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« ETF Update: Back to the Sideline | Main | Predicting Government Actions -- How You Can Profit »

May 31, 2010



I would agree this is not 2008. Now, there are no jobs being created. Millions have been thrown out of their houses, and they are mad. 48% of Americans say they are stressed with debt. Millions are underwater on their houses, maybe for a decade or more, there is no escape for the most part. USA has drastically increased it's debt, without proportional changes in future competitiveness. In fact the "take away" from the reckless spending is that recklessness is rewarded or at least made whole. A complete lack of trust of business, finance, and government has been generated. Contract law is now regularly violated.

So I agree, this is not 2008.

Mike C


I would point you to this piece in the context of asking your opinion on the political outcome since you have mentioned that forecasting likely political action is something you have strong expertise in

Here is the article from Barrons:

Here are the pertinent excerpts:

"But the boundaries of the old highs and the boundaries of the lows in the stock market and in the economy will be with us for a long time. If there were to be a decline in economic activity below the prior low, it would be intolerable, and central banks would print money again. The risk to that right now is that public sentiment has turned more negative about perceived bailouts. There is a lot of criticism about saving financial institutions and running a big budget deficit, but if the government didn't do those things we would be in a terrible situation. It will be impossible to stimulate that way in the future because politically it is untenable. That's a risk because, between now and 2012, the economy will probably go down again, and it will be important for monetary policy and fiscal policy to be able to be stimulative, and for the Federal Reserve to be able to purchase assets again.

Indulge me for a moment, and let's hypothesize that a 2nd leg down in the economy does materialize as Dalio believes (who incidentally has one hell of a track record).

How does the politics play out? Can we see a repeat of late 2008/early 2009 in terms of fiscal stimulus and monetary policy where the government and Fed can pretty much do whatever is necessary to once again put the brakes on any deflationary spiral. Or have the political winds changed with some of the Tea Party rhetoric and some of the trends out there (New Jersey comes to mind)?

Mariusz Skonieczny


Thanks for this post. The amount of volatility that we experienced in May was incredible. However, I am much more comfortable buying stocks now at these prices than I was a month ago. The panic is helping everyone to find good deals. I don't think we are seeing a repeat of 2008, but I think we could see more market declines.


The real world knows that MSM is worthless! The MSM will steer you where the Obama administration wants you to look.

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