Month to Date Market Review: October 11, 2009

The crashes always happen in October. I bet we’ll have a market crash by the end of this month. The dollar will tank and inflation will start kicking in. I’m no expert, I’m just a shlub, but I do know that you can’t keep spending money that you don’t have and expect a good outcome.
Economics 101.

I see ZERO signs of recovery on main street and the real estate market. All that money being driven into the stock market is OUR TAX PAYER money that the banks are not landing back to us and using to boost their bottom line by investing in risky but paper savy financial instruments.

It is nothing but smoke and mirrors.

If you do not understand as an individual investor that you need to get out of the stock market NOW, you are deaf!

NONE of the fundamental regulation problems of stock market have been addressed. The consolidation game those TARP Banks have been playing is making the situation even more dangerous and fragile than it was a year ago.

But the good news is that POTUS played Basketball for TWO hours yesterday with recruited LeBron James and other lawmakers and cabinet members, on the converted White House tennis court.

Mr. Doyle (?)

I am an independent, Registered Investment Adviser with over 30 years experience in the financial markets and publisher of an investment newsletter now in its 8th year. You have provided an excellent analysis of our current economic/financial situation.

For almost forty years we in the US and western industrialized countries have gone on a spending/debt spree unheralded in history. As of today total debt in the US is more than four (4) times our annual GDP, NOT including the Unfunded Liabilities for Medicare – A, Hospitals; B, Physicians; and D, Prescriptions – and Social Security. The first thing you do when in a ditch is to stop digging. Unfortunately we have chosen to solve our problem of too much spend/borrow by spending and borrowing even more. It will not work.
These practices know no political party. All have practiced them. And all of us voters have been complicit in supporting them and our own particular government give-away program and/or tax loophole.

To my shame and many of us in the financial services industry, the major, too-big-to-fail Wall Street banks, aided and abetted by Bush and Obama, have capitalized profits and socialized losses onto us taxpayers now and into the future. What we need to do is take the hard medicine now to lessen the time and depth of the financial hard times. To postpone the day of reckoning will only continue and worsen the damage. We need to temporarily take over these financial behemoths and sell them off at prices that other entities can pay WITHOUT ANY GOVT BAILOUTS. In the future keep them regulated by a market that bankrupts them quickly and thoroughly for taking excessive risks with their own monies, not the taxpayers’. That’s what real capitalism is.

It will be difficult to cut back – start with a ten percent (10%) accross the board cuts on ALL government employees/elected officials’ salaries and retirement benefits and freeze pay levels and government expenditures for the next five years. Enact a $1.00 per gallon tax on all forms of energy that would be used for a real energy renewal program.

For investors, the simple plan is to put one baby-finger, 20%, of one’s investable assets in gold and silver. Such investments will serve one well in the coming currency crisis in the dollar. It might be very soon. Regardless of when, it will arrive and we will see gold at $2,300 and silver at $50 on/before 1 July 2013.

God Bless America and God Bless Us All.

I agree with everything you said.
Hey Government: I don’t care what party is in charge, just STOP SPENDING OUR MONEY!

I don’t foresee the spending to slow down, do you, Stay Alive? Your analysis makes perfect sense, but no one in office is LISTENING to logic and common sense.

I bought Swiss Francs a long time ago.

God Bless America and God help her.

StayAlive…

Thanks for your gracious comments. I do not disagree with your assessments, but do people fully appreciate it? I think not. The market mavens and Washington wizards consistently have people focus on the major market indexes as an indication of our overall economic health. As you so aptly point out, the support in those indexes is primarily a result of BORROWED money.

That money needs to be paid back. A very dangerous game indeed.

You can access all of my work via the Sense on Cents link located on the upper right of this page.

Thanks again.

“Tammy”,

Good move with the Swiss Francs. I first owned them in the early 70s when it was a 4:1 exchange, i.e., $0.25 each. Today they go for $0.9755.

Spending will only slow down when we have to, which is occurring in CA govt today since the tax revenues aren’t there. Problem is lack of longer-term policies/programs to rein in spending across the board and make investments in programs that have long-term benefits, e.g., real energy improvements, transportation/communication infrastructure, etc.

