The Double Dip may come soon.


I read an article in the Financial Times by Robert Reich today.  Reich talks of a double dip but won’t say depression or even recession.  Reich blames consumers for not spending and companies for hording money.  But what he does not blame is the total collapse of the housing market and the inflationary gas prices that persist and seem to be what the administration wants to persist.

Wall Street is saying the same thing but their take is that traders are just scared to drop money in an economy they are unsure of.  But why are they unsure?

Margo Beller at CNBC filed this report.

Wall Street is having a hard time figuring out what to do now that the U.S. economy appears to be sputtering and yields are so low, Peter Yastrow, market strategist for Yastrow Origer, told CNBC.

“What we’ve got right now is almost near panic going on with money managers and people who are responsible for money,” he said. “They can not find a yield and you just don’t want to be putting your money into commodities or things that are punts that might work out or they might not depending on what happens with the economy.

“We need to find real yield and real returns on these assets. You see bad data, you see Treasurys rally, you see all bonds and all fixed-income rally and then the people who are betting against the U.S. economy start getting bearish on stocks. That’s a huge mistake.”

Stocks extended losses after the manufacturing fell below expectations in May and the private sector added only 38,000 jobs during the month.

“Interest rates are amazingly low and that, thanks to Ben Bernanke, is driving everything,” Yastrow said. “We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

“We have many, many homeowners that are totally underwater here and cannot get out from under. The technology frontier is limited right now. We definitely have an innovation slowdown and the economy’s gonna suffer.”

However, he said he wouldn’t sell stocks.

“Any bears out there better be careful because the dividend yields on these stocks look awesome relative to all the other investment vehicles out there,” Yastrow said. “So bears are going to have to find a new way to express their discontent with the U.S. economy.”

The economic downturn and persistent stall in the economy have taken the profit out of the stock market.  Job growth has slowed to a crawl.  As the report indicated many people are under water on their houses.

It is counterintuitive to say that in a market where housing prices are dropping like rocks we are going to experience a depression but look at the cycle.

Prices are rising and the interest rates are being held low by the feds who are just pumping money into the system.  This will create a negative trend on the dollar which will then cause more inflation.  This is a recipe for disaster and nobody is telling you.  Folks we have been led down this road for a reason.  The time for action is now.  Elect only people who will stand for you.  If they say they will work with the opposition boot them out.  The survival of our country as we once knew it is at risk.

P.S.  You can not blame Bush for what is happening right now.  This stall is a direct result of the reaction to the crisis by the Obama administration and the Federal reserve.

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1 Comment

Filed under Economy, Uncategorized

One response to “The Double Dip may come soon.

  1. MikeH

    Pity the forlorn homeowner.
    A 1% monthly devaluation of the most important investment
    of their lives and they STILL will NOT put the blame where it belongs.
    Yet, they still love that cheatin’ Barry Soetero.
    Maybe he’ll phone them tomorrow…like he said…
    or maybe the next day.

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