Best of the Week
Most Popular
1.Will UK Interest Rate Rises Crash House Prices? - Nadeem_Walayat
2.Full on Crash Alert for Major World Stock Markets... - Clive_Maund
3.Gold And Silver Market Bottoming? Big Rally Imminent? Reality Check Says NO - Michael_Noonan
4.The Coming Silver Price Rally Will Outperform All Previous Ones - Hubert_Moolman
5.The Trigger For The Upcoming Stock Crash - Harry_Dent
6.Imploding Department Store Results - James_Quinn
7.Dr. Copper is Speaking, are you Listening? ... - Rambus_Chartology
8.Pandemonium in the Stock Market, Dow falls 1,000 points in a week - EWI
9.Asia's Whirling Dervish of Devaluations Has Encircled China's Exports - Keith_Hilden
10.China Weakens the Yuan; Rattles Global Stock and Financial Markets - Gary_Dorsch
Last 5 days
Stock Market Return to Crisis: Things Keep Getting Worse - 3rd Sept 15
Dow Theory Stock Market Sell Signal Examined - 3rd Sept 15
How OPEC’s Attempt to Save Face Affects the Crude Oil Market - 3rd Sept 15
Crude Oil Price Forecast 2015 and 2016 - Video - 3rd Sept 15
The Real Threat from China’s Stock Market Crash - 2nd Sept 15
How Our “Mixed Economy” Created These Mixed-Up Markets - 2nd Sept 15
'Gravity' Is Returning to Stocks and Bond Markets - 2nd Sept 15
OPEC Divorce And Self-Destruction Thanks To Saudi Crude Oil Strategy? - 1st Sept 15
The Beginning Of A New Financial / Stock Market Cycle - 1st Sept 15
Three Things Every Master Trader Knows About Trading Options - 1st Sept 15
Chinese Yuan Revolution? - 1st Sept 15
Take Advantage of Record-High Auto Sales… Before This Bubble Bursts - 1st Sept 15
Pondering Hitler's Legacy - 1st Sept 15
Mainstream Media Goes Berserk - 1st Sept 15
Your Decisive Stock Market Plan to Follow Whilst Most Investors Shiver With Fear - 1st Sept 15
Are There Stock and Financial Markets Investing Opportunities For The Remainder Of 2015 - 1st Sept 15
Crude Oil Price Forecast 2015 and 2016 - 1st Sept 15
REPO Window Hidden $Trillion QE Monthly Volume - 31st Aug 15
Silver and Warnings From Exponential Markets - 31st Aug 15
Stock Market Calls Fed’s Bluff - 31st Aug 15
Why Some ETFs Led the Stock Markets Down Last Week - 31st Aug 15
Stock Market Collapse - Take The Opportunity To Bail Before It’s Too Late! - 31st Aug 15
The Most Important Market Chart on The Planet - 31st Aug 15
Stock Market 50% Retracement - 31st Aug 15
Stock Market Crash Red Alert for 2nd Downwave... - 31st Aug 15
Independant Scotland 1 Year on, UK Civil War If the SNP Fanatics Had Succeeded - 30th Aug 15
Gold’s 7 Point Broadening Top - 30th Aug 15
The Day the Stock Market Shook the Earth: Takeaways From the Dow’s 1,000-Point Drop - 30th Aug 15
Gold Price Rally Marked by Short Covering - 30th Aug 15
Aging Stocks Bull Market - 29th Aug 15
Economic Destabilization, Financial Meltdown and the Rigging of the Shanghai Stock Market? - 29th Aug 15
The Stocks You Should Be Buying After the Market Drop - 29th Aug 15
How I Learned to Stop Worrying and Love Market Fluctuations - 28th Aug 15
China's Yuan Devaluation: Why It Was "Expected" - 28th Aug 15
Stocks Go Nuts But the Question Remains – Will the Rally Stick? - 28th Aug 15
Fed’s Stock Market Levitation is Failing - 28th Aug 15
The Eight Energy Systems Driving The Stock Market Rout - 28th Aug 15
Silver Sold, then Squeezed - 28th Aug 15
U.S. Economic Fundamentals 'Look Good' - Bullard of St. Louis Fed - 28th Aug 15
Stock Market Margin Calls Mount - 28th Aug 15
Einstein, Physics, Gold and The Formula To End Economic Decay - 28th Aug 15
The 10 Best Stocks for Options Trading Plays in This Market - 28th Aug 15
Economics of a Stock Market Crash - 28th Aug 15
Currency Wars Detonate; Gold Refuses to Budge - 28th Aug 15
UK Immigration Crisis Hits New Record, Trending Towards Becoming a Catastrophe - 28th Aug 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Stocks Slide

