As China’s bubble market burst, U.S may begin it’s pullback like 1930.
By Daniel at 10 August, 2009, 9:14 am
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The S&P 500 is up by 51% with few fundamentals, except the hopes of people who dream of better days ahead. That is at least as big a bubble as the Chinese have. At least China has a manufacturing base. America’s bubble is built solely upon a sea of Federal Reserve (aka “Bankster Slush Fund”) supplied “liquidity” (newly printed paper money).
It is true that the Chinese economy was built largely by American acquiescence to having its own economy wrecked, and the manufacturing portion of its industries relocated to China. But, no matter how the Chinese managed to acquire their productive capacity, at least they now have an industrial base that actually produces something.
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The only effective check on a bubble market is a crash.
Look at the valuations of stocks here and elsewhere.
You would never know that we are in a deep recession and that the banks are insolvent.
The same thing happened in 1930 following the initial crash.
After massive sustained rally into the first half, the real decline thus began.
If half the US mortgages will be underwater in two years hence.
The correction has merely begun.
tarn
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