Quote from stock_trad3r:
market is surging higher from here out. go long. no need to overanalyze this. The stock market is driven by consumer spending which has only slowed very little. Wages and productivity keep rising. Unemployment is just 1/2% above the historic average. This mental recession is hardly as deep as the one on 1992, and that one was very brief.
If the market was to be driven by consumer spending, going forward, I would not be in the market. Individuals (and corporations) are entirely tapped out, and it will take years for them to deleverage to a sustainable level. Credit will no longer be extended to overleveraged individuals and corporations, because they both have a very bad habit of defaulting on debt when they are tired of paying back. I certainly would not lend to any that I know. Neither will the oversea lenders, who hold U.S. dollars (we are a debtor nation), who have figure out that the U.S. financial system is a giant scam built on a house of cards.
However, decreased individual spending can be somewhat offset by increased capital spending spurred by municipal and federal programs. As long as the money is well spent, on building infrastructure and conserving energy, this spending will likely have a good longer term payback (no quick gains here), which hopefully will translate into a higher standard of living.
Unemployment will get much worse. We are only seeing the beginning, and it will be the worst since 1972 - 1973. However, while the market is anticipating the possibility of greater than 9% unemployment, it may top out at 8%, with aggressive fiscal possibility. This is what the market is thinking right now, which is why we may be seeing a bottom.
Trivializing the enormous economic and personal costs of the last decades of superbly idiotic, incompetent and scandalous, and greedy government and corporate governance would be a mistake. Things are as bad as they were since the early 70s and could get as worse as the 1930s. Let's hope, that we have a learned a lesson, that putting good ole boys, who enjoy a good glass of beer, into positions of power, has consequences.
