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DynamicTrends.com
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DynamicTrends.com
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The Bear Market, Credit Crunch, |
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The markets closed early due to the holiday and had a bit of a bear market correction, as Black Friday kicked into high gear and the results so far are screaming out that we’re in trouble. Long lines have been reported at most retail outlets but most markedly at “discount“ stores such as Walmart. That tells me that people are scaling down, squeezed by record gas prices and weak credit, on the amount of money that they are spending. Rising gas and less home equity wealth mean that consumers have less expendable income this year. And what happens to those who’s mortgage payments are continuing to rise? Will they survive much past the shopping season? Some fund managers say that “in its knee jerk reaction to the sub prime crisis, the market may have overestimated the downside.“ DON’T YOU BELIEVE IT!. The Wall Street gurus tried the same thing about 6 weeks ago and its worked out badly for them. The market has already lost all of its 2007 gains (over 1000 points), since they spewed all that claptrap out. Prices are what they are, overblown! Credit is what it is, very tight. Oil is at record levels, and the battered US Dollar which has a tremendous supply in circulation, has gold spiraling up to its 1979-80 highs (It will definitely surpass that record easily by the end of the year)“A far more likely outlook is that the credit crunch will ease at some point in the near future.“ DON’T YOU BELIEVE IT!. Most of the sub prime loans that everybody is talking about, were made throughout 2006. A huge amount of resets on those sub prime loans are coming due in 2008, so expect the credit crunch to last until at least 2009. “The US has not seen a raft of overbuilding“. DON’T YOU BELIEVE IT!. There are a record number of homes for sale “in inventory“. Why do you think builders were giving huge discounts and incentives to reduce their inventories? And why are real estate prices still falling as fast and as steeply as they are? Readers, believe me when I tell you that we are only at the beginning of a bear market that will compare to what Japan went through between 1990 and 2003 (13 years), when the Nikkei index plunged 80 per cent. This isn’t a scare tactic, it’s a warning shot to tell you to begin protecting your assets. The S&P and Dow Jones Indexes have already lost all of their gains from all of 2007. (over 1000 points) Remember, the value of the dollar falls in relation to the amount of currency that is in circulation, which increases as rates are lowered. Here is a great example of inflation:
In 1970 Silver was $1.64 cents per ounce and Gasoline was $0.36 cents per gallon,
164/36 = 4.5 and in 2007 Silver is $14.73 and Gasoline is $3.19 14.73/3.19 = 4.6. In 2007 it costs $3.19 for a gallon of gasoline as opposed to$0.36 in 1970. That’s 8.86 times more. Does this illustrate inflation or what? The value of silver remained the same, You can still buy about 4.5 gallons of gas with one ounce of Silver, while gas has gone up 886% using dollars.
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