Why the Stock Market Should Crash 142 comments
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I'm not saying the stock market will crash, only that if it had any relation to the real U.S. economy that it should crash, and soon. The current politics of experience is so warped by misleading statistics and orchestrated propaganda that it feels strange to state the obvious and find it is "that which cannot be spoken" -- the credit-dependent, consumer-dependent U.S. economy is going down, and going down hard, and the trillions of dollars borrowed and spent by the U.S. government and Federal Reserve to crank up a recovery have failed completely, utterly and totally. The basic idea of Keynesian policy is simple: when the wheels fall off the private, quasi-free enterprise economy the government borrows and spreads mountains of money around like fertilizer which will stimulate "green shoots" of recovery. The forgotten key to successful Keynesian policy is a government which has not been borrowing and spending trillions of dollars even during an era of so-called "prosperity." When a government like that of the U.S. has been propping up "prosperity" with trillions in borrowed money for a decade, then doubling or tripling the "stimulus" in the hopes that the green shoots will be enduring is truly farcical. If the economy needed several trillion dollars in deficit spending to eke out the meager jobless growth of 2001-2007, then why does anyone think that doubling or tripling that deficit spending will create an enduring boom? The truth is the U.S. economy has been dependent on Federal stimulus for years, both the indirect stimulus of artificially low interest rates and unlimited liquidity, and the direct spending of hundreds of billions of borrowed dollars. Even before the financial crisis, the Federal government was borrowing and spending $400 billion a year to prop up "prosperity." All that spending simply papered over the rot at the core of the economy: 1. The primary support of the U.S. economy is consumer spending which is ultimately based on household income and assets. Earned income has been flat to down for most Americans for years. The median income has been skewed upward by the top 10% whose earnings have risen significantly. According to the Bureau of Economic Analysis, real disposable personal income-- income adjusted for inflation and taxes--declined 3.4% in the third quarter after increasing 3.8% in the second quarter. In an economy dependent on consumer spending for 70% of GDP, how can GDP rise by 3.5% while personal income plummeted by 3.4%? Assuming that boost in GDP is real and not just statistical legerdemain, then where did it come from? From borrowed money, of course-- the Federal government borrowed and spent over $1.4 trillion in fiscal 2009. In the good old days of 2002-2007, households would have borrowed and spent hundreds of billions as well. But the consumer, beset by declining assets ($13 trillion lost in the past two years), declining income (see above), falling housing values and worrisome employment trends (17% unemployment/underemployment, broadly measured), is actually cutting back on borrowing. (Revolving Consumer Credit Drops 13.1% in August.) Consumer credit decreased at an annual rate of 5-3/4% in August 2009. Revolving credit (credit cards) decreased at an annual rate of 13%, and nonrevolving credit decreased at an annual rate of 1-1/2% --the longest decline in consumer debt since 1991. So while households are still burdened with almost $2.5 trillion in credit card and nonrevolving debt (auto loans, etc.), they are paying debt down, not adding more. And let's not forget that homeowners pulled out about $5 trillion in home equity in 2001-2007, and the home equity ATM is closed for good. That brings us to: 2. The primary asset in most U.S. households is a home, and home values are still dropping, foreclosures are still rising and the only force keeping the market from falling faster is the Federal government's de facto nationalization of the entire U.S. mortgage market. Of the $1.5 trillion mortgage securities issued in 2009, a mere 1% ($15 billion) have been issued by banks; 99% are backed by the government. The government owns over half the nation's $10 trillion in mortgages via its de facto ownership of Fannie Mae (FNM) and Freddie Mac (FRE), and it has guaranteed virtually all the mortgages originated in the past year via FHA or VA. The residential mortgage market is now effectively owned lock, stock and barrel by the Federal government and its private "central bank," the Federal Reserve. Should the Fed and Treasury reduce their subsidies (that wonderful $8,000 giveaway tax credit to new home buyers or anyone claiming to be one), guarantees and outright purchases of mortgages ($1.2 trillion this year alone), then the mortgage market would instantly freeze up or start pricing in the very real risk that housing is not "recovering" and that anyone holding a mortgage could suffer huge losses if real estate continues declining in value. Here are a few charts to ponder: 3. So how have companies "surprised" with higher profits? By slashing payrolls, R&D and various accounting tricks. Actual revenue growth is missing in action. So how do you keep "surprising to the upside" after you've slashed headcount, burned R&D and turned every accounting trick in the book? You don't. A stock market rising on the hopes of an actual, real, tangible recovery in household income, home equity and creditworthiness is seeing mirages and hallucinating that the lake just ahead is deep and wonderful and stretches to the horizon. Only we never reach the "lake," do we? "Stabilization" is a chimera; the reality is the government is propping up the economy via unprecedented borrowing and spending, and there is absolutely no evidence that private capital, credit or spending are rising from the "stabilization." We are walking through the desert, kept alive by the sugar-water drip of Federal stimulus, guarantees and subsidies. The "so near, yet so far" mirage of "recovery" has been propping up the stock market for nine months, and when a slight breeze blows away the thermal illusion, then the market will crash back to the March lows, or perhaps even lower. That crash will simply reflect the state of the real economy.
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This article has 142 comments:
Unfortunately, the tragic part of this, as with most inflated prices that fall back to a long term trend line, the price tends to over shoot and bottom below the long term trend line, taking that much longer to return to normal. This is but one nail in the markets coffin. It will crash.
On Nov 16 01:00 PM bricki wrote:
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how
> to invest. They are just as wrong as the pollyannas who were predicting
> Dow 40,000 just before the tech implosion in 2000.
When has the housing market ever not been skewed by government involvement? Ever hear of the Community Reinvestment Act? People need to grow up and realize we have never had a perfectly competitive, government free economy.
"Patterns repeat themselves, until they don't". - somebody
On Nov 16 01:46 PM CoverIsBetter wrote:
> "bricki" is right.. These death forecasts are useless if you cannot
> say when.
>
> When has the housing market ever not been skewed by government involvement?
> Ever hear of the Community Reinvestment Act? People need to grow
> up and realize we have never had a perfectly competitive, government
> free economy.
>
> "Patterns repeat themselves, until they don't". - somebody
The utility of the "death forecast" is writ large in you own challenge: At the largest turns, it there is tremendous pressure to capitulate, and join the dying trend. Those who can see the underlying reality, and call upon us to look past the convenient but deceptive barometer of current social mood that recent stock performance represents, do us a serious service.
Good article.
The reality is that high-unemployment has always been good for the market since it puts downward pressure upon the cost of labor providing cheaper goods and services and higher profits for shareholders.
What I see is a slower trend and narrower swings as our economy readjusts to tighter money at higher costs, the efficient companies doing much better than the market average while the less-efficient ones decline or disappear.Isn't that part of the cycle? The remaining companies will be more efficient and profitable substaining the market and more growth.
On Nov 16 01:55 PM dhjoe wrote:
> Question is "do you want to be right or do you want to make money?"
> - I chose the latter.
Might one not say that, while Mr. Smith’s article is too pessimistic and doesn’t capture the other balancing factors in the currently very complex economic situation, the factors to which he refers may well become the basis for a correction, not necessarily a sharp one, towards the middle or end of the first quarter of 2010 if the more positive factors (to which he does not refer in the article) do not become more pronounced by then?
