Are we headed for another crash?

[Requiro]

Do you think we are headed for another crash?

It feels like there is a disconnect between unemployment and the stock market hitting 10k again. Now of course it's dropped back but, can the market keep climbing with high unemployment and low consumer confidence?

 

[RightinNYC]

Do you think we are headed for another crash?

It feels like there is a disconnect between unemployment and the stock market hitting 10k again. Now of course it's dropped back but, can the market keep climbing with high unemployment and low consumer confidence?

I doubt it will be a serious crash, but I pulled out at 1095 and probably won't be getting back in until some time next year. Most of the projections I've read indicate that the market will drop a bit, end the year a little lower, and then stagnate through Q2 next year.

 

[Arch Enemy]

I doubt it will be a serious crash, but I pulled out at 1095 and probably won't be getting back in until some time next year. Most of the projections I've read indicate that the market will drop a bit, end the year a little lower, and then stagnate through Q2 next year.

People like you, pull-outters, are gonna snuff this great country of ours; these colours don't run.
tee hee

 

[danniv]

Yes we are, the bailout money is gone, and any hint if an improvement is because of government funds being injected into the economy. Once the funds dry up so will the fa-sad of improvement; however in addition to Americans being broke, the government and FED will be too. So we got that going for us!

 

[Requiro]

I doubt it will be a serious crash, but I pulled out at 1095 and probably won't be getting back in until some time next year. Most of the projections I've read indicate that the market will drop a bit, end the year a little lower, and then stagnate through Q2 next year.

But you didn't answer the question; how can the market not have a "serious" crash with high unemployment and low consumer confidence? Oh, and add high inflation because of an outrageous debt... the dollar will be like the peso (ok not that bad but...)

How bad will it get if the world drops the Dollar in favor of the Euro or any other currency?

 

[RightinNYC]

People like you, pull-outters, are gonna snuff this great country of ours; these colours don't run.
tee hee

Motha****a I got billz to pay, can't be sacrificing my profits to help the economy.

But you didn't answer the question; how can the market not have a "serious" crash with high unemployment and low consumer confidence?

Because the underlying value of assets isn't dependent on consumer confidence or unemployment. The relationship between unemployment and the broader stock market is tenuous at best.

Furthermore, the market is pretty smart. I'm sure that traders at Goldman read the paper just like you and I, so if they believed that the market was going to crash, they would have adjusted their positions to reflect that. Most news that people consider "obvious" is already priced in, whether good or bad.

Oh, and add high inflation because of an outrageous debt... the dollar will be like the peso (ok not that bad but...)

How bad will it get if the world drops the Dollar in favor of the Euro or any other currency?

I'm certainly not an expert on the broader financial market, but I'm especially not an expert on currency fluctuations. You'll have to talk to don for that, although I don't see why the above principles wouldn't apply.

 

[Ethereal]

Commercial real estate, end of the year, debts to be paid, foreclosures, downturn.

 

[Onion Eater]

I pulled out at 1095

Now that's taking the long view!

The relationship between unemployment and the broader stock market is tenuous at best.

True.

I can think of lots of times when they were completely at odds with each other.

Commercial real estate, end of the year, debts to be paid, foreclosures, downturn.

As a matter of policy, I don't make predictions.

However, I will point out that, if commercial real estate goes down, it will go down a lot faster than residencial properties did. This is because evicting someone from a home they're living in is a time-consuming process and many judges will side with the resident. Commercial leasees do not have "tenant rights," nor much sympathy from judges. Their landlord can and will lock them out without notice and hold their furnishings and inventory for ransom.

I'm certainly not an expert on the broader financial market, but I'm especially not an expert on currency fluctuations.

Exchange rates are a very complicated subject because there are multiple players with different and sometimes hidden agendas. Such an analysis is beyond the scope of my paper, Is the Collapse of the Dollar Inevitable? But I'll post a link to it anyway, because it shoots down some of the scare talk we've been hearing about how the U.S. is going to turn into Zimbabwe. I see no evidence of that.

 

[MrWide]

HI all - I'm new to this forum.

rgds
MrWide

 

[Mach]

Do you think we are headed for another crash?

It feels like there is a disconnect between unemployment and the stock market hitting 10k again?

Why do you feel that way?

