about the credit crisis, next shoe to fall is the bond market. Whittney herself spoke about possible default of minicipalities.
ireland and greek can't refinance their debt in the bondmarket without borrowing from other countries. lenders want higher interest for the default and risk....some corporations pay 10% interest now. the writing is on the wall. debt ----slavery unserviceable is what bankrtupts companies. muni can't default on loans like individuals......they just can't have deficits. muni gov't would have to cut cut to have balance budgets...reality is these muni gov't have been spending frivorsly and bond market has spoken. local taxes cannot support their budgets and debt. free market capitalism put everybody in line...
Prechter has been a perma-bear since late October 1987. He is one shrewd promoter though pandering to the fears of the average retail trader.
Yes, he was wrong in 1987. He was right in 2008. Anyboby know what Don wallanchuk is up to? However, defaltion can happen even with the federal reserve printing money.
see 2 reasons why long term depression will arrive once stimuluses withdrawn : 1. house prices in US. cant have prices as low in US and high in lots of other places at the same time. Divergence. Disease will likely spread globally. 2. india/china export - of fighting for living space on a daily basis. Will lock consumers wallets. japan is ahead in this game and does not have issue 2.
watch these two developments: 1) the attempt to unwind the US Federal support for the mortgage marketplace by severely altering FNMA and FRE (or more popularly known as Fannie and Freddie) 2) the explosive effect of having stimulated and supported so much of the economy through these prior stimulus acts. We are in for so much growth that we just might explode off the launch pad in comparison to other countries and economies... they've been spilling the gasoline all over the place and someone's going to drop that spark and off we go....
I don't know about these predictions of doom. I mean as a country this will not be the first crisis. Do you guys remember the savings and loans crisis in the 1980's or the latin american debt crisis, the list is endless. Every 5-7 years there is a major clamity, we are told this will bring depression, we are told this time is different. As a country we have always come through. Put your faith in Goldman sachs which is saying 2011 will be the year of USA. A 20% rise in US equity market. (i am just being cynical)
Trust me...this is entirely different to any previous 'causes' times 10... The social fibre of the masses is going to be tested...and I sincerely hope I am wrong... NiN