My biggest fear is that we will seek to solve our economic/financial problems through a war, as have most countries historically. I’ve been there, done that. Not a good solution.

In the mean time I continue to make monies for my clients, take care of my family, and sound-off on various blogs, letters-to-the-editor, and contact my elected reps. Can’t/won’t give up.

StayAlive:

The problem with Government is that they don’t fix the problems they created, they just add more to them.

Fannie and Freddie are STILL giving out dangerous loans. And what happened to the changes in mark to market? Nothing.

I don’t know what country you came from that had a war to solve this, but I hope you’re wrong about that happening here. I pray that you are wrong.

I just don’t understand why people are not waking up to this idiocy of spending!!!! Republicans and Democrats alike got us in to this mess, and I doubt they will get us out because they’re more concerned with their re-elections than they are the people they represent.

I want to throw them ALL out of office, bring in some accountants to open up all of the books, and start over so that we can fix the mess. But that’s just wishful thinking.

I’m glad you’re making money for your clients and family and I hope that your war prediction is wrong.

Oh, and Larry, thanks for the article! I wish it was emailed to every American.

Right on, French Nail! I’ve been trying to get my sis to unload her massive investments and she won’t do it. I guess her three kids won’t need college after all, as there won’t be any jobs for them.

I believe this is a deliberate move to destroy the economy. There is no other explanation for the actions of this current POTUS. Maybe this is what he meant about “transforming” the United States. Pretty soon the entire country will be at the mercy of the Government, because free markets will be gone.

And the government is “dribbling” as Rome burns…

Mr. Doyle,

Thank you for the link to your excellent site.

In your most recent posting you state:

“Prosecutors and jurists are looking for a few sacrificial lambs to feed the American public. It just so happens that Cioffi and Tannin present the first high profile opportunities to feed the wolves who have a voracious appetite…I would be willing to bet they present a defense which implicates a large part of the Wall Street fabric. The core of that fabric encompasses procedures which embrace a lack of transparency, truth, and integrity along with very little meaningful accountability or consequences meted out by regulators.”

I very much agree with you. I only wonder that we continue learning the same lessons over and over: 1930s, Richard Whitney five-term President of the NY Stock Exchange convicted of fraud and sent to Sing Sing Prison; 1960s/70s, Fred Carr & Robert Vesco of bankrupt International Overseas Investment Co; 1980s/90s, Ivan Boesky & Michael Milken of insider trading and ponzi junk bonds; and the 2000s, dot-com, Enron, Bear Stearns/Lehman phantom companies, naked short selling, and bogus mortgage derivatives.

This time the debt used to finance the greed and crookedness went too far and put the whole system at risk. All of this has been public knowledge around the world for years, if not decades. I think it was the speed of the collapse that caught most of the big players by surprise.

This time, IMO, the serious, world-class players – world’s top ten banks and governments – are calling in their markers and the debtors can’t pay up. What would you do if your debtor couldn’t/wouldn’t pay up? Confiscate their income generating assets and sell them off to the highest bidder? Rather hard to do when it comes to other countries, without wars. Next best thing is to sell the “stock” of the offending country, the currency of that country, and take in its place stable and/or income producing assets that are recognized and used around the world – gold, agricultural and energy proudcts, etc. That’s what China, et al, are doing and not so stealthly any more.

For Tammy, the last worldwide economic/financial chaos “solved” by war was WW II when the US replaced Britain as the primary monetary and military/industrial power. The long period after the war when America comprised over seventy percent of the world GDP and eighty percent of the stock markets was an aberration. Those days are over, never to return. Now at 24% of world GDP and 40% of world stock markets, we must continue to adapt to survive and thrive, just as the British did, and the French, Spanish, Romans, Greeks, and Chinese before them.

Plus ca change, Plus c’est la meme chose - the more things change, the more they stay the same. And always, Trust but Verify.

i guess that,the Market speculation about a potential further slide in the greenback would be inflationary.