A View of The Next Ten Years - Bull or Bear? Message Board

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Strategies & Market Trends : A View of The Next Ten Years - Bull or Bear?

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From: Thomas V.	3/16/2008 9:56:23 PM
	of 14

A view six years later reveals that I failed to consider in my forecast of 1-2002 the impact of the Federal Reserve’s easy credit policy and a government that lacked the will for responsible regulation. Subject 52346 The Fed has been proficient at creating bubbles and excesses. The housing bubble was created by lax regulations, easy money, and a willingness to loan to mortgagors with questionable credit worthiness. All this was driven by the profits that the financial industry received by securitizing these fictitiously rated mortgages and selling them to investors and institutions as highly safe collateralized debt obligations. The end result was a massive increase in demand for housing that drove up prices that resulted in “Bubble II” which is now in the process of bursting. The only question is how much of our economy it takes with it as a result of the reduction in home values. This loss of the wealth represents more than merely paper losses as it permitted many average Americans to annually pull billions out of home equity that funded all sorts of economic activity including stock market investing. That source of income is gone and in its place are higher costs for everything. IMHO the USA has experienced 40 years of incompetent political leadership. Both Parties should be considered guilty as charged. As a country we’ve been living way beyond our means. Our government has created a “credit culture” that has migrated to the people and the business sector. The government itself has set an example of fiscal irresponsibility has given credibility to a culture where it is OK to live far beyond one’s means with an ever increasing debt load. While our internal credit problem is bad enough it is only half of the USA’s problem. Our other problem has been created by 40 years of absurd trade policies that have created ever increasing current accounts deficits that have weakened our country from a standpoint of economic self sufficiency, and have created competition for resources such as energy, etc in these other countries that further erodes our own economy. Our trade policies were driven by self serving multi-national business interests instead of the interests of the greater good of the country. These failed policies led by our own politicians have put our country at big time risk due to a weakening dollar and that will inevitably lead to major financial pain for Americans. This all leads to my next prediction which is to seriously consider the possibility of worst case scenario and protect a portion of your financial assets now.

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