What is it with all the doomsday predictions

[Eugene]

It’s Christmas soon, time to be festive.

Let’s make a couple of festive predictions:

– Stock market bottom occurred on November 20th when S&P stopped short of 750. Those lows will not be seen again, or at least not during this recession.
– S&P to pass 1100 by April.
– 5% mortgages won’t last. All the money saved in treasuries today will rush for the exits as the stock market is reflated. Interest rates will jump. Obama’s Secretary of Treasury will have no choice but to declare GSE debt backed by the government, in an attempt to keep rates from going over 7%.
– Reverse wealth effect that’s been depressing sales and prices since October will work in the opposite direction as 401k’s climb back to their pre-crash levels. Next spring will be the hottest RE selling season since 2004. Despite slightly higher rates, San Diego housing will bottom in the next few months.

[peterb]

Unemployment hits 8.6% in CA and 6.8% in the USA. More lay-offs are being announced every day. The last 6 years of economic growth is really just massive credit expansion that is now contracting. The trend is markedly downward with strong momentum. But if you’ve got your health, you’ve really got everything. So that’s what eveyone should be feeling good about. Making money happens up and down the cycle. Just play it. Dont judge it.

But I applaud your enthusiasm and positive spin as it will help propell this sucker rally into spring and set-up another fantastic shorting opportunity. It’s a beautiful thing to work the market in both directions.

And for those tracking rents, I’ve been readiing Ward Hannigans’ site lately and both he and Bruce Norris are seeing rents start to cave in Riverside County and some parts of SD county. Worth a read. These guys are pro’s.

Merry Christmas.Happy New Year.

[peterb]

Unemployment hits 8.6% in CA and 6.8% in the USA. More lay-offs are being announced every day. The last 6 years of economic growth is really just massive credit expansion that is now contracting. The trend is markedly downward with strong momentum. But if you’ve got your health, you’ve really got everything. So that’s what eveyone should be feeling good about. Making money happens up and down the cycle. Just play it. Dont judge it.

But I applaud your enthusiasm and positive spin as it will help propell this sucker rally into spring and set-up another fantastic shorting opportunity. It’s a beautiful thing to work the market in both directions.

And for those tracking rents, I’ve been readiing Ward Hannigans’ site lately and both he and Bruce Norris are seeing rents start to cave in Riverside County and some parts of SD county. Worth a read. These guys are pro’s.

Merry Christmas.Happy New Year.

[peterb]

Unemployment hits 8.6% in CA and 6.8% in the USA. More lay-offs are being announced every day. The last 6 years of economic growth is really just massive credit expansion that is now contracting. The trend is markedly downward with strong momentum. But if you’ve got your health, you’ve really got everything. So that’s what eveyone should be feeling good about. Making money happens up and down the cycle. Just play it. Dont judge it.

But I applaud your enthusiasm and positive spin as it will help propell this sucker rally into spring and set-up another fantastic shorting opportunity. It’s a beautiful thing to work the market in both directions.

And for those tracking rents, I’ve been readiing Ward Hannigans’ site lately and both he and Bruce Norris are seeing rents start to cave in Riverside County and some parts of SD county. Worth a read. These guys are pro’s.

Merry Christmas.Happy New Year.

[peterb]

Unemployment hits 8.6% in CA and 6.8% in the USA. More lay-offs are being announced every day. The last 6 years of economic growth is really just massive credit expansion that is now contracting. The trend is markedly downward with strong momentum. But if you’ve got your health, you’ve really got everything. So that’s what eveyone should be feeling good about. Making money happens up and down the cycle. Just play it. Dont judge it.

But I applaud your enthusiasm and positive spin as it will help propell this sucker rally into spring and set-up another fantastic shorting opportunity. It’s a beautiful thing to work the market in both directions.

And for those tracking rents, I’ve been readiing Ward Hannigans’ site lately and both he and Bruce Norris are seeing rents start to cave in Riverside County and some parts of SD county. Worth a read. These guys are pro’s.

Merry Christmas.Happy New Year.

[peterb]

Unemployment hits 8.6% in CA and 6.8% in the USA. More lay-offs are being announced every day. The last 6 years of economic growth is really just massive credit expansion that is now contracting. The trend is markedly downward with strong momentum. But if you’ve got your health, you’ve really got everything. So that’s what eveyone should be feeling good about. Making money happens up and down the cycle. Just play it. Dont judge it.

But I applaud your enthusiasm and positive spin as it will help propell this sucker rally into spring and set-up another fantastic shorting opportunity. It’s a beautiful thing to work the market in both directions.

