Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Dangerous Financial Markets Confidence Game

Stock-Markets / Financial Markets 2010 Aug 02, 2010 - 08:47 AM GMT

By: Martin_D_Weiss

Stock-Markets

Best Financial Markets Analysis ArticleWe are near a major turn in markets and preparing landmark new recommendations this week. So I’m going to be very brief and get straight to the point:

Wall Street brokers and pundits seem to think their dangerous con game can prevail despite a major decline in the real economy.


Well, I have news for them: They may have lured a few investors into the recent stock market rally. But they’re certainly not convincing the hundreds of millions of consumers and businesspeople who have to deal with the worst housing depression, the highest long-term unemployment, and the most chronic credit squeeze ever recorded.

chart1 The Dangerous Game of Confidence

The proof?

First, look at consumer credit — one of the best barometers of consumers’ appetite for spending.

Compared to the prior year, new borrowing has now suffered its deepest plunge since World War II!

In fact, this is only the second time in the past 60 years that we’ve actually seen consumers borrow less than they’re paying back. The last time was in 1991; this time, the decline is more than TWICE as bad and lasting a lot longer.

What about the so-called recovery? Well, there was none whatsoever in consumer credit. It has continued plunging virtually nonstop.

chart2 The Dangerous Game of Confidence

Second, look at consumer confidence.

Every single survey — by the Conference Board, the University of Michigan, and others — confirm the same trend:

Consumer confidence plunged massively in 2008 and 2009 as the housing market collapsed.

Then, it rallied moderately with the Obama stimulus package.

And now, it’s suddenly suffering a new plunge … and that spells trouble for the entire U.S. economy.

Ditto for small businesses. The National Federation of Independent Business (NFIB) just reported that its optimism index plunged to a low of 81 in March of last year, enjoyed a moderate rally, and is now falling again! The main reason, according to NFIB, small business credit is in a DEEP RECESSION.

All this is very obvious to virtually everyone in America except the denizens of Wall Street.

Equally obvious, as I explained here last week, are the three main reasons for this great malaise:

Reason #1. The U.S. housing market is now locked into a chronic, long-term depression, with housing starts still in a disaster zone.

chart3 The Dangerous Game of Confidence

Beginning in January 2006, they suffered their worst plunge in recorded history — from an annual rate of 2.3 million to a meager 477,000 in April 2009. Thus …

In just three years, 79 percent of America’s largest industry, impacting more Americans than any other, was wiped away.

Then, despite a series of government agency programs to shore up the industry … plus $1.25 trillion poured in by the Fed to buy up mortgage-backed securities … plus a big tax credit for new homebuyers … housing starts perked up only a tad.

In fact, this recovery was so small, it retraced just 7.5 percent of the prior fall. In other words, even after massive government efforts and even at the highest point in their recovery this year, the housing industry recouped less than one-tenth of its historic three-year bust from 2006 to 2009.

Worse, the housing industry has now resumed its decline with housing starts falling sharply again!

chart4 The Dangerous Game of Confidence

Reason #2. Long-term unemployment in the United States is now the worst since the government began keeping records over 60 years ago.

A record 4.39 percent of the work force — or 46.2 percent of the unemployed — have been out of work for 27 weeks or more. That’s DOUBLE the worst level ever recorded and TRIPLE the peak level seen in five of the past six recessions.

Plus, on average, America’s unemployed have been out of work for 35.2 weeks, also the highest on record.

Reason #3. Most American consumers and business people clearly see all this in the real world. So they refuse to believe Wall Street b.s. and Washington propaganda. They are fed up and voting “NO” with their dollars each and every day.

My recommendation: You should be doing the same. Do NOT fall victim to the siren songs of those who would lure you back into the same kinds of stocks and bonds that torpedoed your portfolio last time.

Instead, act on the new, landmark recommendations my team is issuing this week.

Good luck and God bless!

Martin

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules