Hard Landing? Most definitely. What's sad is, all the pundits continue to say we will not have a recession. Who are they fooling. You don't knock off $2 trillion in wealth and have a soft landing. The pink slips will start flying next year. Indications are already showing the jobless rate is increasing at a rapid rate. Not alarming, but soon it will be.
Allan Greenspan is the one who should be banned. Unfortunately, Greenspam's work and home environment are similar to a cave with 4 walls. He makes decisions based on #'s in real time, and that spells disaster for next year. When a train traveling at full speed, is suddenly stopped dead in it's tracks by 6 rate hikes, it takes some time to get it back up to steam. Unfortunately, the train needs more coal to make another run, and as of now, the coal($$$) is rapidly disappearing, hence the bond markets. Know what the irony is here? Greenspam has all of his money in Bonds! No real connection just a comment, but there are others responsible too.
The worthless toilet paper spewed out by Goldman Sachs, Lehman Sisters, and others, are part of the equation as well. I fully expect the IPO market to dry up completely in 2001. It's simple economics here. There was way to much supply to meet demand, and eventually that will even itself out, as the trash will be kicked to the curb(delisted.) This will take some time to correct itself, and no one can be sure of the consequences here.
There's a bigger picture here to look at, than just the markets. That is the supply side of the economic chain of EVERY thing, from houses, to apartments, to cars, to restaurants, to hotels, to resorts, to cruise ships, to entertainment, ect.. If you look at all the expansion in these areas, the demand is no longer their to support most of this expansion boom. I suspect that we will see a TON of bankruptcy's begin to flood in, in the next few years. Take professional sports for example....Team owners are signing players to big time contracts, expecting to bring in fans and fill seats. Unfortunately, losing teams will ultimately file bankruptcy, due to no fan support, and some teams will probably be extinct in the next 5-10 years. This is just an example, but the demand will no longer be able to support supply due to the wealth effect being slaughtered this year.
I suspect this decade will be similar to the 80's, where we have a ton of mergers and acquisitions, and layoffs will inevitable result from this practice.
KM |