In other words, while the current upward bias in the economy and in stock and commodity markets will continue for a short while longer, it will run out if not re-enforced soon?
On Nov 16 01:00 PM bricki wrote:
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how
> to invest. They are just as wrong as the pollyannas who were predicting
> Dow 40,000 just before the tech implosion in 2000.
I am bearish for all of these reasons combined. If conditions change (ie, stock prices fall, unemployment falls, earnings rise, etc), I am apt to become more bullish in opinion. Labeling someone a "permabear" simply because they are bearish at the moment (and for good reasons I will add) is nothing more than a weak attempt at belittlement. Name-calling while simultaneously providing substantial contrary data is not going to enhance the dialog.
The Dow currently is reflecting only greed and not accurate at all.
Things are getting worse in all aspects and the Dow has to collapse
to a 7,000 level before things begin to get better in my opinion.
In the New york areas, many stores are empty, the remaining store owners are suffering financially. People are asking for credit in stores, and in Manhattan,Brooklyn, and Queens areas, you can witness first hand how citizens are now taking food out of the garbage, after people discard what they have just finished eating for Breakfast, or lunch, or Diner. I have experienced an onslaught of individuals stopping in my place of business looking for work.
People come in crying that they may loose their homes, or be put out of their apartments lately. They say the Recession is over, but I have stated for the past 6 months that we are in a DEPRESSION.
To be ahead of the curve, the only way of complete recovery, for all Americans, and our Country, is a very obvious result.
One that will take years, however the outcome won't be pretty at all. And Charles the answer is on the Wall. It is 'WAR'.
LIKE YOU SAID IN THE BEGINNING, OF YOUR ARTICLE,
MAYBE NOT TODAY, OR EVEN NEXT YEAR, BUT WITHIN 4 YEARS, THIS IS THE ONLY SOLUTION TO THE BIGGEST
PROBLEM OUR COUNTRY FACES SINCE 1929!
GOD HELP US!
I haven't balanced my check book in 30 years, I don't worry about it, the bank will warn me if I overdraft, then I will have to drag the rabbit out of the hat. Martin Kudrak, Chechoslovokian, son of Borman, warned me in '98 that the Euro was going to be worth more than the dollar and we would become a service society, typical Okie that I am I argued, bullshit. He built the first remote controlled lawn mower I ever saw and the computer I bought from him had autocad of the space shuttle, which I deleted, slowed the computer. Long story short, he was right, he gave me a formula to cut an 18 inch radius with a 6 inch flycutter, ain't possible yet it is. This recession will approximate a depression appearances are deceiving, cat in the hat, don't look back, look up.
Agreed ... The capital markets have never been a good proxy for reality so while the US economy has been going to hell the stock-markets have stayed positive because big chunks of the world are doing much better than in the past. The differential between main street reality ... a very serious decline in US standard of living and quality of life ... and paper wealth on the various "markets" will, at some point collide. This will not be a pretty sight!
Peter
Technicals are still positive (although the "smart money" is beginning to turn negative).
I'll be worried when the technicals and fundamentals are both bearish.
The two richest men in the world saying we need to have faith and invest in this wreck of an world.
A sure sign we are in deep trouble.
What happened to Warren warning us about Derivitives?
I guess he's saying this part of the Economy is OK.
Sure this stock market is being propped up, but, I'm not too worried, because, I own the sailboat I live on, I have ZERO debt, AND, I'm sailing out of this ailing, flailing empire in February, 2010 for good.
I'm starting a small tourism business in Malaysia, because the green shoots over there are export-based and sustainable.
Therefore while you may be correct about the likelihood of another great crash from the reasons you mention, it may not be for a year or two or three, during which time the stock markets could double again.
So one cannot use this reasoning to stay out of the market because cash is a sure loser under current conditions. Instead realize it is probably another bubble forming but the only game in town is to take advantage of it.
I would like to see some articles here on how to recognize the top of a bubble or the beginning of its collapse. Timing the collapse based on rational economic thinking is fruitless because bubbles themselves are irrational and tend to inflate much longer than expected and then crash more severely.
The government is engineering its story so as to paper over the truth. What will the catalyst be to move us out? Change in human behavior, not the government. We have had one big party know it is time to pay the tab.
The market will crash when the nation totally crashes and the greedy elites seem to be workng toward that with their relentless ourstourcing, cheap labor importing and massive defrauding.
On Nov 16 01:35 PM herbert hoover wrote:
> There's no way anyone can invest in these markets unless they are
> naive, delusional or have more money than brains. if this market
> goes up another ten percent, the DJ is at 12000! With these fundamentals,
> that's insane
In fact, the stock market is not growing soley on the prospects of the U.S. economy, that will return to growth but slowly and not at the pre-bubble levels. There is a world out there. Give a look over the ocean east end west. May be you can see something over the sea, as a recent vice presidential candidate did.
household debt service to GDP was 8.8%. Today the household debt service to GDP is 10%.....
Wake up. Anyone who has been naked shorting this market is a fool. Anyone who is blindly jumping in long is a fool. The point of this article is to say that things are not as good as the pollyannas make it appear.
The trend is still up but you need to manage your risk.
On Nov 16 01:00 PM bricki wrote:
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how
> to invest. They are just as wrong as the pollyannas who were predicting
> Dow 40,000 just before the tech implosion in 2000.
But going from your rags to your riches are to earn the money. Because you now know what would work for you, you are building up wealth. Since earned money are capital money. You have sold what you have produced but produce nothing for the money. They do not know how ever their business works and the money become deficit spending. When they print up to monetize the debt, the paper money are bankrupted. Loaning out cheap to every high risks and getting multi with their culture maybe their political asset but their programs are your liability.
You see. How much your money can buy to the ounce of gold are in the proportion to capital money to what is nothing but paper money.
This was particularly interesting: "Of the $1.5 trillion mortgage securities issued in 2009, a mere 1% ($15 billion) have been issued by banks; 99% are backed by the government." Not many people know or realize this.
As far as whether the stock market would crash if it would realize the fundamentals...I have recently put together a series of blog posts that examine from a Technical Analysis perspective whether danger exists in the markets. Here is a link for those interested:
www.economicgreenfield.../
Anyway the banking system like all other wall street ventures could see a neural net in their future investment to this deficit financing debackle fairness......
salil.
Those who survive cut costs, got rid of dead wood, found new markets those who cried got killed. People are still spending you can't change poor habits in one year. They are just not spending as much. So we are chasing different dollars and the market has to adjust to this.
Employment is washing out the poor workers keeping the top working ones. Those who lose need to find a new gig, those jobs are gone. And because of this one reason is why we are not crashing because those top employees are still spending. Example would be the must have products for those type of people such as I-phone and the Storm.
On Nov 16 05:52 PM Adel Antado wrote:
> Nice article on why real-estate is on the decline, but the article
> does not speak to reasons why the stock-market will suddenly crash.
>
>
> The reality is that high-unemployment has always been good for the
> market since it puts downward pressure upon the cost of labor providing
> cheaper goods and services and higher profits for shareholders.
