Its easy to get comfort from short term swings in the market. You can usually look at numbers and say this week is better than last week. In the short term, you can torture the numbers until they start to sing, but in the long term, the numbers cant be rationalized away. The longer term trends (last 7 to 10 years) are incredibly disturbing. We have built up all this "wealth" - not on productivity but on paper gains and borrowings and turned that around to buy consumer goods. Credit card debt and commercial real estate will be the next cards to fall and then the US could go into a sustained long-term recession. If home prices are falling, then its only a matter of time for commercial real estate to fall. Lenders were making commercial loans with the same zeal as the home lenders, creating rising prices. With a recession, businesses will pull back due to lower demand and those strip malls will start to fail and those new high rises will not be filled.
So, then the question is - what is going to bring us out of this recession/meltdown this time? I think we have to go back to actually producing things that the world wants (thats the only thing that makes sense to me). We have given up high paying manufacturing jobs for low paying service jobs over the past 15 years. I still maintain that this time it is different because the fundamentals of our balance sheet are so different from what they have ever been. hope i am wrong
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