Is There A Light At The End Of The Global Financial Crisis Tunnel?

[ronz28]

That light at the end of the tunnel may be the pig flu express coming straight at us. Today Bloomberg reports "The swine flu strain that has sickened people in 30 countries rivals the severity of the 1957 “Asian flu” pandemic that killed 2 million people, scientists said. ... A “moderate” pandemic like the 1957 Asian flu could kill 14.2 million people and shave 2 percent from the global economy in the first year, the World Bank said in October."

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Just when I thought this flu was going to be like any other flu this article pops up so now I wonder....

[cloudhopper]

Here's another interesting view of that light:

http://market-ticker.denninger.net/archive...rling-Over.html

[BEENTHEREDONETHAT]

This covers my comment above in #28

http://www.cbpp.org/cms/index.cfm?fa=view&id=711

The vast majority of states cannot run a deficit or borrow to cover their operating expenditures. As a result, states have three primary actions they can take during a fiscal crisis: they can draw down available reserves, they can cut expenditures, or they can raise taxes. States already have begun drawing down reserves; the remaining reserves are not sufficient to allow states to weather a significant downturn or recession. The other alternatives — spending cuts and tax increases — can further slow a state’s economy during a downturn and contribute to the further slowing of the national economy, as well.

[cloudhopper]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

That will probably be the $1000 bill used to buy a burger at Mickey D's a few years from now. You're faith in BHO is touching (don't get me wrong - compared to W he's a genius, but I personally don't think the US has had a president worth a dam_n since Ike) but naive. Check out this review:

http://zerohedge.blogspot.com/2009/05/gues...eaking-out.html

[quiksilva]

In their latest research a decidedly optimistic JPMorgan states:-

We believe we are indeed very close to the bottom in global economic activity,

and may already be there, with the world economy set to start expanding again in coming months.

although cautions

In addition, there remain some pitfalls among the green shoots, from the US Treasury’s stress tests, to the

impossible-to-predict outcome of the swine flu pandemic. We are optimistic on both of these event risks.

I haven't digested it in full yet, but here's the link to the pdf.

https://mm.jpmorgan.com/servlet/OpenPubServ...RC-505786-1.pdf

[flying]

WASHINGTON (AP) -- The government will have to borrow nearly 50 cents for every dollar it spends this year, exploding the record federal deficit past $1.8 trillion under new White House estimates.

http://finance.yahoo.com/news/White-House-...99183.html?.v=8

[quiksilva]

It seems the headlines alternate between good news and bad news on a daily basis, the Guardian for example is constantly warning not to believe in green shoots and yet their leading story today is the OECD's claim that "Britain may be over the worse of the recession" following on from stories that say the BoE says the worse is yet to come etc.

I think given the huge disparity in views out there, only one thing is truly certain: nobody really knows what is going on or what is going to happen next.

So we all might as well stop worrying and get on with it!

[flying]

I personally don't think the US has had a president worth a dam_n since Ike) but naive.

You should listen to What Marc Faber says at 8:20 into this video

Funny & he agrees with you

Also part 1 if you like

[teatree]

A lot of this global meltdown was a crisis in confidence, a psychological problem. A corner has been turned on this. People are not freaking out anywhere. I give all the credit to President Barack Hussein Obama, who most likely will become one of the greatest American presidents (yes it is early, but so far, so good).

Status quObama

I don't agree with everything in the following article but it does expose that the only real change in the White House is to do purely with image and personality.

'As President Barack Obama approaches his first 100 days in office, the corporate media prepares a new round of fawning idolatry about the Obama administration’s “achievements,” yet a summary glance at what Obama has actually done in that short time with regard to expanding the Bush police state and the Neo-Con empire is worse than even we predicted.

The day after Barack Obama was elected the 44th President of the United States in November last year, we challenged Obama supporters and the administration itself to follow through on the rhetoric of “change” by starting to dismantle the architecture of the Bush police state and beginning to roll back the unwieldy morass of the American empire. Obama has done neither, and in fact his every action has been about ensuring the Bush police state remains in place, that the people who put it in place are protected from prosecution, and that the empire continues to expand.

