This Depression is just beginning

[Bestmiler]

Hey BuyLoSellHi (and anybody else), what are the main reasons you believe will keep the economy in a recession (and/or depression)?

So far I've got:

unemployment rate - will continue to climb which means more people out of jobs so less consumption

savings rate - people are saving more money (less consumption) to pay down debt and for security reasons

unemployment benefits - benefits of thousands will expire in the coming months

national debt - its so high that government will eventually have to raise taxes on everyone or spend less (which is less likely to happen)

personal income - just declined 1.3% so consumers will be buying less and possibly saving more as a result

 

[Daal]

The 30's had 1/3 GDP collapse mainly because of bank panics, collapsing money supply, 10% yearly deflation. Those things are not present right now, the economy will be out of recession within 6 months in all likelyhood

 

[Mvic]

Quote from Bestmiler:

Hey BuyLoSellHi (and anybody else), what are the main reasons you believe will keep the economy in a recession (and/or depression)?

So far I've got:

unemployment rate - will continue to climb which means more people out of jobs so less consumption

savings rate - people are saving more money (less consumption) to pay down debt and for security reasons

unemployment benefits - benefits of thousands will expire in the coming months

national debt - its so high that government will eventually have to raise taxes on everyone or spend less (which is less likely to happen)

Persistent mismatch in asset prices that will stifle economic activity and credit for years.

Tax structure that will increasingly impede recovery.

 

[obama-lama]

Depression, recession, stagflation, reflation, inflation. Whatever.
Here's some actionable opinion, and the keywords for the entire setup are not even uttered by the press, "dollar" and "yield".

Dow 9200-9700 is the window for putting on the paper-based-asset shorts. Paper based assets of all currencies, with heaviest concentration in USD-based. No specific currency is safe, until it is. The one shorting exception is equity of miners, which can be accumulated. Which brings us to the flipside. The same window is for getting long the metals, oil, ags, and other physicals. The trick here is to either take physical possession or trade only those instruments that allow taking physical delivery, like (some)futures contracts. Sorry, ETFs do not qualify.

So where are things going: For the Dow, for starters, the term is retest. For physicals, the term is moonshot. Will this happen in a straight line. No. Will the retest be reached (and breached) within a day or two? Who cares how long it takes, but yes it could be very swift, or not.

There you have a it. A positional game plan, good through AT LEAST the end of the year, with maximum risk of 500 dow points from entry or average price. For position trading (with volatility on the horizon), not unreasonable, and if you know what you are doing, that risk can be reduced substantially.

Now then, if someone hasn't reminded you lately, do your own due diligence, honor your predetermined trade management, and never ever buy or sell instruments that you do not fully understand.

Oh and for those wondering why the Dow instead of the S&P: That's a whooole other topic.

 

[Landis82]

Quote from Daal:

The 30's had 1/3 GDP collapse mainly because of bank panics, collapsing money supply, 10% yearly deflation. Those things are not present right now, the economy will be out of recession within 6 months in all likelyhood

Agreed.
The $141 Billion that got slashed from inventories in Q-2 will also argue for a bigger bounce than expected before year end.

 

[gastropod]

Quote from Bestmiler:

Hey BuyLoSellHi (and anybody else), what are the main reasons you believe will keep the economy in a recession (and/or depression)?

So far I've got:

unemployment rate - will continue to climb which means more people out of jobs so less consumption

savings rate - people are saving more money (less consumption) to pay down debt and for security reasons

unemployment benefits - benefits of thousands will expire in the coming months

national debt - its so high that government will eventually have to raise taxes on everyone or spend less (which is less likely to happen)

personal income - just declined 1.3% so consumers will be buying less and possibly saving more as a result

Have you not been following that the states and municipalities are bankrupt? California sending out IOUs? A county in Alabama laying off 2/3s of its employees? If you followed where the "Economic Recovery" money has/had been going...it has been going to the states and municipalities...which have been using it just to stay alive...now, that money is gone...what next?

-gastropod

 

[monty21]

S&P rallies over 1,000 and you guys are talking about a depression?

75% of S&P 500 earnings beat (even w/ lower estimates). Economic releases have been generally positive. Pending Housing Sales are up over 3%.

Hedge yourself against the dollar and you will be fine. I was once bearish too, but price action proved me wrong.

I also see people shopping. I see nice cars on the road and packed restaurants. I haven't heard about any middle class individuals committing suicide or starving (any class for that matter). Perhaps we are in a recession and not a depression. I suppose if you get technical with the official meaning of depression, you may be right considering negative GDP growth. When all is said and done, it's not comporable to 1932.

 

[Clubber Lang]

Quote from monty21:

S&P rallies over 1,000 and you guys are talking about a depression?

I also see people shopping. I see nice cars on the road and packed restaurants.

I have been saying on here for months that all the restaurants, bars, malls, theaters, casinos etc. near me are all back to business as usual and have been since the spring.

Also, I still do not know one single person who is unemployed or has been unemployed over the past year.

The crash in September and October definitely slowed things down in the NY area, but ever since the weather started changing, people are wasting money as fast as they can get it again. The American way of overconsumption and extravagant wastefulness took a 6 month hiatus but seems to be back in full force.

 

[gastropod]

Quote from Bestmiler:

Hey BuyLoSellHi (and anybody else), what are the main reasons you believe will keep the economy in a recession (and/or depression)?

So far I've got:

unemployment rate - will continue to climb which means more people out of jobs so less consumption

savings rate - people are saving more money (less consumption) to pay down debt and for security reasons

unemployment benefits - benefits of thousands will expire in the coming months

national debt - its so high that government will eventually have to raise taxes on everyone or spend less (which is less likely to happen)

personal income - just declined 1.3% so consumers will be buying less and possibly saving more as a result

OK, after more "refreshments"...I will add to my previous post...

Bestmiler...you are now on my "fantasy" game show...you have won one of two prizes (lucky you!)...which do you choose...the 1973 Ford Pinto (on the books of the game show production company at $800,000) or the $250,000 Porsche (on the game shows books at $250,000)? Well, which do you choose? NOW, FULLY REALIZE THIS...THIS BULLSHIT RALLY IS BASED ON YOU CHOSING THE CLUNKER PINTO!!! ACCOUNTING RULES WERE DROPPED, SO THAT BANKS COULD LOOK - YES, JUST LOOK, LIKE THEY WERE PROFITABLE, BY NOT HAVING TO MARK-TO-MARKET CRAPPY ASSETS - LIKE REAL ESTATE THAT WAS WORTHLESS, BUT IS KEPT ON THE BOOKS FOR HUNDREDS OF THOUSANDS OF DOLLARS...NOT FORECLOSED UPON...SO THAT IT WON'T HAVE TO SHOW UP ON BANKS' BALANCE SHEETS...BUT, THE BANK OF INTERNATIONAL SETTLEMENTS HAS NEW GUIDELINES...THAT HAVE TO BE IMPLEMENTED BEFORE DEC. 2010...FASB BE DAMNED!

You ask why pessimistic...why optimistic?

-gastropod

 

[Clubber Lang]

Quote from gastropod:

BUT, THE BANK OF INTERNATIONAL SETTLEMENTS HAS NEW GUIDELINES...THAT HAVE TO BE IMPLEMENTED BEFORE DEC. 2010...FASB BE DAMNED!

You ask why pessimistic...why optimistic?

Because the banks, brokerages, hedge funds, and most importantly, the government know they have 16 months to jack the shit out of the market before this crap hits it again.

In other words, run the hell out of the market to absurd levels so when it crashes again, it's "only" back to where it was in the summer of 2009 (right now).

Not a bad scam.