I made a new list today.THINGS THAT MIGHT HURT THE ECONOMY AND STOCK MARKET.--Rising unemployment.--Falling industrial production.--Rising inventories.--Record (and rising) individualdebt/equity ratio.--Record corporate debt/GDP ratio.--Record (and swiftly rising) Govt debt.--(Summarising the last three) Record overall public and private debt as a ratio to GDP. Precarious fundamentals in the credit structure.--Tightening bank commercial lending standards.--Record (and rising) trade deficit.--Record (and rising) current account deficit.--Completely unfundable future Govt. obligations including social security, Medicare, pensions, pension guarantees and the rest.--Record (and rising) personal and corporate bankruptcies.--High and rising Mortgage delinquencies.--Near-record bond defaults.--Rising credit card late payments.--Japan deteriorating so fast I finally gave up on my investments there.--German stock market down about 70%, along with big drops in stock markets around the world.--Consumer confidence plunging.--Falling sales except for cars, houses, etc. (funded by debt.)--High energy prices.--Wall St. scandals.--Falling dollar/rising gold.--Market valuations like 1929 before the crash.--Our current position on the Dow/Price-of-gold chart. (very scary)--A continuing tide of stifling Govt. regulation.--A possible trend towards rising tariffs.--Falling M3 money supply. (Started very recently) This indicates a developing liquidity trap.--Lack of economic response to low interest rates. (There is, of course, a response as always. It's just not showing up in the numbers becase the falling rates are being overwhelmed by other factors. Without the falling rates, we would likely be in a very severe recession already)--Signs of deflation popping up all over. Govts. and central banks impotently printing money to fight it. --China exports defeating manufacturing in all developed countries like Japan used to, only much more so.--The continued trend in outsourcing (overseas) of everything from auto components to programming.--Record low capacity utilization.--Falling real wages over the last few decades (this reduces demand)--Rising commodity prices.And then we have:THINGS THAT MIGHT HELP THE ECONOMY AND STOCK MARKET.--Low interest rates. (A dubious benefit because low rates exacerbate the already off-the-charts credit bubble)--Rising productivity. (Normal in recessions as people desperately try to hold on to their jobs)CONCLUSION.Why is no one panicking? Are my wife and I the only ones left in America not using mind-altering drugs? Just what are the annual sales of anti-depressants? Are they putting something in the coffee? (I don't drink it) This is what they call being in a recovery? This is what I call the most dangerous economic situation I have ever noticed. Has any major economy ever escaped from a situation like this without major upheavals? It looks like the coming Fall of Rome to me. While I am on the verge of retirement and not likely to be affected much, I feel sorry for the next couple of generations that will have to deal with this mess.Ed.
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