We presented Obama and his supporters with a series of issues on which to make progress. While we did not expect Obama to accomplish much in his first few months in office, we at least challenged the new President to take the first steps in reversing eight years of ..

continued....

http://www.prisonplanet.com/obamas-first-1...-predicted.html

[flying]

continued....

http://www.prisonplanet.com/obamas-first-1...-predicted.html

I had seen most of whats in that report &

it was a gigantic disappointment when they said they would not prosecute...........We chase war criminals from WWII

Yet in our own yard we turn a blind eye.

Why is it ok now to say ..."those who carried out their duties relying in good faith upon legal advice from the Department of Justice that they will not be subject to prosecution.”

Yet in WWII officers could not in turn say they were following orders could they?

This will come back to bite both this administration & the previous someday.

- Will Obama bring war crimes charges against Bush, Cheney and others for authorizing torture and will the torture of suspects under U.S. detention, a complete violation of both the Constitution and the Geneva Conventions, cease under an Obama administration?

As we found out last week, the answer was a resounding NO. Upon the release of the torture memos, Obama’s right-hand man, chief of staff Rahm Emanuel,

told ABC News that top Bush administration officials “should not be prosecuted either and that’s not the place that we go.” In addition, Obama’s statement that accompanied the release of the torture memos stated, “In releasing these memos, it is our intention to assure those who carried out their duties relying in good faith upon legal advice from the Department of Justice that they will not be subject to prosecution.”

Edited May 12, 2009 by flying

[flying]

Dang...........Not that I was counting on it being much .......but the way they keep moving up the exhaustion date. I am pretty sure it will be exhausted when I get to the early retire date in 10 years.

NEW YORK (CNNMoney.com) -- The recession has taken its toll on Social Security. The officials who oversee the program forecast Tuesday that the Social Security trust fund will be exhausted by 2037 -- four years earlier than estimated last year.

The trust fund reflects a $2.4 trillion surplus paid into Social Security over 20 years that Uncle Sam has borrowed, spent and promised to pay back. Trust fund exhaustion represents the point at which only 75% of benefits could be paid out.

The main reason for the change in forecast: Demand for benefits has grown while money paid in has fallen because of growing unemployment and new tax breaks in the economic stimulus package passed in February

continued here.......

http://money.cnn.com/2009/05/12/news/econo...sion=2009051215

Edited May 12, 2009 by flying

[MJP]

The panic has stopped. That is the start.

'Bull trap' to 'Return to Normal' stage.

Sorry.

[MJP]

For myself I think it has only just begun....barely

The true economic situation will begin shortly.

This is just my opinion & I really hope it is way off base.

Agreed.

There's a big price to pay, greatly increased tax burden and reduced public spending. But the main explosion has happened and has passed. It could have been much worse.

Regarding Thailand, I rather think the metaphor is proving to be a bit like a set of teeth depicted in a cartoon figure such as Wily Coyote in fixed grin mode, which at first exhibits barely a crack but ends in total disintegration.

I'm glad I'm over the worst (I think) of the western meltdown, and not particularly subject to what is to come in Thailand.

It may be severe.

But in the US Obamas raising public spending for his entire term, as is Gordon Clown in the UK, more debt for the taxpayer so the government can waste, sorry wisely spend our money ... spending to get out of debt, print money and huge infation is their way of reducing debt .. all at the expense of prudent savers such as myself.

I think certain poorer nations that rely on exports will be affected as its just basic economics that the US and UK need to start producing more goods to create jobs, the Mcdonalds service sector economy cant be relied upon and something needs to be done about it, hence IMO a more evenly balanced trading relationship with these protectionist countries which will cost them jobs, and our 2 nations are 2 of Thailands biggest trading partners.

