The markets are going down because we are technically broken NOW
By Daniel at 20 November, 2008, 3:39 pm
look at F, GM, GS, C…earnings will cont to come down…PE ratios dont matter right now…credit markets getting worse not better…unemployment skyrocketing, the consumer either broke or frozen in fear…the dollar only rising for technical reasons but we all know it will fall off a cliff soon enough.
There is no way a economy based on credit expansion can do well in the worst credit tightening cycle we have seen in 80 yrs…the poor are too poor to spend, the middle class is turning poor and the rich are too scared to spend , as we have just lost 10T in the stock mkt and 10T in real estate deflation…these are real losses..we all feel poor(well, except the people who have shorted this mkt for the past yr).
And hearing the Fed’s say we dont have deflation is a joke…hmm…all asset classes(stocks, commodities including gold , real estate) all tanking while the dollar is gaining…where have I seen that scenerio before, yup during the early 1930’s…the fed is lying to you…the definition of deflation is the contraction of the money supply and thats exactly what is happening to us right now…it doesnt matter that the Treasury/Feds are pouring money into the financial system because it isnt reaching us, as the banks hoard it… hence the true money supply in a practical sense is severely contracting right now.
Practically speaking, the money supply to us is do we have access to easy loans with respect to credit cards, auto loans, low mortgage rates???…no we don’t because they wont lend it and we dont want it anymore….the social mood has changed in America.
Why are the politicians so ignorant they cant realize that true free mkts bleed off risk and excess but you have to let it work…stocks are over priced, as is real estate, so let them drop and find its natural level…by manipulating the free mkts with socialistic programs they will only delay and exacerbate the problem(ask greenspan about this one)…when youre a crack addict at some point you really do need to slow down and quit…making the crack cheaper or free doesnt really address the problem now does it?
Look at this graph in the link…CMBS is skyrocketing…credit card debt and commercial real estate will blow up soon…and residential real estate has another 30% to drop before it will be over.
http://www.markit.com/information/products/category/indices/cmbx/history_graphs.html
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