probably the subprime woes wont have a major devastating effect on the economy, probably not. but the fact remains, US is still facing a huge budgetary problem due to its war efforts which doesnt seem to ease going forward. In addition, the US economic expansion of the latest years have been done at the expense of consumers, which at this point are quite overwhelmed by bad credit and high interest rates. to finance its foreign policy, the US has to issue billions in public debt, which china, india and others gladly take. So since china and others surplus is financing US deficits, in the future, those imbalances will lead to a transfer of consumption rates from US to elsewhere or IOW, steep economic growth is more likely to be happen abroad, while the US will have to settle for subpar performance. i dont have a slightest clue of what the market will do next but looking at the past sessions, it looks like it is safer to bet on the sell side because the market has already erased much of losses from last week, while the facts remain.
Have you looked into Alt-A loans? What makes you think subprime isn't going to do any damage to the economy? The RE market has done wonders for this economy in the last 5 years.
i know alt-a may become another problem. but it is still soon to understand the implications of these credit problems. it all depends on the magnitude, since at some point the financial system is no longer capable of absorbing the shock. the fed is able to bail out firms to stabilize the system if needed. it has been done in the past. but, since no one knows how far the problem goes, we will have o wait until the shore goes down, to see how many have been swimming naked.
got this off of The Lauriston Letter blog Quoted: "Bernanke is a star down here. The traders love him, they understand what he says, they know he is not going to do anything to scare the hell out of them..." - Bob Pisani on NYSE floor
this is amazing... if the markets rally this time everytime there is a fomc meeting I will go 100% long.
Why not everyday. You can't lose. Buy at the open and sell the close. Or hell don't sell at all and buy that beachfront property..
next thing is bernanke saying it is all ok with the economy but he has to increase rates throughout the year otherwise he will have to peg the usd to eur just to keep the inflation stable. at some point we need to figure out whether is it oil that is going up or the usd that is sinking.