In the UK unemployment is currently 2 million, even the govt who underestimate eveything say ti will hit 3.2 million thats far from being past the worst of it, manufacturing is one of the answers to this hence taking back jobs from the Far East, through equal free trade agreements.

Many banks are as good as insolvent as it was shown last week, they cant lend to fund start up businesses let alone certain long standing ones, so job creation is a long way off.

Also the speak from Obama's govt that this is in the worst case scenario for the banks to go insolvent cynically makes me wonder if they know something theyre not letting on.

Maybe i just need to say "Yes we can" a few more times to believe the black man with the near perfect marketing strategy .... If theyd made Bob the Plumber (whatever he was called) President then that would have been real change ... liberals i shyt em.

2.2 million now.

But, economically inactive between the age of 16 to 65 = 25%!!!

[MJP]

Vive la Recoveweh!!!

[Abrak]

The current rally seems to be driven by the idea that the worldwide banking system's collapse is no longer imminent. Also, values fell so far, so fast, it is reasonable (in March) there was good long term value in many stocks. But the current exuberance?

exuberance existed -and still exists- on the downside, especially financial assets (shares and subordinated bonds). the last two months provided excellent opportunities and profits of 100% and more.

Naam, one of the reasons I (mistakenly) didnt invest at the 'bottom', and wont be investing now is because the majority of forecasters are treating this recession as a cyclical downturn rather than a structural one. And I regard this as exuberance on the upside.

For instance if you take either the Fed's or the CBO (Obama Government) forecasts they appear a very, very best case scenario.

For instance with the CBO numbers they assume:

1. The current downturn will be a relatively minor economic event (some 5 recessions in the 1900s would be worse)

2. There will be no double dip (which happened about 6 times in the 1900s)

3. The US economy will grow at above its natural rate for 4 out next 6 years - growth apart from the current year averaging over 3%.

4. That the MPC of the US consumer will return to over 100% and that consumer debt as a % of GDP will increase.

5. The US consumer will absorb US$2trillion of USTs this year while consumer spending will remain flat - presumably to the extent the MPS was to increase, it would mostly be to pay down debt rather than acquire USTs.

To the extent that view is solely restricted to the stockmarket, it was not obvious that this was true in aggregate.

1. The stockmarket was not obviously 'undervalued'

2. I say this on the basis that if you look at a 10 year moving average of earnings and then look at S&P500 it bottomed at about 12.5x which is about its long term average.

3. Historically bear markets have ended at below 10x. To believe that the market would fall further was not unreasonable on the basis that 10 year MVA is moving down and you have to make very optimistic assumptions that earnings will return to the MVA in the short term.

4. The fact that the market has gone up x% does not in itself mean that it is going up a lot further. In the 1930s bear market there were at 4 or 5 times when the market went up over 25% in rallies and then hit new lows.

Now I fully realize that bear markets are indiscriminate and prices for individual stocks or bonds may have fallen to a level that you would have to be either fool or make ludicrously bearish assumptions not to argue they were ridiculously undervalued. I am not questioning your view say on subordinated debt which may well be seriously undervalued but I do think there is a lot of 'current exumberance' in say economic forecasts and valuations in general which puts me off the concept of investing in this rally.

[pkspeaker]

Obama's such a dik, leading up to his presidency-with the economic crises you would have thought that he would expedite these destructive wars with no end in the ME, especially when the root cause of the crises is the governments insistence on deficit spending and the need for insanely expensive 'stimulus spending' .. instead he slow's down the withdrawal from Iraq from 16 to 20 months; AND he's not really getting out at all because he's going to leave 50,000 there; AND the withdrawal he did announce is back-ended, so that there will continue to be more than 130,000 usn there for the rest of this year, then your supposed to believe that he will get serious about getting out of iraq-instead of making more excuses. this means 100's of billions more of spending there + that other disaster of an endless quagmire Afghanistan.. I don't think a real recovery is possible when the US govt insists on being an imperialist military regime.. Obama is a fraud and a weak president that is continuing a cource of ruination for america.

