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This is a recession that has hit the rich disproportionately. And now Obama is going to hand them the bill for bailing it out and feeding the poor. So while I think the market will increase, I think the improvement will be anemic for the next several years while Obama is beating up the rich.
Reminds me of why I was a Forbes booster.
Economically, he’s one of the only guys who gets it.
Steve, good for thee, as for me, cash is king.
For somebody who is very knowledgeable whenever it comes to economic issues, why does he not also improve his facial appearance? I like the guy, but he’s still too “nerdy looking” and continues to have the perfect face for radio. Steve Forbes face is truly what’s keeping him from actually winning any political office, IMHO.
Action Needed Now To Avoid Depression, Warns ITEM Economist
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club said that quantitative easing is needed immediately
By Angela Monaghan and Edmund Conway
Last Updated: 9:56PM GMT 17 Jan 2009
The Government and the Bank of England have got "days not weeks" to take action to revive the economy or face a prolonged depression, one of the UK's leading economists has warned.
Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club said that quantitative easing, whereby the Bank of England would print money to buy assets such as corporate bonds and consumer loans, was needed now.
"My concern is that people don't fully understand the dangers lurking out there. The Bank of England needs to move towards quantitative easing immediately – you don't have to wait until you get to zero per cent interest rates. If someone is choking to death you don't think twice about giving them an emergency tracheotomy. There may be dangers, yes, but the alternative is that they die," he said.
[snip]
I believe Steve is right, but 2009 for the most part is going to be a disaster that is going to hit everyone. Rich, Poor, everyone is going to be munching on the crap sandwich.
Stocks may come back a bit, but its not going to really be that significant of a move upward. It will be the definition of a bear market rally. There will be mostly sideways trading. Any significant moves will be met will fearce profit taking.
I do believe that the US will recover faster than Europe and Asia. I think Europe is looking at a multi-year recession and any type of recovery in its stock markets will lag the US by 6 months to a year or more.
China is a faux version of capitalism and eventually even its artificial currency pegs to the US and Euro won’t save it any longer.
Both China and Russia are looking at multi-year major recessions as they hitched their wagons to Mercantalism and many of the commodities they attempted to horde will trade lower than the value they paid.
I happen to see similarities w/ what Obama is proposing to do w/ FDR (one of his heroes apparently) and if you read the Forgotten Man by Amity Shlaes you find out quite a bit and it isn’t all that great w/ FDR and his govt. intervention - FDR actually created a depression w/in a depression in 1937/38 (the lowest point even after the crash of 1929) due to his socialistic tendencies on an already unstable economy.
Smart money has the market at 5500 by mid summer, and the dollar having a rally against the euro, frank, and pound in the interim, due to the fact that they are deeper into bad 3rd world paper in europe.
1930, the year after the great stock market crash of October, 1929, was actually rather calm, with the stock market showing signs of recovery three times.
It didn’t last. And while 2009 might be calm for a while, there are several truly enormous economic bubbles that are still going to burst, in no particular order, and with little warning.
—Pension funds nationally are hopelessly overextended, and are going to be a grassroots catastrophe for the millions of people dependent on them, when their bubble bursts.
—ARM and Alt-A mortgages are also going to go bust. The two together are 1.5 times as large as the sub-prime bubble. This will be joined with cities and states defaulting on their municipal bonds.
—US Treasury bills (T-bills) are one of the largest economic bubbles ever created, and when it pops, economists are describing the effect as “spectacular”.
—The Great Hedge Fund Collapse, along with the Banking Collapse, and several others. Just two days ago, it was announced that the Schumer-caused failure of IndyMac in California was going to need 1/3rd of the $35B the FDIC has to cover bank account losses.
—The general recession. Hundreds of retailers will be going bankrupt, defaulting on their loans of both money and goods. This is more a multiplier effect on the rest of the economy.
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--Money that is stable in value, which the dollar manifestly has not been.
--Low tax rates.
--Ease of starting a new business.
--Minimal barriers to doing business, whether overseas (low or no trade barriers) or domestic (no internal cartels or onerous licensing procedures).
None of these are present in today's America. What does that say about our chances?