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Global markets have not been reassured by the coordinated interest rate cuts of several central banks or by recent congressional action, but they should be. Our bet is that financial markets will return to normal in short order and that the U.S. economy will squeak by with a moderate recession. Recapitalizing the banks and working out mortgages will take time, but the financial system will not collapse -- the government won't let it.
The markets, of course, seem to be factoring in some probability of collapse. Why is this wrong?
For starters, the biggest subprime mortgage gamblers have already failed, been nationalized or been married off, shotgun-style, to banks run by grown-ups. Yes, lots of small shoes may still drop, but the Paulson "buy-up" bill, and, ultimately, the Fed's ability to print money, provides the Treasury and Federal Reserve all the tools they need.
Originally posted by prestonposthuma
Ok, now. I see your points, however, I still think we will come out of this one.
-Election years tend to have a down economy.
-The economy goes through high's and low's constantly. Look at the history of it. I believe this is just a low.
-In the early 90's we saw a fall just short of where we are now and recovered in 6 months.
-After the Great Depression, the economic system of the U.S. was set up to never fall as far as it did.
-Great Britain has aided it's banks as well. I think we can assume that other countries will follow.
I think that it is true that our modern day "empire" will collapse. It is imminent. Anyone that wants to dispute that fact is just another follower of the "good ole boys" and the other stereotypical ignorant American who needs to wake up. I just don't think that now is the time.
Originally posted by GradyPhilpott
The Dow is at +778 as of this writing and could be poised to rise even higher before the exchange closes.