posted on Sep, 12 2009 @ 04:48 AM
I've been waiting for the "big crash" since April. When the rebound started around April/May it never did really make much sense to me. There are
virtually no economic indicators that we're coming out of this recession. Job losses were still climbing each month (they are tapering off now,
which is good, but we're still seeing unemployment rise each month). Bank lending is still very tight compared to the last 6-7 years. The rally was
based on Obama and Bernanke's word that the stimulus package will save everything, and the worst is over. It's purely psychological, that's it.
I don't have exact numbers here and just shooting from the hip. According to the Fed, we started shedding jobs at the rate of about 500,000 per
month back in November 2008. November 08 through August 09 = 10 months = 5 million folks who lost their job. That means we need a total reversal --
500,000 new hires every month for 10 months just to get back to where we were employment-wise in November '08. Job losses each month have now
dropped below the 500k mark but there's still way more folks getting laid off than hired . . . we're not even close yet.
The good news is consumer debt is plummeting faster than it ever has before. Not sure what this is the result of -- probably alot of bankruptcies, or
maybe the majority of Americans have realized the error of their ways, living far beyond their means, and are paying back the debt they've been
accumulating for the past half a decade. This is also contributing to the banking system failure since consumers aren't borrowing like they have
been for the past several years.
I'm referencing Peter Schiff here, but soon the Dow will be worth an ounce of gold. Maybe it's at 3,000, maybe it's at 6,000, but at some point
the Dow and gold will meet.
I'm beginning to think maybe the "big crash" isn't going to happen at all. The Fed has printed so much money to prop up our busted banking system
in the last year it's astonishing. What happens when the economy does turn upwards? We have an excess inventory of money. Simple economics: the
only way to correct an overabundance of any commodity is to reduce the value of that commodity. Doesn't matter if that commodity is apples or
potatoes or U.S. Dollars.
I think the Dow may keep going straight through the roof. Problem is, by the time it hits 14,000 again, you won't care how well your investment
accounts are doing, because you're paying $23 a gallon for gas, $13 for milk and $11 for a loaf of bread.