It's only a matter of time before the current market jeers turn to tears. As the markets head higher, more and more investors continue to pile money into the stock market in fears that the train is pulling away from the station.
As unsuspecting investors stand on the train tracks watching the caboose leave the station, behind them another train is getting ready to run over them.
This new locomotive has several rail cars attached to it;
1) Car 1: A $13 trillion dollar debt, and the White House said that the national debt would grow by $9 trillion over the next ten years, up from its previous forecast of $7 trillion.
2) Car 2: The Federal Reserve has monetized debt (printing money) to buy Treasury bonds and hold down interest rates.
3) Car 3: The stated unemployment rate is 9.7%, a 26-year high. Alternate calculation methods put the unemployment rate at 16-20%.
4) Car 4: Millions of Americans have lost their jobs, their homes, and their pensions.
5) Car 5: Commercial Real Estate is on the brink of collapse. Why? The consumer, who is 70% of the nations GDP is not, and cannot, spend enough to prop it up. High unemployment, stagnant or declining wages, will cause consumers to spend less. Eventually, commercial real estate will get hit as mall operators will have less cash to make their mortgage payments.
6) Car 6: Wall Street and the White House have hyped the temporary economic recovery as a sign of new bull market. The current economic downturn is far from over.
7) Car 7: Don't be fooled by intermittent blips of new economic activity, such as the cash-for-clunkers automobile giveaway program.
8) Car 8: Sooner or later more debt and money creation will fuel inflation and the Fed will no longer be able to hold down interest rates by buying bonds. Gold prices jumping over $1000 per ounce should be a wake up call.
9) Car 9: Corporate insiders are so excited about the markets new found life, that they are selling in mass.
10) Car 10: The rats are taking over the ship. Goldman Sachs paid out $11.4 billion in bonuses so far this year.
Health insurance companies (?), and the pharmaceutical industry spent between $100 million and $ 300 million to defeat healhcare reform in the 1990's. Can they do it again?
Now the Wall Street bankers (button pushers) are working overtime to rally the markets to get your mind off the one year anniversary of the stock market crash that lead to the demise of Lehman Brothers, Bear Stearns, AIG, Washington Mutual, Fannie Mae, Freddie Mac, Countrywide, Wachovia, and almost Merril Lynch.
See, the bankers know investors have a short memory. Throw investors a bone, and erase all painful memories. Oh Yeah! How about all those lost jobs? Can they make those go away quickly too? I don't think so.
Jeers if you take profits, tears if you don't.
