The market isn’t the economy.

Remember how the market went up for a few years in the depression? Remember all the rallies in Japan over the last 20 years?

The U.S. economy can (not saying when) go totally in the toilet and the markets be up or flat if the foreign earnings converted to dollars is up due to devalued dollars.

We still have the obligations of the trust funds to deal with. We still will have to deal with paying for a national health care plan. We will still have debt in households, cities, states and corporations that will take years to get under control. We still have to get use to consumers spending about 11% less than they did when they were 70% of GDP due to spending more than their income due to debt.

We still face the falling dollar and rising deficits that we can’t reduce even by 1/2 now that unemployment has passed what those projections were based on. Don’t confuse a market recovery based on the appearance that Asia is recovering and commodity nations to mean that we will necessarily turn our economy around, or if we do, not for long.

We have systemic problems many nations don’t have and they aren’t going away until we get reforms in our monetary and economic and trade and other policies. We have to reform how we fund social security as it will be going cash flow negative this year or next. Medicare already is cash flow negative and forcing us to borrow more for that short fall until we get our healthcare system reformed.

We are still increasing debt by more than there is money to lend us and the CBO says that will quadruple interest payments and that will totally devastate tax revenues we need for other spending and even if you taxed the wealthy 100%, it wouldn’t even come close to being enough.

–Jan

Related Posts:

• Let’s see, that passing of the crisis would be in 2020? 2030?
• While we are in a depression, don’t confuse that with what the market will do.
• Do not equate what the market does to the Depression we are in.
• 2009 Will Be Interesting For Stock Market
• How do you have a bottom if the consumer still hasn’t fully realized what has happened?

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