prudentinvestor

Preview from Europe: Stocks Almost Back in the Black

Mole, Thanks again for the informative and entertaining report. "..Barclays (BCS) has finally sold off the family silver to keep it from taking the Queens schilling..". Very nicely said! However, if memory serves me, Austria had schillings, but HM Elizabeth Regina used to have shillings.

Close to the End of the Selling Cycle

There are some investors who have legitimate concerns that many stocks may not recover for a very long time due to the changes in consumer behavior and global economic balances. For instance, who is to say that AXP card holders, some of whom are being paid to just "go away", will resume spending (and paying their bills!) in anything like the past decades? In the case of BA, who is to say that global travel will return to the overheated excesses of the past decades, in which "Joe Sixpack" hops on coast-to-coast flight for a weekend out? Additionally, both these companies have balooning pension liabilities.

So yes, the stocks are at multi-year lows, but perhaps for good reasons, and perhaps these reasons are not going to disappear soon.

Let's Just Say It: Print More Money

You state: "..Bankruptcies, defaults, and deleveraging are destroying money at an historic pace..".

True, money has been destroyed, but not wealth.

Wealth was not destroyed. Houses did not burn to the ground. Factories did not turn to rubble. Airplanes did not vanish into thin air. Malls did not vaporize. No real wealth was destroyed. A money illusion of wealth which had been conjured, now turns out to be just what it always was, an illusion. So, time to face reality than to continue attempting to create illusions.

What you advocate is attempting to reflate an illusion that created the overcapacity that you so decry. The money bubble illusion certainly created overcapacity in some areas, at the expense of others. Education, health, environmentally sound energy, all suffer from underinvestment, whereas financial chicanery, shopping, and amusements all have overcapacity. Attempting to perpetuate this warped economy will simply create larger problems down the road.