Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (51757)	5/26/2006 1:02:08 AM
From: mishedlo	Respond to of 116555

Time Running Out It appears that we are now at a point in time when the worst that some of us doom-and-gloomers have been predicting might be near. The reason for this assessment is that something very important transpired during the past few weeks that has gone mostly un-noticed: to wit, four noted pundits -- two economists and two investment gurus -- employed by the most powerful and influential financial firms in America, who were cautious for a long time, capitulated. Two of them, Rich Bernstein and David Rosenberg, work for Merrill Lynch, and their capitulation could be taken as a result of a common conclusion. The other two, Stephen Roach of Morgan Stanley and Bill Gross of PIMCO, have given up their bearish outlook for the U.S. and the world economy. All this happened over a period of 15-20 days during which the financial markets seemed to be signaling greater danger and uncertainty ahead than for quite some time. It began with David Rosenberg, interviewed remotely on CNBC. He said at the time, “We have raised our target on S&P 500” – that is, he and the firm have turned more bullish on the stock market. Mr. Rosenberg, the chief North American economist for Merrill Lynch, has been very cautious on the economy, a big believer in the Housing Bubble and its recent climax. He has also been a staunch deflationist, maintaining that the economic forces in play are deflationary, and that inflation is not a threat. . . Only Question Is When From the conditions that have existed in the U.S. for the past ten years, a Second Great Depression is unavoidable; the only question is: When? The time window has been narrowed down to this decade, I believe, and is dependent on how the unwinding of consumer debt plays out. The man who contributed most to this dangerous condition, Alan Greenspan, has manifestly ignored his own advice: “Debt is bad. Pay it down as fast as you can.” Also, he shared my distinction between private debt for consumption versus for productive investments: “…there is no limit to the size of private debt, provided it is used for productive purposes.” news.goldseek.com

To: mishedlo who wrote (51757)	5/26/2006 7:49:51 AM
From: Earlie	Read Replies (2) \| Respond to of 116555

Mish: Couldn't agree more with his comments. Aside from the now fully evident US real estate bubble implosion (getting underway at a subdivision near you), the list of "worrisome" items grows longer: employment.... we are already seeing the first of what will likely be a torrent of lay-offs in the construction, real estate agent and mortgage lending trades (which provided the replacement jobs when manufacturing employment took its 3.5 million job hit). consumer pull-back.... happening even as we speak, this nasty wave will also intensify as more "refi-your-home" ATMs shut down pension fund meltdown.... the boomers are exhibiting "perfect timing" as they enter their retirement years in large numbers, just as their pension plans hit empty. This is a gigantic problem that few care to discuss but it "ain't goin' away". dollar meltdown..... this is now underway and it is difficult to see how it can be reversed. Yes, it may be mildly positive for the trade deficit but if the world decides that it is no longer comfortable funding an out-of-control debt junkie, the implications for US stocks and bonds are ugly. Global dollar shucking looks to be underway. energy costs.... as they say in the movies, there is good news and there is bad news. The good news is that energy costs will fall in concert with the global slowdown that is getting underway. The bad news is that the positive impact this could have on economic activity may well be "too little, too late", especially if unemployment gets into a spiral dive. Best, Earlie