>
>
> What I see is a slower trend and narrower swings as our economy readjusts
> to tighter money at higher costs, the efficient companies doing much
> better than the market average while the less-efficient ones decline
> or disappear.Isn't that part of the cycle? The remaining companies
> will be more efficient and profitable substaining the market and
> more growth.
If you haven't made a small fortune in the past 6 months, you are an utter fool.
On Nov 16 01:35 PM herbert hoover wrote:
> There's no way anyone can invest in these markets unless they are
> naive, delusional or have more money than brains. if this market
> goes up another ten percent, the DJ is at 12000! With these fundamentals,
> that's insane
We will all be living in a new, and not very pleasant paradigm which will take us ????????
So the really serious doomer/gloomers (as opposed to the fear-mongers) best hope that they are really, really wrong.
On Nov 16 12:44 PM tunaman4u2 wrote:
> Money printing & US dollar devaluation seems to trump all right
> now
The bad news is what he says is true we are consumer led
The good news is most of those who spent too mucheither have had their credit revoced or their income reduced ,or both
Those of us who are prudent are now buying things because they are much cheaper
The Chin aand the Us partnership will continue
WE are the consumers and they are the merchants
On Nov 17 11:44 AM Ted Kavadas wrote:
> I liked reading this article.
>
> This was particularly interesting: "Of the $1.5 trillion mortgage
> securities issued in 2009, a mere 1% ($15 billion) have been issued
> by banks; 99% are backed by the government." Not many people know
> or realize this.
>
> As far as whether the stock market would crash if it would realize
> the fundamentals...I have recently put together a series of blog
> posts that examine from a Technical Analysis perspective whether
> danger exists in the markets. Here is a link for those interested:
>
>
> www.economicgreenfield.../
On Nov 17 08:38 AM jimmy Turano wrote:
> CHARLES YOUR ARTICLE MAKES SENSE AND SOME OF THE COMMENTS AS WELL
> ARE VERY GOOD IN DEED.
> The Dow currently is reflecting only greed and not accurate at all.
>
> Things are getting worse in all aspects and the Dow has to collapse
>
> to a 7,000 level before things begin to get better in my opinion.
>
> In the New york areas, many stores are empty, the remaining store
> owners are suffering financially. People are asking for credit in
> stores, and in Manhattan,Brooklyn, and Queens areas, you can witness
> first hand how citizens are now taking food out of the garbage, after
> people discard what they have just finished eating for Breakfast,
> or lunch, or Diner. I have experienced an onslaught of individuals
> stopping in my place of business looking for work.
> People come in crying that they may loose their homes, or be put
> out of their apartments lately. They say the Recession is over, but
> I have stated for the past 6 months that we are in a DEPRESSION.
>
> To be ahead of the curve, the only way of complete recovery, for
> all Americans, and our Country, is a very obvious result.
> One that will take years, however the outcome won't be pretty at
> all. And Charles the answer is on the Wall. It is 'WAR'.
> LIKE YOU SAID IN THE BEGINNING, OF YOUR ARTICLE,
> MAYBE NOT TODAY, OR EVEN NEXT YEAR, BUT WITHIN 4 YEARS, THIS IS THE
> ONLY SOLUTION TO THE BIGGEST
> PROBLEM OUR COUNTRY FACES SINCE 1929!
> GOD HELP US!
My own viewpoint is simpler. I tend not to worry about the things I can not change but simply to work with what I can. I sleep better that way and enjoy life more. Peter Lynch said it like this:
"If you spend 13 minutes a year trying to predict the economy, you have wasted 10 minutes."
"Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what is actually happening in the companies in which you've invested."
"There is always something to worry about. Avoid weekend thinking and the dire predictions of forecasters. Sell a stock because the company's fundamentals deteriorate, not because the sky is falling."
"Everyone has the brain power to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether."
"A stock market decline is as routine as a January blizzard in Colorado. If you are prepared, it can't hurt you. A decline is a great opportunity to pick up the bargains left behind by investors who are fleeing the storm in panic."
"If you study 10 companies, you will find 1 where the story is better than expected. If you study 50, you will find 5. There are always pleasant surprises to be found in the stock market - companies whose achievements are being overlooked on Wall Street."
I, personally, prefer to spend my time studying the companies to find those pleasant surprises. They are out there and it does not matter if the markets are going up, down, or sideways. You can make money with them at any time and in any time frame. It has been noted that stocks lead the economy, and if you focus on the latter, the stock market will leave you in the dust almost every time. News is also ALWAYS behind the market and any given news story lasts only a few minutes before the market goes it's own way. It is something to think about.
The chosen one (Obama)will place himself in position (probably with UN blessing) as the sole arbitrer of the resulting chaos. Behind closed doors(just as with any and all recent legislation by the Demo-gogues) the new world order will be connived. Look for all of our most indebeted-to supporter nations (China, Japan, most of the rest of Asia) and those who openly revile us (Russia, Saudia Arabia, and all Islamo-facist dictatorships) to have a revered place at the carving table.
Be prepared to see a dismembered USA as a final outcome. We have 35% of the world's wealth, but 5% of its population. After the "redistribution", those wealth and population numbers are gonna look a lot closer.
"After all (quoth Obama), its only fair."
"We have seen the enemy, and he is us.." and those elected that we have thrust into absolute power.
Good article. The other thing is the psychological effects too.
Of late we heard the Bill Gates and Warren Buffet coming out of the woodwork to mutter to the crowds saying "...Hey guys, the worst is behind us...(the sky is all clear now, everything is going to a okay)..."
Those words in parenthesis are mine. Well, doesn't this sound too familiar? As with the Volkswagen Toureg and the Toyota Vanzer, these two models are their worst sellers, and yet they spent tons of money in the TV airwaves pounding their virtues and pushing their sales. In actuality, the VW Toureg had been rated as one of the least reliable and slowest-selling models! Similarly, the Toyota story is everyone's guess.
The point is Companies always push hardest for those that are hardest to sell (remember your real estate agent kept showing you over and over that particular house that you had doubts about?)
Moreover, if indeed the worst had come and gone, it would be obvious to everyone. The fact that these two Yesterday's gentlemen had to say it openly is by itself suspect. If indeed the Dow would plunge to 3000 in 2010, their wealth would simply be cut in half at least. So you see the vested interest there.
TK
On Nov 16 12:58 PM Donald Ingram wrote:
> Charles - excellent article. Agree. House values will recede a further
> 24% - 42% before they find a bottom. With the Feds artificially propping
> up the real estate market and banks holding foreclosed properties
> off the market, or refusing to foreclose so as to not have to recognize
> a failed loan, the housing recovery will endure much more pain before
> a long, slow recovery can take place.
>
> Unfortunately, the tragic part of this, as with most inflated prices
> that fall back to a long term trend line, the price tends to over
> shoot and bottom below the long term trend line, taking that much
> longer to return to normal. This is but one nail in the markets coffin.
> It will crash.
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how to invest.
Wrong. There have been plenty of people describing how this would play out, from nearly a decade ago.
What they can't do is give you exact timing, partly because the market can stay irrational lomnger than you can stay in it, and partly because you have no idea how far into penury the US banking system will demand that your government drive your grandchildren.
