there have been booms and busts in all asset classes, bit this latest fiasco has never been populated with strawberry pickers being awarded $720K mortgages.... the beenie baby tulip craze can't approach this.... http://hollisterfreelance.com/news/contentview.asp?c=213141
IMHO, the dice.com is a good indicator of a job market health. The number of tech jobs fell down from 100K+ in October-November to 90,266 today, 10%+ drop. Keep watching...
I wish people would quit making comparisons to the 70's. This environment is NOTHING like the 70's. The 70's had supply shocks for oil (middle east embargo) and interest rates in the double digits. Interest rates are relatively low now, and even though oil prices are high right now, there are no unpredictable supply shocks that are likely. 2007 is nothing like the 70's or the 20's. We are very likely to go into an economic downturn, but I seriously doubt that all the doom and gloom that people are predicting is even close to possible. We have low interest rates, high employment, a low dollar and a strong world economy. If we experience stagflation (or are already experiencing it), IMO, it'll be actually quite mild.
There's a huge difference between how the dollar is manipulaed through fed policies vs. the Chinese goverment basically being the only player on the block in terms of influencing the currency exchange rates. The dollar floats and therefore, is probably valued where it should be. The Yuan is fixed. If the Chinese government decided to let it float, I gaurantee it wouldn't end up the day anywhere near its current levels. Secondly, The US is decades away from ever being an exporting nation even if we went in that direction. I'm sorry, but I'm not buying the doom and gloom...and don't confuse me for a permabull, because I actually believe we are in a bear market right now.
China took off about the same time as the US housing market and much of its gains are from structural relocation of manufacturing by US cororations. China is trying (trying) to develop domestic demand because it knows how much it is dependant on the US economy. What looks like a strong world economy may be a home equity refinancing and now credit card driven US economy. US corporate productivity and profits have come from shifting manufactiring to China and keeping the price point the same. How long will strong emloymennt in both China and US last if the economy tanks?
Very good points all around. The salient point for me is that we have an economy artifically boosted by steriods in the form of cheap/reckless credit. Once the economy gies "clean" - i.e. is detoxified (from the steroids)the adjustment process will be volatile and painful. Personally I can envisage a situation where ALL asset classes go into a medium term bear market.
last time i checked, the federal reserve is the only player on the block which influences money supply of the dollah. Same show, different actors.
The effect of delveraging on the stock market may (may) be less than in 1929 or 2000 as the leverage is more in the housing sector. It is however still a factor with hedge funds taking the place of margin trading Walt & Irma's Did I read somewhere* that there are plans to edit REDUCE margin levels? If so it seems the idea is t prevent/reduce the forced sales from leveraged players and the amount of margin the prime brokers need to put up for their hedge fund clients to continue to meet exchannge(as opposed to broker) collateral requirements. The selling on the two main lows had that 'forced sale" look about it. *lost the link - any body got confirmation of this?
Wrong again, the Yuan is not fixed. It has already moved away from fixed dollar peg and is in continual revaluation of it's currency. The US complains that the Chinese do not allow their currency to appreciate fast enough. Imagine 3 Chinese men walking into Congress and telling us to appreciate the dollar.