Too Much Debt and the Recession - What Happens Next?
When Paulson came out today and stated that his earlier plan to save the western world was not working, he offered up a plan "C" (or is it "D") to relieve pressure on consumer credit, scrapping his earlier effort to buy mortgage assets.
"Years of misguided fiscal and monetary policy and market-distorting regulations have resulted in reckless borrowing and spending on Main Street, pervasive gambling on Wall Street, and rampant fraud and corruption at every intersection. America's borrow and spend economy, and the bloated service sector that evolved around it, must be allowed to topple, so that a more sustainable economy grounded in savings and production can rise in its place. Any government efforts to delay the adjustment and spare us the pain will backfire, turning this recession into an inflationary depression."
Peter Schiff
No matter what happens or what the next plan is here, are the 3 reasons "INO" believe stocks are headed lower.
* Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.
* Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.
* Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.
Let's look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the '70s.
That bear market was brutal as it did not let anyone out. Over the course of the early '70s, the bear market basically wore people out to the extent they eventually just threw in the towel.
"INO" believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.
The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope.
The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace.
Only when we see the new regime take! office this coming January will we see any meaningful changes.
The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama cannot make any sweeping changes until he is sworn into office.
Yes, he may hit the ground running, but the reality is, it's not for over two months from now and a lot can happen to the market in two months.
The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and INO expect they will be, it's going to push this market and everything else down to new lows.
It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.
However there are always opportunities to make money in the marketplace. These opportunities may not be in stocks! It may be in forex or the commodity markets.
So buckle your seatbelt. I think we are in for a bumpy ride...check out the new video analysis: The Dollar, Stocks and Crude Oil.
"Years of misguided fiscal and monetary policy and market-distorting regulations have resulted in reckless borrowing and spending on Main Street, pervasive gambling on Wall Street, and rampant fraud and corruption at every intersection. America's borrow and spend economy, and the bloated service sector that evolved around it, must be allowed to topple, so that a more sustainable economy grounded in savings and production can rise in its place. Any government efforts to delay the adjustment and spare us the pain will backfire, turning this recession into an inflationary depression."
Peter Schiff
No matter what happens or what the next plan is here, are the 3 reasons "INO" believe stocks are headed lower.
* Number one: The trend in most all stocks is down. This trend is likely to persist and last longer than most people imagine.
* Number two: There is no plan. The government is floundering and does not have a plan that is going to work anytime soon.
* Number three: We have a lame-duck president, and nothing is going to happen of any consequence until President-elect Obama is sworn in.
Let's look at the first problem. Most people trading the market today have had no experience in a prolonged bear market like the one we had in the '70s.
That bear market was brutal as it did not let anyone out. Over the course of the early '70s, the bear market basically wore people out to the extent they eventually just threw in the towel.
"INO" believe the market is going to make another new low and take out the recent lows that were put in place in early October. Unlike a bull market that constantly needs positive news to drive it higher, a bear market just falls under its own weight.
The second problem we have is that there is no concrete plan in place to rescue the economy. In fact, the domestic and global economic issues are so great that they are overwhelming in scope.
The Paulson plan, which is being changed and will continue to change, is a major concern and creates significant uncertainty in the marketplace.
Only when we see the new regime take! office this coming January will we see any meaningful changes.
The third problem we have is a lame-duck president. This is a major problem for the markets as President-elect Obama cannot make any sweeping changes until he is sworn into office.
Yes, he may hit the ground running, but the reality is, it's not for over two months from now and a lot can happen to the market in two months.
The key levels that everyone is going to be watching for are the recent lows we saw in early October. If these lows are taken out, and INO expect they will be, it's going to push this market and everything else down to new lows.
It will exacerbate the housing situation, the unemployment situation and most of all, the morale of the country.
However there are always opportunities to make money in the marketplace. These opportunities may not be in stocks! It may be in forex or the commodity markets.
So buckle your seatbelt. I think we are in for a bumpy ride...check out the new video analysis: The Dollar, Stocks and Crude Oil.
posted by Learning Coach | 6:36 PM
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