And for those tracking rents, I’ve been readiing Ward Hannigans’ site lately and both he and Bruce Norris are seeing rents start to cave in Riverside County and some parts of SD county. Worth a read. These guys are pro’s.

Merry Christmas.Happy New Year.

[Eugene]

In the early 80’s, things looked even bleaker than they do today. Unemployment was around 10%. Between mid-81 and mid-82, S&P lost 30%.

S&P bottomed on August 12, 1982, at 102. Unemployment rate continued growing steadily, gaining a whole percent until peaking in December. Official recession was over in November 1982. By the time the first drop in unemployment rate was recorded, S&P was already in 140’s.

S&P bear market not unlike todays began on July 16, 1990. It coincided with a spike in unemployment. Between July 16 and October 11, S&P went from 368 to 295. Unemployment continued growing well past that date. Recession officially ended in March 1991. Unemployment didn’t really begin to decline till July 1992, when S&P was above 400.

During the post-dot-com/9/11 recession, S&P bottomed in September 2002. Unemployment peaked in June 2003. Between September 2002 and June 2003, S&P gained 25%.

What’s the lesson? Simply that unemployment is a lagging indicator and it will keep growing past the bottom. If you’re fixated on high and growing unemployment, you will incorrectly identify true economic recovery as a “sucker rally”. If you attempt to act on this misidentification, you can lose a lot of money. Shorting the market in May 2003 would have been a costly mistake.

And one more thing to consider: this is the first recession since 1961 that’s going to be dealt with by a Democratic president and Democratic majorities in both chambers of Congress. It’s unimaginable that anything like Obama’s stimulus package could have come from the desk of Richard Nixon or Ronald Reagan. For the first time since 1961, we will see what recovery looks like when it’s guided by real economics rather than supply-side pseudoscience or dogma of fiscal conservatism.

[Eugene]

In the early 80’s, things looked even bleaker than they do today. Unemployment was around 10%. Between mid-81 and mid-82, S&P lost 30%.

S&P bottomed on August 12, 1982, at 102. Unemployment rate continued growing steadily, gaining a whole percent until peaking in December. Official recession was over in November 1982. By the time the first drop in unemployment rate was recorded, S&P was already in 140’s.

S&P bear market not unlike todays began on July 16, 1990. It coincided with a spike in unemployment. Between July 16 and October 11, S&P went from 368 to 295. Unemployment continued growing well past that date. Recession officially ended in March 1991. Unemployment didn’t really begin to decline till July 1992, when S&P was above 400.

During the post-dot-com/9/11 recession, S&P bottomed in September 2002. Unemployment peaked in June 2003. Between September 2002 and June 2003, S&P gained 25%.

What’s the lesson? Simply that unemployment is a lagging indicator and it will keep growing past the bottom. If you’re fixated on high and growing unemployment, you will incorrectly identify true economic recovery as a “sucker rally”. If you attempt to act on this misidentification, you can lose a lot of money. Shorting the market in May 2003 would have been a costly mistake.

And one more thing to consider: this is the first recession since 1961 that’s going to be dealt with by a Democratic president and Democratic majorities in both chambers of Congress. It’s unimaginable that anything like Obama’s stimulus package could have come from the desk of Richard Nixon or Ronald Reagan. For the first time since 1961, we will see what recovery looks like when it’s guided by real economics rather than supply-side pseudoscience or dogma of fiscal conservatism.

[Eugene]

In the early 80’s, things looked even bleaker than they do today. Unemployment was around 10%. Between mid-81 and mid-82, S&P lost 30%.

S&P bottomed on August 12, 1982, at 102. Unemployment rate continued growing steadily, gaining a whole percent until peaking in December. Official recession was over in November 1982. By the time the first drop in unemployment rate was recorded, S&P was already in 140’s.

S&P bear market not unlike todays began on July 16, 1990. It coincided with a spike in unemployment. Between July 16 and October 11, S&P went from 368 to 295. Unemployment continued growing well past that date. Recession officially ended in March 1991. Unemployment didn’t really begin to decline till July 1992, when S&P was above 400.

During the post-dot-com/9/11 recession, S&P bottomed in September 2002. Unemployment peaked in June 2003. Between September 2002 and June 2003, S&P gained 25%.

What’s the lesson? Simply that unemployment is a lagging indicator and it will keep growing past the bottom. If you’re fixated on high and growing unemployment, you will incorrectly identify true economic recovery as a “sucker rally”. If you attempt to act on this misidentification, you can lose a lot of money. Shorting the market in May 2003 would have been a costly mistake.

