Economic Drubbing Should Subside - Temporarily

The economy is probably in a recession at this time. If not completely, certain sectors undoubtedly are. We can only identify recessions after the fact, so by the time you hear a confirmation of a recession the market and the economy have probably already begun to recover.

I expect the current recessionary environment to improve somewhat. I do not expect the economy to appear strong by any means, but I believe that the drubbing the economy has experienced over the past few months will subside for a few months at least. This should influence traders and investors to breathe a big sigh of relief, and it may influence higher market levels too.

Take it while you can get it, because the bad news will come again. Late in the year I expect another drubbing. By the 4th quarter of 2008, the market should look very fragile again, and as we roll into 2009 I expect a depressionary environment to surface.

Comments

[Jason Rines...:]

I will say depression by the end of 2009 contingent on two things:

1) Reigning in government spending
2) A dramatic energy policy being introduced.

Neither is likely to happen this election season. Americans have just started feeling real pain and are screaming for bailouts. Bailouts will happen and the responsible shall bail the irresponsible out for the next two or three years until only the top 1% still have plenty of loot for the good life. The rest of us will vote in responsible leadership in 2012 but by then we will be a 2nd world country.

2008 Apr 06 07:52 AM

[richjoy:]

Seems to me we need people with a negative view to keep us grounded in reality...but to predict "another drubbing" without mention of the unforeseen factors causing it seems negative for the sake of being negative. (Also, it seems "i Think Big" is thinking very small to suggest that the US is going from tail that wags the dog, to dogshit in only 4 years). In summary, this kind of negativity lacks credibility, and is therefore a waste of my time.

2008 Apr 06 08:17 AM

[Yokohama Kid:]

The Government and Fed have done the best possible bailout for alleviating any pains at different levels that I hope will consequently shore up economy in the last quarter of the year. We now have to endure whatever pains we are going through. Just look around and find there is no one else except USA to keep the whole world going forward

2008 Apr 06 08:59 AM

[deaverb:]

The headlines go to subprime but forget that Ben's moves have dropped interest rates for the rest of us. My wife's ARM just reset on 4.1.08 so she saves $650 per month--and $150 gets put into principal paydown. Her corporate loan saved her $450 per month. She "reinvested" in creating more audiobooks--2--which employ people, are at a lower cost than competitive items, will lead to more production. This is happening thoughout the economy with the solvent but not rich. If current Ben rates hold up, her ARM will reset next 4.1.09 and she'll save another $400. This money goes to people still working, not retire, and not coupon clipppers. Good policy. Subtle so the media tends to ignore. But it is solid.

2008 Apr 06 09:15 AM

[deaverb:]

My error about the investment in 2 audiobooks. That was just for April. She saves another $1100 in May and so on and so on. That will get reinvested too.

2008 Apr 06 09:16 AM

[Deacon:]

My Letter to Editors at DailyReckoning.Com:

Pay attention, folks!

This is a conspiracy-driven dismantlement of the West's
financial underpinnings, for a certain purpose: TO EQUALIZE
GLOBAL ECONOMIES, for future installation of one-world
government.

I've provided all the details in my essay, "Planned
Destruction of America" (linked below), which is my report
on Lt. Col. Archibald Roberts' 1968 booklet: "The Anatomy
of a Revolution".

Study my essay, then write as if we're all being led down
a path to hell on Earth by secretive, elite movers and
shakers on the Left and Right (path to hell aka Third-Way
Global Economic Socialism. Read and learn and teach:

The EU and the coming North America Union are products of
the 1940s GATT formulations, and very few analysts are
aware of it ((GATT, NAFTA, and CAFTA are socialistic
attempts at equalizing global economies, in order to in-
stall one-world government under THIRD-WAY Global Economic
Socialism)).

My missive to Ron Paul’s staff, regarding my view that
this financial crisis is not by happenstance nor
mismanagement—but BY DESIGN!:

The Honorable Ron Paul is ignorant of an ongoing conspiracy
to topple, financially, the West, in order to equalize
the world’s economies; for building one-world government
under GLOBAL ECONOMIC SOCIALISM. // The conspiracy began
in the 1940s with the GATT formulations. // Ask why
Greenspan had violated his chairmanship duties by advising
prospective home buyers to take out an ARM. // Ask why
Greenspan had sent out fed regulators to warn banks that
they’d be charged with RACISM if they didn’t loosen home
loans for minority, HIGH RISK home buyers. // Ask why
Greenspan recently, TRAITOROUSLY, had advised OPEC oil
producers to de-link from the U.S. dollar. // Greenspan -
the FEDERAL RESERVE - has embarked on a purposeful set of
monetary policies designed to destroy the West’s financial
underpinnings. // Read about the WHO, the HOW, and the WHY
of it in my below article (first one):

Planned Destruction of America
planneddestructionofam.../

Corporate America: What Went Wrong?
corporateamericawhatwe.../

This one helps to confirm efforts to PURPOSELY trash
America’s financial underpinnings:

www.321gold.com/editor...