Real estate will continue to be a drag, but it's not the panic it was before. It will likely not be a panic in the short term again, both because the worst appears to be over, and because we know the government will spend us out of it anyway, so why worry (about that).

What happens during such a widespread catastophe is that nearly all players in the broader, even international, economy, get a big wake up call. The alarms went off, red alert, management stopped sleeping behind closed doors, workers stopped playing video games all day at work, people perked up. When they did, they looked around and thought, "good gods, we have some really lazy employees and managers, and our complacency has opened the door for our competitors." So they get serious (often a cyclic thing), and they start trimming staff, expenses, and start actually managing again, and workers fearing for their jobs are more productive, etc. They run a tighter ship, they are more aggresive with opportunities, and they pay closer attention to the bottom line. BEfore they maybe didn't need to bother with another sales call that day, they were already over quota. Now? Every bit mattered.

So we have an economy that has, through a panic, made itself leaner, and really aware of the cost of failure. At the same time, big downturns open up a ton of opportunity for business and individuals, to come in at a lower cost, be it investing at a lower cost, or starting a business, or competing in markets they otherwise couldn't before.

So the economy becomes a much stronger engine, once that gets some traction for a while, jobs will return. In many cases, those let go are the bottom 10%. Really, we probably never needed them to begin with. But when boom times return, their marginal work ethic will be enough to eek out a little more profit so we'll grab any warm body we see..once again. (yes, even so many people were let go who WERE really good and efficient, I'm generalizing).

Sure, the real estate market is going to be in the hospital for a while longer, it's just no longer in ICU, and it's no longer scraing the crap out of us in terms of panic.

That's how I feel about it.

 

[Requiro]

Why do you feel that way?

Because Wall Street doesn't produce anything. They make money out of thin air by betting. If people can't get a job and the government money runs out (with a segment of our society not wanting to have that money out there in the first place) then there will be fewer people buying products. Those bets will lose causing the market to tank again.

But it sounds to me as if you believe the People should serve the Economy instead of the Economy serving the People. You're saying that even in good economic times we shouldn't work a little less and enjoy life a little more but rather, work work work, stress stress stress and then die. Isn't life more than how hard you work to buy more stuff you don't need?

 

[Mach]

Because Wall Street doesn't produce anything. They make money out of thin air by betting. If people can't get a job and the government money runs out (with a segment of our society not wanting to have that money out there in the first place) then there will be fewer people buying products. Those bets will lose causing the market to tank again.

I'm sorry, I took it as you asking if we're going to have a second big crash right on the heels of the first. That's in the news lately, and to that I say no.

Down the line, 5-10 years from now? Yes, we will have another stock crash and recession. Yes, it will most likely be related if not soley within, the financial sector. We will likely have other sectors periodically as well.

But it sounds to me as if you believe the People should serve the Economy instead of the Economy serving the People.

I don't see the difference. When I make a new cell phone, and you use it, I'm serving you. Markets are just ways to get people ultimately serving one another. Efficient markets make this more efficient, that's a good thing.

You're saying that even in good economic times we shouldn't work a little less and enjoy life a little more

No, by all means do that if you like. It raises career risk, especially over time, but that's your call to make. The relationship between quality of life, and working to live, is complex and personal.
The good thing is markets like the U.S. support the entire spectrum of life choices, and manages them all fairly effectively. Healthcare is a stickler right now, but other than that it's pretty good right?

 

[RightinNYC]

Because Wall Street doesn't produce anything. They make money out of thin air by betting. If people can't get a job and the government money runs out (with a segment of our society not wanting to have that money out there in the first place) then there will be fewer people buying products. Those bets will lose causing the market to tank again.

I'm not sure what you're talking about. The stock market is an index of the value of companies. These companies are tangible things that produce pretty much everything. With that in mind, why do you think Wall Street doesn't produce anything? What do you define as "Wall Street"?

But it sounds to me as if you believe the People should serve the Economy instead of the Economy serving the People.

This sounds more like a bumper sticker than a cognizable economic policy.

You're saying that even in good economic times we shouldn't work a little less and enjoy life a little more but rather, work work work, stress stress stress and then die. Isn't life more than how hard you work to buy more stuff you don't need?

Everyone is free to do whatever they want. How does my decision to work hard and accumulate property or to relax and enjoy life affect your freedom to choose which approach to take?