DJIA on track for worst monthly loss since February 2009

This is the type of news that drives markets. More and more we are seeing news about cities, states, real estate, etc. come out that shows we aren’t in a recovery. We are in delay mode waiting in the eye of the storm for the other side of the storm to hit us. How long can we delay it? Months to a couple of years depending on what the rest of the world and global consumers and global lenders do. We are no longer in control of our own destiny and more and more investors are waking up to that fact.

Why don’t analysts know what the “timing” is on this crisis?

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The next financial crisis by Kenneth Rogoff

…..But can blanket government largesse be the final answer? Government backstops work because taxpayers have deep pockets, but no pocket is bottomless. And when governments, particularly large ones, get into trouble, there is no backstop. With government debt levels around the world reaching heights usually seen only after wars, it is obvious that the current strategy is not sustainable.

If the trajectory is unsustainable, how long can debt keep piling up? We don’t know.
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In this article, they are trying to explain why this crisis is so difficult to predict and why there is division among analysts as to when things will happen. We have seen different analysts from the doom and gloom crowd say everything from this coming quarter to 5 to 10 years from now. We have seen even our own government (CBO) say they don’t know what will really happen and that their projections are probably way too optimistic because they don’t include “the next recession.”

The article also has this

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Our models show that even an economy that is massively overleveraged can, in theory, plod along for years, even many decades, before crashing and burning.

http://www.guardian.co.uk/commentisfree/2009/sep/12/world-economy-financial-crisis-debt
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Japan is a good example of that “plodding” but they were financing their debt from their own citizens and don’t have the world’s reserve currency that nations are leaving.

We can’t even get analysts to agree on the markets, let alone the global economy or the U.S. economy. Globalization has changed everything and now the dog (U.S.) that wagged the tail (emerging markets) is being wagged by the tail. Many say that if the Chinese economy falters, it will drag us down a long ways. China is one of our leading buyers of our exports.

GDP is terrible at helping us really see what is going to happen in this global economic world we are growing smaller in. Emerging markets now demand more oil than developed nations. There are 2.5 billion middle class consumers (250 million in China) that will determine prices, not our consumer demand, like before. Yet, many keep pinning their hopes on this highly manipulated number.

- JanPaul

Related Posts:

• Why don’t analysts know what the “timing” is on this crisis?
• 2010 Could be very UGLY.
• Harvard Profs: This Crisis Is Not Over
• A must read! Roubini Says Carry Trades Fueling ‘Huge’ Asset Bubble
• Consider: Is unemployment a “leading” or a “lagging” economic indicator?

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