NOTE: Check the US dollar graph and the comments. Always trust your financial advisor and his graphs.
Time to pop the champagne, everybody! JP Morgan Chase has reported 3.6 billion in profits and CNBC’s beloved Dow Jones has gone over 10,000. Everything’s hunky-dory, right?
Well, there are many reasons to suspect the total phoniness of the recent rally. For one thing, the big financials are making profits mostly through trading, that is, zero-sum games that don’t do much of anything in the way of wealth creation (every good trade is mirrored by a bad one). And they’re doing it on money they’ve borrowed at 0 percent interest from their good friends at the Federal Reserve. A situation like this is inherently unsustainable – an economy can’t be based on people borrowing from their uncle – which means most if not all of the gains are pure bubble. There certainly aren’t any signs of job creation or productivity gains in the real economy to justify these rises in valuations.
It’s worth going into all this in more detail, but for now, let me quote a few gems from a great blog I stumbled upon the other day, “News from 1930,” which reports on what the perennially bullish Wall Street Journal was saying a year after the ’29 crash.
Here are some choice cuts:
LINK HERE
WHAT HAPPENS IF THE DOLLAR COLLAPSES?
Trade wars could break out. Overexposed banks might collapse. And that's just for starters.
LINK HERE
Lets not forget about the classic diversion tactic,war,with anyone,about anything,whatever, nothing galvanises a nation more than one thats at war, particuarly if its over resources.I can almost hear those f 16 s fueling as we speak.
ReplyDeleteEconomic advisor? Only trust yourself, the stockbrokers are goons that get paid to pump up crap. They don't know anything more than you. I remember 15 years ago when I had a broker. He talked me out of winning position after winning position. Eventually I left him and since then have only had one year where I did not return double digit percent increases. That was in 2006.
ReplyDeleteI hear you 6:36. Once I stopped listening to all the manipulators and liars I started doing well, but only after losing a hell of a lot.
ReplyDeleteLive and learn I guess. If the herd is going one way I typically go the other. I bought a lot of gold in 2001-2003 when everyone said I was a backward numskull for doing it.
Likewise, my accountant pressured me to buy a large commercial building in 2006 and I stopped short of signing the papers because I had a bad feeling about pricing being so high, regardless of the low interest rate.
My close friend now has 10 million in commercial RE holding and a 15% occupancy rate.
You mean your friend has 10 million in debt and no way to pay it.
ReplyDeleteAm I correct?