The Continuing Downward Spiral
Today’s economic news in not good. Heavy job losses reported for June sent the stock market down. California is about to start issuing IOU’s and state workers have been ordered to take another (3rd) mandatory day off each month (the forced 3 day vacations translate to about a 14% pay reduction). Yesterday’s auto sales figures were abysmal as well. There is clearly more pain to come. I really don’t understand some of these so-called experts calling for a 3rd or 4th quarter 2009 recovery. What data are they looking at and what world are they living in? A prediction of a recovery anytime in 2010 seems crazy at this point. There is a big difference between the bottom of an economic cycle and a recovery. The bottom of the curve can stay flat for quite a while.
The stock market is a ticking time bomb, in my opinion. It is the only financial indicator that anyone can point to for good news. This may be the very reason the stock market has done relatively well in recent months. The market is easily influenced by the herd. There are few leaders in any herd and many followers. I think there are going to be a lot of people getting hammered (again) in the stock market soon. There is not enough stability anywhere in the economy to support the growth. I am not a stock market expert by any means but I just don’t see how the stock market can continue to perform well in the midst of everything else that is going on. If the stock market does tank, watch out. If you think the level of panic felt in January & February was bad, this will be worse. This comes back to my reasoning why I think the stock market is inflated to begin with. People believing that things are better, and therefore investing in stocks, will push (and has in my opinion pushed) the market higher. If their beliefs turn out to be incorrect, a huge deflation of confidence will occur. That will be brutal.
Where does it end?
UPDATE – I forgot to mention the bank failures today. Meet #’s 46, 47 & 48, #’s 49, 50 & 51 and # 52 courtesy of Calculated Risk. That’s 7 bank failures today. Pretty brutal day.
Being an optimistic man would definitely make a difference.
May be its difficult have hopes at certain situations but i am sure
we all can have great hopes at this point of time..
Idaho Real Estate