[Abrak]

The panic has stopped. That is the start.

'Bull trap' to 'Return to Normal' stage.

Sorry.

MJP this is an interesting graph but it doesnt apparently refer to any data.

If it is simply one persons view of sentiment then I fully understand it but it wouldnt account to much. There are many graphs that look like this but dont necessarily show the same thing - for instance the Price Shiller chart on home prices would look pretty similar but would at the same time imply that prices were still around 10% above fair value despite their fall.

The US stockmarket would look very much the same but again I havent seen justification that say current prices are around mean having bounced back from below equilibrium. This doesnt mean it doesnt exist - for as a very wild guess - it might refer to implied stock equity premiums.

Clearly it refers to something, I just dont know what.

[MJP]

The panic has stopped. That is the start.

'Bull trap' to 'Return to Normal' stage.

Sorry.

MJP this is an interesting graph but it doesnt apparently refer to any data.

If it is simply one persons view of sentiment then I fully understand it but it wouldnt account to much. There are many graphs that look like this but dont necessarily show the same thing - for instance the Price Shiller chart on home prices would look pretty similar but would at the same time imply that prices were still around 10% above fair value despite their fall.

The US stockmarket would look very much the same but again I havent seen justification that say current prices are around mean having bounced back from below equilibrium. This doesnt mean it doesnt exist - for as a very wild guess - it might refer to implied stock equity premiums.

Clearly it refers to something, I just dont know what.

Sorry, it's the bubble lifecycle theory. The psychology of bubbles sort of thing.

Hold on I've another somewhere. I can't find it. It showed the stock market bear rallies through the 1930's. But here's another good one. Total US debt as a proportion of GDP. Backs up Soro's claim that we are at the end of the post war super-boom, Kondratiev sort of K-Winter stuff.

It's all depressing as hel_l to be honest.

[Abrak]

Sorry, it's the bubble lifecycle theory. The psychology of bubbles sort of thing.

Hold on I've another somewhere. I can't find it. It showed the stock market bear rallies through the 1930's. But here's another good one. Total US debt as a proportion of GDP. Backs up Soro's claim that we are at the end of the post war super-boom, Kondratiev sort of K-Winter stuff.

It's all depressing as hel_l to be honest.

Hey no need to apologize - I love charts especially ones that go back a 100 years or more.

I particularly respect the time and effort that say Shiller went to in 2000 to plot charts of house prices to GDP going back as much as 500 years in the case of Amsterdam. The fact that he almost certainly got a few thousand emails telling him he was an idiot to come to the conclusion that US property prices were overvalued and that they subsequently went up 50%, doesnt make his analysis bad or him stupid (imho). It more points to the fact that if he can fairly point to a bubble in house prices (based on nearly 1000 years of analysis) in 2000 then to the extent that banks were lending at 50% higher asset prices in 2006, points to them being mildly stupid not him.

Unfortunately your latest graph while pointing to the obvious is fairly well known (it also double counts debt to a certain extent imho). I am not sure what graph you are looking for as regards stockmarket rallies in the '30s bearmarket but if it is the one showing that there were 4 or 5 20%+ bear market rallies that ended up in the market heading to new lows, I am sure I have it on my PC and will post it if you like.

[MJP]

Sorry, it's the bubble lifecycle theory. The psychology of bubbles sort of thing.

Hold on I've another somewhere. I can't find it. It showed the stock market bear rallies through the 1930's. But here's another good one. Total US debt as a proportion of GDP. Backs up Soro's claim that we are at the end of the post war super-boom, Kondratiev sort of K-Winter stuff.

It's all depressing as hel_l to be honest.

Hey no need to apologize - I love charts especially ones that go back a 100 years or more.

