Markets starting to price in benefits being halted?

Discussion in 'Economics' started by KINGOFSHORTS, Jun 29, 2010.

  1. It looks like Unemployment benefits will not be renewed for 2+ million. So as they stop getting the check, consumption will further fall.

    I wonder if that then will lead to a new bout of unemployment (snowball effect) as consumption/demand drops then more workers get laid off.

    And it begets a spiral.

    Most of the economy was based on people collecting unemployment checks and government stimulus.

    Now with both going away, S&P will probably drop to 500-540
  2. There are other ways they can compensate for the loss of demand. If they concentrated on it they could prevent any further fall out.
  3. How?

    Right now Americans are saturated with heavy debtloads (college,housing,credit cards)

    Jobs being cut, unemployment benefits running out.

    Those with jobs will stop spending due to fear of losing a job.

    And unfortunately American companies were thinking short term when jobs got sent overseas, now the chickens are coming home to roost.

    An economy based on exporting debt, importing goods and services cannot be sustained indefinitely.