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Optimism About A Recovery Starting To Fizzle [The Worst Is Yet To Come?]
MSNBC ^ | August 17, 2009

Posted on 08/17/2009 11:55:13 AM PDT by Steelfish

Optimism about a recovery starting to fizzle Observers expect stocks’ rally to end as economic reality starts to set in

Aug. 17: As stocks see their biggest drop in more than a month, a CNBC panel discusses if this sell-off could be the beginning of a more significant market correction. CNBC

John W. Schoen Senior producer,msnbc

What happened to all the optimism?

Less than a week ago, many people were celebrating the beginning of the recovery. The Federal Reserve itself claimed the economy is “leveling out.”

Now some investors and market watchers say the stock market may have overestimated the prospects for an economic rebound — and share prices could be due for a bigger pullback after a 50 percent surge since March.

"The market has gotten way ahead of the reality on the ground,” Pimco's Mohamed El-Erian, co-chief executive officer of the largest bond fund manager in the world, told CNBC Friday. "We are yet to see a durable and sustainable recovery, but the market has gotten ahead of the process by pricing that in."

On Monday, some investors echoed those second thoughts, sending stocks 2 percent lower and stalling a rally that had pushed the market up 15 percent since mid-July.

The initial exuberance followed economic data over the past few weeks showing that one of the worst recessions since World War II many be ending. Job losses slowed in July. Many forecasters believe the U.S. Gross Domestic Product will likely turn positive again in the third quarter after steep declines since the recession began in Dec. 2007.

The relentless retreat of housing prices seems to be slowing. And massive infusions of government cash — the $787 billion economic stimulus package, the $700 billion bank bailout and the Federal Reserve's $1 trillion intervention in the financial markets —

(Excerpt) Read more at msnbc.msn.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: fizzle; optimism; thecomingdepression

1 posted on 08/17/2009 11:55:13 AM PDT by Steelfish
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To: Steelfish

“The Federal Reserve itself claimed the economy is “leveling out.” “

Yes, before the next leg down.


2 posted on 08/17/2009 11:57:57 AM PDT by givemELL (Does Taiwan Meet the Criteria to Qualify as an "Overseas Territory of the United States"? by Richar)
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To: Steelfish

The only people celebrating a “recovery” were the Obama administration and we all know how they tend to “mis-speak”


3 posted on 08/17/2009 11:58:18 AM PDT by NMEwithin
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To: Steelfish
Less than a week ago, many people were celebrating the beginning of the recovery.

MSNBC especially. They were practically victory dancing on their news desks. "It's just gone!" (to paraphrase on of their panel members about the recession).
4 posted on 08/17/2009 11:59:23 AM PDT by mmichaels1970
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To: Steelfish

Fantasy. The idea that we are gonna recover as of now needs to be added to the junkyard with the perfectly good clunkers.

Jobs & Debt. America hasn’t been stellar in producing private sector jobs this decade.

The worse is yet to come.


5 posted on 08/17/2009 11:59:25 AM PDT by BGHater (Insanity is voting for Republicans and expecting Conservatism.)
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To: Steelfish

I have seen speculation that the runup in stock prices has been fueled primarily by the investment banks with money from the TARP. If that’s true and small investors entered the market with the expectation this was a true rally instead of a govt funded bubble they’re in for a real surprise.


6 posted on 08/17/2009 11:59:53 AM PDT by saganite (What would Sully do?)
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To: Steelfish

EXACTLY as predicted as far back as last winter....

A slight increase in economic activity, that the media would try and trumpet for the glory of Obama, even when every indicator says otherwise, followed by a SHARP fall off in late-September, early October. There is NOTHING holding up our economy at this point except GOVERNMENT SPENDING.

We aren’t anywhere NEAR the bottom of thing. It’s going to get worse, before it gets a WHOLE HELLUVA LOT WORSE!


7 posted on 08/17/2009 12:01:23 PM PDT by tcrlaf ("Hope" is the most Evil of all Evils"-Neitzsche)
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To: Steelfish

“”The market has gotten way ahead of the reality on the ground,” “

Ya think!

I don’t understand what’s kept the market afloat. Socialism is bad ju ju for free markets to prosper. I expect things to get worse if we don’t turn this out of control federal spending around. It’s not enough to stop health care, bailouts and such. We actually must start SHRINKING the size and scope of the federal government. We’ve already taken on enough to sink this ship, any more just assures it will sink faster.


8 posted on 08/17/2009 12:03:13 PM PDT by precisionshootist
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To: Steelfish

>What happened to all the optimism?
The Federal Reserve itself claimed the economy is “leveling out.”

Something like getting smacked in the face with a cold wet reality fish called record unemployment claims, lousy jobs data, and poor retail sales...


9 posted on 08/17/2009 12:05:04 PM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: BGHater

“America hasn’t been stellar in producing private sector jobs this decade.”

Actually for a lot longer than that.

The lesson here is that EVERYTHING comes from just two sources of wealth creation, manufacturing or mining, BOTH of which the Democrats have spent 3 decades trying to destroy in the name of the planet.