I particularly respect the time and effort that say Shiller went to in 2000 to plot charts of house prices to GDP going back as much as 500 years in the case of Amsterdam. The fact that he almost certainly got a few thousand emails telling him he was an idiot to come to the conclusion that US property prices were overvalued and that they subsequently went up 50%, doesnt make his analysis bad or him stupid (imho). It more points to the fact that if he can fairly point to a bubble in house prices (based on nearly 1000 years of analysis) in 2000 then to the extent that banks were lending at 50% higher asset prices in 2006, points to them being mildly stupid not him.

Unfortunately your latest graph while pointing to the obvious is fairly well known (it also double counts debt to a certain extent imho). I am not sure what graph you are looking for as regards stockmarket rallies in the '30s bearmarket but if it is the one showing that there were 4 or 5 20%+ bear market rallies that ended up in the market heading to new lows, I am sure I have it on my PC and will post it if you like.

If you've got it that'd be great! I love that chart. Really shows how things can keep on dropping and dropping and . . . dropping. Bear rallies are a fascinating psychological phenomenon.

I aire on the side of not inflation or deflation, but biflation.

Anything bought typically with credit and any asset class which bubbled due to the credit boom - will deflate.

Anything bought for cash, inc CC's, such as food, energy etc - will inflate.

We may yet witness a sort of hyperbiflation. Well hyper usually means 50% a month or something, unlikely that, but a highbiflation, certainly.

[Abrak]

If you've got it that'd be great! I love that chart. Really shows how things can keep on dropping and dropping and . . . dropping. Bear rallies are a fascinating psychological phenomenon.

I aire on the side of not inflation or deflation, but biflation.

Anything bought typically with credit and any asset class which bubbled due to the credit boom - will deflate.

Anything bought for cash, inc CC's, such as food, energy etc - will inflate.

We may yet witness a sort of hyperbiflation. Well hyper usually means 50% a month or something, unlikely that, but a highbiflation, certainly.

I will post the chart tomorrow on the basis that if noone else appreciates it - you will at least.

Hyperinflation doesnt, imho, refer to such high levels of inflation - say zero growth 12% inflation, 8% interest rates would also qualify.

I had to look up what biflation meant but I get the concept and thought it an interesting idea some while back. I even thought that say if you bought 'corn' you might be in a 'win, win' situation on the basis that it out performs in an inflationary environment say the 1970s and you might well expect it to outperform under a deflationary scenario such as the 1930s. Unfortunately, basic commodities proved a dud investment in the 'great depression' which rather put me off the idea.

See....some comments here....

http://www.thaivisa.com/forum/Financial-Cr...tml&st=1875

I like the idea of 'biflation' as a concept but there is relatively little written about it. Then again as someone pointed out to me the other day, if you are looking at historical precedents for the current economic scenario you are almost certainly looking in the wrong place.

[MJP]

If you've got it that'd be great! I love that chart. Really shows how things can keep on dropping and dropping and . . . dropping. Bear rallies are a fascinating psychological phenomenon.

I aire on the side of not inflation or deflation, but biflation.

Anything bought typically with credit and any asset class which bubbled due to the credit boom - will deflate.

Anything bought for cash, inc CC's, such as food, energy etc - will inflate.

We may yet witness a sort of hyperbiflation. Well hyper usually means 50% a month or something, unlikely that, but a highbiflation, certainly.

I will post the chart tomorrow on the basis that if noone else appreciates it - you will at least.

Hyperinflation doesnt, imho, refer to such high levels of inflation - say zero growth 12% inflation, 8% interest rates would also qualify.

I had to look up what biflation meant but I get the concept and thought it an interesting idea some while back. I even thought that say if you bought 'corn' you might be in a 'win, win' situation on the basis that it out performs in an inflationary environment say the 1970s and you might well expect it to outperform under a deflationary scenario such as the 1930s. Unfortunately, basic commodities proved a dud investment in the 'great depression' which rather put me off the idea.

See....some comments here....

http://www.thaivisa.com/forum/Financial-Cr...tml&st=1875

I like the idea of 'biflation' as a concept but there is relatively little written about it. Then again as someone pointed out to me the other day, if you are looking at historical precedents for the current economic scenario you are almost certainly looking in the wrong place.

