Market crash: are we there yet ?

[wind_magic]

Originally Posted by Rickm505

Thanks... I think...

Rick, I totally didn't mean it in a bad way.

To give an example of the above, take last week for example. I was watching the market, using chart patterns, momentum indicators, VIX, oversold indicators, etc, waiting for the first bounce of a bottom. When the S&P hit 1170 I was happy, and then I waited for the inevitable rally, which came soon enough, as it always does. My reasoning had little to do with the non-sense they were talking about on the news. The only thing I cared about was that the news was convincing everyone that the world was ending, that it was reinforcing what the market was doing, and causing people to act as a crowd that all moves in one direction, which always means a rally is imminent.

You on the other hand were posting about how bad things were, about mortgages, about all the stuff going on in the news, and what the government should or shouldn't do, etc, a whole puzzle of reasoning that I never did understand. You were talking about how bad things were for people, economic numbers, something about GDP, about what Republicans were doing or saying, and then finally you were vindicated in your reasoning when the government did what you said they should have done and the market rallied. You even invoked Cramer's name at one point. I don't mean to characterize what you said in the wrong way, people can go back and read it themselves.

But see that's what I find so amusing. It's like two parallel universes existing in the same space. I got my rally, and you got your rally, the result was exactly the same at the exact same time, and yet the lines of reasoning were COMPLETELY different. That's what I really enjoy about it. I mean I think that the things you are saying, for you, actually hold together in a coherent way that makes sense, and I know what I think holds together, and yet what we think is completely different with the same result. I mean I didn't even know the government was going to do anything, I couldn't have cared less, I knew I was getting my rally regardless of what they did, yet that became the "reason" that the market rallied.

There are times that your posts are a bit confusing as you seem to switch sides quite a bit.

Editing because I didn't see this part when I wrote my response. Yes, of course I switch sides a lot, because the market is always moving and changes directions. I am always watching for what is going to happen next. In general we actually agree, I think the long term trend is down, but it won't go straight down, it does rally.

[Rickm505]

Originally Posted by sailaway21

You're correct when you start out saying that there's a difference between interstate trucking and finance. In trucking we're interested in not only safety but have an expectation we can assure the end results. We cannot do that in finance. Nobody is alleging that anyone took off for the Bahamas in this case either; they acted within the law. !

Well sailaway, it would appear that my $1.5 Trillion figure was in fact incorrect. No joy for you I'm afraid. It appears I was too conservative. The final number looks to be $1.8 Trillion, which means of course that we have a new standard in Republican legacies. This administration will leave us with more than a $1 Trillion deficit next year and set new records for deficits in any administration on the planet.

The US dollar ought to begin nose diving immediately as we ramp those printing presses up. I can't wait for the estimates on how much our currency is about to fall.

You should be very proud as your boys have done a bang up job, not to mention your skill in forecasting events.

And yet... here you are arguing that your boys stayed within the law. Tehcnically correct, I agree but only you would think this wasn't morally corrupt. Just as corrupt as this whole adminstration has been. Imagine, paying a lobbiest to change the law so you can perpetuate a fraud and then being defended as staying within the law. This might be a new standard for oximorons (law abiding) as well.

It's been suggested that this mess is apolitical. I did get a good chuckle from that. Frankly, Democrats just aren't smart enough to have pulled this off, or corrupt enough.

Look at the bright side. There's absolutely no doubt that George Bush will finally be remembered for something.

If I were him, I wouldn't bother waiting by the mailbox for those George Bush Library donations and in fact might hanker for a warmer climate.

[PBzeer]

Rick - you might have noticed that I mentioned, put it better than I did, about the New Deal. My thoughts on the effects of the New Deal, come not from the article, but from my own knowledge going back to the mid '60's, forward. And while you may feel you did a good job of discrediting the messenger, there's was little in the way of response to the message. Nor was it any attempt to "justify" Bush or the GOP.

I've read Schlesinger, and if I wanted a New Deal sycophant, liberal viewpoint, he would certainly be my choice.

[Rickm505]

Originally Posted by PBzeer

Rick - you might have noticed that I mentioned, put it better than I did, about the New Deal. My thoughts on the effects of the New Deal, come not from the article, but from my own knowledge going back to the mid '60's, forward. And while you may feel you did a good job of discrediting the messenger, there's was little in the way of response to the message. Nor was it any attempt to "justify" Bush or the GOP.

I've read Schlesinger, and if I wanted a New Deal sycophant, liberal viewpoint, he would certainly be my choice.

Her message? She's a layman, not an expert. She doesn't have a message or rather her message would just as valid as mine would be if I decided to write a book on pork bellies.

Now..there's a thought....

Thank you for not defending Bush or the GOP and please remember to vote Obama.

(I just couldn't help it)

[PBzeer]

Rick - that's still not an invalidation of the points she made. Especially, when you merely cite an historian and Democratic Activist's view as an alternative.

The points stand independent of the writer. You either refute them, or accept them. You can't dismiss them them out of hand, and try to maintain any pretense of intellectual honesty.

[wind_magic]

Originally Posted by Rickm505

The US dollar ought to begin nose diving immediately as we ramp those printing presses up. I can't wait for the estimates on how much our currency is about to fall.

I generally agree. They have turned a credit problem into a currency problem, because that debt will have to be monetized at some point. I'm sure Republicans will be happy with that because it will essentially be a flat tax when it is monetized that will affect all consumers equally. It certainly benefits young people.

