Rally of 1931 to haunt the markets this year, SEC hasnt really stopped anything, Fed must find a way to hide toxic assets, bear market not reversible, Currencies deprecate against gold, funding new health insurance initiatives not easy in times of debts, Monetary policy to become inflationary
The next major move in the stock market will be down. We are seeing the last vestiges of a rally similar to what we saw in 1931. The rally we expected at 6600 up to 8500 will end as soon as all the financial institutions that need to sell what stock is necessary to bolster their balance sheets. Our guess is the rally has been aided in a big way by short covering and the participation of the US government. Those who believe the SEC has stopped naked short selling are sadly mistaken. Markets weaken during the summer as volume dries up during the vacation season. In addition, second quarter earnings will be very disappointing, especially in the financial segment. Unemployment continues to worsen and capacity utilization is at its lowest level in years. Banks continue to cut credit lines and not lend nearly as much as they did before. Citigroup’s earnings should turn down again. They won’t have another $2.7 billion gain or another $400 million mark-to-market fictitious gain. Absent those gains they would have lost $2.8 billion.
The credit crisis certainly isn’t over after 23 months. The credit markets are still very tight and the residential and commercial real estate markets are still in a state of collapse. In the midst of this ongoing fiasco the Fed is monetizing $2.2 trillion in treasuries, Agencies and CDOs, collateralized debt obligation, otherwise known as toxic junk. Our fiscal deficit for this year ended 9/30/09 will be between $2 and $2.5 trillion, followed by more than $2 trillion in 2010.
Times are tough, everywhere and export nations are determined to keep their products cheaply devaluing their currencies.
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Because all things happen again in history, I'm going to go ahead and call the next great commodities bubble right now:
ReplyDeleteTulips.
Yup , you read it right. Tulips. We shall truly come full circle with this and ultimately , one tulip bulb shall speculatively be worth 1 supertanker full of oil parked in the Indian ocean waiting for inflation to quadruple it's value in 6 months.
Condoms. Just because no one will be cruel enough to want to drag a kid into this mess. Any kid around today can look forward to his slavehood only.
ReplyDeleteOn the other hand, condoms may be near worthless because people may need them to perform labor on their farms.
ReplyDeleteKids, that is...not the condoms. Oops!
ReplyDeleteI'm already packing to move south of the border. I did never bite the story to own your
ReplyDeletehome because always realized that what you were
owning was 30 years of debt. So long U S... A
+1 - forget that. When homes crash 80%, when mortage rates are 21%, then trade in some precious metals and buy one outright. You will be the only one with anything of value making an offer.
ReplyDeleteAll the people that still him variable interest rate home loans - $hit are they screwed. That doesn't even take into account hyperinflation and huge property tax hikes.
More kids equals more mouths to feed and more heads to shelter and less mobility.
ReplyDeleteYeah but I think alot of people are going to need to grow their own food. Look to history on this one. Lot's of kids were needed years ago when we were more of an agricultural society.
ReplyDeleteIt really depends on what you are growing. (or raising). You dont need an army of workers to raise your own food on a farm, however if you are trying to farm as your only source of monetary income, paying on a mortgage and maintaining heavy equipment and tractors, you'll want to have a larger farm with more workers.
ReplyDeleteHaving a family, having love, etc, these are the things that make being human worth anything. It sure isn't electronics and plastic crap from China that keep me from giving up everyday. For whatever kids take in expenses they give back in motivation, insperation...and they can eventually work if needed.
ReplyDeleteKids are great and I love them to death but right now is about thee worst time to bring a new life in to this world.
ReplyDeleteThe less a person has to worry about right now the better. It sounds bad I know but the truth is often finger nails on the chalkboard to the ears.
Kids have been born during the worst times in our history. We owe it to ourselves and our kids to raise them properly and teach them the right way to do things. We have a unique opportunity here to learn from these massive mistakes and teach them otherwise. Yes life will be hard for them but it has to be for them to learn. Part of our problem is life isn't hard enough anymore, in many ways.
ReplyDeleteThe future is going to happen, with or without us or our kids -- the best contribution one can ever make is to have kids and raise them properly. Even if the rest of the world sucks. Belief in God has crystalized this worldview for me as an absolute truth. There's a reason we are here...
If you are lucky enough to be single, stay single. If you don't have kids, don't!!!!!!!!!!!!!!!!!!!!! The very last thing you want is kids going into this mess. A no brainer. Anyone dumb enough to breed right now .... well ... just braindead.
ReplyDelete