Replies

before the doom and gloom gets out of control, look at the sequence of events that occurs with a normal economic recovery:

Guys like Celeste simply ignore all of the indicators that precede EVERY recovery: stock market up, basic materials prices up, rising industrial production, falling employment losses, corp profits improving, steep yield curve, declining credit spreads, deflation stopped.

Some industries recover faster than others. The normal sequence is high PE multiple tech (AMZN, GOOG, APPL, EBAY), then financials, then retail housing and autos, then low PE tech (IBM, INTC), then paper and chemicals...etc etc (this is explained really well in Jim Cramer’s “Real Money”, and if you don’t believe him you can go back and look at the quarterly reports for these companies yourself and see that the relative timing here is correct).

I still say this economic recovery is unfolding as normal. If you don’t trust government statistics, look at corporate earnings. High PE multiple tech leads the cycle. All of AMZN, GOOG, AAPL, EBAY exceeded expectations. More importantly, they were UP year over year in revenues and profits (except EBAY).

Year-over-year revenue growth would not be possible for any company if the doom laden scenarios of Celeste etc. were real.

One other point, if we get a normal economic recovery, and less inflation than the 1970’s, then gold is going to crash. Anyone with more than 5-10% precious metals is risking huge losses.

The stock market is up because it is presently pumped full of phony government fiat currency, driven by monstrous banks (CITI, BAC) that still have billions of dollars of worthless garbage for assets, backed up by near-zero-interest loans from the US government, which instead of lending out themselves, they are leveraging into equities to generate daily commissions for the big brokerage houses. In turn, stock prices have been bid up to absurd levels (P/E over 160) amidst the illusion of liquidity.

At the same time, there are zero, none, NADA private sector jobs being created outside of the make-work union gubmint variety. Private credit demand is not merely declining - it is crashing, while huge numbers of commercial and residential ARM's are about to reset - at much higher rates. Good luck with that. If you really think our economy is about to improve, you're in for a deep shock: it's not even close to hitting bottom.

Do yourself a favor - don't listen to stock-pumpers like Cramer - he's selling product, not reality. The only thing propping up the last table leg right now are artificially low interest rates and an (also) intentionally suppressed US dollar. The Fed can't keep it up forever. When short term-rates creep back up and the dollar rises: look out - the whole house of cards comes down. "Extend and pretend" only works for so long. America won't recover fully until we get back to having sound money, transparent business practices, low corporate taxes and fair trade practices.