Since my return from holiday, I have been scratching my head wondering why the market (in this case the S&P) has moved so high for little or no reason. The economy still appears to be very much on the defensive with unemployment rising and the business environment still on a slippery slope.
I made this video before the stress test was announced and I suspect that all of the stress test leaks have already being discounted by the market.
Is it just me, or should we all apply for a bailout?
Every time I read, listen, or watch the news, the US government is bailing out someone and giving away more and more money.
When does it stop?
The U.S. Government is convinced it can spend its way out of this mess. This is same mess we spent our way into, so how could we possibly get out of it by spending even more money? I can't see the logic in that.
Here we are again, giving more and more money to Citi (NYSE_C) and Bank of America (NYSE_BAC). Didn't BAC just buy Merril Lynch and Countrywide ... and now they need even more money just to keep going.
Here's my take: rather than spend all this money (and we're talking trillions of dollars at this point), why not give all the small-businesses in America a serious tax break. Small businesses produce 80% of all the jobs in this country. Small businesses do a far better job and have a vested interest in getting it right. I am not so sure the Government has the same vested interest. Does anyone know for sure what happened to the first 350 billion dollars of the TARP money?
So, if we cut taxes for small business they will have more capital to invest, increase employment numbers and can become competitive again. I would also do away with capital gains. If we cut corporate taxes for small businesses and eliminate the capital gains tax, we could certainly slow down and turn this freight train back to more confident times.
What's also amazing to me is that we have the same players in charge, just in different uniforms. With all this talk about change and the need for experienced people, it may be possible that this is not the answer. Just look at what experienced people have gotten us into in the first place. We need some new ideas from people who have common sense and know that two and two is four.
I would really like to get your views on what you think could be a solution for the US economy. If you want to leave a comment, you're more than welcome to do so. We ask only one thing, that comments are not obscene or threatening to anyone.
Many people have drawn a parallel between the current economy and to the crash of 1929. I have been doing some research and I found that the crash of '29 lasted a little over 34 months. When the stock market reached its high on September 3, 1929, it basically went straight down with some minor rallies, but eventually put in its ultimate low on July 8, of 1932. That was 34 months later. If you think of the recent high in the stock market being on September 9, 2007, and you look at a bear market period of 30 to 34 months then you are looking at an absolute bottom in the stock market some time in 2010 and not 2009.
Trust, confidence, hope for the future: these are all the elements that are needed to drive the stock markets of the world higher. I believe that President-elect, Obama's job is an impossible task. Expectations for this President are way beyond belief. He may (or may not) fall short on promised solutions for all the economic and other challenges we face in the future. Only time will tell.
I think that the stock market is going to remain in a decidedly negative tone and expect that short-term rallies will be met with selling pressure. All of the old ways of valuing stocks through earnings, dividends, sales and so forth can be thrown out of the window for the next year and a half. What we're trading now is simply fear, frustration, and the destruction of value.
Let me know your comments.