Do you agree with Davidowitz?
Seems pretty bleak to me too. I’m trying hard to be an optimist, but it doesn’t seem like anything has improved, only gotten worse. In fact, California is now showing a 11.9% unemployment rate.
Even the supposed venerable and indestructible Los Angeles has an 11.6% rate and bulletproof Orange County has 9.2%. Those are all depression-era numbers when factoring in the
I agree with him 100%.
The fundamentals of the economy have not changed and we are worse off as far as budget and national deficit’s, and inflation. Any kind of bullishness on the overall American economy is bullishshit. On the flipside, Davidowitz is correct that there are some shiny spots in the markets, and always will be. Even between 1929-45 there were prosperous companies.
I am not endorsing any companies he has mentioned only because I have not researched any of them. I got back into the market in Jan. after a complete cash out in 2008. I am happy to say I have doubled my money, but am gearing up for a pullback. The govt. “stimulus” was likely to have a positive effect, but it was for the short term, and is delaying the inevitable. It wont be over until they quit propping up inefficient companies, printing money, and American’s start saving again.
I am just one person, but personally I believe that we are headed off another cliff before the end of 2009. I don’t see the red light yet, but the latest bull run is suspicious and can only be sustained for a little longer. If we have another surge in the markets in the next month or the Dow hits 10k, I’m out and hang on America, another bumpy road is ahead.
It’s a thought-provoking segment. I certainly agree with the general tenor that debt-financed U.S. consumerism has turned into an addiction that will be painful to break. The federal government has transferred the pain of that unsupportable debt from the private sector to the public. Private companies understood what bad shape they were in, and realized that the debt would destroy them. Once the debt is shifted to be public, the “owners” of the debt (ordinary people) don’t understand it and can’t conceptualize of numbers so large. It’s as if the debt vanished into some inexplicable hole in the ground. The housing bubble was a once-in-40-years opportunity to restore our bottom line to sanity, but we chickened out and put the reckoning off to another day. When that day comes it will just be all the worse.
That said, I did want to add that economists are famous for, as the saying goes, calling 13 of the last 7 recessions. Most people don’t make big purchasing decisions based on rational factors, they do it on impulse. That’s why marketing works. So if the psychology of consumers swings to the better, even if it’s completely unjustified by the fundamentals, the economy could really pick up. It’s a strange sort of self-evoking positive feedback.
We have a credit challenged society. With credit shrinking and credit worth borrowers shrinking, the economy has a very tough mountain to climb. It all needs lots of time to resolve. The question Davidowitz had was why the stock market has been going up. Basically, it is a rebound in wave structure which offset the severe drop we had. The decline will resume again, which will balance out his model.
Roubini asks a great question: countries have been borrowing and spending like mad – so how do they stop?
http://www.forbes.com/2009/08/.....ubini.html
The part that scares me most is not the consumer behavior – but that the country is ran similarly to how the average person runs their own finances. We want more than we can afford, and will beg borrow or steal to get what we want. (note: need and want are 2 very different things)
It seems like Californis has economic problem that go way beyond what is happening elsewhere