U.S Stock Markets Disconnected From Reality

[Ufo Believer]

From: Campaign For Liberty

Earlier this year, I predicted that the 2009 rally in U.S. stocks could bring the Dow Jones Index as high as 10,000. It looks like that level has been achieved. If, at this point, the index reverses course, I would have made a fairly good prediction.

However, it is important to get beyond the charts and look at the fundamentals. The furious six-month rally in the stock market has certainly not been mirrored by the economy as a whole. Instead, the country remains in recession, with unemployment continuing to rise and corporate earnings continuing to decline. This has pushed up trading multiples to the point that where value is now a distant memory. How could the stock markets have recovered so strongly in the face of economic recession?

First, this rally is mostly about the financial sector. The U.S. government decided that, no matter what the cost to the citizen, the major banks had to be saved. Bank losses were transferred to public books and unprecedented funds were showered on the banks to keep them solvent. Bank borrowing costs were reduced to near zero and, for the first time, interest was paid on reserves held at the Fed. Many of these banks were designated as ‘too big to fail,’ so they became a nearly risk-free bet.

More here: http://www.campaignforliberty.com/article.php?view=276

[ninjadude]

You can stop reading at the point he whines about unemployment. Unemployment is a lagging indicator. It trails the general economy. By quite a bit.

[MARAB0D]

I think in NZ dollars - and the rate rose 33% within the last 120 days versus US dollar. This does not reflect the devaluation of US currency, perhaps it fell some 15% only for that period, however this may be enough for the people to be dumping the actual dollar and buying whatever is available. Properties are over-priced, so they buy the shares of bluechips, hence Dow growth. It is better to have the shares of the really existing manufacturers, than lose everything to crisis and inflation. I can see the serious possibility that Dow would continue further rise, as US government only has one option left, to print more money (unless of course they want to switch to amero or to start WW3).

Edited October 16, 2009 by marabod

[acidhead]

I think in NZ dollars - and the rate rose 33% within the last 120 days versus US dollar. This does not reflect the devaluation of US currency, perhaps it fell some 15% only for that period, however this may be enough for the people to be dumping the actual dollar and buying whatever is available. Properties are over-priced, so they buy the shares of bluechips, hence Dow growth. It is better to have the shares of the really existing manufacturers, than lose everything to crisis and inflation. I can see the serious possibility that Dow would continue further rise, as US government only has one option left, to print more money (unless of course they want to switch to amero or to start WW3).

yup... they may play some more wild cards but it will not do any good in the long run.

I suggest everybody brace themselves... things are going to get ugly.

MSM and the White House will blame the 'free' market for the depression... further confusing and dividing 'popular opinion'.

[MARAB0D]

yup... they may play some more wild cards but it will not do any good in the long run.

I suggest everybody brace themselves... things are going to get ugly.

MSM and the White House will blame the 'free' market for the depression... further confusing and dividing 'popular opinion'.

I agree, by december-january it may be a time to fasten the seatbelts. I do not think though, that they have any more rabbits left in the hat, because all possible maneuvers require massive investment, but the active printing press might precipitate a conflict - the cheap dollar would deprive China of its national treasure of $2 trillions; this would shake the soil under the Chicom government, so in order to maintain stability in a country with no money and 200,000,000+ unemployed, the first choice option is to start a nuclear war and land grab. However US has a certain substantial chance that this war would be against Russia. If, however, the war turns to be longer than expected, then with no doubts India would do its best to hit China from behind, and we would have the largest continent all glowing red in daytime and green in night time. Imports would stop, and we would start wearing the fig leaves... What's gonna be next I do not even want to think about.

[Mr Honeybadger]

Our government has created many jobs in one sector of our society. It's own. ( The US Government )

But American business has been able to do more with less. ( Less employees that is ) That's probably why many of them are now able to turn a profit.