Dow now 11,000

[phk]

S&P is usually 1/10 of the Dow, and NASDAQ is usually 1/5. So going by them things are even better currently.

Give it time.

(Well okay not the 'socialism' bit, even I find that overblown.)

You have been predicting economic doom ever since I first started talking to you about the economy. At one time you were predicting hyperinflation, and then several months ago you suggested that the economy would collapse next year. All of these things could potentially happen, but I sometimes wonder what you might start thinking if the economic crisis of the millennia doesn't happen?

The way I see it the evidence is pretty overwhelming by now that we've simply delayed castrophe if you look closely. U6 unemployment is at 17%, 48% of houses expected underwater in a year, 1.5 trillion in further losses from resetting mortgages, OPEC moving way from the dollar and the G20 openly suggesting a new global reserve, consumer credit continuing to plunge, the fed buying up treasuries and bailing out companies left and right, etc. To me this is no different than when I was predicting a crash when the DOW was at 14,000. I've been anticipating something like this since 2003 basically.

So you've been predicting the same looniness for 7 years now and none of it has still yet to happen? Basically exactly like LaRouche and Hinn then.

The indices are calculated differently. Dow Jones is price-weighted while the S&P 500 is float weighted.  

Btw most investment literature even says that price-weighted indices are flawed.

Comparing them directly, without any adjustments, is very useless since they are measured in different units.

[Sam Spade]

S/P wasn't 1/10th of DOW in 2000 and neither was the NASDAQ 1/5th of the DOW.  lol

[Mint]

So you've been predicting the same looniness for 7 years now and none of it has still yet to happen? Basically exactly like LaRouche and Hinn then.

I was talking about the market tanking in 2008 after peaking a year earlier when it hit 14,000. Back when it was at 14,000 I was still making the argument that a crash was coming because of housing and all the imbalances (particularly under Bush and co) and we were probably in recession. Then the market collapsed a year later. I don't see much difference between then and now, honestly.

[Sam Spade]

So you've been predicting the same looniness for 7 years now and none of it has still yet to happen? Basically exactly like LaRouche and Hinn then.

I was talking about the market tanking in 2008 after peaking a year earlier when it hit 14,000. Back when it was at 14,000 I was still making the argument that a crash was coming because of housing and all the imbalances (particularly under Bush and co) and we were probably in recession. Then the market collapsed a year later. I don't see much difference between then and now, honestly.

That's because there aren't any - except that there's no credit expansion going on right now short of what the government's doing in an attempt to make up for the private sector.

[Free Trade is managed by the invisible hand.]

Some of these trends are healthy-- 48% of houses expected to be underwater in a year is good news, not bad news. It means that the over inflated, unrealistic housing valuations of the mid-2000s are coming into better alignment with incomes.

Again, in the long run we will be better for it. I have argued that much, remember my stance on the savings rate? But unfortunately, the way the economy is currently structured about 70% of GDP is consumer spending. What exactly do you think will happen if that trend continues continues? A large part of what people are expecting to happen in terms of 'recovery' hinges on it, and I just don't see how its possible because it just doesn't make sense for the very same reasons you pointed out.


The difference between this and prior recessions is the length of unemployment. Even in 1982 at the absolute worst of the recession, the U-7 (now U-6) numbers were at 16.3%. Now they're up again to 16.9% and that's with the fed keeping rates at historical lows in an attempt to prop up the market and trillions spent on stimulus, governmental or otherwise.

What about The Global savings glut?
Why is the length of unemployment important if job losses continue to decrease?

[Free Trade is managed by the invisible hand.]

The S&P 500 is a better indicator than the Dow, people only pay attention more to the Dow for some reason.

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Some of these trends are healthy-- 48% of houses expected to be underwater in a year is good news, not bad news. It means that the over inflated, unrealistic housing valuations of the mid-2000s are coming into better alignment with incomes.

Similarly, consumer credit falling is not by itself bad news, especially when it is accompanied by a stable or rising savings rate, stable or rising personal income, stable or rising employment, and stable or rising consumer spending. All of which we are seeing. Under such circumstances, falling consumer credit is actually a good thing, since consumers became far too much dependent on debt during the bubble years. It is better for them to cut their balance sheets.

