the elections will shift attention away from the markets..for a time... the panic created will let the big banks accumulate for the election fever...run up... choice between Dr. Strangelove... and Obama and Mama Clinton...a young revitalized Presidency wont be elected on a policy of taxation. do American people really want more taxes? Political advisors will shift rhetoric away from taxation. so a young revitalized Presidency can create conditions for a 'stop run' against the greater fundamentals of the economy.
The Stars have aligned for a Crash. Everything is weak - from housing, to auto, to financials, to discretionary spending. Consumers are tapped and the Fed plans to curb 'now problematic' inflation. This is it. Thats the signal. When the Fed raises, it means the Banks and IB's cleared most - if not all - of their CDO's. ARM-holders will go under in droves. More foreclosures on the way. RE nowhere close to a bottom. Forget Housing to save the day. Oil should come down, but the economy will go into "Official" Recession, regardless. We're already in Recession now using 1980's CPI. Take another angle - there is nothing to drive the economy up. We're already at 2% FF and dropping like a stone. This isn't irrational pessimism. This is a paycheck-to-paycheck economy leveraged to the eyeballs, struggling to stay afloat with skyrocketing energy and food prices. As long as Bernacke keeps funds at these ridiculously levels, Oil and Commodities will only continue to rise. Americans will be forced to dole out more-and-more just to live, discretionary consumption will drop, layoffs across the board, and thats it. There is no more juice. Americans maxed out all their credit and home equity that now, ain't worth squat. Its a mathematical certainty. Big inflation or Recession, or both. There is no other way.
Achilles28 wrote..... Its a mathematical certainty.... Good post, Achilles28..... The bottomline is what matters.....
This is a good post. Pretty much covers it. My worry is several years of flat to no growth even if we do get a good "shake em out" recession (which we've needed for at least the past 18 mos). The 90's had the tech boom, and 2000's had the debt fueled home binge (and all the spending refis created). Since the consumer is actually even more of our economy now (72%), and they are by any measure completely tapped (I can display parabolic debt levels if anyone wants to see them), what could possibly be next? Exports certainly won't do it. A major "Green" revolution could be even larger than the tech boom, and actually create real products, but I believe we are years away from that. And don't even get me started on emerging markets. If we fall hard, the BRIC's fall harder. They are all export dependent on the major industrial powers. Maybe India would get through OK. We are going down further than most will accept imo. It may be a sudden whammy, but I think it will be a slow painful drool to the lows, which are going to be at a level I do not even want to speculate. my 2 cents. Jay
In the short term the cost of fuel and the unwinding of the debt thingy are not done affecting the economy... besides, our periodical recession is due to happen anyhow. if Windows OS could recognize speech and eliminate the mouse and keyboard it might set off a tech bubble again but it would be nothing compared to Global Warming...... it requires $45 Trillion [with a T] in infrastructure worldwide... thus the neverending panic-talk about it...
It's starting to look this way. One thing I am noticing is the fact that the IBES charts show equities under valued by 45% at present time. In 1999, equities were over valued a little over 60%. Of course, we all know what happened in 2000-2002. What do you think? Good post, btw!
Well, crashes happen in oversold markets, not over bought ones. Something to think about. I don't even consider valuations. I look at global economics, which in my 46 years, is set up as ugly as I have ever seen it. All sorts of ugliness in the main engine, secondary engine (Euroland and Japan showing serious cracks), and over optimism in emerging markets, which has happened before. This time is a bit different from what I have seen though, mainly due to the debt levels, and political cowardice to deal with it. I do not foresee global collapse and depression, but can see a damn long period of low growth and optimism.
I didn't see a beaten down consumer confidence like this in 2000-2002. :eek: I make a few calls to people I'm refered to, and hear some "colorful" responses. In fact, I think some would rather talk about their sex life, or toilet habits than dare talk about investing.:eek: No kidding! The sentiment is that low right now.
Interesting clips! And, if we get Odumba (scary) for President, and he goes wild with taxes, putting in countless bureaucratic government-run social programs, etc., in this environment...:eek: :eek: :eek: