Considering the Impossibility
Posted by Frugal on March 6th, 2009
Everything is possible now with the unraveling speed of Wallstreet 700 trillion derivatives. Which of the following scenario may come true? Maybe all of them.
1. Dow at 3500 in 2011.
2. Gold at 5000 in 2016.
3. S&P 500 bottoms at 400.
4. The economic depression lasts more than 20 years until 2032/2033. This is not coming from me, but from the best economist that I know.
5. All major banks nationalized at 80% of more, with stocks trading at penny levels by the end of 2009, continuing to extract hundred of billions every quarter from taxpayers to cover their derivative losses. Why is there no one outraged by benefits going to all the counter parties of the banks? The losses of the banks are the gains for the counter parties of the banks, which are being paid by all the US taxpayers, and eventually by the entire world through monetization and inflation.
My “own crystal ball is showing” me that the stock markets will literally plummet another 50% to 60% in the second half of 2009, deflating everything until 2011, after which inflation gradually accelerates towards 2016, and wipes out all the cash holders. I predict in less than 15 years, there will be a hungry and unemployed mob rioting in the streets of Washington DC.
The other day, I donated more to Ron Paul’s calling on fighting against mis-using of taxpayers’ money. American Republic is becoming a farce of preferential money distribution. Although intellectually I believe that US will not come out of this unstoppable economic mess until wrecking itself, emotionally I must “do my part” of trying to turn things around. Who else will turn USA around, if everyone of us don’t stand up and fight together? There will be no one saving this country from even dire economic except us.
I understand that it sounds almost stupid to consider the impossibility of my little donation and my lonely voice will make any difference to the fate of this nation. But when I ask “who else” to myself, I think I might as well begin with myself, joining hands with Ron Paul’s campaign. I’m literally a “hopeless romantics”. But who says (my) love (for the nation) needs to be logical?
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March 6th, 2009 at 2:08 pm
dude
u need to get a break ;
u were suggesting a rally in the last post? and now u say new lows
March 6th, 2009 at 2:08 pm
dude
u need to get a break ;
u were suggesting a rally in the last post? and now u say new lows
March 6th, 2009 at 9:20 pm
If the best economist that you know is a convicted criminal who ran a ponzi scheme, I would be very worried too.
March 7th, 2009 at 8:10 am
Frugal,
I appreciate the post – you are right about the fact that the banks’ counterparties are teh big winners (John Mauldin points this out this week as well), but I think that the Armstrong post is alot of voodoo.
Economists talking about “omens” and “cycles” that peak at the first day they picked on the graph are advocating, not analyzing. His chaotic exegetical style is the kind of argumentation I would expect from the pulpit, where the priest is making a case based on faith, not facts, and whose answer is both predictable and known before he starts: trust Jesus (or whomever).
March 7th, 2009 at 11:59 am
any idea on the april 19 high/low?
- USD high
- DJIA, S&P, NASDAQ low
March 10th, 2009 at 10:42 am
I have to agree with other posters here… I, literally, read this blog for pure entertainment now. The author regularly crosses the line between informed economist and something almost akin to spiritual ‘faith’ based commentary. Save the faith for church and with discussion with your maker… here we need economic insight, not faith, especially nto faith in a convicted lunatic.
March 11th, 2009 at 11:22 am
I think everyone OVER estimates Americans patience with failure. We are a people not tradition bound. I think we’ll try one thing and if it doesn’t work we’ll try another and so on. America has a culture unique to the world. There is strong a undercurrent (thats been asleep for a while) of self sufficiency, risk taking and a willingness to be “un-conventional” ( I like to say that the US is a refuge for all the various weirdos of the world). I’m short term bearish but longer term, I think we’ll figure it out.
March 17th, 2009 at 3:53 pm
None of these scenarios are likely to happen, my guess is the Dow to 3500 would be the most likely of the three, which isn’t saying much. This global equity desecration of stock values is over-reactive, there are many good companies with strong earnings and clean balance sheets that have been treated as if they were Citi or AIG, these comapanies will gain market on weaker ones and their stock prices will turn around and likely see incredible gains, when will it happen? Who knows, most rational experts see the market bottoming later this year and rallying hard in late 2010.