Jason:
As you requested, here’s my prewrite on the stock market crash and the start of the second Great Depression so we have something to post the moment it happens. That will probably be before Halloween, but the market might hang on until Thanksgiving.
PLEASE REMEMBER not to post before the crash actually occurs! It’s an open secret that the collapse is imminent and that it will make the Great Recession of 2007-9 look like a day at the beach. But we’ll look stupid if we jump the gun, especially in the (admittedly very unlikely) event that the market continues its climb or we suffer only a minor correction.
Cheers,
Tim
P.S. Again, DO NOT push the wrong button and post this when you finish editing!
In retrospect, the only surprise about the Crash of 2025 was that anybody was surprised.
“We will have a crash,” The New York Times financial columnist Andrew Ross Sorkin told 60 Minutes just weeks before the collapse.
“Beware these two months,” warned the veteran financial analyst Jon Wolferbarger’s newsletter BullandBearProfits.com, because “Most Major Crashes and Bear Markets” occur in October or November. Wolfbarger himself warned MarketWatch to expect the biggest bear market since 1929.
The Motley Fool’s John Fieldsend noted that “the Warren Buffet indicator,” which is the market capitalization of all stocks divided by Gross Domestic Product, stood at its highest point in history. For the sake of comparison, right before the dotcom crash, it had been 140 percent. On October 17, it was 218 percent. The Yale economist Robert Shiller’s cyclically-adjusted price-to-earnings (CAPE) ratio stood at its second-highest point in history; the highest point had been right before the dot-com bubble burst.
And yet greedy fools kept shoveling cash into the stock market, boosting the S&P 500 25 percent between April and October. Most of these gains came from four tech stocks that were invested heavily in Artificial Intelligence: Nvidia, Meta, Microsoft, and Broadcom. The AI chipmaker Nvidia alone drove about one-quarter of the gains.
This AI bubble was a haunting echo of the radio-stock bubble prior to the 1929 crash: promising technology, premature expectation of quick profits. RCA was the Nvidia of its day. An October 2025 Bank of America survey of global fund managers found that 54 percent of them thought tech stocks overpriced. Even Chat GPT acknowledged the AI bubble.
Another obvious parallel to the Great Depression was President Donald Trump’s reckless tariffs. These brought trade protections to their highest level since Smoot-Hawley, the disastrous tariff Congress imposed eight months after the 1929 crash. The Yale Budget Lab reported that the tariffs cost the average household $2,400 in 2025 and lowered GDP by half a percentage point. But the greatest harm was the heightened level of uncertainty about when and where Trump would impose tariffs. The most visible result was that the number of jobs created each month fell by about 100,000.
Yet another parallel with 1929 was the lack of transparency. The crash prompted President Franklin Roosevelt to create the Securities and Exchange Commission to (among other things) compel extensive disclosures about publicly-traded stocks. But the rise of largely-unregulated private credit and private equity, known collectively as “shadow banking,” made it much harder for the public to assess risk. The collapse of Tricolor Holdings, a subprime auto lender, and First Brands, an auto-parts supplier, both of whose financing was fairly opaque, prompted JPMorgan Chase chief executive Jamie Dimon to observe on October 14, “When you see one cockroach, there are probably more.”
Sorkin sounded a similar theme in an October 13 New York Times Magazine piece that drew parallels between the hucksterism and outright fraud preceding the 1929 crash (the subject of Sorkin’s latest book) and the rapid entry of ordinary savers into the risky world of shadow banking. In both instances, financiers waxed eloquent about “democratizing” the market, but “when transformation comes this quickly,” Sorkin warned,
[I]t rarely benefits everyone unless it is paired with transparency, oversight and regulation…. The pattern is familiar, stretching back to 1929: Whenever access expands faster than safeguards, charlatans rush in and ordinary investors are often left holding the bag.
I’d warned about the instability of private equity in September (“The Financial Sector Was Tottering Even Before Trump”), but Sorkin, who knew infinitely more about markets than me, was significantly more pessimistic than I was. I phoned my broker just in time.
Postscript, 2085, by Greta Noah:
To my late great-grandfather’s definitive and widely-anthologized account of the Crash of 2025, The New Republic’s editors have asked me to add the following update.
It would be America’s bad luck that the Crash of 2025 occurred when a Republican occupied the White House. Public misperceptions to the contrary, Republicans had always been much worse at managing the economy than Democrats. It was hardly coincidence that Herbert Hoover was president at the start of the Great Depression, Ronald Reagan at the start of the savings and loan crisis, and George W. Bush at the start of the 2008 financial crisis.
It was even worse luck for America that the Republican who was president when the stock market crashed was the mentally unstable kleptocrat Donald Trump. Trump’s chaotic attempts to revive the economy with additional tax cuts, higher tariffs, and the illegal closure of the SEC drove unemployment so high that in the 2026 midterm he lost both houses of Congress to the Democrats. In April 2027 Trump was impeached for the third time, and the third time proved the charm. Trump was removed from office, with no fewer than 15 Senate Republicans giving Democrats the necessary two-thirds majority to convict.
But the year and a half of Trump mismanaging the post-crash economy had taken its toll. Thousands of Baby Boom retirees descended on Washington to demand a bailout for catastrophic losses in their retirement plans. Modeling themselves on Coxey’s Army, the unemployed masses that flooded into Washington during the Panic of 1893 to demand federal jobs, the Boomers, with Trump in mind, called themselves Cocksu—on second thought, let’s set that colorful detail aside.
Trump’s attempt to reduce 35 percent unemployment by quadrupling the staff of Immigration and Customs Enforcement shrank the workforce by deporting not just undocumented immigrants but also millions of United States citizens, including First Lady Melania Trump, Elon Musk, Ana de Armas, John Oliver, and five dozen white Anglo-Saxon Protestants who traced their lineage back to the Mayflower.
The deportations reduced competition for jobs, but not enough to offset the continuing shrinkage of job openings as Trump jacked up tariffs on the European Union to 10,000 percent. Treasury secretary Howard Lutnick, who succeeded Scott Bessent after Bessent was arrested for beating Bill Pulte to death, encouraged Trump to jack up EU tariffs in retaliation against the euro displacing first the dollar and then the World Liberty Financial stablecoin USD1 as the global reserve currency.
Twenty years would pass before the economy was back to normal, the workforce stabilized through passage of bipartisan immigration legislation, the Ivy League and other research universities reopened, cryptocurrency outlawed, the Trump Ballroom demolished, the Republican Party replaced by a revived Whig Party, and a greatly diminished financial sector brought back under a strict level of government supervision not seen since the 1960s. The only upside to the global depression that followed the Crash of 2025 was that it diminished carbon emissions to the point that only relatively modest regulatory measures were necessary to eliminate climate change entirely. Social media had been wiped out in 2028 by repeal of Section 230 of the Communications Decency Act, and mainstream newspapers and magazines were starting once again to find an audience.
The American public had regained its sanity, but with every expectation that 100 years or so down the road all these lessons would be forgotten, and everything would go all to hell once again.