[sailaway21]

Just to note a few of Rick's more blatant errors. Arthur Schlessinger was an historian and, basically, a propagandist for the Kennedys. His grasp of economic policy became outdated approximately 1956, such as any grasp he ever had. He was not an economist and had no training in economics...much like Rick's criticism of the respected WSJ author who makes her living writing on economic matters. As to economics, Schlessinger was an unrepentant Keynesian, a classification you'll find now only in economic history it's been so thoroughly discredited.

The fundamental point that Rick has made from the start has been no more validated today than it was then. Real estate alone is not going to crash this economy no matter how much Rick hopes and repeats it. The slaughter of the hogs continues. Rick has consistently managed to overlook such matters as energy and war, not to mention the events of 9/11.

What is currently going on is a restructuring of the market to restore confidence in the market. The actual economy is not the issue and is largely solid. Months ago I pointed out the woes of the auto industry as being a much more serious problem with longer lasting consequences. All those actual houses that were built in response to low interest rates have not disappeared...they're still out there and worth something. Arguing over who screwed up in financing them isn't going to make them disappear either. We're bailing out the folks who got us into this mess and there may be no other alternative lest we risk a real crash.

Rick thinks there is a money shortage. He's as wrong as can be. There's plenty of money and there has been all along...in fact there's been too much money and that's been the root of the problem. Had the Fed tightened interest rates this all would have fallen out in a much more progressive fashion. They still need to tighten interest rates, btw.

If things are crashing then perhaps I could get an explanation of this chart. Yes, the market is still higher than it was four years ago.
http://finance.yahoo.com/q/bc?s=^DJI&t=5y&l=on&z=m&q=l&c=


Unemployment is still relatively low. Recession may still be a possibility but it's been a year since Rick has announced it's arrival. Eventually he'll be right. Blind squirrels finding a nut or two and all that.

Rick might also explain to us why the subprime and real estate woes have infected Britain, with completely different laws, as well. Money was cheap in Britain and most of the western world as well. too many cheap dollars chasing too few qualified borrowers.

Now I might have missed something along the way as Rick was on my ignore list for quite some time but my recollection of the earlier post of this economic Nostradamus of sailnet is that the majority of his posts have centered around the fact that real estate is crashing, real estate is the backbone of the US economy, and the Feds must do something to bail out real estate so the game can continue unabated. I failed to note all this reform talk a year ago, hearing only that we must prop up the current system, at least from Rick.

What continues to be amazing is that the economy is doing as well as it is. I suppose we can all thank God that Rick is not involved in the energy industry for that. I don't know where the market is going to go from here or the overall economy either but I'm still as confident as I ever have been that Rick knows not either. And I'm still stuck with the implacable notion that his ideas on where things should go are a sure fire way to make matters inevitably worse. On that account, his ideas and thoughts have been remarkably consistent.

[sailaway21]

Here's yet another succinct recounting of events that does not comport with the Florida condo-king's recolluections.
RealClearPolitics - Articles - The Old Economic Rule Doesn't Work

[PBzeer]

As I browse an increasing number of outlooks about the bailout, from cost, oversight, and political posturing, I'm beginning to wonder if what emerges this week will be far different than what has been proposed. I'm beginning to get the sense that we are at a "Fram Moment". We can take a hit now, or a bigger one later. Because what I'm reading indicates that whatever happens will be a political, not an economic, solution. And that is not good news.

The continued attempts in every downturn to create a soft landing, I think are becoming counter-productive. While I can certainly understand the motivation, I think it sends out a message that isn't conducive to putting the reins on marginal business practices. And when you come right down to it, it is marginal business practices, "irrational exuberance", that is the root of the various bubbles that have happened.

Such practices are not discouraged, when there is a very real expectation of "rescue" when the bubble inevitably bursts. Lack of regulation does not create bad business decision making, it only makes it possible. What does promulgate it though, is a lack of risk. And risk is the arbiter of economic decisions. As long as there is a government (read taxpayer) safety net, then risk is unduly minimized. To me, that is the real problem.

[wind_magic]

I don't really think it matters much what they do. It didn't matter much what they did when the credit bubble was building. These things play themselves out over time. Bubbles are essentially all bubbles of trust, too much faith in rising prices, too much faith in companies that might not deserve it, too much faith in consumers, too much faith in tomorrow, etc. Trust and faith get to such high levels that, like in the past few years, people don't question anything, don't even get documentation that loans can be repaid, don't ask questions about bond ratings, they just take it all on faith. When that bubble in trust bursts and people start to pull back there is really nothing that can be done about it. Yes, I can see that government is trying to restore faith in the markets by bailing people out, but I don't think it will do any good. Trust and faith may simply move in the other direction for a while, towards increasing amounts of mistrust, increasing amounts of pessimism, a little doom and gloom, more caution, until they go too far in the other direction. It may not matter what the government tries to do, it could just be throwing good money after bad, tossing more money on the fire to burn. Sometimes the best thing to do is NOTHING. Maybe what we need is a little credit destruction, maybe what we need is a return to big gothic stone buildings for a while instead of doing all of our banking at the "house mortgages and liquor" drive-thru or the "grocery store bank cubicle and change sorter", maybe a little fire to burn out the brush and make room for new seeds to grow.