But the trajectory and the direction are dead certs.
For investment advice, use your brain. Unless you think you can time the market, get out of it, pay down debt, secure real estate to live in, invest in hand tools and learning how to use them, learn to garden.
On Nov 16 05:52 PM Adel Antado wrote:
> Nice article on why real-estate is on the decline, but the article
> does not speak to reasons why the stock-market will suddenly crash.
>
>
> The reality is that high-unemployment has always been good for the
> market since it puts downward pressure upon the cost of labor providing
> cheaper goods and services and higher profits for shareholders.
>
>
> What I see is a slower trend and narrower swings as our economy readjusts
> to tighter money at higher costs, the efficient companies doing much
> better than the market average while the less-efficient ones decline
> or disappear.Isn't that part of the cycle? The remaining companies
> will be more efficient and profitable substaining the market and
> more growth.
Admiral Buffet and Commodore Gates have a reason to send us out to sea and it ain't for our own health or wealth.
Batten down the hatches!
It may come at Noon or by tea time, but it will come and blow hard.
Let the foolhardy take the skiff out to the oyster beds; more rations for the rest of us.
There are plenty of reasons for a correction or two. I just don't see a global meltdown. What is the trigger? The fundamentals are surely weak, but they were bad yesterday, and last month. Where's the nuclear bomb going to go off?
You only look for your shadow, found it, and declared a long hard winter ahead.
I agree that the consumer is not spending. He's been hit, and doesn't know how secure he is. So what does he do, he saves. This deleveraging has pulled an enormous amount of money out of the economy. Since employment is a lagging indicator. It won't be until later that the spending will happen. I don't see further deleveraging. There's nothing else to be pulled out.
Factories stopped building things. They had too much inventory. Now, factories are going through their inventories. Slowly but surely. Sooner or later, they will need to start making their products again. They will hire workers. Who will buy things, causing other factories to have to make things.
It's not going to be all peachy-keen. It'll be up, down, and up again. I just don't see the case for a major crash any more than I see a case for a major boom.
It's just going to be an up, down, up, down cycle.
So, I held my nose and went long. I'm making money, which I know as a trader is all that matters, but I have more of a pit in my stomach now than I did when I was short.
Logically and fundamentally, there is no reason for the market to be where it is, but the first rule of trading is don't fight the trend (which I again, learned the hard way).
Which reminds me of another Wall St. adage, "The market can remain irrational longer than you can remain solvent".
I still firmly believe that this current episode is going to end badly, as to when, who knows. If I had to guess, within 6 months at the outside and it will be an absolute show-stopper.
Good luck!
I'm so sorry the real 'chosen one' (by the US Supremes) doesn't have to clean up the mess he and the rightwingers since Reagan created. Bush and Co. left Mr. Obama a 30+year mess to clean up.
Thinking people recognize your radical right wing rhetoric--spewed like venom against the Prez--and know that you were whining and complaining whenever a word was said against Bush, Reagan, etc and their henchmen, but now it's okay for you to whine and complain about Obama. Typical.
Weren't most of the 9/11 criminals from Saudia Arabia, the home of Bush's bosom buddy dictators?
Iraq? One or two of them from there, I think. So how come no one bombed the Saudis?
Did Obama start the wars in Iraq and Afghanistan? No.
Your venom has no place in this discussion. Accepting reality is a more useful exercise. It helps to think through the facts to come to some idea of how to approach today's issues and make rational choices.
On Nov 17 02:18 PM dragonpaw wrote:
> War, unfortunately, will be the solution for the new regime's self-inflicted
> ills. Israel will someday soon bomb the bejesus out of Iran. This
> will be done "without US approval." Obama will come out aghast against
> this action. He will decry the Isreali over-reaction, placating further
> Islamic sympathys and revving-up jihadist terrorism.
> The chosen one (Obama)will place himself in position (probably with
> UN blessing) as the sole arbitrer of the resulting chaos. Behind
> closed doors(just as with any and all recent legislation by the Demo-gogues)
> the new world order will be connived. Look for all of our most indebeted-to
> supporter nations (China, Japan, most of the rest of Asia) and those
> who openly revile us (Russia, Saudia Arabia, and all Islamo-facist
> dictatorships) to have a revered place at the carving table.
> Be prepared to see a dismembered USA as a final outcome. We have
> 35% of the world's wealth, but 5% of its population. After the "redistribution",
> those wealth and population numbers are gonna look a lot closer.
>
> "After all (quoth Obama), its only fair."
> "We have seen the enemy, and he is us.." and those elected that
> we have thrust into absolute power.
exactly where the majority voting american public has through
its unfortunate lack of education and awareness as to how to
insist on responsible government leadership brought us. To the brink of a tragic economic and social collapse.
In what should be a prosperous advanced democracy, such a
dark path is trully a useless waste of human potential that will
be embossed in the annals of history for centuries to come,
that is if the human survives!
Erick Tippett
Chicago, Illinois
the
The market will stay afloat until after Xmas, at least.
On Nov 16 01:35 PM herbert hoover wrote:
> There's no way anyone can invest in these markets unless they are
> naive, delusional or have more money than brains. if this market
> goes up another ten percent, the DJ is at 12000! With these fundamentals,
> that's insane
On Nov 17 09:44 AM Kevin_T wrote:
> Just as the tech bubble continued inflating for years after Greenspan's
> famous "irrational exuberance" statement, the current stock bubble
> can also keep inflating for a long time, fed by nearly free borrowed
> money and reinforced by momentum. Pundits were talking about the
> "housing bubble" for at least 3 years before it finally rolled over.
>
>
> Therefore while you may be correct about the likelihood of another
> great crash from the reasons you mention, it may not be for a year
> or two or three, during which time the stock markets could double
> again.
>
> So one cannot use this reasoning to stay out of the market because
> cash is a sure loser under current conditions. Instead realize it
> is probably another bubble forming but the only game in town is to
> take advantage of it.
>
> I would like to see some articles here on how to recognize the top
> of a bubble or the beginning of its collapse. Timing the collapse
> based on rational economic thinking is fruitless because bubbles
> themselves are irrational and tend to inflate much longer than expected
> and then crash more severely.
I also think markets will crash sooner rather than later, but its the effect of printing money to hand to investment houses who should have been allowed to crash and burn instead of being propped up by the "nepotism" of treasury and fed leaders.
Example:
Why is Goldman so sacred that it could change into a bank holding company just in time to get a "bailout" it didn't need, "made-whole" from its insurer (AIG) who was bailed out, then turn in an astounding profit 1Q later and finally repay its "bailout" to avoid any compensation restrictions on its executives (again just in time). All thanks to its alumni of course...
What will bring this economy (and country) down is the corruption of principles at the highest levels of the government. Check the rest of the world. What is the biggest hurdle for any country's domestic agendas - in any of the "developing" nations = unfettered corruption and nepotism in government and general public.
This usually starts with a larger separation between the "upper" and "lower" economic classes. The first signs of which are already here as the author points out - "...The median income has been skewed upward by the top 10% whose earnings have risen significantly...."
