I think stocks are still overvalued by 40-50%. Housing is still overvalued by 30-40%. The end is nowhere near and the government is only prolonging the pain with the bailouts. If they want to fix anything, they need to revamp our trade policies to encourage job creation in THIS country. Until that happens (and I’m not optimistic that it will EVER happen), hold onto your hats, folks!
Is it too tough to ask all Americans to live below our means? Of all the success stories i’ve read, people live through homelessness and hunger and come up with something that benefits all people to overcome truly tough times. I dont have a problem with rich people being rich and doing what they like and i am also smart enough not to let someone con me out of my hard earned money. Though if all people want to do is spend money credit is easy to get and maintain with hard work and discipline. What if all americans worked toward colonizing the moon that would certainly put a lot of people back to work and give everyone something proud to be a part of.
I agree with those that think we haven’t seen nothing yet. One writer mentioned bird flu,etc…ebola is rearing it’s head as we speak in Congo.
But again I feel it needs to be said: Wages stagnated for 20+ years. CEO pay skyrocketed. Congress gave itself 28k in raises in a 10 year period without raising the minimum wage. See a pattern? I for one am estatic we are saying enough; with our wallets and purses. Sadly many will pay with their livelyhoods as the fatcats sit in their mansions until it gets ‘better’.
On a related side note: There are too many people, 6 billion +. I fear the front of the roller coaster train has crested the hill. Only question is: when will the rear of the train crest?
In my opinion, that is the wildest ride………….
I’ve found an WaPo article that says significant things about the “economy beyond our means” question:
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/03/AR2009010300027.html
It seems that there are around $9 trillion of loose cash sitting on the investment sidelines because the market’s not producing 10% annual ROI any more. Maybe it’s not about consumers living beyond our means as much as it’s about investors heppy to sit on their hands and let the economy go to hell, as long as they don’t lose much in the process.
$9 trillion absolutely dwarfs any amount of money the federal government can come up with, and it’s sitting idle while the economy languishes.
So, is it really the consumers who are feeling way too entitled here, or is it the investors?
The stock market will probably hit a low 50% below current levels sometime in the next 6 years. Even if this happens it could go up this year, but my expectation is that it will be down.
@ Sybil
“Not only is more reduction going to happen on main street, but Wall street is just now catching up to the fact that main street ran out of money.”
That’s why the official remedy is to get credit flowing again. Who needs income when you can spend other people’s money? No money down and no payment until doomsday. We will have the gravy train under full steam and back running in no time.
One of the important questions is:
How much of our so-called economy, pre-crash, was solely a function of people living beyond their means? Because people have run out of “beyond their means”, like it or not, and more loose credit to help them get back there wont help.
Personally, I think a whole lot of our economy was based on that. And, with some luck, people (business and hopefully government) is going to get back to living within their means.
In case anyone missed it, a switch from “beyond” to “within” means a reduction.
Not only is more reduction going to happen on main street, but Wall street is just now catching up to the fact that main street ran out of money.
2009 has a ways down to go. And that is if geo-political problems don’t drive up the cost of oil. If that and climate problems don’t drive up the cost of food. If Birdflu or some other Virus X doesn’t slam the planet. If conflict doesn’t shut down a nation or two or interfere with shipping. Or some other bad thing waiting in the wings doesn’t occur. If any of that happens, it will go down even MORE.
Small investors should get a clue. The American consumer ran out of money a while ago and ran out of credit this last year.
I think the fund manager Forester has some decent ideas. No or little investments are made into oil these days. That means production from existig fields is declining at about 8% a year. With new projects being cancled due to lack of credit and a low oil price it won’t be too long before declining supply will catch up with declining demand. About 12-18 month oil will be back at $70-100. Some technology and gold as safe haven in the days of the trillion $$ bailouts should do OK. Other than that, this recession will be much longer and deeper than most people think.
Hi Mike,
It was 66.7% and the year was 1933.
1932 was a bad year, though not as bad as 1929, 1930 and 1931.
If you are using the Great Depression as a parallel, we can expect a bounce (dead cat) this spring, possibly back above Dow 10,000, then another leg down with 2009 ending lower than it is today.
I think we will see several more years of declines with extreme volatility, like the early 1930s, with a bottom of about Dow 5,000 before this is all over.
Too much damage has been done to this economy and there will be no quick fix.
Depends on when the next shoe falls, credit card debt. I look at the action of people as much as numbers. For far too long people have kept a life style going by moving money around, example credit card debt to home loan. The home refinance cash cow has died so in the mean time they are running up credit card debt at an alarming rate and in some cases fixing it by raiding their 401K etc.
Now the scary part, the fix, spend more by offering a tax credit and other stimulus packages the government is offering. In the short term this in fact may help the market. My worry, the credit card crisis may and most likely could be far bigger and more damaging then the current situation.
Answer maybe if lucky higher in 2009 but duck for cover in 2010. Might be a good year to invest in bankruptcy lawyers.
Stocks should finish quite a bit higher this year, maybe up 33% or more.
A lot of it depends on how successful the Obama Stimulus is. If he directly stimulates the economy with jobs like the 1932 WPA, the markets and economy could rocket skyward together. 1932 was the best year that the stock market ever had: +66%. If it’s too heavy on tax cuts, the rich will hoard the money and the poor will buy cheap imports from China, frittering away the stimulative effects.
We’re all watching.
I have to agree, the worst is yet to come, I see the stock market going doen to new lows before this is over.
Andres Montejo Law