savings are much lower
Saving rate is low in the US because of the way they measure savings. What really matters is net worth.
net worth is decreasing
Do you have a link that shows this? The baby boomers parents are passing away. Numerous friends of mine who have lived their whole lives beyond their means are now inheriting the assets that their parents spent a lifetime building. (my parents were not so thoughtful and didn't acquire any) Which means that their net worth took a jump skyward even while their 401ks are down 20-30%. Plus their houses are appreciating even beyond the home equity lines of credit.
the world ex-USA is sinking in a synchronized and bubble energized fashion
For lots of different reasons. Asia is too dependant on exports, Europe is still mired in socialist policies, South and Central America has terrible financial controls, The former Soviet Union is taken over by thugs and Africa is being destroyed by AIDs. What else is new.
. I think the money is shortly going to where it has been spiraling towards, what CB describes as money heaven,
The thing everyone losses sight of is that as stock prices fall stocks become more valuable.
pretty well pinned in place by the FED rate cuts
The FF rate matters less than the amount and size of the repros and coupon passes. The Fed has put a rising floor of money under the market. The real problems will occur as we start to recover because that's when inflation will rear it's ugly head.
The Nasdaq has really only given up the peaking spike (3000 points), and have yet to regurgitate all the previous bubbly froth (another 500-1000, depending on policy
The index is deceptive. While the Naz is busy taking out the trash and some companies stock runs to zero, there is very positive money going into those companies deemed survivors. This money has NOT shown up in price appreciation yet. Primarily because the public is still selling them down. Traders are still being rewarded for selling. Meanwhile the institutional money moving in is slowly but surely soaking up supply.
The market cap weighted average decline is poisoning the equity backing for corporate and consumer loans
Those that need to borrow can't and those that are able to borrow don't want to. C&I loans are down even though M2 is rising.
Some folks may argue with my vision of real estate price decline, in which case they will either have to concede that massive inflation could take place, or convince themselves that the FED can indeed steer the economy and make porridge not to hot and not too cold. I think these folks final education will be a bitter one.
The Fed has voted in favor of inflating us out of this hole. They are thinking we're back in 1998 and the Asian crisis will keep a lid on inflation. The money pumped into the economy has to show up somewhere. It'll show up in asset prices or consumer prices. It seems to be showing up in both places. The excesses in Northern California real estate are being unwound now. Except for pockets where demand always outstrips supply, housing inflation in this country was held down for quite a while after the S&L crisis and only started to show up significantly in the last five years. Real estate is not leveraged to the extent it was during the S&L crisis. Of course this could change if we see unemployment rise significantly.
Whatever one buys now will more likely go down rather than up in the interim.
There is always something to buy the way there is always something to sell. The question is, is the risk to reward ratio high enough to get out of cash?
There is nothing to buy now. The onset of inflation, deflation, stagnation, recession or explosion is all more tolerable as long as one has cash
I heard this a year ago and yet 40% of the companies 100 million or more market cap are up over 15% in the last year. |
