Petsamo wrote:SWalsh wrote:
I speak with a very bright young man who teaches at Univ of Pittsburgh and went to whatever school is 2nd to the London School of Economics for his PhD. He is willing to sit down with any economist and argue with them that it is impossible to valuate the SPX over 500. As someone who was a professional trader I agree with his position that unless there is someone big enough to step in their way (and the big boys are all bailed out and beholding to the purse strings of government) a mkt can be held indefinitely at a far higher value than it is worth.
I like listening to
Larry Kudlow and he had a guest who believes the DOW should be at 18,500. Based on current dividends, DOW 18,500 is less radical than S&P < 500.
Yes Europe is a basket case, but I saw a statistic that the US is in worse shape if state and local government debts are added to the US debt. And no one is complaining about US local communities defaulting.
I'm neither a bull nor a bear. I just wanna be on the right side of the market.
ME TOO!
No one is complaining because there is a government-media complex that does not report reality. The one created back in 1929 was amazing. Then that last straw, which they can't exactly identify, introduced reality. With it we became a fascist nation under FDR and his National Recovery Act that was ultimately struck down by the Supreme Court. But out of it grew a belief by some that the government must always guide the economy. Sure, Ryan Seacrest is doing great as is that Kirdashian girl(s). They widely do not report bad news. There is much circus now but the bread is going out the back door to a different class than you and me. I hear worries from some retired cops, firemen, school teachers, and servicemen and women as to their losing much of their pensions at some point. Those who have a interest in how cities/states are doing are following it all closely from what I can determine. And while I really do truly despise the Bush family in many ways, were he president we would know of it.
Larry Kudlow said on a day gold rallied to its then high of $550 that it was a major short. He remained bearish whenever I heard him to $800 and then stopped discussing it. He is an economist turned actor. That what I mean when I mention my friend who is beholding to no one and says that none of these people dare give a truly bearish opinion or they will lose their jobs. I know another economist who is involved in managing billions of mostly European money. He said 3-4 months ago as spreads started widening that what he sees building is potentially far worse than 2008 and that they have fixed nothing.
There is one Lender of Last Resort to the world and it is now the Fed. I don't know the point at which they will be deemed to be irrelevant as the LOLR, but at that point the world changes. Now, I think they will essentially print until the marketplace forces austerity upon them. Their past minutes are replete with comical predictions for the future. But I still do not forget something a wise and wealthy friend told me once,
"Never underestimate the steps a government will take to perpetuate its existence". I think we have seen that since this administration start intervention in March/April 2009. He recently told me that by all means always own some gold, but do so for your children as they will ban its use in trade as they cannot collect it all, and they will put revenue agents out to enforce it for all those survivalists who think they can weather what they think is coming. I don't know what is coming, but I have more reasons to suspect it is an ill wind than one at our backs.
I hear from many friends who are invested heavily, "The government is never going to let this go down again". Well let's see the Fed buy the entire bond market if defaults occur. I heard comedian Colin Quinn saying that they go to Davos, walk out and ask the people how things are, and report back that things look pretty good from what they see.
I'm surely not hoping for a crash. We are not a homogeneous society like we were back in the 1930s and there will be unthinkable problems. A severe depression will be hellish and I don't know how we'd pass through it without great loss of freedom. We are past the point where the right thing to do would have been bitter, but necessary, medicine. There is also no precedent in history that I am aware of for success in what we are doing. FWIW, In Oct 2009 (WSJ) 91 year old Ms. Schwartz, who wrote with Milton Friedman (who I think is ranked too highly by many economists), said that of all people Bernanke should know he is pushing on a string by extending bailouts to companies run poorly. I would add that effectively outlawing bankruptcy in capitalism is like outlawing purgatory/hell in religion....the discipline is destroyed. Now we have advanced crony capitalism. It has brought us OWS which could be a problem to our survival.
I'd like to be optimistic, but as a parent of recent grads who have many friends also struggling or unemployed it is difficult (actually impossible) to be as such. America got raped and no one went to jail for it as a lesson to others. I'm listening to Dickens', "A Tale of Two Cities" right now. How fitting as we have two Americas.