We are still far too arrogant in our hopes for a solid recovery.
By Daniel at 5 January, 2010, 11:42 pm
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I see a rallying stock market, but I also see:
small business owners continuing to lay off and close up shop in our area
new businesses going out of business within a few months
foreclosures are gaining speed
residential real estate sales are absolutely stalled, with more inventory coming onto the market (I know and talk to several very senior real estate professionals)
malls and even now the discount stores are ghost towns
hotel and motel lots have mere handfuls of cars in them
neighbors have no vacation plans for warmer climates
kids’ sports activities are being cut way back
eating out is being cut
80% markdowns are back at the outlets
recent (1/4/10) property assessments showed tax values had DECREASED 32-36% — and this is not Las Vegas!!
power company SHARPLY INCREASING rates as there are so many vacant properties, and fewer customers to pay their bills
In this article, Global bear rally will deflate as Japan leads world in sovereign bond crisis, there is a lot of pessimism and the scenario is quite concerning.
In summary:
- The contraction of M3 money in the US and Europe will puncture economic recovery
- The surplus regions have not increased demand enough to compensate deficit countries. The vast East-West imbalances that caused the credit crisis are no better a year later.
- The fiscal blitz has merely shifted the debt burden onto sovereign shoulders
- There is a global excess capacity; bonds will slither back down in a deflation scare.
- Weak sovereigns will buckle. Debt service costs will tear the budget to pieces.
- Japan will flip from deflation to hyperinflation.
- China too will be in a quandary. It will make as big a hash of this as Western central banks did in 2007-2008.
- Ugly loan books will set off wave two of Europe’s banking woes. The North-South split has gone beyond the point of no return for a currency union.
- The dollar rally will gather pace.
- GreenMom
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