Happy Days [aren't] Here Again!
So that I’m not accused of plagiarism, let me explain what I am pasting below. It comes directly from a recent Gerald Celente email I received as a subscriber to his Trends Journal. I want to impress upon you that I am generally not one to copy/paste paid material. But in this case, given the message, I will take the chance, because Celente communicates it as clearly and effectively as anyone. Even then, however, I am not going to paste the entire email. Instead, I will encourage you to consider a subscription yourself. That link will take you to the Trends Research Institute where you will learn everything about Celente and the Journal. Check it out.
Back to our post, let me start off by summarizing what Celente is talking about before I paste the most relevant portion of his email. In a nutshell, about 95% of the people out there are rejoicing and dancing in the streets because the market hit 10,000. Here is what Celente has to say about this:
But Dow 10,000, March 1999, is not the same as Dow 10,000, October 2009. Back then:
- United States unemployment was 4.2 percent. Now it’s 9.8 percent and rising.
- Oil traded around $16 per barrel. The prestigious Economist that now proclaims the Great Recession over, in 1999 predicted oil would fall to $5 and remain low for the foreseeable future. Oil is now trading above $78 a barrel.
- It took 91cents to buy one euro, today it costs almost $1.50.
- An ounce of gold cost $280 in 1999, today, $1050.
The Wall Street/media celebration of Dow 10,000 is unwarranted, deceptive and will prove destructive for those who make important decisions based upon so flimsy a pretext. Foreclosures are at an all time high, businesses go bankrupt, jobs continue to disappear. The dollar’s dive and gold’s historic high is no mirage. Gold doesn’t lie.
What 80 percent of economists call “Recovery” is a “Cover up.” Who do you believe? If you still believe the economists and The Economist who keep getting it wrong, the Trends Journal is not for you.
I think you get the picture. The bottom line is that there is virtually nothing substantial to warrant the current rally. Nothing has actually improved. In fact, things are considerably worse when you take into account all of the bail out money still sitting in vaults waiting to flood the market. Add to that the costs of continued as well as impending wars, welfare and social security coming due, and the dream of universal healthcare (among many other drains) and you have even less reason to smile.
We have not even begun to talk about the cry for a new reserve currency around the world, just about anything that China might do, and the perpetual powder keg that is the middle east which could explode at any moment. We are not even close to seeing the end of the real estate crisis as over 7,000,000 homes are still scheduled to be foreclosed on in the near future (see below), and when that happens there will be nothing left to hold back the commercial real estate collapse which could easily be the most devastating of all - a “final straw” of sorts leading to a whole new basket of rotten apples that the same 95% of the people who think, “We’re back, baby,” never dreamed of.
The point is, someone needs to explain why we are apparently coming out of the recession. There are virtually no legitimate reasons for it except that the DOW hit 10,000. That may be good enough for some of you, but it makes no sense. What does make sense is that, the DOW is very vulnerable to short term influence, and what we are seeing could very easily be the result of a White House and Media blitz designed to assure people that everything is OK. People’s perception has a huge influence on the markets, and I am betting that this is primarily what we are seeing.
The thing is, the majority of people are still not spending the money they used to, and for that matter, most don’t even have the money to spend to begin with. Unemployment is still a very scary stat to consider, foreclosures are no where near done with and the commercial real estate market effects are only now beginning to rear their ugly head.
So what we likely have here is what happens when the people with all the money and power - who happen to be the same people who got us into this mess and who are still trying to save their shirts (e.g. Wall Street, Washington, and the banks in general) - do everything they can to save a burning building. Their vast resources will indeed hold off the inevitable, and might even convince some people (again, only among the people with enough resources to make a difference) that things are “back in black” and so prop up the barn a bit longer, but that’s about all they can hope for.
I take that back. There is something more they can hope for, and that they are banking on, quite literally. Their ultimate hope may be to convince the people who have lost nearly everything that it’s safe to buy those new homes (tax credits), buy those cars (cash for clunkers) and use those credit cards, while facilitating the further indebtedness of not only the nation but the nation’s people. Hoping that bigger backyards, new car smell, and cool ipods will distract from unpayable mortgages, repo’d cars, and more credit card defaults, the powers that be hope to push the inevitable ends on to the next investment broker, the next administration, and the next bank president, while grabbing whatever profits and praise they can in the meantime.
But, whether the people wise up and just say no to deficit spending or the money finally runs dry (either through devaluing of the currency or red numbers in bank accounts), the spending and so-called “prosperity” simply cannot continue. The sad thing is that the higher-ups know this, and they rely on the apathy and lethargy of the masses to profit from it financially and socially. They realize that Americans today are but a wisp of what they once were. The elbow greasing, get-up-and-go mentality of the early years is all but gone thanks to the artery greasing, sit-down-and-watch-American Idle mentality of today’s American.
Ultimately, something’s got to give. We must look at more than the DOW to determine the state of the economy. The fundamentals simply don’t justify the numbers. Don’t be fooled.
Regarding the comment about the impending foreclosures, I was referring to this quote from Bloomberg which has stick with me like a stone in my shoe. It’s just one of the many indicators out there suggesting that we are still far from safely home.
Sept. 23 (Bloomberg) — The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said.
The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report.