And now good old USA is headed down that same old road of ruin traveled by many "free" countries, unless the elected leaders get above this "disease". Because the next step is for corruption is to spread into the general public. Then we'll be just another "developing" nation miserably trying to find the money to feed an (aged) population - no longer self sustaining...
Printing money so you can make your rich friends richer is greed at its ugliest and will drive the average joe further into debt.
...maybe that stimulus money should be sent to the individuals instead of bailing out devious quant failures.
A wave of this magnitude is extraordinary and it is impossible to establish fundamental reasons to support this huge wave and it has already proved the point by the subsequent crash.
The question now is whether the March 2009 lows of 6500 marked the turning point and the reversal to 10400 as sustainable. 10400 is a 1340% increase in price over 25 years and that still seems to be way out of the domain of economic fundamentals. Has the US economy grown 1340% in 25 years? Wow, that would be miraculous!
If the low point of 1982 represents 'fair value' then the market value as determined by economic fundamentals (actual economic growth) of the past 25 years would be closer to dj at 3000. This puts the US economy today at slightly more than 4 times its size in 1982.
We need to throw the expansionary monetary policies of the US Federal Reserve into this model. On this point, I don't have the numbers to work with and I have no clue how much money/credit they have "issued" and to what extent they have expanded base money supply. Assuming that they have doubled it then the money from thin air would inflate the 1982 figure compounded by actual economic growth to 6000.
The current real credit market contraction coupled with central bank monetary expansion clouds the matter further.
The end result is that until this clears up it is really guessing where we are at. On balance though, I agree with the article. I believe that the inherent potential for a decline of the DJ below 6000 is there. The question is whether the shenanigans of financial wizardry can continue to make it appear otherwise.
But an interesting comparison, nonetheless...
www.planbeconomics.com.../
It seems the mountain of debt will be inflated away (i.e. defauted).
Now that's a formula for prosperity!
Ray Bob
On Nov 16 12:44 PM tunaman4u2 wrote:
> Money printing & US dollar devaluation seems to trump all right
> now
They its lights out. Game over.
"Sorry folks, but all that money you put into stocks, bonds, real estate, insurance policies, and retirement funds is ... gone. You got tricked fair and square, and now its time to move on."
- Obama, 2012
We are in a depression.
On Nov 17 09:51 AM Robert Jung wrote:
> Great article. I have been wondering if we've been in a recession,
> depression, decession or repression since 2000. It looks like we
> are mirroring history - 30's and 70's. If this is the case, we are
> probably half way through the trouble.
>
> The government is engineering its story so as to paper over the truth.
> What will the catalyst be to move us out? Change in human behavior,
> not the government. We have had one big party know it is time to
> pay the tab.
>
And those of us with no debts and who already have more than one million would pay for this then? I don't think so.
On Nov 18 08:18 AM User 380388 wrote:
> What would have happened if our government had given every American
> household a million dollars with the stipulation that all debt be
> paid off? How many foreclosures, bankruptcies and credit card defaults
> would have been avoided ? How many retail jobs and small businesses
> would have been saved? How much in local and state property and sales
> tax revenue would not have been lost How many families and lives
> would have been saved, the true cost of our economic hell? What would
> of this cost-$250 million or so- compared to the hundreds of billions
> now spent?
On Nov 17 09:59 PM AllStreets wrote:
> Hear, hear. The consuner is a dead duck. But the corporations in
> the stock market are, what, 38% in global revenue, riding on the
> backs of the developing countries. They are not the U.S. economy.
> Furthermore, there's no fixed link between the stock market and the
> economy. Stock and commodity markets are casinos driven by the options
> markets, which in turn are driven by computer buy/sell programs to
> benefit the investment banks that run them. Also, the stocks are
> bought and sold by the market makers. When the entire world dumped
> stock on them last year at low prices, they owned the market. Now
> they are raising prices until most are dumped back onto the retirment
> funds at much higher prices. Then, and only then will prices crash,
> and that will not be until the vast majority is convinced there's
> no direction but up. It may take a few quarters of "recovery" to
> get to that point.
"increase in savings" as per official figures, decreasing revolving credit, decreasing personal income, decreasing home values... and they still have the bollocks to say "ECONOMY IS REBOUNDING".
Hahaha.. what a bunch of jokers
I'll continue to be a buyer up until the day all of you bears turn bullish...
The author is wrong. Even if the income of the top 10% exploded by ten times, it would not affect the median. Such careless mistakes in an article grounded in statistics make it hard to take his gloomy scenario as gospel.
That's not to say a crash won't happen, but I'm skeptical of the author's analysis proving why it will.
We had a crash last year following the collapse of Lehman Brothers. Earlier in 2008, the government successfully orchestrated the dissolution of Bear Stearns by moving its assets to JP Morgan for pennies on the dollar. In mid-summer, Fannie Mae and Freddie Mac were essentially put into receivership, again, in a way that was not too disruptive to the markets and economy.
But then the "moral hazard" crowd ramped up their vocal chords and convinced Federal types to just let the next bank fail. There was genuine concern that if we didn't let businesses fail, then everyone would jus take for granted the government would save the day. So, they let Lehman fail without even a hint of assistance. Big Mistake!
This little miscalculation got the snowball started and by the middle of October the markets and economy were in freefall. All lending was frozen and the world was on the verge of a complete economic collapse.
But then sounder minds prevailed and central bankers were able to bring the economy out of a fatal dive by applying monetary stimulus (very effectively) and fiscal stimulus (not very effective as politicians played games). The end of the first quarter 2009 saw a surprising recovery in profits and from there, the economy has gone one way: UP!
So, I don't know what rock you have been hiding under, but everything you wrote is yesterday's news. The markets don't trade on past news, but on forward news. Understand that, and you have the secret to financial success.
You may criticize the data for being backward-looking, but since all of these trends are continuing and there has been no real fundamental correction, the problems presented are in fact forward-looking as well. There will be a day where some of these numbers turn around, and that could be as early as sometime in 2010. But for the moment, investors ought to proceed with extreme caution.
>
> So, I don't know what rock you have been hiding under, but everything
> you wrote is yesterday's news. The markets don't trade on past news,
> but on forward news. Understand that, and you have the secret to
> financial success.
Buy plenty of gold......and lots of ammo.
We're all inside a house of cards and it's coming down
sooner than anyone realizes.
On Nov 17 11:54 AM 7footMoose wrote:
> The questions I have for the assembled masses are, "What happens
> to the value of gold and other precious metals IF the premise of
> this article is correct?" Logic tells me that it collapses as demand
> collapses along with the purchasing power of the consumer BUT that
> may not be correct. Also, if I posses gold in such an event, how
> many rounds of ammunition for my Smith & Wesson do I need to
> protect it?
But for the record, Charles is a "Perma-Bear". He wrote a book called "Survival Plus". This guy is burying money and canned goods in his backyard waiting for the apocalypse.
It won't ever come, but that's fine for Charles. He'll keep finding scary numbers on the internet and showing them to us all. He'll keep mixing fact with pulp financial fiction to keep the pot stirring.
This guy is a fiction writer of sorts on the side. Mostly, cheesy pulpy stuff fronting for his blog on which he collects "donations". I wouldn't listen to him. He is the worst kind of very lonely man who preys on your fears to draw you closer.