Look at Iceland today. That's biflation. Not pleasant.

The thing that drives my fear over biflation is TARP and other bailout cash, printy, printy!

Politics is so bent now that no one really knows where the cash is heading or ending up. I think the likes of Goldman Sachs will use the cash to leverage another bubble, this time in basic human needs to off-set their losses on a burst real estate bubble.

Either way, Housing will continue to unwind, coming under more pressure as less money is available as everyday living costs soar. The banks are not going to put the money anywhere near the housing market until it is fully unwound, or unless they are nationalised.

[Quaker]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits. However, that does not necessarily mean that Thailand is out of the woods yet as we have our own set of unique problems - and I foresee an issue with debt default (loan and credit card) here.

I amn going to a breakfast event on Thursday 21st May which will discuss a survey on Business Confidence in Thailand. I have completed the survey this week but not seen the results yet. It is done by Synovate Thailand. I suspect it will show more optimism amongst business in Thailand than many on here seem to portray. We shall see.

I am not sure where the details of the survey and event are (I got an email invite from Synovate) but I imagine more details will be on their website. Will let you know what they say about Business Confidence.

[flying]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits.

I am curious & your not the first to say that but..........What are these signs that you & some others have seen?

Thanks

[MJP]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits. However, that does not necessarily mean that Thailand is out of the woods yet as we have our own set of unique problems - and I foresee an issue with debt default (loan and credit card) here.

I amn going to a breakfast event on Thursday 21st May which will discuss a survey on Business Confidence in Thailand. I have completed the survey this week but not seen the results yet. It is done by Synovate Thailand. I suspect it will show more optimism amongst business in Thailand than many on here seem to portray. We shall see.

I am not sure where the details of the survey and event are (I got an email invite from Synovate) but I imagine more details will be on their website. Will let you know what they say about Business Confidence.

Thanks for posting. Much of it is about confidence, a lot of it. But during the 1930's carnage there were lot's of bear rallies but the market continued it's fall over the longer term.

Understanding the psychology of bear rallies and as importantly, the timing and duration, the bear rally speculator could do rather well.

[Naam]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits.

I am curious & your not the first to say that but..........What are these signs that you & some others have seen? Thanks

the green shoots

[midas]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits. However, that does not necessarily mean that Thailand is out of the woods yet as we have our own set of unique problems - and I foresee an issue with debt default (loan and credit card) here.

I amn going to a breakfast event on Thursday 21st May which will discuss a survey on Business Confidence in Thailand. I have completed the survey this week but not seen the results yet. It is done by Synovate Thailand. I suspect it will show more optimism amongst business in Thailand than many on here seem to portray. We shall see.

I am not sure where the details of the survey and event are (I got an email invite from Synovate) but I imagine more details will be on their website. Will let you know what they say about Business Confidence.

Thanks for posting. Much of it is about confidence, a lot of it. But during the 1930's carnage there were lot's of bear rallies but the market continued it's fall over the longer term.

Understanding the psychology of bear rallies and as importantly, the timing and duration, the bear rally speculator could do rather well.

Firstly - I just saw your greeting in another thrread Hi again MJP ........

Secondly these so called green shoots are like artificial flowers made of plastic.

This is/ was a suckers rally............and you cant base the health of an econonmy on business confidence .....

The stock market still has big hurdles to clear. You can have a jobless recovery, but you can't have a profitless recovery. Consider: Earnings are subpar, Treasury's last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying "I don't stand with them," California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?

http://online.wsj.com/article/SB124208415028908497.html

Edited May 15, 2009 by midas

[MJP]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits. However, that does not necessarily mean that Thailand is out of the woods yet as we have our own set of unique problems - and I foresee an issue with debt default (loan and credit card) here.

I amn going to a breakfast event on Thursday 21st May which will discuss a survey on Business Confidence in Thailand. I have completed the survey this week but not seen the results yet. It is done by Synovate Thailand. I suspect it will show more optimism amongst business in Thailand than many on here seem to portray. We shall see.

