Against Aphobus

Will We Have a Good 2009? Not If History Is Any Guide

Good point nowhereman,

The dollar strength throws a bit of a curve ball. History also never repeats itself exactly the same way. Thought the dollar strength is IMO undeserved, it is a force to be reckoned with and will hopefully stall or soften our economic fall.

On the other hand, if the government continues to abuse the support other nations have vested in our dollar, (as they have increasingly for the last 30+ years), the government will at some point see an abrupt abandonment of that support.

I have seen no confirming signs so far, but hopefully under Obama (and Volker) there will be policy smart enough to use this temporary dollar strength wisely and as part of a real solution rather than just as an opportunity to procrastinate and exacerbate the problems.


On Jan 04 09:55 AM NOWHEREMAN wrote:

> Everything said presupposes a dollar drop. If the dollar rises, what
> then? If the Treasury Bubble persists because of the CDS and rising
> bankruptcy outlook, will the stock market rally?.
>
> You look at 1929, I look at 73- 74. If you use 1929 as your guideline,
> the Dow is heading below 2,000. IMO

Will We Have a Good 2009? Not If History Is Any Guide

I agree. It's nice that the media (and government) woke up to the fact that we were in a recession--if a year late. What continues to be very troubling is the naive acceptance of the misappropriation of funds in TARP. We have acknowledged some of the crises, but still fail to provide more than a bandage solution to any of them.

Just yesterday, I heard another pundit prattling (I believe on Fox News) about how "nine times out of ten the market rises after a bad year" and that the "worst thing you could do is try to time the market and miss it". What they failed to mention was that the one time it was not up was during the Great Depression, and that going long after the first year, you would have lost something like 43% of your remaining money.

Another interesting point that everyone seems to be missing is that the Great Depression didn't happen overnight. While they label this just another measly recession and not a depression, the markets are down more in the first year of this "recession" (38%) than they were in the first year of the great depression (30%).

Yes, maybe down years following immediately after down years are a 1 in 10 rarity, but so far we are positioned more strongly that way than even we were during the beginning of the great depression!

It would be fantastic if what I'm saying turns out to be a false alarm. I just find it very reckless to ignore the danger.

I'm afraid that until there is more caution and some real solutions--hard choices made, that there is still room for the markets to fall.

Returning to a Gold Standard Is a Bad Idea

Ricard, Your argument is thought provoking, but isn't it just as possible that the U.S. would have benefited monetarily in this crisis if we were on the gold standard?

Yes, people would likely not be fleeing to treasuries rignt now, but all the over-valued CDS, stock, bonds, etc. that were sold to the rest of the world would have already been paid for in gold ;)


On Dec 30 09:21 AM Ricard wrote:

> This argument is not valid.
>
> If we were on the gold standard during this crisis, gold itself wouldn't
> have prevented the majority of Americans from borrowing to the hilt.
> Gold may bring your much-sought-after accountability, but it wouldn't
> have prevented the leverage that destroyed so much wealth.
>
> In this case, your accountability would have dire consequences.
> America would have been stripped of its gold by foreigners as they
> redeem their dollars for gold instead of Treasuries, and we would
> only have one way to regain it back: war. If we do not wage war,
> our economy would have been so crippled from this bout of euphoria
> that we would have not only lost our pre-eminence, but quite possibly
> our nationhood due to the subsequent lowering of our per capita consumption.
> Remember, we don't really produce as much anymore, and without large
> gold stocks, it would cost us dearly as a percentage of gold stocks
> remaing to purchase what others produce.
>
> This doesn't sound like a reasonable solution for fiat to me. Your
> "accountability&am... only comes as the consequence of inane choice.
> It does not counsel or deter stupidity.
>
>
>
> On Dec 30 08:56 AM archman82011 wrote: