You think it’s at a bottom? Good Luck!!
Don’t forget that at least half of the home owners are upside down in their mortgage and their jobs are probably in jeopardy. And what about the cost of gas? I don’t see it making any adjustments except to continue it’s increase do to India and China’s newly acquired thirst for the product. The credit market? No one knows what the underlying value of your assets are and you may not either so who’s going to loan you (and your business)money? This is probably good news though because maybe people will start living within their means for a change. But their goes the consumer driven economy. Thank goodness for the world economy because foreign consumers will be the only consumers that have money to spend for quite some time. Congratulations Americans, your greed has finally taken it’s toll and the price must be paid for this perfect storm that you created.
Through all the past 9 market crashes, the S&P 500 dropped in percentage, 21, 28, 22, 26, 36, 48, 27, 34, 20, 49 (latter one is under G. Bush). That alone tells a story even to a deaf person. Anyway, the average drop was about 31%. As per the S&P 500. we have only dropped about 17% so far. We are in a bear market, and they never have truend into a Bull in just a few months, bear markets are painful in that they endure for a very-very long time, don’t let your emotions get to you, if you want to gamble go to Vegas. I’ve been caught in some sucker rallies, and it hurts an awful lot.
I know that this will be hard to believe, but here it goes:
The mortgage crisis is exactly what is needed to deflate the housing bubble. The combination of bankruptcies, foreclosures, jingle-mails, and short-sales will transfer very large amounts of badly needed capital from wealthy lenders to poor borrowers. The poor will spend, because they must to live, thereby turning savings into spending, and this will begin to rejuvenate US GDP growth in the second half of this year and beyond. The fiscal stimulus plan will assist, too.
This is how recessions work and why there have always been brighter days ahead just when the skies were darkest.
Time for some major fiscal policy where the Federal Government spends our money on programs that provide a return, rather than inflation. We need domestic job creation provided by the following:
We need infrastructure projects like NAWAPA, MagLev Trains, Clean Renewable Energy Plants, which add production capacity and goods to our economy. We do not need more Military, Homeland Security, Police, Immigration spending, which only leads to inflation.
Econ 101—- a society with $100.00 circulating in the economy, the government wants to spend $100.00 to get out of a recession, the elephants want to build some weapons for protection, the donkeys want to give the money to the poor. Both are wrong, because these actions double the money supply but to not add goods and services to the economy.
Now this society has $200.00 circulating chasing the same amount of goods as before the governments fiscal policy, before you know it people are willing to pay more for things and thus inflation.
The Citizens wish the government would build aqueducts, maglev trains, and clean renewable energy plants, with the $100.00, this way there will be more water for farms, a transportation system that does not require imported fuel, and non pollution electrical plants that lower the cost of everyone’s energy.
The elephants and donkeys fight and decide to compromise, they waste the money and opportunity, a large and populace country from the East takes over the world.
WAKE UP AMERICA —- even oil executives understand our situation “Shell Oil Company president John Hofmeister, said that the energy supply outlook was “sobering” and that the U.S. needed to tackle the energy quandary with programs akin to the Manhattan Project, or Apollo moon launch.”
WRITE ALL YOUR ELECTED OFFICIALS EVERY ONE OF THEM AND DEMAND THEY PASS LEGISLATION FOR THESE PROJECTS.
I am reading some of the posts below and I am awe-struck by the profound ignorance and utter lack of financial knowledge. For all of those who think that this just a “business cycle” or better yet “money doesn’t vanish, it just changes hands”…Please, re-read your Economics 101 textbooks.
Even though Mr Bush thinks that saying something enough times will make it so, it does not work this way. We can’t just wish for the problems to be fixed.
Specifically to the comments below…
1) This is not a business cycle, it is the exposure of self-serving corruption and lack of control over our banking system.
2) The US economy is built upon unsubstantiated -call it phony – equity. Our housing alone has approximately 12 Trillion dollars worth of excess equity that must come out before anything may be said to be “fixed”
“Bounceback” you say? Sure…Why not? Wallstreet keeps telling us that the fundamentals are just great.
