Best of the Week
Most Popular
1.BrExit House Prices Crash, Flat or Rally? UK Housing Market Affordability Crisis - Nadeem_Walayat
2.Stocks Bull Market Climbs Wall of Worry, Bubble? When Will it End? - Nadeem_Walayat
3.Gold Price Is Now On Its Way To All-Time Highs - Hubert_Moolman
4.Deutche Bank Stock Price Crash - The EU Has Problems Far Beyond the Brexit - Harry_Dent
5.UK interest Rate PANIC CUT! As Banks Prepare to Steal Customer Deposits - Nadeem_Walayat
6.Gold and Silver Bull Phase 1 : Final Impulse Dead Ahead - Plunger
7.Central Bankers Fighting An Unprecedented Global Economic Slowdown - Gordon_T_Long
8.Putin Hacking Hillary for Trump, Russia's Manchurian Candidate? - Nadeem_Walayat
9.Stock Market Insiders Are Secretly Selling, Cycle Top Next Month - Chris_Vermeulen
10.Gold Sector - Is it time to Back up the Truck? – Mortgage the Farm? - Peter_Degraaf
Free Silver
Last 7 days
Ignore Yellen and Buy the Dip in Precious Metals - 27th Aug 16
SPX Downtrend Should be Underway - 27th Aug 16
Unraveling the Secular Economic Stagnation Story - 27th Aug 16
The Precious Metals Sector and the Fed. . . - 27th Aug 16
Stock Market - All Is Calm, All Is Not Right - 27th Aug 16
Gold Junior Stocks Q2 2016 Fundamentals - 26th Aug 16
Buy Gold’s August Dip? Gold’s Monthly Sweet Spot In September - 26th Aug 16
The IMF’s Internal Audit Reveals Its Incompetence and Massive Rule Breaking - 26th Aug 16
Commodities Are the Best Bargain Now—Here’s What to Buy - 26th Aug 16
Why I Left Canada and Became A Citizen of the Dominican Republic - 26th Aug 16
The GLD vs GOLD - 26th Aug 16
Can Stocks Survive Without Stimulus? - 25th Aug 16
Why Putin Might Be on His Way Out - 25th Aug 16
Bond Guru Gary Shilling - The Bond Market Rally of a Lifetime - 25th Aug 16
A Zombie Financial System, Black Swans and a Gold Share Correction - 25th Aug 16
OPEC’s Output Freeze: What Has Changed Since Doha? - 25th Aug 16
Merkel Prepares For a Deliberate Crisis While White House Plans For a Disastrous Succession - 24th Aug 16
Suspicious Reversal in Gold Price - 23rd Aug 16
If Trump Can’t Pull Off a Victory, Expect a Civil War - 23rd Aug 16
Ceding ICANN and Internet Control to Globalists - 23rd Aug 16
How to Spot an Oversold Stock Market - 23rd Aug 16
Gerald Celente Sees Worst Market Crash, New Military Conflict, Gold Spike to $2,000/oz - 23rd Aug 16
EU Olympics Medals Table Propaganda Includes BrExit Britain - 22nd Aug 16
BrExit Win's Britain Olympics Success Freedom Dividend, Economy Next - 22nd Aug 16
Stock Market Top Forming, but Slowly - 22nd Aug 16
(Really) Alternative Banking Systems - 22nd Aug 16
Vauxhall Zafira Fires - Second Recall Issued - Inspection Before Bursting into Flames? - 21st Aug 16
Will the Stock Market Bubble Pop Regardless if the FED Never Raises Rates? - 21st Aug 16
US Government Spending - 3 Big Stories Not Being Covered – Part III - 21st Aug 16
Silver Analysis - 20th Aug 16
SPX New Highs, Correction Next? - 20th Aug 16
Housing Bubble - The Marginal Buyer Holds The Pin That Pops Every Asset Bubble - 20th Aug 16
Gold Miners Q2 2016 Fundamentals - 19th Aug 16
Which Price Ratio Matters Most in a Fiat Ponzi? - 19th Aug 16
Big Policies, Bigger Failures - 19th Aug 16
Higher Crude Oil’s Prices and USD/CAD - 19th Aug 16
Here’s Why You Should Look for Dividend Stocks and How - 19th Aug 16
Deglobalization Already Underway — 4 Technologies That Will Speed It Up - 19th Aug 16
These 6 Charts Show Why the Average American Is Fed Up - 18th Aug 16
SPX Easing Lower - 18th Aug 16
Low / Negative Interst Rate’s Legacy - 18th Aug 16
The 45th Anniversary of The Most Destructive Event In Modern Monetary History - 18th Aug 16
USDU - An Important Perspective on the US Dollar - 17th Aug 16
SPX Completes Wave 1 Decline - 17th Aug 16
How to Quickly Spot Common Fibonacci Ratios on a Chart - 17th Aug 16
When Does a Forecast Become a Trade? - 17th Aug 16
Kondratiev Wave - The Financial Winter Is Nearing! - 17th Aug 16
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" - 16th Aug 16
Stock Market Bears Turning Bullish At New All Time Highs - Time to Get Worried? - 15th Aug 16
Job Seekers Sacrificed to the Inflation Gods - 15th Aug 16
A Look At Commodities and Financial Markets Trading Week Ahead - 15th Aug 16
Stock Market New Top Forming? - 15th Aug 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

How to Trade Elliott Waves

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

© 2005-2016 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

Catching a Falling Financial Knife