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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: MrGreenJeans who wrote (6717)	11/6/2011 8:42:21 PM
From: marc ultra	1 Recommendation Read Replies (2) \| Respond to of 10065

MGJ < Then<->Now Asian Contagion=Possible European Contagion Russian Default=Greek Default (or Italy, Spain, Portugal, France(?)) LTCM=MF Global In the end, these problems seem to be worked out somehow. It's interesting that the more I look at every detail and comparison it just comes up negative for the current time and argues against any comparisons with 1998. In 1998 we were running a minimum of about 3% growth or nicely around trend or higher and the economic tailwinds were very strong as the tech bubble was just forming. The The Fed started cutting sharply from the 5 1/4 we were at and this is where we were with all these seeming analogies and the Fed cuts just sent the market soaring. Everything now is to the glum opposite. We're mired in continued deleveraging, austerity and default risk as predicted by Rogoff and Reinhart after a financial crisis, the Fed can go from 0 + some maneuvers to 0 plus some other maneuvers, and rather than a tech boom at our back we have a continued housing bust hangover, structural unemployment and and financial headwind and the worst fiscal circumstances I can recall. when was the US ever in weak growth or recession while everyone was screaming about the need for austerity? Maybe in the 30's when people were worrying about budget deficits too soon so that's not a great analogy to argue things are well. Rather than stimulating the public sector there is a massive hemorrhage of relatively high paying high benefit public sector jobs which is putting a huge headwind on employment and the economy and will continue as stimulus for the states is basically dead and the sluggish economy further erodes the fiscal situation in the states and localities. Good news these days is Greece may have a controlled default instead of a disorderly default and every tick of Italian bonds is watched to see if panic is appropriate. This just ain't 1998 and there is no quick fix to anything. Maybe we'll continue a decent market rally from here muddling through thanks to low valuations but this is no 1998 where we shot up to the 2000 highs and everything was great. We are extremely vulnerable here to shock or recession and the the economy just can't handle that now. The fact is while for various reasons I don't think we have a 2008 all over again but this looks a lot more like 2008 than 1998 and the big risks look to be to the down side. If I look at usual candidates beyond the obvious Europe etc. it often is a new oil shock and that could happen by itself due to Fed action or increased tensions with Iran or similar. Oil prices are already heading back up on their own.