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“I can’t stand it anymore. I have to say something. You act like you actually want a depression. What’s wrong with you?”
The above letter came from a dear reader who has missed the point. We are as generous and warm…as caring and sharing…as anyone outside a mental institution. We only want the best for our fellow countrymen…really.
(more...)A while back, our colleague, Chris Mayer, employed a wonderful analogy to illustrate the passage of time from the roaring twenties through to the dustbowl thirties. The former decade, Chris explained, was captured in essence by F. Scott Fitzgerald’s The Great Gatsby. It was a period ripe with wild speculation, fueled by an explosion in EZ money, and of reckless excesses in general. (If any of this sounds familiar, you can probably already guess the point at which Chris was driving.)
(more...)The depression is alive and well!
Unemployment claims just came in higher than expected.
And new house sales in January were at their lowest ever. Pundits were quick to blame the snow. But sales were off even in areas that had better-than-usual weather.
Household income has gone nowhere in 10 years. Stocks have suffered a lost decade too. And now Ben Bernanke says we’d better be careful…because the recovery ain’t no sure thing.
(more...)The recession is over. Everyone says so. Well, not everyone actually…just economists…especially economists from Wall Street and Washington.
In a research note entitled, “Return to Normalcy,” John Silvia, Chief Economist at Wachovia, gushes, “With the war against the Great Recession over, our newly reappointed head of the Federal Reserve now seeks to take us back to normalcy in the financial markets. Let’s trust that he too ushers in a decade of prosperity.
(more...)The depression is alive and well, thank you.
The Dow rose 91 points yesterday. Gold fell $6.
Officially, the crisis is over. Everyone says so. Central bankers and Treasury officials have been congratulating themselves. It’s been a year now since the end of the world didn’t happen. These fellows take credit for it.
(more...)“How can you keep talking about a depression,” asks a Dear Reader, “when the economy is clearly recovering just as it should be.”
Ah ha! We’ll explain in a minute.
First, the latest from Wall Street: The Dow fell 18 points yesterday. We’re still not sure whether the final, fading phase of the bear market has begun or not. This bounce took the Dow back to 10,725 on January 19th. It hasn’t seen that level since. Was that it? Was that as high as it’s going to get? Is it down from here on out…until the Dow finally bottoms out somewhere south of 5,000?
(more...)Worse than the Great Depression…
Stocks ended Friday trading not much higher than where they began. Gold rose $3. Oil is trading over $80 a barrel this morning. And stocks in Asia are “recovering” from the Fed’s discount rate increase of last week.
If the market wanted to crash, it would have plenty of reasons to do so. China is tightening bank lending rules. Here in the US, there is the aforementioned Fed discount rate increase. In Europe, Greece is going back to the marketplace to raise more money. And in the Mideast, today’s news tells us that many Kuwaiti could be wiped out by the latest downturn in their multi-billion dollar investment industry.
(more...)Dear, dear reader…we’re sorry to write so much. We would have written less…but we just didn’t have time.
As expected…the Bubble Era was followed by the Bust Era. We’re in it now.
And as expected…the feds swung into action, busily making things worse. The last budget from the Obama Administration beats even our cynical expectations. We anticipated something stupid. But this is suicidal. Scandalous…
(more...)Got money?
You might find it hard to hold onto. Americans with money are caught in a vise. On the one side is the de-leveraging economy. On the other is the government.
The depression squeezes everything – asset prices, businesses, earnings. And it’s going to be with us for years – no matter what the papers tell you. Get ready for a 20% decline in stock prices, says our old friend Marc Faber. Another analyst puts the current P/E at 22…also implying a loss of about 20% just to get down to ‘normal’ levels.
(more...)America’s president proposes a tax credit to businesses that take on new employees. We never met a tax cut we didn’t like. This one is no exception. It lowers the cost of labor, making it easier to hire and pay people. So far, so good.
But is Mr. Obama proposing to cut government spending also? Not really. He’s pretending that the feds can have their cake and eat it too…that they can forgo the income given up by the tax credit…and yet, still spend it.
(more...)Yesterday, the Dow was down 150 points the last time we checked it. And this morning, Asian stocks are falling again. China’s stock market has fallen below its 200-day moving average – a bad sign.
Is this a little correction in the long upward climb of stock prices? Is it a pause in humanity’s march to perfection? Or is it a resumption of the bear market that began 2 years ago?
(more...)Where we are now is a matter of great debate: Are we in recovery? Or is the depression deepening?
No one knows for sure. Investors stumble around in the dark, bumping into data and knocking over lamps. It would be nice if someone would turn on the lights. But that’s not how it works.
The best we can do is to try make out the shapes of the biggest pieces of furniture in the room. What else is out there? We don’t know.
(more...)