Posted on 01/21/2010 7:36:00 PM PST by blam
Stock Market Set to Crash
Stock-Markets / Financial Crash
Jan 21, 2010 - 02:24 PM
By: Casey Research
Doug Casey: "Stock Market Set to Crash" (Interviewed by Louis James, Editor, International Speculator)
L: So, what's on your mind this week, Doug? I understand you've had a "guru moment"…
Doug: Well, it's nothing but a gut feeling, but I think the stock market is riding for a big fall this year. Everyone was afraid the world was going to come to an end a year ago, and it almost did. But governments all around the world stepped in and printed up trillions of their various currency units – it's not just the United States. And still, retail price inflation hasn't blossomed. It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem. It stems from an economic version of the theory that all we need to fear is fear itself. As long as we have the right psychology, everything is going to be okay – total nonsense.
L: That old saw: as long as there's confidence, all is well.
Doug: Yes. It's the Wile E. Coyote theory of economics. As long as you never look down after running off a cliff chasing the roadrunner, you can keep treading air. Unfortunately, although the power of positive thinking may help in many ways, it's of zero use if you continue living above your means and making stupid decisions.
L: Insolvency doesn't seem to matter; as long as everyone has confidence that things will keep going, the experts believe they will. But in the real world, you can't remain insolvent for long, even if "you" are the United States as a whole society.
Doug: Exactly. My thinking about the stock market is this: corporations have done as "well" as they have mainly by cutting expenses. Laying people off, that sort of thing. So the bottom lines have not fallen as far as we might expect – but the top line has been hit. Revenues are falling for corporations across the board.
L: And the market has to notice this reality sooner or later.
Doug: Yes. The world's financial system has to adjust to a new reality, one with lower levels of consumption and differing types of production. The legions of unemployed are not going to go back to work anytime soon, at least not doing anything like what they were doing before the bubble burst. The economy is going to continue deleveraging. There's going to be less debt to allow the purchase of all this stuff people have been buying, resulting in lower corporate earnings. So it's hard to see revenues doing anything but continue to spiral downwards for years to come.
And then there are financial "accidents" waiting to happen.
L: Like the bank failures the government has admitted it expects this year? The FDIC says there will be more bank failures in 2010 than in 2009, with the spin being that 2010 will be the peak of the crisis.
[snip]
Bump.
Ping
Quick, start handing out money again!
I got mostly out of the market in October, and finished off the rest just last week. But I’m sure they’ll still find a way to take my money (devaluation, etc.)
Blam - you always make great financial market posts... and from my home state....
None of these reasons contradict the Wile E. Coyote model. All they do is emphasize that he is in fact standing on thin air, which the model recognizes, as it also recognizes the inevitability of that fateful downward glance.
Gold heading steady at 1095.
Thanks.
Roll Tide.
Thanks for the post. I agree that the key to this is “It seems that governments are bent on keeping asset prices up to avert panic. They focus on controlling perception instead of fixing the problem.” Dems are great with this. Remember Clinton, he was all image over substance, a master at it.
I have been amazed that the market has been up so much, for so long, and attributed to fat cats like Soros manipulation.
On Kook to Kook AM yesterday, they had Celente, as well as another interesting pundit, Greg Hunter http://usawatchdog.com/
They see nothing but crash and doom.
As they point out, all of the pap from the MSM is pure
feel good BS, to keep Obamie from looking so bad.
The REAL stats are just too horrendous for the MSM to report.
Deflation
They can always pass a new capital loss tax.
Roger that.
Just scrap all the indices and create ONE index based on Highest % Gainers every day and everything will be rosey. /sarcasm
There is a tremendous disconnect between the market indices and the reality on the street.
Yep! I’m an alum... class of 78.
Laissez-Welfare And The Goldman Gang
By Gerald Celente
01/21/10 Kingston, New York
[Editor's note: Trend forecaster Gerald Celente describes the events of 2009 as if he were writing economic history from the future. Read on to see how he portrays the fateful past year.]
Early in 2008, with the global equity markets in free fall and financial conditions rapidly deteriorating, most Americans were persuaded to accept the necessity of government bailouts of brokerage firm Bear Stearns and the Fannie Mae/Freddie Mac mortgage lenders.
But in late September, when the TARP (Troubled Asset Relief Program) was proposed by George W. Bush, both the near trillion dollar size of the package and the encroachment of government into free enterprise provoked intense public opposition. Polls showed that as many as 90 percent of those who contacted their representatives and senators were against the passage of TARP, but TARP was passed.
The “Land of the Free” and “The Home of the Brave” had become the “Land of the Federally Subjugated” and “The Home of the Meekly Subservient.” The socioeconomic landscape of America had been so dramatically altered that it bore little resemblance to the nation of their forefathers or even their grandfathers.
Not only was TARP foisted upon the nation, when the inspector-general in charge of overseeing the bailouts demanded to know where the money went, the US Treasury refused to tell him! “It is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient,” said the head of the Treasury program.
[snip]
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