I agree with OP, but it will happen sooner than 4 years. I think it will happen this year. Market will finish up big.
That's what I'm thinking. The Gummint/Fed are trying to short-circuit the decline and artificially fix housing prices above their real value (relative to incomes). The way they might temporarily appear to succeed is to "get credit flowing again".. but that means lending to the same people who defaulted once already... bad plan. All the ET'ers should be hoping I'm correct.
Obama is Nero, not a hero, dancing to his own tune (let's worry about health care for all...right now!!!!) while the houses across the street are burning down. I think this guy really wants the destruction of wealth, not the redistribution of it.
IMO, thats explains why the next bull market will have weaker legs than the last. An entire generation of new home buyers ruined their credit and equity. The next batch won't even qualify. So its up to the 401K'ers and middle-aged yuppies to borrow and spend. Certainly, its the end of no-doc lair loans. Propping values by reducing payments could work. But from what I read, Obama ear-marked less than a 100 Billion for that. Which is ridiculous. Just underscores it as lip service. Either a nationalization of toxic mortgages or the Government reducing payments/paying mortgages is six or one half dozen. They're both workable and should have been done to begin with, assuming CDS was to stay on the books. Anyway, its all conjecture at this point. Obama is just there to hand money to the bankers and nothing will get solved. That case, its 15% unemployment+ . And that will lead to some interesting times.
Somebody needs to tell the OP that we are in a credit crisis. It would also be important to tell him that credit comes from savings. Someone also needs to ask the OP to ask the old timers how long recessions last when government creates massive inflation. The only thing that matters is that credit comes from savings. Printing massive amounts of money will create inflation and kill savings even more and will make the credit crisis even worse. The great depression and the actions of FDR portray this concept of economic failure perfectly. We are in a different recession because this recession is threatening the very existance of every single dollar in the entire system. There is a possibility of everything being a worthless.
Stocks may find a bottom any day but I doubt a bounce-even prolonged-will translate to or reflect broader economic strength. This is the Big One. How it plays out from this point in market terms-who knows. We could find support at 675 and trade up 300pts the rest of the year and then break again next year-we could virtually flat line down here or we could keep crashing into the 1994 breakout. Simply unpredictable. But in my view further deterioration in employment and profits is predictable and end of day voters will care more about their job remaining intact than whether the Dow is 6000 or 8000. Until people you considered untouchable are out on the street I wouldn't look for macro capitulation. This is not a drill......