Taking financial advice from a guy who wrote a book about 2 teenage boys crossing the country together? Please. Anybody who re-uses that plot to get a high page count, and your money, ought to be easy to avoid on your reading list.
On Nov 16 01:00 PM bricki wrote:
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how
> to invest. They are just as wrong as the pollyannas who were predicting
> Dow 40,000 just before the tech implosion in 2000.
What I thought was missing from the article was - if people are not spending, what are they doing with their money?
If they are saving it, why are the banks only lending 1% for mortgages?
And, can you separate the effect of sophisticated speculators (hedge funds, derivatives, etc) on the market from us just plain buy/hold folks?
And would someone tell me why credit card companies and stock companies are now calling themselves banks?
Your myopic view is what will fuel the next leg down. Profits rose 'surprisingly' because of CUTS, not increases in revenue. Job losses continue to mount while consumers pay down debt. News flash - there will be no economic recovery without the U.S. consumer.
Financials led the rally because of the repeal of the mark to market rules for bank assets back in March. They can now assign their own values to toxic assets and not have to worry about that pesky little thing called reality.
So yes the market has rocketed higher, but it is purely liquidity driven. If you have made money on the uptrend as many of us have, good for you, but you need to put the kool-aid cup down.
On Nov 18 12:02 PM Brian McMorris wrote:
> Earth to Charles Hugh Smith: Have you been asleep for the past 18
> months? Apparently. Let me fill you in.
>
> We had a crash last year following the collapse of Lehman Brothers.
> Earlier in 2008, the government successfully orchestrated the dissolution
> of Bear Stearns by moving its assets to JP Morgan for pennies on
> the dollar. In mid-summer, Fannie Mae and Freddie Mac were essentially
> put into receivership, again, in a way that was not too disruptive
> to the markets and economy.
>
> But then the "moral hazard" crowd ramped up their vocal chords and
> convinced Federal types to just let the next bank fail. There was
> genuine concern that if we didn't let businesses fail, then everyone
> would jus take for granted the government would save the day. So,
> they let Lehman fail without even a hint of assistance. Big Mistake!
>
>
> This little miscalculation got the snowball started and by the middle
> of October the markets and economy were in freefall. All lending
> was frozen and the world was on the verge of a complete economic
> collapse.
>
> But then sounder minds prevailed and central bankers were able to
> bring the economy out of a fatal dive by applying monetary stimulus
> (very effectively) and fiscal stimulus (not very effective as politicians
> played games). The end of the first quarter 2009 saw a surprising
> recovery in profits and from there, the economy has gone one way:
> UP!
>
> So, I don't know what rock you have been hiding under, but everything
> you wrote is yesterday's news. The markets don't trade on past news,
> but on forward news. Understand that, and you have the secret to
> financial success.
This is wrong. The median income will not be affected by the top 10%. The median is the income of the person/household at the 50 percentile of the group, counting up from the bottom. In other words, if you have 99 people with differing incomes, it is the income of the person who has income rank # 50. The income of the top 10% could triple and it would not affect the median. The mean income would be subject to distortion by skewed distribution and that is why they report median incomes instead.
At last someone who is a realist! I feel sorry for the doom and gloomers, because if they are wrong... they lose...if they are right ..they still lose, along with everyone else.
What a way to live.
I like your attitude much better and I act accordingly, myself.
Glad to hear there are some of us left in this world.
JR
On Nov 17 02:09 PM mbkelly75 wrote:
> Thanks to the writer for this article. The charts and commentary
> were well thought out, clearly said and gave food for thought.<br/>My
> own viewpoint is simpler. I tend not to worry about the things I
> can not change but simply to work with what I can. I sleep better
> that way and enjoy life more. Peter Lynch said it like this:
> "If you spend 13 minutes a year trying to predict the economy, you
> have wasted 10 minutes."
> "Nobody can predict interest rates, the future direction of the economy,
> or the stock market. Dismiss all such forecasts and concentrate on
> what is actually happening in the companies in which you've invested."
>
> "There is always something to worry about. Avoid weekend thinking
> and the dire predictions of forecasters. Sell a stock because the
> company's fundamentals deteriorate, not because the sky is falling."
>
> "Everyone has the brain power to make money in stocks. Not everyone
> has the stomach. If you are susceptible to selling everything in
> a panic, you ought to avoid stocks and stock mutual funds altogether."
>
> "A stock market decline is as routine as a January blizzard in Colorado.
> If you are prepared, it can't hurt you. A decline is a great opportunity
> to pick up the bargains left behind by investors who are fleeing
> the storm in panic."
> "If you study 10 companies, you will find 1 where the story is better
> than expected. If you study 50, you will find 5. There are always
> pleasant surprises to be found in the stock market - companies whose
> achievements are being overlooked on Wall Street."
> I, personally, prefer to spend my time studying the companies to
> find those pleasant surprises. They are out there and it does not
> matter if the markets are going up, down, or sideways. You can make
> money with them at any time and in any time frame. It has been noted
> that stocks lead the economy, and if you focus on the latter, the
> stock market will leave you in the dust almost every time. News is
> also ALWAYS behind the market and any given news story lasts only
> a few minutes before the market goes it's own way. It is something
> to think about.
Soros has been saying for years that market prices can affect underlying fundamentals. What we are witnessing here is government trying to put "reflexivity" to work.
Joseph Tibman, Author, Murder of Lehman Brothers
On Nov 18 04:00 PM Wayne A. Corbitt wrote:
> Brian,
>
> Your myopic view is what will fuel the next leg down. Profits rose
> 'surprisingly' because of CUTS, not increases in revenue. Job losses
As for the type of stimulation that has a taxpayer impact, that is fiscal stimulus. That stimulus has been a disaster (and usually is). But only $700B was allotted for that stimulus and most of that has not been spent (the TARP funds have been or will be returned, so they don't count). Unfortunately, politicians get to dictate how fiscal stimulus is applied, which is the primary problem with it. Rather than doing something needed, permanent and good, like rebuilding our broken down water and highway systems, or fixing the electric grid so we can convert to solar power, the yoyos in DC are applying the funds to more inefficient government services (ObamaCare anyone?) and/or pet projects that do not add permanent economic value to this country.
On Nov 18 12:30 PM Joe Snow wrote:
> I have to agree. Whatever improvement in economic activity there
> is exists only due to government spending. Once the spending stops,
> the whole thing comes down like a house of cards. The only way to
> keep it going is to keep spending but that leaves us with a huge
> debt and higher taxes so less money will be available to fuel a real
> recovery.
On Nov 16 12:58 PM Donald Ingram wrote:
> Charles - excellent article. Agree. House values will recede a further
> 24% - 42% before they find a bottom. With the Feds artificially propping
> up the real estate market and banks holding foreclosed properties
> off the market, or refusing to foreclose so as to not have to recognize
> a failed loan, the housing recovery will endure much more pain before
> a long, slow recovery can take place.
>
> Unfortunately, the tragic part of this, as with most inflated prices
> that fall back to a long term trend line, the price tends to over
> shoot and bottom below the long term trend line, taking that much
> longer to return to normal. This is but one nail in the markets coffin.
