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Stocks are overvalued by 50%, writes Andrew Smithers, kept afloat for the moment by corporate...

Stocks are overvalued by 50%, writes Andrew Smithers, kept afloat for the moment by corporate buybacks. Smithers - who sat out the 90s bull market, but had the fortunate timing of putting his bearish ideas in permanent print in March 2000 - says cash on corporate balance sheets is the mirror of the fiscal deficit. When the deficit gets reined in (2013?), so will corporate cash, and so will stock prices.
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Comments (3)
  • Stoploss
    , contributor
    Comments (1727) | Send Message
    Uhh, you don't destroy a country and just walk away, no sir.


    No, he will be back in for a second term. We all go down TOGETHER this time, no running, and no whining.. Even if i have to vote for him, to help make that happen, then so be it.


    He's in no matter what...
    28 Mar 2012, 08:58 AM Reply Like
  • gfroth
    , contributor
    Comments (3) | Send Message
    I don't think so...............
    28 Mar 2012, 10:39 AM Reply Like
  • mikeurl
    , contributor
    Comments (423) | Send Message
    "Smithers said that fiscal deficits must be exactly matched by cash surpluses in other sectors"


    That isn't technically accurate. The Fed can, and has, monetize the debt by simply creating new money. It isn't a closed system where the deficit MUST be financed by cash investments by other stakeholders. Yes, generally it works that way but QE 1 and 2 were straight up monetization of the deficit. With, apparently, no negative side effect on expected core inflation.


    The whole situation is odd. Normally 600 billion in new money to pay for new government debt would translate quite smartly to a devalued currency and higher interest rates. But...not so for the US, at least not yet.
    28 Mar 2012, 01:08 PM Reply Like
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