The Crumbling U.S. Economy, Worse is Yet to Come

Economics / Recession 2008 - 2010 Oct 19, 2008 - 06:48 PM GMT

By: Money_and_Markets

Economics

The Crumbling U.S. Economy, Worse is Yet to Come

Best Financial Markets Analysis ArticleMike Larson writes: I invest prudently to help ensure the future financial well-being of my wife and two daughters. And Martin, who visited us recently, shares the same philosophy.

But when future history books are written on the twenty-first century, they will probably show that this time — right now — was the most dangerous for investors in decades.


Just look at what's happened in the last ten days.

We've seen the U.S. government throwing money at the credit crisis with wild abandon — cranking up the total cost and potential liability of fighting this disaster to more than $2.5 trillion.

We've seen endless “happy talk” from President George Bush, Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson, declaring that their latest schemes really will “end the credit crisis once and for all.”

But all their efforts are already backfiring: The fear of huge bond supplies to finance this folly is driving up interest rates on Treasury bonds. And as I showed you on Friday, that's sending mortgage rates through the roof, threatening to sabotage the entire bailout plan.

Meanwhile, nearly the entire economy is crumbling.

I wish I didn't have to sound so bearish. No one wants to see workers thrown out on the street, millions of Americans suffer through deep recession, or stocks fall out of bed. But the fundamentals at the heart of this crisis are not improving. To the contrary; they're signaling one of the worst Octobers on record.

Just take a look at last week's pile-up of dismal news announcements (along with my view on each) …

First , the National Association of Home Builders announced that October has been the cruelest month ever for the housing industry. The group's index, which measures home sales and buyer traffic, has just fallen to the worst levels in its 23-year history.

My view: A lasting recovery in construction activity, sales, and home prices remains many, many months away.

Second, the U.S. Department of Labor reported that 3.7 million Americans are now receiving unemployment benefits — the most in more than five years.

My view: The broad economy is behaving like the Titanic, and these job losses could be just the tip of the iceberg.

Third, U.S. industrial production cratered 2.8% in September — more than three times the decline that was expected and the single-worst reading in any month going back to 1974.

My view: This is the first hard data confirming what we've suspected all along — that this recession could be at least as bad as the 1974-75 recession, which was the deepest since the Great Depression.

Fourth, housing starts plunged a staggering 6.3% in September. Worse, applications for construction permits — a solid indication of how housing starts will fare this month — crashed 8.3%. Single-family home construction is now running at levels we haven't seen in 26 years!

My view: The housing market is still on the ropes. Commercial real estate is getting killed. Lenders are shutting down their operations. The only good news is that home prices are falling so far so fast, there is now some hope that homes will be affordable again in the not-too-distant future.

Fifth, consumer confidence just suffered its steepest monthly drop in history. The Reuters/University of Michigan Surveys of Consumers said its confidence index plummeted from 70.3 all the way down to 57.5 in one fell swoop.

My view: This is frightening. But it should come as no surprise to our readers: It goes hand in hand with the “blackest of Black Octobers” that I warned you about last month.

Ignore the Washington and Wall Street Spin.
These Powerful Economic Forces Are Screaming,
“THE WORST IS STILL AHEAD!”

As long as the forces that drive the economy and the stock market continue to fall so steeply and deeply, almost any stock you own or buy now is a potential time-bomb that can sink your portfolio.

There are exceptions, of course. And if you or your money manager know how to hedge against downside risk, that's another alternative.

But I will repeat what I said at the outset: This is a dangerous time for investors. So my recommendations are as follows:

  • Ignore the spin coming from on high. It's just noise. It won't make a bit of difference.
  • Don't be fooled by rallies in the stock market. They're little more than mirages based on fantasy. The bigger they are the better the selling opportunity.
  • If you want to protect your family as much as I want to protect mine, you'll get your money to safety. The more the better.

Until next time,

Mike

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 .

Money and Markets Archive

© 2005-2015 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

Biggest Debt Bomb in History