> It will crash.
On Nov 18 04:50 PM jr007 wrote:
> mbkelly,
> At last someone who is a realist! I feel sorry for the doom and gloomers,
> because if they are wrong... they lose...if they are right ..they
> still lose, along with everyone else.
> What a way to live.
> I like your attitude much better and I act accordingly, myself.<br/>Glad
> to hear there are some of us left in this world.
> JR
Have you noticed the annual per capita incomes of some of these "emerging markets"?
In no particular order:
(1) Brazil: $8,295
(2) Mexico: $10,200
(3) Malaysia: $8118
(4) China: $3259 (THIS is the country that's going to pull the world out of recession?!)
(5) Thailand: $4116
(6) India: $1017
en.wikipedia.org/wiki/...
Not ONE of these "emerging markets" is any replacement for a single American or European consumer (And Corporate America would just as soon keep it that way, thank you very much.)
As far Corporate America is concerned, the people of these EMs are little more than beasts of burden, to be used and disposed of at will. If they make money there, great. If not, there's always the US and Europe.
On Nov 17 11:08 AM AxIt wrote:
> In fact, the stock market is not growing soley on the prospects of
> the U.S. economy, that will return to growth but slowly and not at
> the pre-bubble levels. There is a world out there. Give a look over
> the ocean east end west. May be you can see something over the sea,
> as a recent vice presidential candidate did.
On Nov 16 01:00 PM bricki wrote:
> I'm tired of articles from perma-bears and shorts in denial. These
> viewpoints are completely useless when it comes to determining how
> to invest. They are just as wrong as the pollyannas who were predicting
> Dow 40,000 just before the tech implosion in 2000.
On Nov 18 10:57 PM Liz wrote:
> Personally, I think most of the "emerging markets" are overrated.
>
>
>
> Have you noticed the annual per capita incomes of some of these "emerging
> markets"?
>
>
> In no particular order:
>
> (1) Brazil: $8,295
> (2) Mexico: $10,200
> (3) Malaysia: $8118
> (4) China: $3259 (THIS is the country that's going to pull the world
> out of recession?!)
> (5) Thailand: $4116
> (6) India: $1017
>
>
> en.wikipedia.org/wiki/...
>
>
>
> Not ONE of these "emerging markets" is any replacement for a single
> American or European consumer (And Corporate America would just as
> soon keep it that way, thank you very much.)
>
> As far Corporate America is concerned, the people of these EMs are
> little more than beasts of burden, to be used and disposed of at
> will. If they make money there, great. If not, there's always the
> US and Europe.
>
On Nov 16 05:52 PM Adel Antado wrote:
> Nice article on why real-estate is on the decline, but the article
> does not speak to reasons why the stock-market will suddenly crash.
>
>
> The reality is that high-unemployment has always been good for the
> market since it puts downward pressure upon the cost of labor providing
> cheaper goods and services and higher profits for shareholders.
>
>
> What I see is a slower trend and narrower swings as our economy readjusts
> to tighter money at higher costs, the efficient companies doing much
> better than the market average while the less-efficient ones decline
> or disappear.Isn't that part of the cycle? The remaining companies
> will be more efficient and profitable substaining the market and
> more growth.
Let's see: they are printing money like never before and we say that they want to prop up the economy ( real estate, car manufacturers,stock market etc.) . On this count alone the article is spot on: it can't work.
But what if what they're trying to do is simply to generate inflation ? Given enough of it, nominal prices will duly rise and they will be able to claim that prices and the economy have recovered.
Like at high tide, everything will be lifted and they will claim victory.
People will be impoverished, you'll need $ 20 to buy a hamburger but hey, the price of your house will have recovered somewhat and we can go on to the next elections...
Like bernanmke or not he had to do what he did. Buffett and others all say that
Our dollar has been declining in purchasing power since 1945 the key is will the Chinese continue to buy our debt
What else are they going to do
One there own people will not buy all the worthless high margin items they produce
second of all where else they going to put all their trillions?zimbabwe
No government has even spent itself to prosperity. No revenue growth = no economic recovery. Seriously, even government revenues are shrinking yet they continue to ramp up spending. Try doing that in your own home and see what kind of financial shape you will be on after a couple of years. That leaves you with the HOPE that the spending will turn things around and the debt you incurred can be repaid.
How many bull markets have been sustained by government spending while companies can not grow their top line? Please do us all a favor and step awaaay from the kool aaaaaiid.
On Nov 18 07:08 PM Brian McMorris wrote:
> Myopic, "drinking the kool-aid"; "purely-liquidity-driven" (and what
> bull market has not been?) these are the favorite words / terms of
> the bearish types that can't think for themselves but must fall back
> on tired phrases that were first trotted out 12 months ago.
Value is a sticky term.
However, if the premise of this article is correct, the price of gold and precious metals, along with all other commodities, will go up.
If you possess gold when this happens, the number of rounds of ammunition you will need to protect your gold will be directly proportional to the number of people who know you have the gold.
Societe Generale tells clients how to prepare for 'global collapse' www.etfdesk.com/headli...
At least one good thing of an economic crash or flush will be good, it will put scare mongering writers like you out of business for good.
- 90% of people still have their jobs
- the stocks that drive the market are important parts of a range of world economies that have miles to go in expansion and a huge desire to upgrade their standard of living
- US home values are a location specific problem, but it seems that the froth of speculative edge of town expansion in "boom" towns has blown away, and the key areas that people have always wanted to find homes are stable, even growing slightly. The averages that are thrown around gather in a very wide swathe of different circumstances
I have opinions but little hard evidence to say what will happen in, say, the next six months. but precisely because the markets are aware that the overall future direction still holds a lot of promise it is likely that it will not be down for long.
Perhaps its easier for me to see as a non-American, but you may be pleased to note that competing with the great majority of large American companies is not for the faint-hearted
On Nov 19 03:17 PM John Aislabie wrote:
> Markets will go up and down and I am sure I can't catch the timing.
> But the current position has another way of being viewed:
> - 90% of people still have their jobs
> - the stocks that drive the market are important parts of a range
> of world economies that have miles to go in expansion and a huge
> desire to upgrade their standard of living
> - US home values are a location specific problem, but it seems that
> the froth of speculative edge of town expansion in "boom" towns has
> blown away, and the key areas that people have always wanted to find
> homes are stable, even growing slightly. The averages that are thrown
> around gather in a very wide swathe of different circumstances<br/>
> I have opinions but little hard evidence to say what will happen
> in, say, the next six months. but precisely because the markets are
> aware that the overall future direction still holds a lot of promise
> it is likely that it will not be down for long.
> Perhaps its easier for me to see as a non-American, but you may be
> pleased to note that competing with the great majority of large American
> companies is not for the faint-hearted
My reading is that option #1 is being predicted by the market. It certainly fits rational expectations based on an increase in money supply. But I would only enter the liquidity trade, with a couple of exceptions. If you're equipping or feeding the developing world, you're not going out of business. In fact, you're likely to see improving business as the grand transfer of wealth (and the Asian creation of wealth) proceeds apace.
