I believe the government money is only delaying the inevitable in the case of todays economy. I think that while injecting record breaking amounts of capital we did little to improve or change our financial world. The stimulus is a PR approach to helping our citizens without getting their hands dirty. Without changing regulations and or the way the would be failed companies operate leaves our chances of us seeing a meaningful change on the street slim to none in my eyes.
Without the government stimulus we would just be further along the process of correcting the unregulated markets of the "Go-GO" 90's and for the most part unregulated housing market from 2002-2006. I have a hard time convincing myself we did not just throw money at the problem. The tax payer absorption of these losses will result in a less abrupt depression but in the end will prolong the length of the depression. I do not think the government money will affect the depth of the crash. If we let a couple of these juggernauts fall we would have a much higher Unemployment rate today and a current equities market priced lower than the March lows. By injecting the capital from Washington we have created our current rally and hope/expectation that the recession is over and things will proceed as "Usual". I expect to see the bear market return in the next 1-2 months and unemployment will continue to grow. I expect lower lows will still be made and that some of these TARP Banks will still fail like CIT Group the other day. I found the CIT Group loss to be a bigger hit to our economy than most seemed to because of the type of loans they made. The concentration of small business loans they had is particularly damaging for a economy to lose in a time of contraction. As we all know none of those small business owners that lost there loan during the CIT Group Bankruptcy will not see any TARP money.
Todays Date-11/3/2009
Current Dow Price-9773
Recorded Unemployment 9.8%
I expect to see March Lows broken and unemployment get up to 13-14% in the next 12-18 months. "When others are greedy be fearful, when others are fearful be greedy". We all know who said that but I think it is of the utmost relevance to todays market place. When people think the party is back the market has a unique ability to end the party a little earlier than anticipated. Look to alternative investments if you haven't already. The lost decade in real estate and stocks hopefully will open your eyes to the investment class.
To gain good insight as to where we are going as a nation watch the movie Broke-The New American Dream and or read Harry Dent's new book.
Without the government stimulus we would just be further along the process of correcting the unregulated markets of the "Go-GO" 90's and for the most part unregulated housing market from 2002-2006. I have a hard time convincing myself we did not just throw money at the problem. The tax payer absorption of these losses will result in a less abrupt depression but in the end will prolong the length of the depression. I do not think the government money will affect the depth of the crash. If we let a couple of these juggernauts fall we would have a much higher Unemployment rate today and a current equities market priced lower than the March lows. By injecting the capital from Washington we have created our current rally and hope/expectation that the recession is over and things will proceed as "Usual". I expect to see the bear market return in the next 1-2 months and unemployment will continue to grow. I expect lower lows will still be made and that some of these TARP Banks will still fail like CIT Group the other day. I found the CIT Group loss to be a bigger hit to our economy than most seemed to because of the type of loans they made. The concentration of small business loans they had is particularly damaging for a economy to lose in a time of contraction. As we all know none of those small business owners that lost there loan during the CIT Group Bankruptcy will not see any TARP money.
Todays Date-11/3/2009
Current Dow Price-9773
Recorded Unemployment 9.8%
I expect to see March Lows broken and unemployment get up to 13-14% in the next 12-18 months. "When others are greedy be fearful, when others are fearful be greedy". We all know who said that but I think it is of the utmost relevance to todays market place. When people think the party is back the market has a unique ability to end the party a little earlier than anticipated. Look to alternative investments if you haven't already. The lost decade in real estate and stocks hopefully will open your eyes to the investment class.
To gain good insight as to where we are going as a nation watch the movie Broke-The New American Dream and or read Harry Dent's new book.