And one more thing to consider: this is the first recession since 1961 that’s going to be dealt with by a Democratic president and Democratic majorities in both chambers of Congress. It’s unimaginable that anything like Obama’s stimulus package could have come from the desk of Richard Nixon or Ronald Reagan. For the first time since 1961, we will see what recovery looks like when it’s guided by real economics rather than supply-side pseudoscience or dogma of fiscal conservatism.

[Eugene]

In the early 80’s, things looked even bleaker than they do today. Unemployment was around 10%. Between mid-81 and mid-82, S&P lost 30%.

S&P bottomed on August 12, 1982, at 102. Unemployment rate continued growing steadily, gaining a whole percent until peaking in December. Official recession was over in November 1982. By the time the first drop in unemployment rate was recorded, S&P was already in 140’s.

S&P bear market not unlike todays began on July 16, 1990. It coincided with a spike in unemployment. Between July 16 and October 11, S&P went from 368 to 295. Unemployment continued growing well past that date. Recession officially ended in March 1991. Unemployment didn’t really begin to decline till July 1992, when S&P was above 400.

During the post-dot-com/9/11 recession, S&P bottomed in September 2002. Unemployment peaked in June 2003. Between September 2002 and June 2003, S&P gained 25%.

What’s the lesson? Simply that unemployment is a lagging indicator and it will keep growing past the bottom. If you’re fixated on high and growing unemployment, you will incorrectly identify true economic recovery as a “sucker rally”. If you attempt to act on this misidentification, you can lose a lot of money. Shorting the market in May 2003 would have been a costly mistake.

And one more thing to consider: this is the first recession since 1961 that’s going to be dealt with by a Democratic president and Democratic majorities in both chambers of Congress. It’s unimaginable that anything like Obama’s stimulus package could have come from the desk of Richard Nixon or Ronald Reagan. For the first time since 1961, we will see what recovery looks like when it’s guided by real economics rather than supply-side pseudoscience or dogma of fiscal conservatism.

[Eugene]

In the early 80’s, things looked even bleaker than they do today. Unemployment was around 10%. Between mid-81 and mid-82, S&P lost 30%.

S&P bottomed on August 12, 1982, at 102. Unemployment rate continued growing steadily, gaining a whole percent until peaking in December. Official recession was over in November 1982. By the time the first drop in unemployment rate was recorded, S&P was already in 140’s.

S&P bear market not unlike todays began on July 16, 1990. It coincided with a spike in unemployment. Between July 16 and October 11, S&P went from 368 to 295. Unemployment continued growing well past that date. Recession officially ended in March 1991. Unemployment didn’t really begin to decline till July 1992, when S&P was above 400.

During the post-dot-com/9/11 recession, S&P bottomed in September 2002. Unemployment peaked in June 2003. Between September 2002 and June 2003, S&P gained 25%.

What’s the lesson? Simply that unemployment is a lagging indicator and it will keep growing past the bottom. If you’re fixated on high and growing unemployment, you will incorrectly identify true economic recovery as a “sucker rally”. If you attempt to act on this misidentification, you can lose a lot of money. Shorting the market in May 2003 would have been a costly mistake.

And one more thing to consider: this is the first recession since 1961 that’s going to be dealt with by a Democratic president and Democratic majorities in both chambers of Congress. It’s unimaginable that anything like Obama’s stimulus package could have come from the desk of Richard Nixon or Ronald Reagan. For the first time since 1961, we will see what recovery looks like when it’s guided by real economics rather than supply-side pseudoscience or dogma of fiscal conservatism.

[peterb]

Good point to recount economic history, as I am a believer in it repeating itself, too. I believe your only mistake is in correlating this recession with the last two or three. This one has all the earmarks and fidelity of 1825, 1873 and 1929. They were massive credit bubbles that burst after many, many years of growth. They had multiple waves of corrections down, between which there were some strong relief rally’s.

But logic should prevail and act as a confirmation of this as well. I have a lot of trouble determining what will cause employment to rise. Or more importantly, what will cause demand to rise and get the level of profitability needed to sustain the current P/E levels that are now projected and reflected in the market prices. We essentially need to find another real estate bubble to create or other such industry for the money to flow into. But nothing seems to be coming to the surface. I actually think this was the impending scenario in 2002, but extremely cheap money ran into housing and we were off to the races. That’s all imploding now.
I stand by my thesis that the last 6 years was almost entirely a debt driven growth with little if any productivity gains or anything else of a sustainable nature. So we now must give it all back as it was not real nor sustainable. And if you count the DotCom as a bubble as well, then we need to give it back to about 1998 levels. I think this is very possible as well as an over correction to the downside as the market regains its mean.
Only time will tell, but we need another bubble and I dont see it anywhere. I think we are now stuck in reality and have to face the fact that the creation of wealth can only be sustained with innovation and gains in productivity and invention. These tend to take more time than creating bubbles.