P.S.

Oil is payoff for the West's efforts at providing PROXY
COMBATANTS for Israel--for protecting Israel from expanding,
encircling Islamic Arabism; a Jewish nation-state having
supporters throughout the West willing to destroy the entirety
of Western civilization for Israel's sake.

That's the gut-wrenching truth of why Western democracies
are sacrificing blood and treasury in the Middle East; especially
the U.S., which has enough off-shore and on-land oil reserves
to last 300 years at her present rate of consumption, and
which reserves were PURPOSELY capped and/or not drilled
because Israel's supporters poured millions of dollars into
ENVIRONMENTAL MOVEMENT groups' coffers, to work at
keeping America from oil/energy independence and tied to
Israel's interests in the Middle East. That's the truth you'll
NEVER see nor hear reported in Western mainstream news
media, because Israel's supporters control what's fit to be
said or printed about why the West wars with Islamic
Arabism.

2008 Apr 06 09:46 AM

[curious cat:]

deacon, you're preaching to the converted,... but you're on the wrong website. try conspiracynuts.com. the rest of us are investing in commodities, preparing for the day when everyone will be walking around with aluminum hats.

2008 Apr 06 11:03 AM

[keneaise:]

Richjoy, I agree that the negative perspective helps keep us grounded. I also agree that making a forecast of a market drubbing followed by a depression without any supporting reasons or theories seems to be shouting gloom and doom for it's own sake. I believe Mr Kee has what he considers reasonable supporting information and forecasting models but chose not to share them for some reason. This choice makes the article more skeleton than meat.

I Think Big's statement "The rest of us will vote in responsible leadership in 2012" is a self-delusion. It ain't gonna happen. The issue is much more complex than that. It's going to take a lot more than a few new faces. I am retired and am seeing huge increases in core costs of living combined with erosion of buying power and little return from my investments. Conceptually, I love Mr Kee's Investment Rate model but even if it worked to perfection, I could not afford what to me is a pretty steep $200 a month fee. This kind of fee to the average investor in these times could only be justified in retrospect. It is hard to know what to do with so many biased and self-serving articles out there.

2008 Apr 06 12:14 PM

[Thomas Kee:]

Ther Investment Rate Measures the rate of change in investment inflows over extended periods of time. It is the foundation for this opinion and analysis. If you are not yet familiar with it, you can read about it on my site.

2008 Apr 06 01:02 PM

[Woofer:]

Thanks, Deacon, for the reassuring words. I, for one, am happy to learn that there is a conspiracy behind this mess. That at least suggests some element of intelligence -- even if malign. My worst fear is that the American plight is simply the result of blind greed and arrogance run amok. So it's good to know that somebody is running the store. But I still can't figure out whether Mitt Romney is the Antichrist. Any thoughts on that?

2008 Apr 06 10:08 PM

[bill d:]

Some of you people must have been born yesterdsay - or came from another planet. We have been through this before and at the time you doomsayers were predicting the end of everything. Take a REAL look at the 30's through the 90's. I've lived through it - I doubt few of you have. The only big difference is the gov has become so used to handing out money to anyone that whines loud enough, if we are going to have a BIG problem - that will be it.
Missed the last comet trip - obviously some of you should have taken it.

2008 Apr 07 12:11 AM

[vodka_tonic:]

"I expect the current recessionary environment to improve somewhat"
"Late in the year I expect another drubbing."
awesome analysis....the economy will improve till the 3rd quarter and then die in the 4th quarter.
obviously, you are a graduate of the DeVry School of Economics.

2008 Apr 07 02:47 AM

[bill d:]

Very good -I like that - I took a DeVry TV repair course under the GI Bill a long time ago - each time I passed a lesson I could get paid about $20. I did build a 27 inch color TV though which at that time retailed for about $800 and it was all vacuum tubes !!!

2008 Apr 07 03:50 AM

[bill d:]

I doubt Deacon will be wearing an aluminum hat - maybe aluminum foil - wait - what's that bright light out there ?? and that hi pitched sound ?? Oh Oh I think i'm bein . . .

2008 Apr 07 03:55 AM