The Market Hick

Our Coming Depression

The last time a government bailout worked was Chrysler in the early 80's.The warrants zoomed in value and the loans were repaid(Just for the record since you asked). However that was a company specific problem, not the systemic problem we have today due to de-leveraging.

Your analogies to the 1920's-30's are valid, debt as a percentage of GDP are way too high. However I disagree that people are really aware of the problem and ready to accept the 'bitter' medicine. Rather we live in an entitlement society born of the new deal, and the entitlement mentality has only grown each decade with new government programs designed to help the 'needy' yet used by the middle and upper class. The most egregious of entitlements today seem to the 'right' to pay lower taxes in the guise of creating jobs for the lower classes. I think that when the reality comes home to roost that we are not as wealthy as we seem, we will see some very serious social upheaval - like riots that will make the one in LA in 1991 look like a picnic!( I am stocking up on firearms, ammo and fire extinguishers)
True value destruction has yet to be seen from the coming calamity. I think your projection of Dow are far too generous. If we see massive store closings, we will see concurrent retail store bankruptcies. Try to picture a world without either Lowes or Home Depot, Target, Bed Bath and Beyond, Whole Foods. Picture lots of malls with empty store fronts and therefore lots of bankrupt REITS. GGP will be the first to go followed by many others like SPG, CBL, MAC.
As an investor your guide should be to look to the bond markets. In the deflationary environment that we will soon face, its better to have a contract guaranteeing repayment and secured by assets than a residual equity interest.

It's a Bull Market in Government Intervention

First it was "save Bear Stearns and save the world" then it was "save Fannie and Freddie and save the world" now we seem to be at the point where it's "save the world and save the world".
My question is who do we have to save next to save the world?