Let’s fast-forward a year to October 2009. The U.S. unemployment rate stands at 10 percent. Crime is up across the country. The economy is shrinking. No arm-twisting from the Treasury has managed to restore the broken confidence between borrowers and lenders. Banks, the few still standing, are holding fast to their cash. Property prices are down more than 25 percent from current levels.
The Dow is still heading south as people get used to the idea of stocks trading at no more than 10 times earnings, rather than the much higher ratios our former leveraged world delivered.
There's a point at which humans get too negative.......and I think we've reached that point with this crisis. Back in 2001, it seemed there was a possibility that the world would come to an end. This time its not whether the world will come to an end but when. We seem to like to scare ourselves into total meltdown.
New buildings stand empty all over New York because at the end of a boom — that’s to say right now — a lot of new construction comes to market. Exports, long a bright spot in the economy, have plummeted because of a rising dollar. The deficit and national debt stand at unprecedented levels.
The hedge fund industry is decimated — its model of flipping cheap borrowings into leveraged bets around the world has blown up — and one desperate, even contrite, former master of the universe has just sold a Rauschenberg for $9 million less than he paid in 2004.
People still have way too much debt, and the collateral for it keeps evaporating. They are angry. Civil unrest is stirring.
Huh? What riots have happened? The author is getting carried away with himself.
It may not get that bad, of course. On the bright side, gas prices are plunging. There’s a lot of money sitting on the sidelines in places like Dubai. And, as I mentioned, the dollar is up — more than 20 percent against sterling and the euro in the last three months.
You can get a plate of pasta in central London now for less than $50. You can even take a short tube ride for less than $6. There must be hope for us all!
And STI reduced, not eliminated its dividend and the stock got whacked badly. There is too much fear prevailing in the world....everyone needs to chill a bit. |
