Posted on 08/10/2009 8:25:56 AM PDT by rabscuttle385
Rising U.S. stock prices — particularly following a 50 percent decline — say nothing about the health of the U.S. economy or the prospects for a recovery, says Euro Pacific CEO Peter Schiff.
"In fact, relative to the meteoric rise of foreign stock markets over the past six months, U.S. stocks are standing still."
"If anything, it is the strength in overseas markets that is dragging U.S. stocks along for the ride."
There is an inexplicable but widely held belief that stock market movements are predictive of economic conditions, Schiff writes at GoldSeek.com.
(Excerpt) Read more at moneynews.newsmax.com ...
fyi
whoops, did Schiff forget to buy the cheapest valuations in a quarter century?
better luck next time goldie
I think his point is correct that overseas markets have done better and we are in a dead cat bounce. Watch energy prices. They are perking up due to overseas demand and a slumping dollar. This will choke off any faux recovery or greenshoots.
He’s right. The Depression had something known as a dead cat bounce. Basically, there was a rise in stocks back in 1930 where they recovered much of the lost value from the crash. Then it leveled off and then they went back on their precipitous drop which they continued doing until finally bottoming out in 1932.
There was also a stemming of unemployment in 1930. It did have a max out but then for a while, it looked as if it was on the end. Then it finished its decline and went back on the upswing and once it was on the upswing it became a torrent.
People seem to not realize that. That for a while it appeared as if the recession was on the mend in 1930 before the final shoe dropped. I am wondering if we are looking at the same situation here.
We are still a house of cards based on debt, and the government is building more layers on top and weakening the cards in the foundation... and then complaining that the consumers are saving too much and not spending enough. The only way we've been able to keep going this far is by convincing foreign people and governments to work hard and lend us money in anticipation of being paid later.
“People seem to not realize that. That for a while it appeared as if the recession was on the mend in 1930 before the final shoe dropped. I am wondering if we are looking at the same situation here.”
I think so. 0bama’s doing the same stupid things that got FDR into trouble. Given rising taxes and uncertainties created by government intervention, any recovery is on thin ice. We are also looking at another BIG round of foreclosures here soon.
If “cap and tax” passes, head for the exits. Ditto for 0bamacare, except that will take longer to really kick in.
To me this market is one to trade, not one in which to invest.
Another thing driving stocks are the earnings reports of major Dow components are deceptively positive, based on cost cutting such as on operations and labor, not actual top line revenue growth. In other words, other than Apple few if any Dow components reported actually EARNINGS growth, but rather showed profits based on cost cutting. Of course the media won’t tell you that. No, this as portrayed as a real stock ralley based on actual economic growth when in fact it’s built on a foundation of sand. Investors are just tired of not making money and are trying to make money by hanging on the thinnest of reeds.
True. You can make some short-term profits if you're smart but in the long run the profound debt will crush either the economy or the dollar or, probably, both at the same time.
Roosevelt sort of came in when it bottomed out. A lot of what Obama is doing is copying Hoover especially with government support of zombie banks, which was Hoover’s primary form of “economic stimulus” post 1930 because Hoover operated on the belief that “if you just get credit flowing it will all come back”. We followed that same logic now, sank a trillion into zombie banks and now have nothing to show for it and it didn’t even have its intended purpose of loosening credit, just like the same actions in 1930-32
The Failed Obama Administration© at its finest...
It’s just another bubble, this time it’s a gubmint debt bubble...probably the final bubble. Next step after that will be a major war.
Do you think we’ll reach a point where customers (European, Chinese and Japanese governments) buy our debt with similar printed paper? I’m not in finance, I don’t understand a lot about the industry, but is this possible?
People seem to not realize that. That for a while it appeared as if the recession was on the mend in 1930 before the final shoe dropped. I am wondering if we are looking at the same situation here.
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With all the wonderful plans coming from Obama and crew I would give two to one odds the answer is yes. There is no possibility of recover when the country is ruled by people who don’t want to see a recovery.
rabs pinged me on this yesterday. Keep in mind how much money has been created and given to banks in a short period of time and how low short term interest rates are :
"Rising U.S. stock prices — particularly following a 50 percent decline — say nothing about the health of the U.S. economy or the prospects for a recovery, says Euro Pacific CEO Peter Schiff. "In fact, relative to the meteoric rise of foreign stock markets over the past six months, U.S. stocks are standing still," "If anything, it is the strength in overseas markets that is dragging U.S. stocks along for the ride." There is an inexplicable but widely held belief that stock market movements are predictive of economic conditions, Schiff writes at GoldSeek.com. The current rally in U.S. stock prices has caused many, including President Obama, to conclude that the recession is nearing an end, Schiff notes. “Reality is clearly at odds with these optimistic assumptions,” he says.
>>0bama’s doing the same stupid things that got FDR into trouble.
Bingo. I’m currently reading Amity Schlaes’ “The Forgotten Man”. The parallels are astounding.
Interesting - thanks for the ping.
This is one hell of a bear market rally ...
RE :”This is one hell of a bear market rally ...”
LOL, I know what you mean. Schiff always said this could be a bear market rally but never said for sure it was not wanting to get caught.
But does the huge bounce from the last few months after the crash panic translate into earnings and jobs except banking that gets free resources from fed =money??
They are printing money at historic levels and almost giving away home loans, and money for homes and cars, but the Keynesian stimulus cant last indefinitely because prices and long term interest rates will skyrocket with debt. Look what happened in 2008.
All government does with incentive programs is “pull demand forward.”
This creates a short term upswing in the economy, but creates depressed demand further down the road.
With demand dropping below normal, not only are the new jobs lost, but also jobs that normally would survive a recession, had government not created a demand bubble.
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