Other parts of the above statement are just ignorant. The Fed's mortage buying program ended on March 31, and it had been substantially slowed for months. They haven't been "bailing out companies" (providing liquidity) for some time as well. Most of the liquidity lines have been contracting sharply for a year and basically defunct since last summer. Over last winter and this spring, most of them have been quietly shut down, without much media attention.

Some of the Fed purchase programs were not very effective at all. Are we done with those trial modifications yet?

[Beet]

I'm not saying that we should be trying to re-inflate that bubble or any sort of return to prior levels makes sense. Certainly the government's actions suggest they do, but that's not what I'm arguing. What I'm pointing out is that represents another leg falling in what was arguably the center of this crisis. Housing is absolutely not done correcting itself, anyone trying to argue that there's a 'return' in that sector is lying if not delusional.

Yes I agree, I think housing is more likely to fall over the next 5 years than rise.

However, that does not mean we have to have another panic. The case of Japan shows that you can have a solvency crisis without having a liquidity crisis. That is not to argue that we're becoming "another Japan", just that housing prices can fall without necessarily a fall 2008-style catastrophe. Bernanke, Geithner, and others are more aware of the problems today than they were in October 2007.

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I agree they should be broken up. The JP Morgan profit announcement today is taxpayers' money.

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The IMF is working on it? The Special Drawing Rights (SDR) are certainly not an alternative currency. They have been around for years. Also, keep in mind where the IMF gets its funding from.

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HAMP has nothing to do with the Fed's mortgage purchase program.

[Free Trade is managed by the invisible hand.]

Looking back on statements made last year that predicted catastrophe is funny.

Doom sayers will always be around. Its a Belief system, and such things simply do not change.

[Free Trade is managed by the invisible hand.]

S&P is usually 1/10 of the Dow, and NASDAQ is usually 1/5. So going by them things are even better currently.

Give it time.

(Well okay not the 'socialism' bit, even I find that overblown.)

You have been predicting economic doom ever since I first started talking to you about the economy. At one time you were predicting hyperinflation, and then several months ago you suggested that the economy would collapse next year. All of these things could potentially happen, but I sometimes wonder what you might start thinking if the economic crisis of the millennia doesn't happen?

The way I see it the evidence is pretty overwhelming by now that we've simply delayed castrophe if you look closely. U6 unemployment is at 17%, 48% of houses expected underwater in a year, 1.5 trillion in further losses from resetting mortgages, OPEC moving way from the dollar and the G20 openly suggesting a new global reserve, consumer credit continuing to plunge, the fed buying up treasuries and bailing out companies left and right, etc. To me this is no different than when I was predicting a crash when the DOW was at 14,000. I've been anticipating something like this since 2003 basically.

So you've been predicting the same looniness for 7 years now and none of it has still yet to happen? Basically exactly like LaRouche and Hinn then.

He has predicted hyperinflation as well, and he once suggested that our economy will collapse sometime next year. Thus I am wondering what will happen if the economy doesn't collapse some time next year? The biggest problem with Doom Sayers,or ultra cynics is that it is really easy for them to confirm their bias. For example that jackass investor peter schiff is getting all this attention because he predicted the economy would collapse, and when it happened it only confirmed his world view. Peter Schiff's prediction came 14 months before it happened, but it didn't take a genius to figure out that we would have a recession towards the end of the bush presidency. So maybe TOSO, HoffmanJohn, and peter Schiff were all able to predict a financial crisis, but all of these predictions were made within the decade.

Predicting a financial crisis is actually very easy, but it is more important to point out what the causes were. Blaming it all on the Federal Reserve, Fannie mae, CRA, and big bad government is very simplistic way too look at things.

[k-onmmunist]

Sorry Mint, I still can't believe you. There is no scope for things to get worse.

[CARLHAYDEN]

Sorry Mint, I still can't believe you. There is no scope for things to get worse.

Look around, there is considerable data suggesting things will get worsel

[I spent the winter writing songs about getting better]

Things will obviously get worse because of Obama and his evil socialist policies. Duh.