Before I bid you goodnight.
By Daniel at 11 September, 2009, 11:36 pm
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Now we are borrowing from foreign nations to fund short falls in Medicare/Medicaid, just started borrowing for Social Security and are borrowing for FDIC since any bonds they have in their trust fund has to be bought by the government and to do that the government has to borrow the money.
We are borrowing for part of every program in government. Tax revenues are falling. Consumers are tapped out, corporation have too much in too many cases. Cities and states can’t meet budget and their tax revenues are falling. Many of these defaults are falling back on the assets of the banks and while many are hiding them by not foreclosing or holding them off market after they do, it is all still out there.
I am not, by any chance, a Geithner fan but, in the interview the other night, he had a very serious look when he said, unemployment will be high for quite a bit longer (that also hits banks who need payments from those people) and the recovery (what recovery?) will be very slow. At least he is telling people some of the truth, though he tries to paint it as if the government has things under control.
If he means 5 to 10 years, then I agree. We have two years of Alt-A’s and ARMs to reset ahead of us. Bank failures are going to be with us for a long time and could easily get much worse than the current pace.
And, during all those years, the deficit will be higher than projected and that means trying to get enough loans is going to be very hard with the number of nations leaving the dollar.
Don’t take the possible end of the dollar as the reserve currency lightly. They may have no choice. We can’t sustain this level of borrowing for 5 to 10 years and the world is becoming aware of that. Have investment plans in place for all kinds of market moves because if the global recovery is real, there will be all kinds of opportunities in international companies and commodities.
I look for a rally in the dollar and brief ABC correction in the S&P, DOW and NAZ before they head back up and the dollar down. We are near a support level and near a point in the market where a brief correction would actually give people more confidence in buying into it as long a the “global recovery” talk continues. Until proven not to be a real recovery, it will be treated as one by a lot of investors.
Have a great weekend.
JanPaul
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