Seems to me that when everyone starts to believe in something, that’s when it will all come crashing down very soon. Apparently people believe in the economic rebound. Which means that, like housing and the internet bubbles before it, the bubble of hope will grow and pop and things will get bad again.
This is all part of the same bubble in our economy.
We are in the midst of a long-term secular bear market that started with the internet bubble and moved into the sub-prime bubble.
We have a long way to go before we get out of this secular bear market.
Things look very similar to other secular bear markets of the past. You can have substantial cyclical bulls in that long term secular bear. This is what we are seeing.
For instance the number best year, the best 3 years, and the best 5 years for the stock market were in the 1930′s.
Recently the Fed has increased the adjusted monetary base 125%, but banks are still not lending.
Why? They are not lending because they know we have some bad times ahead with the option ARMs. Record foreclosures in the first quarter of 2010 and the option ARMs adjust later this year and next year. If there is no more housing crisis and the velocity of money picks up, we will have some nasty inflation. The Fed under Carter increased the Adjusted Monetary Base 12-13% and when he did interest went to about 20% and inflation went to over 20%…and that was 1/10th of the amount recently introduced today…
If we are in a recovery as some put it, why is unemployment still nearly 10%? Why is the U6 above 16%? U6 is unemployment and underemployment.
So let me sum this all up. We have some real issues yet ahead.
Peter Schiff Euro Pacific weekly Radio Show
You might want to listen to him
Peter Schiff was right off of youtube
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