TruthSayer

Encouraging Similarities to the End of the 1973-4 Bear Market

Funny to think we can suggest this recession can closely represent 1973-1974 when all we have put in and all the wealth lost is causing many to pronounce this as the Great Recession and a small potential to be a great depression. The govt. is spending propotionally more than WWII recession/depression.

The top 10 monthly gains in the market resided in the 1930's. The bottom of the market was not until midyear 1932. Now I am not saying we are in a great depression or even have a strong probability I am just moving from one fact to another. Did you know - the March gains dont even show up in the top 10. Another perspective - 1Q1930 saw a 15% gain vs 4Q1929 - only to see by the end of the year it was down 40% from 1Q1930. Okay so lets say we are not in a great depression maybe only 50% as painful as the great depression - this would suggest a retrenchment of 20% by year end.

My main point is be careful comparing this to another period without comparing the scale of the issue to the other period.

GMAC Bailout Flaws: No Appreciation of History

GM failure is relative just like many other things. There are many alternatives and this is not a black and white issue.

I do not think a collapse of our auto manufacturing would occur. This is just like any other manufactured item. If you have too much supply you will have some pain as you transition back to equilibrium. Orderly bankruptcy with government backing is one gray alternative. This is used by almost any other manufacturer when they hit tough times. The US government could of backed all loans to suppliers to prevent the cascade of collapses. They could even promise to back all warranties as the transition was being made.

A truth - this goes for not just GM but the banks - Avoiding bankruptcy helps mainly current shareholders and the executive team.

GMAC plan is trying to prop up demand. You cant believe the solution is to prop up people buying cars when they dont need one and/or cant afford it? WHY is it the solution for many is to go back to living beyond our means? Its not sustainable.

On Dec 31 09:29 PM sr9web wrote:

> Ok, so what would you recommend? Let GMAC fail?
>
> Get real, you have no f'n idea how bad things will be if GM fails
> and GM needs GMAC.

2009 Outlook and Beyond: Let Truth Be Your Guide

perceptions_now - good points and once again I need to clarify - I am not saying there will no longer be growth, but we have a temporary overbuild as a result of building capacity for the expected growth which I do believe we all can agree this year and next will not be what we all thought a year ago.

Boomer demand was being spent - they participated in taking home equity loans buying multiple homes and purchasing numerous goods. The sad story boomers started to believe home equity would be part of their savings so they spent more of the cash in hand - sort of like holding a stock thats quadruple they started spending before they cashed out. As all traders know you cant book a profit till you sell it. In addition the greed was even stronger, many people with 401Ks with nearly a million dollars kept their money in stocks even though they were approaching retirement. They wanted the 12% gain not the 3% from money markets. However they all suffered for this greed. Unfortunately I personally know many and they all could of easily lived a nice retirement before this year but got greedy and kept it in stocks - now 40-70% lower. Businessweek had a very sad article on gentleman who did exactly what I said above.

So yes Fundamentals - Supply & Demand will dictate what happens. We are in agreement here what we may differ is the supply/demand outlook. Oil will rise eventually but I think it may take a little longer than many people think. $30-$40/bbl was considered a high base forecast just 5 years ago. In my own forecast models I do have much higher oil outlook, but how I reckon it will get there is due to inflation from printing 8.5 trillion dollars.

DavyJ - your right on a personal level but when discussing macro economics you really need to remove yourself from that. The pain is the transformation needed to have a balance economy not just based on our consumer spending.

Summary points:
BOOMER DEMAND less than what was forecasted a year ago but will still be there - MAIN DRIVER: Boomers money reduced
OIL SUPPLY will be needed but not as much as forcasted a year ago - MAIN DRIVER: Demand reduced and large supply coming online as investments in the oil market are very chunky - e.g. check out crazy horse development out in the gulf.


On Dec 28 08:00 PM perceptions_now wrote:

> The basics of economics have been and are, being ignored!!!
>
> Supply & Demand have and will, dictate what happens in the economy.
>
>
> The basic economic assumption of Growth has been slowing and will
> now go into reverse.
>
> Baby Boomers earning & spending capacity and the Oil production
> have now Peaked.
>
> You tell me, WHAT IS GOING TO REPLACE THE BOOMER DEMAND & THE
> OIL SUPPLY that is sustainable, over time ???

2009 Outlook and Beyond: Let Truth Be Your Guide

satguru - I am sorry I wasnt clear enough - I meant to elude the housing bubble was not COMPLETELY Bush Administration fault. I disagree with the Bush in going to war. I disagree with his first veto was for stem cell research while passing transportation bills with 1000's+ of earmarks.

I was just trying to keep things real and true. I am very upset with the adminstration but getting to the point of contriving things to be upset about will lead to missunderstanding & worse yet rewriting of history therefore leaving one to repeat history.

“If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.” George Bernard Shaw - I think this occurs because we attempt to re-write history to please our emotions.

The housing bubble began with relaxing credit standards for Freddie and Fannie under the premise of allowing more people to buy houses - particularly minorities. People who objected were deemed un-american for not wanting people to own homes. Once the bubble started no one wanted to or brave enough to close it before it got this big - including the Bush adminstration.

Hopefully I cleared this up - I believe the worse sin is being a hypocrite so I take your statement seriously.


On Dec 28 11:24 AM satguru wrote:

> Perhaps the writer needs to live by the truth first. It is always
> in a Republican administration that all hell breaks lose. He says
> why blame Bush. Hell! it was on the Bush watch that we had 9-11,
> it was on the Nixon watch we had the oil crisis in the 70s, it was
> on Reagan's watch we had the huge budget deficits, it was on Bush
> Sr's watch we had the Savings and Loan debacle and now this on Bush
> Jr's watch. SO cut your BS!!! We are in a heap of trouble and it
> will take years to unwind. WE DON"T NEED ADVICE FROM YOU WINDBAGS!!
> JUst a bunch of money grabbing hypocrites and a hypocrit is worse
> than a liar!

2009 Outlook and Beyond: Let Truth Be Your Guide

Msoori - Your right never say never - it was for competition with FOX news...but it is unlikely in the near term we have the same purchase ability - one can see this already occurring with the credit card companies reducing and eliminating credit limits.

The article you sent me I will be honest I couldn’t read all of it - yes I believe in hearing and supporting the right of other peoples opinion its just too early in the morning to read it completely. I will try it again some other time. However the gist of it is no where close to my belief. UK is and will be in a worse off situation than the US. The EU socialist structure will keep it limited. The US is likely to approach the EU structure - higher taxes but hopefully we never get to them. The US still has mobility in classes though not guaranteed. I would argue/debate/support the US still holds the greatest promises for rags to riches. This will keep the US dominant. Hopefully the politicians will realize that this is what is keeping this country great. Complete socialism = everybody poor/sad/mediocre except for the very few. The truth is Capitalism will always have poor but there is at least hope (at times can be small nonetheless exist) one can be at the right place at the right time and apply oneself to become successful.

This country needs to maintain that hope of potential. You can see this in the general public not wanting to tax to infinity the well off. If we get to that point then the public is agreeing there is no hope for them and their children to one day succeed.