Financial topics

[Trevor]

Many are doing everything they can to pay off their personal debts. Unfortunately, many have gone so far into debt that it's next to impossible to do so. It's a very difficult trap to get out of.

Our national debt, on the other hand, is continuing to skyrocket with no sign of it even slowing down, for all the talk of cutting spending.

[Higgenbotham]

Common theme of mine: "If (fill in the blank "person of influence") said it, it's automatically deemed true but if you said it, it needs to be proven.

Refuse to accept something as fact just because an authority figure, whether a professor, the Vatican, or politician, told you to believe it, and automatically many amongst the sheep will accuse one of pandering to conspiracy theories, even when one can present many facts that support one’s opposition view much more strongly than the widely accepted view.

Because universities are so focused on teaching us “what to think” instead of “how to think”, this dumbing down process...certainly humanity should strive to achieve creativity and foster critical thought in order to establish a more moral society and to root out corruption.

http://www.zerohedge.com/contributed/la ... heir-power

[John]

Total US Debt since 1950




http://www.pimco.com/EN/insights/pages/ ... -2012.aspx

Everyone is deleveraging -- except the U.S. government.

John

[Trevor]

in the last part of that graph, it almost looks like it's leveling off, although at 360 percent of GDP, that's still enormously high. I don't expect it to drop to any significant degree until there's a full-scale economic collapse.

Since Greece's 2-year bond yield have now gone up to 172 percent, I don't think that day is far off.

[Higgenbotham]

Fed figures.

http://research.stlouisfed.org/fredgraph.png?g=4kc

[Trevor]

Yep, and I'm noticing that it takes a very sharp corner during the 1990's, when the Baby Boomers were entering their peak earning years.

[Higgenbotham]

This is from an e-mail I sent Monday. It's interesting from a generational standpoint that the S&P 500 has nudged just slightly above the week's high point and turned lower this morning on a slew of bad news reports, and has so far followed the 1929/30 path timewise (out of the August crash low). Let's see what happens. As always, I am skeptical, but the news this morning isn't real great either. The piece that caught my greatest attention was a story that quoted Microsoft execs as having said 4th quarter PC sales declined even more than they expected. It's been my sense that the overall economic data will start to come in below expectations.

You can see the low was November 13, 1929.

The rebound out of that low topped April 16, 1930.

That rally out of the 1929 crash low was 5 months and 3 days long, and ended 3 days after the April 13, 1930 full moon.

A similar rebound out of the August 9 low would take the market up to January 12.

My expectation again is that things could get a bit more extreme.

[Trevor]

I admit, I've been looking at the DJIA instead of S&P, and it seems like the previous bubble started towards the end of 1923 and began to leak around 1929, so it lasted about 6 years. This one has lasted for about 16 years, and I'm wondering what kind of a difference that it'll end up making.

[Higgenbotham]

I admit, I've been looking at the DJIA instead of S&P, and it seems like the previous bubble started towards the end of 1923 and began to leak around 1929, so it lasted about 6 years. This one has lasted for about 16 years, and I'm wondering what kind of a difference that it'll end up making.

It should make a lot of difference, which I think is why we'll only see facets of the Great Depression repeat within much larger overall activity and any correlations will remain well hidden.

[Trevor]

what I'm wondering is if it means that the stock market will stay below trend value for an even longer period of time than the last bubble.