Now, the wealth creation process in the developing world is very unstable, so volatility will be back, that's for sure. But probably... in a trading range as the currency itself continues to slide in real terms (and I'm not talking dollar to Euro comparisons here!). We all know you can't print money out of thin air without consequences.
When To Sell (Justin Mamis)
www.amazon.com/When-Se...-
On Nov 17 09:44 AM Kevin_T wrote:
> Just as the tech bubble continued inflating for years after Greenspan's
> famous "irrational exuberance" statement, the current stock bubble
> can also keep inflating for a long time, fed by nearly free borrowed
> money and reinforced by momentum. Pundits were talking about the
> "housing bubble" for at least 3 years before it finally rolled over.
>
>
> Therefore while you may be correct about the likelihood of another
> great crash from the reasons you mention, it may not be for a year
> or two or three, during which time the stock markets could double
> again.
>
> So one cannot use this reasoning to stay out of the market because
> cash is a sure loser under current conditions. Instead realize it
> is probably another bubble forming but the only game in town is to
> take advantage of it.
>
> I would like to see some articles here on how to recognize the top
> of a bubble or the beginning of its collapse. Timing the collapse
> based on rational economic thinking is fruitless because bubbles
> themselves are irrational and tend to inflate much longer than expected
> and then crash more severely.
Why on earth would Corporate America want to double their salaries? As far as they're concerned, it's like throwing money at oxen!
They won't do it unless Beijing forces their hand (There's been talk of setting up a state-funded Social Security system in China -- to spare Chinese workers from having to save 30% of their incomes for retirement.)
On Nov 19 05:56 AM john connor wrote:
> one thing to keep in mind: it is easier to double the income of the
> average Chinese appx $3k to $6k in a lower tax evironment, than an
> American/European around $40k to $80k in a higher tax environment.
> Unless we get devaluation of the USD/FRN then it maybe easier, you
> would need 80k-100k+ to survive!:-(
On Nov 19 02:59 PM Mike smoth wrote:
> I am sick and tired of these people that say that WE NEED to have
> a Darwinian economic crash or flush. The problem with this theory
> is the assumption that flush will produce a better being. That is
> a terrible assumption. It may actually produce a terrible being.
> We could end up in economic and political chaos that may give rise
> to either communism or a fascist society.
>
> At least one good thing of an economic crash or flush will be good,
> it will put scare mongering writers like you out of business for
> good.
On Nov 17 09:54 AM swaps wrote:
> The current shrinkage of the stock market from its all-time highs
> somewhat correlates with the shrinkage of the job base.
>
> The market will crash when the nation totally crashes and the greedy
> elites seem to be workng toward that with their relentless ourstourcing,
> cheap labor importing and massive defrauding.
Wouldn't you have hated to have been one of those traders in 1932 who missed doubling your money because you were waiting for the next iminent crash?
The big thing you need to think about is why the authorities did nothing about the housing bubble, the collapse of which has done so much damage.
And I think the answer is that the Fed considers its primary responsibilities NOT to be controlling inflation, minimizing unemployment and maximizing economic growth--but instead to
maximize short-term bank profits.
On Nov 18 07:13 PM Brian McMorris wrote:
The authorities can take
> out the liquidity whenever desired just by selling the accumulated
> assets back into the market, once it is safe to do so. They can
> also leave in the liquidty as long as desired.
That's why one trades on perception of reality and not reality itself. Nevertheless, one should be aware of such reality and be ready to pounce once the crowd finally uncovers it. So get ready to put your short positions...
On Nov 17 08:32 AM jmann83 wrote:
> Its the old saying ''markets can remain irrational longer than you
> can remain rational'' and price often goes further for longer than
> we think, it's the classic carry trade on again with Ben's helicopter
> money, the US government has no choice but to inflate away it's issues,
> deflation would be the worse of the two evils, buying anything priced
> in USD is the trade right now and could be for several or more years,
> the yen carry trade lasted almost a decade before imploding last
> year. Risk assets could go a lot higher before coming back, as it
> would take a major pyschlogical market shift for a USD rally and
> selloff in everything else.
On Nov 18 08:18 AM User 380388 wrote:
> What would have happened if our government had given every American
> household a million dollars with the stipulation that all debt be
> paid off? How many foreclosures, bankruptcies and credit card defaults
> would have been avoided ? How many retail jobs and small businesses
> would have been saved? How much in local and state property and sales
> tax revenue would not have been lost How many families and lives
> would have been saved, the true cost of our economic hell? What would
> of this cost-$250 million or so- compared to the hundreds of billions
> now spent?
On Nov 18 10:57 PM Liz wrote:
> Personally, I think most of the "emerging markets" are overrated.
>
>
>
> Have you noticed the annual per capita incomes of some of these "emerging
> markets"?
>
>
> In no particular order:
>
> (1) Brazil: $8,295
> (2) Mexico: $10,200
> (3) Malaysia: $8118
> (4) China: $3259 (THIS is the country that's going to pull the world
> out of recession?!)
> (5) Thailand: $4116
> (6) India: $1017
>
>
> en.wikipedia.org/wiki/...
>
>
>
> Not ONE of these "emerging markets" is any replacement for a single
> American or European consumer (And Corporate America would just as
> soon keep it that way, thank you very much.)
>
> As far Corporate America is concerned, the people of these EMs are
> little more than beasts of burden, to be used and disposed of at
> will. If they make money there, great. If not, there's always the
> US and Europe.
>
www.thepanicnews.com/2.../
Whilst the exact timing of a retreat is near-impossible to ascertain the chances of a meaningful dip in equity prices has increased in recent weeks. At the very least investors should certainly not presume the current bullish trend will develop into a multi-year bull market.
Source: www.elliottwave.com/r....
Stop printing money and making whatever money people already have worthless. And give the opportunity to Americans to make a decent living through a well paying job. After all, they deserve it, because they are among the most productive people in the world!
admin
htttp://inevtrics.com
Great artical Charles!
To:Monticello, I too am looking for a place like Panama!
To, MBAmichael, Right own target!
To: dirty harry, Market does indeed trade on forward facts,
sentiment,
so get ready for the news that will be your indicator
buy index puts, sell some !
Even obviously your man Obama just said on
national T.V. we are probaly headed into another
recession if we don, contain our debt!!!
That Is Your Preceding News!!!
Thanks
On Nov 17 08:32 AM jmann83 wrote:
> Its the old saying ''markets can remain irrational longer than you
> can remain rational'' and price often goes further for longer than
> we think, it's the classic carry trade on again with Ben's helicopter
> money, the US government has no choice but to inflate away it's issues,
> deflation would be the worse of the two evils, buying anything priced
> in USD is the trade right now and could be for several or more years,
> the yen carry trade lasted almost a decade before imploding last
> year. Risk assets could go a lot higher before coming back, as it
> would take a major pyschlogical market shift for a USD rally and
> selloff in everything else.
Only if you're selling short...and carelessly at that.
If that's true, then you're just gambling...and you probably deserve to lose it all.
On Nov 20 07:08 PM Tim McPartland wrote:
> Well written article--but maybe a bit too logical--one can go broke
> trying to pick tops in markets.
good articles 4 slow Sunday: financeopinionss.blogs...