Around $12.5 TRILLION already threw into “the economy”.

The total amount of money that has been thrown in one way or another at “the economy” by the goverment including both the Treasury and Federal Reserve is now around $12.5 TRILLION accordingly to Bloomberg. Almost 96% of that is directed to Wall Street and the banks, and about 4% to the real economy on Main Street. What drives the economy, however, is Main Street and people have not been in such economic stress all across America since the 1930s and their plight is getting much worse every day.

If Main Street cannot or will not buy the products and services of the Wall Street companies and the banks, then what is going to prop up their earnings? It is obvious that earnings are falling for practically every industry in the economy that is not directly or indirectly government supported.

The government can’t keep doing this as they have been doing. Collateral against loans is getting worse all of the time for the major banks. Housing prices are now down over 20% in the past year - and this directly effects the value of the collateral held against the loans. Yet, financial stocks have been rising substantially over the past monthly based on nothing more than financial shenanigans and short-term optimism while at the same time all of the core problems on the bank balance sheets are worsening dramatically.

Commercial real estate is now collapsing and office vacancies have soared to over 15% and stores are closing in droves. Hotel occupancy rates are falling, and it is apparent that commercial real estate held as collateral for bank loans will continue to fall precipitously this year.

So, why are the stock markets going up? The only answer is: For no good reason at all, other than wishful thinking.

I was looking at a chart of the Nazdaq from the burst of the tech bubble and the DOW from 1929 on. Interesting.

http://www.dickreuter.com/res1.php

Here is the Nazdaq

If it was not a bull market in the 2000’s but just an inflation based rally (DOW never reached old high when adjusted for inflation) then we may be further out in this market than we thought BUT, since total debt is way higher this time, it may not end as soon.

Also, we can hit a bottom and not recover for years in a debt based depression, like the 30’s, while in a recession, it does turn around soon after a bottom is set.

Related Posts:

• Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash - Oct. 30
• Recently I wrote that I thought the NAZDAQ would lead, not the DOW and S&P. Today an article that covers ETF’s had this.
• A very good explaination of what is happening to the economy.
• Firms keep output steady even as they slash jobs: study
• The fraud is simply reaching EPIC levels—-

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