I am not sure where the details of the survey and event are (I got an email invite from Synovate) but I imagine more details will be on their website. Will let you know what they say about Business Confidence.

Thanks for posting. Much of it is about confidence, a lot of it. But during the 1930's carnage there were lot's of bear rallies but the market continued it's fall over the longer term.

Understanding the psychology of bear rallies and as importantly, the timing and duration, the bear rally speculator could do rather well.

Firstly - I just saw your greeting in another thrread Hi again MJP ........

Secondly these so called green shoots are like artificial flowers made of plastic.

This is/ was a suckers rally............and you cant base the health of an econonmy on business confidence .....

The stock market still has big hurdles to clear. You can have a jobless recovery, but you can't have a profitless recovery. Consider: Earnings are subpar, Treasury's last auction was a bust because of weak demand, the dollar is suspect, the stimulus is pork, the latest budget projects a $1.84 trillion deficit, the administration is berating investment firms and hedge funds saying "I don't stand with them," California is dead broke, health care may be nationalized, cap and trade will bump electric bills by 30% . . . Shall I go on?

http://online.wsj.com/article/SB124208415028908497.html

There are spurts of baseless confidence which cause little rallies. Afraid the long term from here (next decade at least) is down.

[midas]

There are spurts of baseless confidence which cause little rallies. Afraid the long term from here (next decade at least) is down.

But in the end it was an " engineered rally " maybe just to get the " suckers " to carry these liabilities instead of the taxpayers ......

se

Total Meltdown And Civil Unrest – Wall Street’s Manipulated Stock Market Rally

http://eldib.wordpress.com/2009/03/27/tota...k-market-rally/

[Abrak]

I think that there are signs that we are bottoming out and that the banks around the world will soon be back to making obscene profits.

I am curious & your not the first to say that but..........What are these signs that you & some others have seen?

Thanks

I will give you a vaguely sensible answer to this question on the basis that I am merely pointing out the obvious rather making a serious case for economic recovery.

(1) Economic news is getting less bad relative to expectations than before. (On the basis that economic news is almost by definition 50% above expectations and 50% below this clearly has to happen at some point.)

(2) If you were to take a look at US car demand figures all the indications are that they are bottoming (or flattening out) at say a seasonally adjusted rate of 9.5m (about half peak demand). This is not an unreasonable assumption given the last 3 months figures and bearing in mind that it represents a monthly per capita demand that is the lowest post WW2. Given that people presumably hardly owned cars before WW2 this is not an unreasonable assumption as about as bad as it gets. (Going back further would be a bit like looking at mobile handset sales in 1980.) (Comparable nearly as low figures in 1967 are a statistical anomaly on the basis that GM was on strike.)

Now this sort of figure looks good on a month on month basis and to the extent that it looks bad on a yoy basis now it will clearly look better in a few months. (In absolute terms I agree it is meaningless - it is say estimated that based on demand of 11m cars, over 50% of US car production should be shut permanently.)

(3) There simply has to be a recovery in say US production numbers at some point simply because we will see the end of the destocking cycle at some point. When this inevitable event happens it will be treated by glee by some forecasters who will show it is proof that recovery is on the way, and merely evidence of the inevitable by others.

(4) Finally, there has been some shockingly bad reporting of figures - things along the lines of 'US house starts in February were up 25% on January - the largest increase since 1990'. Then you look at the figures and you find that Feb house starts have always been ahead of Jan and are down 3% on a seasonally adjusted basis and that they are down 40% on the previous year which was the worst in 16 or so.

(5) Even though I have to a large extent pointed the statistical inevitability of recovery based on no real recovery at all - I do also believe that more genuine signs of a 'bottoming' will emerge. At one stage, all the signs were that the US was heading for a GDP contraction of around 10%. A 12% fiscal deficit together with a stabilisation of the banking system will mean that any contraction will be 5% at most and so numbers will genuinely improve.