We are living in a “TINKERBELL ECONOMY” It only exists as long as everyone believes in magic. When it comes to the economy and any chance for a bounceback…It’s gonna’ take magic…Lots and lots of magic.
There are always winners and losers in any trade, in any economy. James Cramer is correct when he says, “There is a bull market somewhere!” It’s true. When housing slumped in the early 90s, tech took off. When stocks slumped in the early ’00s, housing, and now especially, commodities has zoomed! The economy is working as it should. There’s nothing to “bounce” back from. For some companies, like energy, food, and diversified industrials,’07q1 is going to be very STRONG! For those associated with finance like home builders, furniture stores, car companies, or banks, earnings may be subdued.
Additionally, expectation economic numbers are bogus. It’s like asking if somebody expects it to rain tomorrow. The weather person is wrong more than half the time! Secondly, the reported savings rate is NOT NEGATIVE in that it doesn’t count capital gains, nor 401Ks (retirement), 529s (college), or HSA (Health Savings Accounts). Third, there is not a nationwide housing bubble-foreclosures are only high in certain pockets. Manhattan is UP 3% YTD!! Fourth, as I mentioned countless times, american staples are so cheap: oil at $.20/cup, beer $2.5/cup, and coffee $1.75/cup. Fifth, there will not be a demographic crisis in 2010. With our weak dollar, it make our stock market and real estate very attractive to foreigners to ensure the asset valuations remain high.
Sunshine people! The best is yet to come! The stock market has discounted the current alphabet finance weakness (MBS, CDO, CLO) and is looking to the future! Now is the time to buy real estate and stocks! If you listen to cetain media outlets trying to get liberals elected, you will talk yourself into despair and miss the greatest bull market in our history! Now is the time!
yes, yes, yes, we will have a rally, we have a little more time to “get our house in order”, It is a merciful moment – for now the economic trends are changing and the momentum is turning up. I am thankful for the breather, but am making many changes in my life in order to prepare for the REAL problem of the demographics kicking in, beginning in 2010.
It is important to note, that wealth is not lost, it just changes hands, if we are smart – and really ready, this will be good news for many and sad news for those who are not making appropriate changes.
No. The economy and corporate earnings growth will not bounce back in the 2nd half of the year. The present conditions that the U.S. economy are experiencing will lead to a severe and significant downturn. The negative savings rate, the increasing commodity prices, the last 3 months of accelerating job losses, the severe slowdown in housing, the large number of foreclosures and bankruptcies, etc.. all of these factors paint a very ugly picture.
It seems a lot more people are being a lot more rational now. The freaking out world is ending panic seems to be subsiding. I think most of us have seen this before plenty of times. It’s just a business cycle. I think things will improve late this year or early next year. The fed is talking of ‘maybe’ recession because I think we do not yet have the data to know how bad it is right now. I work in an industry that is very much on the pulse of all manufacturing from consumer and business demand and I see that we are about at the bottom now. Inventories are full and demand is low. No one is making new stuff or ordering more of anything. They are currently in the process of making cuts that will eventually lead to the appropriate amount of production. At that point demand will pick up in relation to supply and things will start to turn the other way. For those of you who say that this time its different, this has happened a million times over the existence of humans and it will never stop happening. Don’t think you’re that special to see the end of business cycles as we know them. People are cheering the cuts because they know that signifies a change in the cycle to the next stage. If we stay in one stage of the cycle for too long that would be of concern. Now lets push to get our failing done fast and get on to rebuilding.
Of course it will come back. as surely as hem lines go up and come down. We all have to much product and when the needs out do the haves, we will all be out there buying again. Home prices were way to high to start with. Lenders were eager to profit off of people who really shouldn’t have been able to purchase a home–they really didn’t have the financial qualifcations to pay the mortgage. This problem was created by LENDER’s and they should be made to bear the brunt of this through whatever litigation is required. For goodness sake, young kids are given credit cards and they don’t even have a job paying enough. And will you guys quick ADVERTISING telling KIDS to SPEND SPEND SPEND. They don’t the money to do this. And when we get this all back in line, so to the economy will be back in line.
