SeeTheLight

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

There are really only two possible scenarios, another repeat run at the housing bubble (and you can all imagine how that will work out), or the stark reality that housing prices were highly over priced and are not going back there any time soon.

I agree, big government has likely saved the big banks, and if his loan modifications actually work the banks will be able to survive by just kicking the can down the road and letting the huge profits they are making off the credit spread keep them above water as they write off the bad assets over time.

But what does that do for the consumer? They are ones that own these underwater houses and lost their jobs which are not coming back due to offshoring? Some one has to pay for all the bailouts, even if they get a smaller mortgage payment, they are not going to have a positive home equity for a long time. The consumer is tapped out and no one is bailing them out, in fact they are being asked to take on more debt via cash for clunkers, the housing rebate and soon cash for appliances. Of course that will be the only way to spur demand because without a government subsidy who will want to take on more debt? Oh then add in the triple specters of increased taxation, inflation and devaluation of the dollar and where does that leave the 90%? INSOLVENT.

But I expect to continue rallying so long as the government is supplying copious amounts of monetary lubricant to an economic engine that has a major oil leak.

Good Luck all

Preview from Europe: Another 'Glass Half Full' Day

@thelastangryclown - Yes, I guess the way I worded that didn't quite capture what I meant. I meant there is heavy selling pressure although it has had a number of bounce back days, i.e. today. The way the media spins it is that it is a mild correction in the face of an overwhelming Bull market. But you are correct that my "hints" should be actually "neon flashing warning" sign.

Good Luck all

On Aug 21 08:01 AM thelastangryclown wrote:

> LOL @ SeeTheLight... you're seeing the first hints of selling pressure
> in China, are you? The Shanghai index was down over 20% in 11 trading
> days. Let us know when your hints are confirmed, would you?

Preview from Europe: Another 'Glass Half Full' Day

The video links were excellent. Thanks.

I know I am in the minority, but I am beginning to feel like this market is a major Bull trap. The low volumes you mention, plus the end of day buying are dangerous portents. As well I am seeing indications of high insider selling, the first hints of selling pressure in China (and the first thoughts that perhaps it was experiencing its own Bubble).

It just seems to me that once everyone is Bullish, the only way to go is Bearish. And I've been hearing that analysts are over 90% bullish. A number scares the heck out of me and made me imagine the following scenario:

If I were a cartoonist I would probably draw the following cartoon to describe the market situation right now:

It would be a huge banquet party filled with Bulls wining and dining under a massive "Green Shoots Market Rally 2009 Celebration". And at the front entrance would be a few sheep donning Bull costumes and one would say to the other "Hey guys, we made it!" and at the other end of the room at a small door marked "Fire Escape", would be a few wolves shedding their Bull costumes and at the bottom of the alley underneath the fire escape would be a few Goldman Sachs limos waiting.

Of course there would be a drunk Bear near the entrance proclaiming the end of the world is coming but with no one listening to him and at the front banquet table would be a bunch of Bulls that look suspiciously like Cramer and the rest of the CNBC talking heads.

Hopefully I'll be close enough to that exit if it comes to pass.

Good Luck all.