Do not equate what the market does to the Depression we are in.

During the depression, those with money to invest “wisely” came out billionaires.

We face several years of high unemployment.

During the Bush years, a rising stock market wasn’t helping most people who, even though they had jobs, saw their buying power eroded.

If you adjust the DOW for inflation, it never reached the 2000 peak.

But, worse, when adjusted for real CPI calculated the very same way we had always calculated before the started playing games with it to keep wages and entitlement payments down, we didn’t have a single full year that had a positive GDP. Even with the bubble there were only a few quarters that peaked above zero.

The DOW can go to 50,000 and we could still be in a depression if the dollar keeps falling. We can’t grow or tax out of the mess we are in so, how can anyone say we avoided anything. We may have delayed it and be in the eye of the perfect storm but, we are definitely still in the storm.

More companies are closing and/or leaving the U.S. Even Microsoft says they will have to leave if the Obama policies are passed. Alcoa has said it will have to move to Iceland to get away from the rise in electricity prices it will see here if cap and trade passes.

We already have oil companies moving to Switzerland but, their stocks, Microsoft and Alcoa, will still trade on our exchanges and make the market rise. It will rise even faster if foreign earnings are being converted into lower value dollars.

The stock market and the economy have a relationship but, at times it is very fickle like in the 70’s when many made a lot of money in the market while the actual value of it fell when adjusted for inflation.

See chart here.

http://www.dogsofthedow.com/dow1925cpilog.htm

A ton of buying power was lost in the 70’s.

It will take 5 to 10 years for consumers and corporations to get debt under control. Profits have fallen so much that tax receipts from corporations are down 57% since last June. That means we need over 100% growth in earnings to just get back to where we were when we are still sinking. (yes, I know, less fast, but still sinking).

The default rate on business for one company that deals with them has doubled to 56%.

quote:
July 20 (Bloomberg) — Advanta Corp., the credit-card company that cut off almost 1 million small-business accounts after posting three quarterly losses, said the default rate more than doubled in June from May to 56.95 percent.

Excuse me? 57% delinquent credit cards among small business? You mean to tell me that nearly six out of ten small business accounts can’t pay their bills? This is bullish? Small business provide the bulk of job and economic growth - how are they going to do that when 6 out of 10 can’t pay their credit card bills?

http://market-ticker.denninger.net/archives/1241-More-30%25-Trouble.html

If you really want to know how things are going, turn off the TV and read Denninger and Financial Sense and some of the other sites with authors that are beholding to the banks and government shills and puppet-masters.

But, yes, the market can go up, especially if there is a emerging market bull market and recovery with or without our economy.

JanPaul

Related Posts:

• Bernanke believes inflation is the solution for the depression.
• The numbers from JPM:
• The market isn’t the economy.
• Most people can’t get a handle on the difference between value and price.
• Are you ready to experience the mortgage buying effect?

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