On Apr 23, 2:34=A0pm, Jerry Kraus <jkraus_1...@[EMAIL PROTECTED]
> wrote:
> On Apr 23, 4:16=A0pm, solon fox <solon...@[EMAIL PROTECTED]
> wrote:
>
>
>
>
>
> > On Apr 22, 12:07=A0pm, Jerry Kraus <jkraus_1...@[EMAIL PROTECTED]
> wrote:
>
> > You believe that the DJI would have to more than double in order to
> > signify an upcoming recovery? Nonsense! Stocks were moderately
> > overvalued prior to the subprime mortgage crisis. The dollar has been
> > extraordinarily devalued. All the is required for a slow recovery (we
> > don't want a fast inflationary recovery) is for the dollar to
> > strengthen and for the DJI to trend upwards from 12,200 where it was
> > trading in spring of '07. The DJI is already trending upward from a
> > low of 11,508 in March '08 to > 12,700 today.
>
> > Long term bonds are holding flat at the moment indicating that
> > investors are beginning to predict the end of interest rate cuts. The
> > bond yield curve points smoothly upwards with 20 yr and 30 yr bonds
> > trading even. This indicates a slow desired recovery.
>
> > > There is no massive housing crisis in Europe. =A0Just in some areas
to=
o
> > > closely tied to the U.S. market, like Switzerland, Ireland, Spain.
> > > Not Britain, France or Germany. =A0Their economic growth will be
slowe=
d
> > > by the problems in the U.S., but their currency will remain stable.
> > > Because socialism works better than capitalism. =A0As you are
currentl=
y
> > > observing.- Hide quoted text -
>
> > > - Show quoted text -
>
> > You are correct about the uneven housing market in the EU (and I am
> > glad that you recognized the declines which I referenced). The ECB is
> > in a tough spot wanting to lower interest rates in order to relieve
> > the credit crunch. The Bank of England announced a bailout program
> > yesterday due to the tightened credit market. But, the ECB faces
> > stagflation with wage inflation in Germany and France also suffering
> > from consumer product inflation. It's a bit touch and go. The ECB
> > would like to lower interest rates, freeing up credit (and weakening
> > the Euro, which they believe to be too strong) and at the same time
> > they are worried about inflation the same as the Fed.
>
> > Nonetheless, credit is tight and depreciation in real estate will
> > spread if the ECB doesn't act to lower rates. Pressure is mounting as
> > most european analysts are looking for lower rates.
>
> > Things were simpler before globalization. It isn't just the ties to
> > the US, it is the banking problem that has created a EU credit crunch.
> > Ultimately, the ECB will act to protect their economy, which means
> > lowering interest rates, releasing credit, stimulating economic growth
> > (and suffering inflation). All of which will help to strengthen the US
> > dollar, enable the Fed to begin raising rates to fight inflation and
> > so on.
>
> > Lather, rinse, repeat.
>
> > I see nothing remarkable or distingui****ng about the current economic
> > crisis and past recessions. Hence, the pattern will be replayed.
>
> > One of the primary reasons that recessions aren't endless downward
> > spirals is because people are simply motivated to work and improve
> > their own standing. People are always trying to do better and more
> > often than not, their efforts give results.
>
> > Bears are always bearish in a bear market and bulls are always bullish
> > in a bull market.
>
> > -solon fox
>
> > BTW My dreams never become nightmares. Dreams are just dreams.
> > Nightmares are what happens in real life.- Hide quoted text -
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> > - Show quoted text -
>
> If by "recovery" you mean some slight growth -- 1% or so -- in the
> current massively depressed economy, where the fall in the dollar
> means that our GDP is effectively down as much as it was in the
> Depression -- about 50% -- sure, that's a possibility.
>
> If you want to say everything's is wonderful, there is no depression,
> it doesn't matter that 10 trillion dollars in debt is going unpaid,
> ever, it doesn't matter that truck drivers can't afford to put gas in
> their trucks, it doesn't matter that 20% of the population will lose
> their homes, it doesn't matter that it is currently impossible to hang
> onto wealth in any form -- well, enjoy your fantasy world.
>
> I'd like to see some changes, myself. =A0And not your desired "slow
> recovery". =A0This sucks.- Hide quoted text -
>
> - Show quoted text -
Yeah, I understand your points. It isn't that I want a slow recovery,
it is that a slow recovery _is_ what we will get. Inflation is going
to hurt us and is already hurting us. A fast recovery isn't possible
because inflation would prevent it. If the economy began a fast
recovery, then inflation would move even faster forcing the Fed to
raise rates faster than the economy can grow and sending us right back
to the dumper.
A slow recovery is desired because we can't have a fast recovery and
'slow' is better than 'none.'
I take issue with terming the current situation a "depression," not
because I think you aren't correct in your *****sment, "this sucks;"
but, because I know how much worse a real depressiion can be.
I would be happier with a 2 to 4% growth in GDP, but a 1% GDP growth
is more probable for third and fourth quarter 2008 with 2 to 4% in
2009 (if we're lucky and don't get hit by another crisis.
Foreclosure statistics have been notoriously skewed with double and
triple re****ting of the same property --- so, I'm not sure of the
actual number of people who have or will lose their homes. I'm seeing
numbers between 2% and 4% (while alarming, it is much less than 20%).
If you know of a reliable source, let me know. I'll check to see if I
can find one later when I get the chance....
While I'm not unsympathetic to the plight of people forced out of
homes that they cannot afford, a higher priority must be jobs.
-solon fox
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