John Pseudonym

U.S. Household Sector Not as Bad Off as Commonly Believed

"We have all watched that spectacular collapse of leverage on Wall Street and are now in the process of rebuilding a sounder financial system"

Are we?

Is pumping a TRILLION(s) DOLLARS into failed institutions a method for building a "Sounder Financial System"?

From my perspective, that's an attempt to keep the old system alive; or to bring it back from the dead...

If we were really building a sound system, we would let the worst institutions fail and hand their assets over to best run banks.

Instead, we are propping up the losers with imaginary taxpayer money.

In doing so, we're building a bigger mess that will end with the world questioning the solvency of the US Government itself.

10 Contrarian Reasons for a Bottom

When the market rallies on bad news, it's a bottom; but is it the final bottom?

I say no, It's a temporary technical bottom.

8000 and 9000 are big technical numbers.

The closer we get to 9000, the more you want to be in a short position.

This is not your fathers recession. This is the beginning of a new era and things will not be "as they were" 3 months from now.

The government is doing everything it can to re-inflate the housing balloon. But the hole is too big and all efforts will fail.

Deficits will explode

The economy will contract and then become stagnant.

Unemployment will be at least 9% and then some type of bottom may be in.

But the era of the "borrow and spend" economy as it was is over.

6.5% Rallies Only Occur in Bear Markets

The new bubble is bonds.

What a predicament we are in...

If the economy turns for the better, the bond market will collapse. Interest rates will jump and the value of the dollar will sink.

Oil and commodities will spike too...

Everything is just so bad...stick with cash for now.

Investors React to the Markets Like Deer in Headlights

The bottom will be in when unemployment holds steady or declines for 3 months in a row. At that point I would feel comfortable that the worst has passed as employment is a lagging indicator.

Banks Are Yet Again Under Pressure

"The SEC should impose moratorium on "shorts" immediately."

That's ridiculous. If a company is healthy and "shorts" go after them, the shorts are going to get their heads handed to them.

Shorting is only successful when you short bad companies and bad companies are doomed to fail no matter if their stock is being shorted or not.

Investors React to the Markets Like Deer in Headlights

"especially if the world's growth areas start looking away from Wall St.’s headlights and focus on their own better short term prospects and potential."

That's why everything is tanking! People are focusing on short term prospects/potential and they don't see any.

The collapse is mostly rational; anyone with a brain can look out and see the world economy grinding to a halt. How is that good for future profits?

The real headlight induced panic is yet to come. That will be the average Joe yanking his 401K money en mass. January will be interesting at that is when a lot of people are allowed to change their 401k allocations.

If the 401k heard heads for the door in January, that will sink the DOW like never before. Bond yields will tank as the money rushes in and people head for "safety".

At that point you will have a mega bubble in the bond/treasury market.

When that bubble breaks interest rates will explode and the US's ability to pay it's debt will come into question....

Currency/bond crisis dead ahead as the Democrats are steering us directly into the berg.

Banks Are Yet Again Under Pressure

The CEO of Ford made (or showed what) a fool of himself whining about not getting any money.

First he's says it's not his fault the economy tanked. That's true, but it's his job to at least have a plan for/if/when the economy tanks. What the heck are you being paid for? To stand their in good times and collect big checks and then whine when times turn bad and your company is instantly bankrupt?

Then he whines about people not getting loans (that they can't pay back) to go out and buy those $50,000 SUV's. Apparently he thinks the good old days of loaning money to people that can't pay it back are just a few months away and with this government bridge loan he can survive until the banks start giving away money again.

Not only did these fools not see it coming, they don't even understand what it is that has bankrupted them!

It's over GM, FORD and Dodge. The credit bubble has burst and it will be a long time (after you're gone) before we start loaning trillions to people that will never pay it back.

Here's how to save your company.

1. Go into CH11

2. Dump all of those ridiculous union contracts.

3. Fire 50% of your employees.

4. Hire a new design/engineering staff.

5. Build good cars people want to buy.

Welcome to Wall Street, Barack Obama

"However, for confidence to return, sustained moves above 10,000 for the Dow and 1,000 for the S&P 500 are required."

Remember how we reached 14,000...the world bought stocks with imaginary money.

The imaginary money still exits, but the bankrupt publics' access to it is shrinking by the day.

I've said for years that the final blow will be the direction of cash flow for the average investor and his/her 401K plan.

A mountain of money poured into stocks through 401k's. As the inflow reverts to an outflow, the market will have no where to go but down...

Chasing Unicorns: The Cycle Gods Are Still Playing with Us Mere Mortals

900 point short covering rally; plain and simple.

Everyone short had a big profit on paper.

Some started to take that profit and drove up the market.

Others feared losing their profit so everyone panicked and exited their short positions; DOW shoots up 900...

Very dangerous situation here; not a time for "buy and hold".

If you're smart, nimble and quick to see the light is a train, then get in and make some money. If not, be happy with your 4% CD return.

The Next Bubble?

"The Next Bubble?"

How can you miss it; it's short term US Treasuries!

When that bubble bursts, interest rates will jump. Sending another crushing wave through the system.

What will burst that bubble?

1. Lack of confidence in the ability of the USA to pay it's debt; ouch!

or

2. All is well and we're back on our merry way to borrow/spend ourselves into prosperity.

I'm betting on #1...

The Credit Hostage Crisis

PS> That 1.2 Trillion in wealth loss was coming no matter what. Either it happens really fast now or we drag it out over the months and years ahead.

10's of Trillions of Dollars of artificial wealth were created in the last 16 years. Now it's time to give it back and there's no stopping that fact.

The Credit Hostage Crisis

"But for anyone who believes that gridlock in Washington is a good thing, you are witnessing one of the huge disadvantages of partisan paralysis"

How in the world are you allowed to post here?

Our founders built the system with gridlock in mind. They viewed government a necessary evil and chained that evil with gridlock.

They wanted the government to function (outside of it's day to day duties) only when the people gave it clear direction. The people gave it clear direction: DO NOT BAILOUT THE PEOPLE THAT CREATED THIS MESS!

Yes, the economy will be a mess with a severe recession/depression in our future. But when we hit bottom, those that took us there will be gone.

This bailout would have kept them alive and in a position to start over and continue their corrupt methods of attaining as much wealth as possible.

What happened here was an attempt by the financial system to transfer it's insolvency to the US Government. I would much rather have the financial system fail than have the credit worthiness of the US Gov come into question on a global scale.

THANK GOD the bill is dead and let's keep our foot on it's throat just to be sure!

Are We There Yet? Not Even Close.

Buy and hold folks; think long term.

You keep buying and holding while I sell and you'll be rich in 50 years.

Thanks!

Expect the Real Rally by Mid-2009

Show a 30 year DOW chart to any chartist and they will not be smiling (Unless they're short the DOW).

We have a good shot at 10,000 in the short run (6 to 12 months) and 8000 in the next 2 years. If we break 8000, then we will be in a freefall to 5000 or 6000.

Think it can't happen?

Look at Japan, China, Russia...and on and on...

It's out turn folks; be ready!

The Great Consumer Crash of 2009

When the history books are written on this subject, this article should be included.