Are We Out of the Woods?

2 months ago, everybody was saying the fundamentals would suck for at least another year. Now that there's a serious rally, people are saying the economy is recovering fast. Fundamentals, schmundamentals. If you look at things from a technical perspective, a massive rally was to be expected, followed by a long drawn-out slide to the previous lows, possibly lower. If the economy was as bad as everybody described it a few months ago, this is far from over. I can't wait until this guy get crushed by the downturn.

NO! We are only postponing the inevitable. Instead of deflating the bubble, we are only inflating it with new (government debt). I am not saying that the markets will crash this year (although they probably will), but it may take a few years or maybe even more. But when it all comes down, it will be BRUTAL!

"Out of the woods" implies improvement. At least to me it does. I don't think we'll see improvement for a while. But it does seem that we're ceased to be in free fall.

So we're all in agreement. This rally is a head fake.

Too bad our consensus isn't enough to get us an invite to one of Nouriel Roubini's parties. I'd love to see the wall vaginae for myself. (Note the proper plural form of vagina. Kinda makes me feel like a target school grad.)

It's the Obama rally baby.

Seems like confidence in the banks is returning. We might see 8000 again, but I think we're out of the dark days. Lots of attractive valuation out there, and if the herd mentality of 'not missing the rally' kicks in, we could be in for a nice little summer.

I'm bullish on America, baby

The way I see it, the leverage in the system has never really been flushed out. I has instead been shifted around from banks and such to the government. The massive budget deficits etc. show this clearly. The United States government is the largest corporation in the world and has trillions of dollars in deficits and unfunded liabilities for things such as healthcare and social security. Since the economy will not likely turn around for a long time, the government will need to raise taxes on individuals and corporations in order to pay off its trillions of dollars in debt. Higher taxes imposed on an already hungover economy will most likely do more harm than good.

Another worrisome thing is that the US continues to think it can pull money out of thin air by issuing debt. With the Chinese increasingly nervous about the state of the US economy and their call for a new global reserve currency, I can only see the US cost of debt in the future continue to increase to levels that will curtail its current ability to raise money to meet its under-funded obligations

Additionally, we have a serious threat for a serious uptick in inflation. Gasonline prices, despite the economic climate, are about $2.50 per gallon. Food prices remain buoyant and the cost of other essential goods and services remain high. With any sign of a slight improvement in the economy and with the amount of money in the economy, any uptick in the velocity of money will create a potentially crippling inflation scenario in which case people will be increasingly challenged to purchase basic necessities.

I know this sounds grim but it is important to try and prepare for a potentially bad scenario playing out. The government, media and Fed have been wrong all along on predicting what will play out in this crisis. In April of 2008 Bernanke stated in a testimony that the US will return to growth in the second halfof 2008 and 2009. That turned out to be pretty inaccurate. The stress tests were a bunch of BS as they failed to take into account a more dire scenario and didnt factor in other ticking time bombs such as commercial real estate and credit cards.

The media has a bias to act overly optimistic and forget about the important issues. If they expressed any sort of pessimisn they wouldnt have a job.

Yea i wrote that part hastily, you caught me with my pants around my ankles on that one. I do think they used too mild of a case though