Tuesday, April 7, 2009

Bull Market

It presages good times to come, the recent rise of the stock market. Observers see signs and portents that we may be about to see the end of our recession, as housing prices "bottom out" they say. How odd it is to read of people daring to make prediction's about our economic crisis after so many failed predictions prior to the appearance of the downturn itself. I put no faith in predictions and make none myself. Almost none that is; no precise predictions because precision in guesswork makes no sense.Let me now make a prediction: we are nowhere near the end of this Depression.
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I look at the unemployment figures and I see disaster piling upon disaster, each month, whether you look at the official statistics (8.5%) or the shadow statistics (20%) or something in between (U6 at 13.5%). How can our economy improve with millions of people unemployed, broke and facing homelessness?
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The rest of the world is sinking too and I can see no sensible argument that we can pullout of our crisis if the rest of the globalized world is mired in failure. Mexico is in deep trouble but further away Japan is sunk, Ireland is sinking, Spain is teetering and the Ukraine is a basket case. As is everyone in between all around the world.
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The US government has thrown as much money as it can at the banks and insurance companies and nothing substantial has changed. Except the perception that things may be getting better and so it is the stock market goes up. On a perception. Are investors so desperate that they feel the need to feed themselves on fresh air sandwiches?
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On the other hand there is not much else to offer investors. President Obama's people absolutely will not punish the banksters or even try to get to the bottom of the fraud and corruption that wrecked the financial system, as unregulated as it was.And until they do clear the fraud up and bring true transparency our crisis will lumber along and drag us all down.
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I like the foreign policy initiatives, the support for scientific research, the sense that the President is a thoughtful member of my generation. I just deeply despise his reliance on Summers Geithner and Bernanke who all, in their ways, helped create this mess. Until they go we don't get transparency, and without that we don't get areal recovery. This blip is temporary. My prediction is worse to come. Take that to the bank of your choice.

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