This market is long over due for a correction.
By Daniel at 23 January, 2010, 6:17 pm
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Household demand is primarily dependent on current and expected near-term income. Investment demand by firms, however, is based heavily on the state of long-term expectations. The two are interrelated, to be sure. So if real wages are stagnant, people do not have money to spend so firms are trapped not knowing what to invest in for the future. The only thing they can do to stay afloat is cut more jobs, and cut workers hours. When the cash flows from operations of a business are not sufficient to fulfill either the repayment of principle or the interest due on outstanding debts, they borrow more money to pay or file for bankruptcy. With the most generous bailout in human history, that did not happen in 2008. We allowed companies who should have failed to stay alive. The longer this government refuses to break the TBTF banks, supports GSE’s, lies to the American people, the longer it will take for real confidence to return to markets. We will continue down the vicious cycle of government having to continually “roll over” debt obligations and issue new debt to meet commitments on maturing debt. One giant ponzi scheme and more failed economic policy pushed by Obama and Geithner.
This could come true: The next economic perfect storm - should start mid February 2010
- ImpendingDoom
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