If you want an example of how Democrat feel-good legislation can kill jobs, look no further than the American lightbulb industry, with 35,000+ mostly union jobs lost since the bill passed that bans incandescent light bulbs...


10 posted on 08/17/2009 12:06:08 PM PDT by tcrlaf ("Hope" is the most Evil of all Evils"-Neitzsche)
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To: saganite

>if small investors entered the market with the expectation this was a true rally instead of a govt funded bubble they’re in for a real surprise...

Maybe not - they can sell and take profit from their buys at their low points.


11 posted on 08/17/2009 12:07:11 PM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: bill1952

Small investors, usually 401K or IRA account holders, tend to get in on the rally late and hang on too long. Perfect pigeons for something like this.


12 posted on 08/17/2009 12:11:08 PM PDT by saganite (What would Sully do?)
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To: BGHater

Agreed...the fundamentals for a sound recover for the economy do not exist at this time.


13 posted on 08/17/2009 12:11:29 PM PDT by RSmithOpt (Liberalism: Highway to Hell)
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To: NMEwithin

Indeed their attempted intervention may actually be further harming the economy.


14 posted on 08/17/2009 12:11:37 PM PDT by AEMILIUS PAULUS (It is a shame that when these people give a riot)
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To: tcrlaf

“The lesson here is that EVERYTHING comes from just two sources of wealth creation, manufacturing or mining, BOTH of which the Democrats have spent 3 decades trying to destroy in the name of the planet.”

100% correct!!

I especially love the wealth creating “Cash for Clunkers” program. Creating wealth by smashing things! Hell lets just smash all cars that are over a year old and not of green nature. We’ll be rich!!

These people are truly nuts! Anyone that follows them is even more nuts.


15 posted on 08/17/2009 12:11:39 PM PDT by precisionshootist
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To: saganite
re: I have seen speculation that the runup in stock prices has been fueled primarily by the investment banks with money from the TARP.)))

Read same thing. But I hope the banks made some money, at least, and can use it to pay back some of the TARP!

16 posted on 08/17/2009 12:13:34 PM PDT by Mamzelle (bring your cameras to all political gatherings--video if you can)
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To: saganite

Good point - I would never stash equities in such places in this economy...


17 posted on 08/17/2009 12:13:46 PM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: Steelfish

18 posted on 08/17/2009 12:14:31 PM PDT by ari-freedom (Obama acted stupidly...and that's after knowing all the facts.)
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To: Steelfish

"I'm not surprised."

19 posted on 08/17/2009 12:15:46 PM PDT by jiggyboy (Ten per cent of poll respondents are either lying or insane)
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To: precisionshootist

It’s not just the spending but how it’s being spent. FDR built dams. Eisenhower built the interstate highway. Obama fixes potholes.


20 posted on 08/17/2009 12:18:35 PM PDT by ari-freedom (Obama acted stupidly...and that's after knowing all the facts.)
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To: Steelfish
WHERE"S MY GREEN SHOOTS! I WAS PROMISE GREEN SHOOTS!

21 posted on 08/17/2009 12:20:39 PM PDT by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: Steelfish
Notice the rally before the crash...

22 posted on 08/17/2009 12:26:38 PM PDT by TSgt (I long for Norman Rockwell's America.)
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To: ari-freedom
FDR = misguided American
Obama = America Hating Marxist

That sums it up in my opinion!

23 posted on 08/17/2009 12:27:39 PM PDT by precisionshootist
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To: Mamzelle

If there is no value in the market then those bankers are “making money” off the backs of naive investors.


24 posted on 08/17/2009 12:29:13 PM PDT by saganite (What would Sully do?)
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To: Steelfish

Face it...the big money on the left was inflating the market long enough to try to ram health care through. They can’t keep it up forever.


25 posted on 08/17/2009 12:31:46 PM PDT by ez ("Abashed the devil stood and felt how awful goodness is." - Milton)
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To: tcrlaf

Speaking of ‘wealth’.
Discuss....
The current situation is due to an emphasis on ‘value capture’. (Or Stealing From Each Other) Wall Street, Government, F.I.R.E. economy taking value from one but not returning value to producer. Eventually, like a ponzi scheme, you run out of other people’s money.
The real method of producing ‘wealth’ is ‘value creation’.
(or making something valuable and trading it for equal value) REAL ‘spreading the wealth’. All sides win! Labor, raw materials, capital equal productivity noone looses.
If you apply these hypothesis to economic principles, could you answer the problems in our current dilema?
Could the ‘Free Market’ function again if the directive was to ‘create value’?


26 posted on 08/17/2009 12:33:46 PM PDT by griswold3
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To: Steelfish

Is there a treasury auction soon? Seems each time there is one, the market goes down and everyone rushes to ‘secure’ Treasuries!


27 posted on 08/17/2009 12:35:20 PM PDT by griswold3
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To: tcrlaf

What about agriculture?


28 posted on 08/17/2009 12:58:53 PM PDT by I-ambush (I didn't think, I never dreamed, that I would be around to see it all come true-McCartney and Wings)
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