I wish. But I don’t believe.
Do tell, how do the current stock market bulls “look beyond the credit crisis” when we have no clue how broad, deep or long this credit insolvency actually will be?
And please inform me how some are able
to “look beyond the recession” when the big guns: Ben B. and Alan G. are not even sure if we will have a recession?
Absolutely not! This economy will be stuck in the mud for the foreseeable future. Everyone says the market is looking ahead to a recovery in six months. Ha ha ha ha ha!!!! Whatever. We just got the worst six-month consumer expectation reading ever recorded in March. EVER RECORDED!!! What in the world is the market looking “forward” to? This is the worst housing crisis this country has ever seen, and it is going to take Herculean efforts from the Fed and the gov’t to fix it. It will completely change the way our financial system, and wealth building system, works. And you think the economy is going to recover in six months? Anyone who thinks so is SORELY mistaken, including all of the “expert” hedge fund managers and institutional investors. I see the economic data every day, from all across the nation, and it is truly horrible. Earnings season is kicking off, and the market will probably rise on bad news because they think the worst is over. Well, the worst isn’t over by a long shot. However, if everyone thinks the worst is over, or at least trades like it is, then, well, by self-fulfilling prophecy the market will trade higher. It doesn’t matter what the truth is, it only matters what people “think” the truth is.
No: the economy will continue to sink well into 2009.
As long as housing boat is sinking, the economy is along for the ride. There are several more waves of mortgage resets occuring in the next couple years and each one is a hit to consumer confidence.
The Bulls are coming back out but I’d have to say that this recent rally will fade as earning season continues and the bad economic data keeps streaming in. Just a couple of weeks ago the talk on the street was a global finanicial meltdown, now everything looks like its going to be ok? Talk about a manic market. I’m anticipating a drop once we hit 1410 on the S&P.
It’s too late for oh-eight. We’re a quarter in, and this boat is going to take a lot longer time to turn around. The market’s recent exuberance of “The credit crisis is over!,” is absurd. The reminder that 75% of GDP is reliant upon the consumer in this country usually shuts up just about anyone thinking this one’s going to turn around anytime soon. The consumer is all tapped out, and the reports prove it. Businesses aren’t rushing back to increase their employees’ income just so that they can spend money; most are cutting payrolls left and right to stay afloat for the next few years. And if you take a look at the 3 most recent recessions in this country, and compare our current credit crisis to the real estate crisis of the early 90s, real estate will stabilize right around 2010 and remain stagnant until 2012 if we’re lucky, and the economy might stabilize by 2011, assuming energy prices go down, jobs increase dramatically, along with livable incomes.
Yes: the US economy and corporate earnings growth will bounce back in the second half of the year.
We need to produce and sell more, purchase and consume less. We need to export more and import less. This process is already well underway. It would have been less painful if we had acted before the trade and budget deficits got so large (along with personal and government debt), but we only seem to be able to unite during a crisis, even if it has to be one that we created for ourselves.
We got fat, are now on an economic diet, are struggling with the program, but will be much healthier in the near future for having shaped up.
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Dear Folks,
Until we de-couple Wall Street from Main Street, its not much use in working your butts off so that the Wall Street guys can cream your efforts off again.
Just think about life without Wall Street – you do not have to hear silly analysts spinning why oil prices spike because a refinery shut down for maintenanc, or even better, floods destroyed fields of corn produced for ethanol.
Now, these traders manufacture and collude information to manage market expectations -i.e their expectations are your pain.
The relevance of a recovery in the next 6 months or so, very much depends how much of a spin will be created to warp speed – anyway, most will be caught in the warp, they have no inkling!
Decapitate Wall Street and get back to basic Main Street !