Five Reasons the Market Could Crash This Fall

Seeking Alpha ^ | August 04, 2009 | Graham Summers

[arthurus]

With all this blather about “green shoots” and economic “recovery” and new “bull market,” I thought I’d inject a little reality into the collective financial dialogue. The following are ALL true, all valid, and all horrifying…

Enjoy.

[arthurus]

What's wrong with this?

[rockabyebaby]

http://www.freerepublic.com/focus/f-news/2308823/posts

[DustyMoment]

1. Obama and the Dem controlled Congress
2. Obama and the Dem controlled Congress
3. Obama and the Dem controlled Congress
4. Obama and the Dem controlled Congress
5. Obama and the Dem controlled Congress

[agere_contra]

I can’t see anything wrong with it.

The Obama dynasty has continually interfered with the production of wealth. The mere threat of pro-Union health care reform is crushing real recovery: add on the mere threat of removing the Bush tax cuts, the likelihood of a new CapNTax bill, the GM disaster and so on, and we can see that businesses are paralyzed and unable to grow.

The banks have been given loads of taxpayer money, and they have been pouring that money into equities. And I can’t see that anyone else has. Right now the Banks are the market, and I can’t see that changing. Because no-one else has spare money to invest.

The Depression should have started some time back. IMO it’s been postponed, or rather masked, by all the funny money in equities.

But if Obama declared a tax holiday and cut spending the depression could still be avoided. Which is another way of saying it won’t be.

[paul in cape]

I went all cash 10 days ago. The big one is coming, sooner than you think.

[VegasCowboy]

The banks have been given loads of taxpayer money, and they have been pouring that money into equities.

Where do you get this? True banks can't invest in equities. Investment banks can, but Goldman (probably the biggest player) has paid back its TARP funds.

I'm curious if you've seen anything that validates, or is this just a theory?

[agere_contra]

Investment Banks, sorry for the confusion.

I am channeling a report I read on the Daily Crux, but danged if I can find it. If I can find the link for you I will post it up.

If it turns out to be something commercial-in-confidence from Stansberry then I will just be mysterious.

And if I’m flat-out wrong I’ll admit it :0)

[yadent]

From Bloomberg; Banks, including Goldman, are benefiting from lower borrowing costs after the FDIC in October of ‘08 started GUARANTEEING bank debt issues that mature within 3 years. Goldman according to latest filings have made out quite well with this policy. Also didn't AIG funnel taxpayer funds to GS with no payback strings?

[agere_contra]

One half of it is here

Goldman Sachs has engineered a sweet deal enabling them to bet on equities at higher leverage.

[agere_contra]

I can't find it (lame I know) but there was an article about how almost all of the 50% rise in the SP 500 since the 10th July has been from the investment banks using very cheap credit from the Feds from your pocket.

[VegasCowboy]

Thanks. I’m interested in seeing the article if you ever find it.

Yes, the investment banks are benefitting from a low cost of funds right now. They place collateral at the Fed and can borrow against it at very low rates. This allows them to lever up quite a bit, but whether this is driving the stock market materially higher is another question.