[peterb]

Good point to recount economic history, as I am a believer in it repeating itself, too. I believe your only mistake is in correlating this recession with the last two or three. This one has all the earmarks and fidelity of 1825, 1873 and 1929. They were massive credit bubbles that burst after many, many years of growth. They had multiple waves of corrections down, between which there were some strong relief rally’s.

But logic should prevail and act as a confirmation of this as well. I have a lot of trouble determining what will cause employment to rise. Or more importantly, what will cause demand to rise and get the level of profitability needed to sustain the current P/E levels that are now projected and reflected in the market prices. We essentially need to find another real estate bubble to create or other such industry for the money to flow into. But nothing seems to be coming to the surface. I actually think this was the impending scenario in 2002, but extremely cheap money ran into housing and we were off to the races. That’s all imploding now.
I stand by my thesis that the last 6 years was almost entirely a debt driven growth with little if any productivity gains or anything else of a sustainable nature. So we now must give it all back as it was not real nor sustainable. And if you count the DotCom as a bubble as well, then we need to give it back to about 1998 levels. I think this is very possible as well as an over correction to the downside as the market regains its mean.
Only time will tell, but we need another bubble and I dont see it anywhere. I think we are now stuck in reality and have to face the fact that the creation of wealth can only be sustained with innovation and gains in productivity and invention. These tend to take more time than creating bubbles.

[peterb]

Good point to recount economic history, as I am a believer in it repeating itself, too. I believe your only mistake is in correlating this recession with the last two or three. This one has all the earmarks and fidelity of 1825, 1873 and 1929. They were massive credit bubbles that burst after many, many years of growth. They had multiple waves of corrections down, between which there were some strong relief rally’s.

But logic should prevail and act as a confirmation of this as well. I have a lot of trouble determining what will cause employment to rise. Or more importantly, what will cause demand to rise and get the level of profitability needed to sustain the current P/E levels that are now projected and reflected in the market prices. We essentially need to find another real estate bubble to create or other such industry for the money to flow into. But nothing seems to be coming to the surface. I actually think this was the impending scenario in 2002, but extremely cheap money ran into housing and we were off to the races. That’s all imploding now.
I stand by my thesis that the last 6 years was almost entirely a debt driven growth with little if any productivity gains or anything else of a sustainable nature. So we now must give it all back as it was not real nor sustainable. And if you count the DotCom as a bubble as well, then we need to give it back to about 1998 levels. I think this is very possible as well as an over correction to the downside as the market regains its mean.
Only time will tell, but we need another bubble and I dont see it anywhere. I think we are now stuck in reality and have to face the fact that the creation of wealth can only be sustained with innovation and gains in productivity and invention. These tend to take more time than creating bubbles.

[peterb]

Good point to recount economic history, as I am a believer in it repeating itself, too. I believe your only mistake is in correlating this recession with the last two or three. This one has all the earmarks and fidelity of 1825, 1873 and 1929. They were massive credit bubbles that burst after many, many years of growth. They had multiple waves of corrections down, between which there were some strong relief rally’s.

But logic should prevail and act as a confirmation of this as well. I have a lot of trouble determining what will cause employment to rise. Or more importantly, what will cause demand to rise and get the level of profitability needed to sustain the current P/E levels that are now projected and reflected in the market prices. We essentially need to find another real estate bubble to create or other such industry for the money to flow into. But nothing seems to be coming to the surface. I actually think this was the impending scenario in 2002, but extremely cheap money ran into housing and we were off to the races. That’s all imploding now.
I stand by my thesis that the last 6 years was almost entirely a debt driven growth with little if any productivity gains or anything else of a sustainable nature. So we now must give it all back as it was not real nor sustainable. And if you count the DotCom as a bubble as well, then we need to give it back to about 1998 levels. I think this is very possible as well as an over correction to the downside as the market regains its mean.
Only time will tell, but we need another bubble and I dont see it anywhere. I think we are now stuck in reality and have to face the fact that the creation of wealth can only be sustained with innovation and gains in productivity and invention. These tend to take more time than creating bubbles.

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