Posted on 08/17/2009 11:55:13 AM PDT by Steelfish
Optimism about a recovery starting to fizzle Observers expect stocks’ rally to end as economic reality starts to set in
Aug. 17: As stocks see their biggest drop in more than a month, a CNBC panel discusses if this sell-off could be the beginning of a more significant market correction. CNBC
John W. Schoen Senior producer,msnbc
What happened to all the optimism?
Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is “leveling out.”
Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound — and share prices could be due for a bigger pullback after a 50 percent surge since March.
"The market has gotten way ahead of the reality on the ground,” Pimco's Mohamed El-Erian, co-chief executive officer of the largest bond fund manager in the world, told CNBC Friday. "We are yet to see a durable and sustainable recovery, but the market has gotten ahead of the process by pricing that in."
On Monday, some investors echoed those second thoughts, sending stocks 2 percent lower and stalling a rally that had pushed the market up 15 percent since mid-July.
The initial exuberance followed economic data over the past few weeks showing that one of the worst recessions since World War II many be ending. Job losses slowed in July. Many forecasters believe the U.S. Gross Domestic Product will likely turn positive again in the third quarter after steep declines since the recession began in Dec. 2007.
The relentless retreat of housing prices seems to be slowing. And massive infusions of government cash — the $787 billion economic stimulus package, the $700 billion bank bailout and the Federal Reserve's $1 trillion intervention in the financial markets —
(Excerpt) Read more at msnbc.msn.com ...
That sums it up in my opinion!
If there is no value in the market then those bankers are “making money” off the backs of naive investors.
Face it...the big money on the left was inflating the market long enough to try to ram health care through. They can’t keep it up forever.
Speaking of ‘wealth’.
Discuss....
The current situation is due to an emphasis on ‘value capture’. (Or Stealing From Each Other) Wall Street, Government, F.I.R.E. economy taking value from one but not returning value to producer. Eventually, like a ponzi scheme, you run out of other people’s money.
The real method of producing ‘wealth’ is ‘value creation’.
(or making something valuable and trading it for equal value) REAL ‘spreading the wealth’. All sides win! Labor, raw materials, capital equal productivity noone looses.
If you apply these hypothesis to economic principles, could you answer the problems in our current dilema?
Could the ‘Free Market’ function again if the directive was to ‘create value’?
Is there a treasury auction soon? Seems each time there is one, the market goes down and everyone rushes to ‘secure’ Treasuries!
What about agriculture?
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