The Greatest Depression Is Coming

Financial Sense ^ | 11 Mar 2003 | John Finger

[narses]

You poor man, can you stand the depression?

:)

[narses]

Buy high, buy high!

[dinodino]

The operative words: "tech stock." Don't compare some scammy .com to a blue chip.

[Citizen of the Savage Nation]

Not denial, its just that the article has to prove its claims. I remember 1990 and 1979. When it gets that bad, let me know because we are a long way off. Even in 1991, on weekends you were not going to get a seat at a $5 blackjack table without a grenade. Nowadays, make that a $10 blackjack table...

[MHT]

His unemployment numbers are flawed because the most recent numbers are heavily weighted by the worst winter weather the East has seen in years, dramatically effecting construction employment--which is seeing 20-year high's in some areas! Take out the numbers directly effected by the storm and the unemployment situation is not as dreadful as painted.

The markets have been seriously effected by Arabs dumping their own holdings and selling short (gee--helping undermine our economy is a form of terrorism all unto itself), as well as the impact of hedge funds owned by the likes of Julia Roberts, Michael Eisner, etc.--in other words, liberals who get richer everytime they can create more bad news about Bush and his war economy.

There is always room for negative creeps--and Buffett's predictions of a dire future are directly related to his lovefest of all things Liberal and Democrat.

WE are the economy--and WE make things happen. This guy is no Larry Kudlow!

[Toskrin]

The author wants to have it both ways. What he is ignoring is that inflation rates and interest rates are closely tied together. In fact, inflation rate is probably the single biggest determinant of interest rate. Historically, the interest rate of long term debt runs about 4% greater than inflation. So inflation determines interest rates.

Next, the author talks about high P/E ratios and the "housing bubble". Well, probably the biggest determinant of average P/E ratios is the interest rate. The stock and bond market compete. If the bond market has low yields, money will shift to the stock market. In fact, based upon the current interest rate, all measures of stock market value show the market is significantly undervalued. And of course housing prices are primarily dependent upon the interest rate.

The author proposes a future economy where there is deflation but P/E ratios are low and the housing bubble has burst. Doubt it.

[SSN558]

"Immigrants in CA are living in garages and 3-4 families in a house. They're not building new houses."

Yup. Land they are not making anymore of it.

[JohnOG]

You are right on the money.....
The people posting on here bad-mouthing this article and talking about how wonderful the economy is are the same type of talking heads you see on ALL the financial channels/......
Rukeyser. Cavuto,Kudlow, Tom McManus (emphasis on the Anus, where his head is located) of Bank of America, these guys are ALWAYS wrong about their predictions on the "bull market" of their wet-dreams, and we keep listening to them.......in these guys world there is always going to be a second-half recovery....in 2000, 2001, 2002, 2003.....hehehe :)
The market will always rise 20-30% this year....2000, 2001, 2002, 2003.......
In these guys world a GDP that is being artificially inflated by absolutely OUT OF CONTROL Federal spending and debt-ridden Consumer spending is a good thing....
So let these pie-in the sky optimists blather on...'cause there're always wrong.....John.

[narses]

You're gonna ruin his day. Facts aren't the issue, doomsaying is FUN. Spam, what a wonderful food. And it is high tech, see?

[templar]

Buy spam and generators. ...

Well that about sums it up. Sad thing is that I knew someone that actually did that back in Nov of '99. Except he went to Idaho, not Montana. Weathers better there, I think.

[evilC]

Jesse Livermore, earned $100 million on Black Tuesday, October 29

Of course poor old Jesse died broke, by his own hand.

That said some great bits of wisdom are attributed to him including the ones about cutting your losses and keeping your winners, not blaming the market, and never adding to a losing position.

[narses]

The market will always rise 20-30% this year

When has Rukeyser EVER said that? Are facts your enemy, or have you just never had a formal introduction to truth?

[Morrigan]

Let me tell you my economy story. I work for a center that sells "vanity" products: weight loss, sexual performance, hair regrowth, etc. I thought just a short while ago--hey, the economy must not be that bad. People are still spending boatloads of money on crap they don't need.

Yesterday, we were told our commissions had to be cut in order to keep the company open and competitive. Money is being lost somewhere, and now I am losing money myself! My base pay is low, all the money I make comes from commissions--and now my company has had to cut my pay in order to do good business.

Whether a depression is coming or not, I don't know. What I do know is that I am glad I have no credit cards, which means no debt for me. I have no house payment, so I don't have to worry about that. My car is second hand and paid off, so I don't have to worry about that. Really, the only bills I have are my rent, electric, food, and insurance for medical and my car. So I should probably try to start socking money away now, just in case the sky does start falling!

[Paulus Invictus]

Raise an appropriate finger to this Finger guy! He's trying to sell his book.

[narses]

LOL, real men don't mind subzero weather. Buy spam. Buy lead and brass. Buy gold. Buy a generator. Move to Montana. Die happy and safe. Like Jesse Livermore.

[fifteendogs]

When you couple this with the global cooling that comes with the global warming, things really don't look too good. Then there is Armageddon just over the horizon, not to mention planet X. What are we all to do?

[esopman]

The log-linear chart is interesting, but IMHO, counters the thesis that things are basically OK.

Any technician can draw lines through bumpy graphs; the % growth lines keyed back to the 10 level are not as significant as, for example, a line drawn through the 1935 to 1985 (100 to 1000) 50-year range. This line would fall below the equity growth 'bubble' which coincided with the secular retreat in interest rates over the last couple of decades. Such a line would show about 5,000 on the DJIA in 2010.

I would encourage all Freepers to plot the last 100 years of AAA corporate bond rates. The linkage of cash inflows to equities from 20 years of declining rates is clear. The rates are bottoming (even overshooting on the bottom; yes, the Fed will ease).

We are in a secular bear market. Not even a war bounce with be sustained. Equities will not recover until we have worked through the real estate bubble, the credit bubble and who-knows-what-else. We're talking a few years here...sigh.

[narses]

Sell Spam. Everyone needs spam.

[narses]

Buy spam. And Gold. And Montana Real Estate.

[Morrigan]

LOL! We could sell Spam and tinfoil hats.....