's shockwaves look like ripples.  Granted, -213.04 is not a market crash, but you can see that the "recession is over" talk may be a bit premature.    

Does it mean that the stock market is going to crash as it did in 1929?  If I had the answer to that, I'd win the Nobel, and any other worthless award.  All I am saying is that the conditions are primed for something big and the pessimist in me says it ain't good.  I'll leave you with this.  After the market crashed in 1929, it took until late 1954 for the stock market to recover all its loses.  The chart below details the Dow Jones Average during the 1920s through the Great Depression.  Notice the market went up before bottoming out a few years later.  I'm just a historian, but we had our crash in 2008, and we have our rally now, what lies ahead for our economy?  Again, if I had the answers, I'd be a rich man with more awards than you can shake a stick at.  And I wouldn't have even had to invent the internet or global warming....