One thing for sure, the economy and markets have been fighting gravity pretty hard. This crisis and downturn are going very slowly. Maybe it's a combination of safties built in or something that has changed behavior enough-- like antidepressants and anti-anxiety drugs.
Will there be more bank failures in the next couple of years, probably? But it will pale in comparison to the late 80s and early 90s when over 1500+ banks failed.
I am always amazed at the doom and gloom portrayed in the news media, including CNBC. Don't people remember previous market downturns. I wasn't around for the depression, but the 70s was no piece of cake with gas lines, double-digit interest and inflation. Yet today with 5.5% unemployment, 6% 30 year mortgage loans, and only 1% of the 100M+ homes in foreclosure, everybody thinks this is the end of life as we know it.
In 6 to 12 months, the stock market will rebound, housing prices will start to climb, gas prices will be around $3 a gallon, and life will go on.
Moreover, how many banks do we have now? More than 1500, even? I think there has been some consolidation.
I lived through the 70s, too. I was in the gas lines. But are we talking about the beginning of a crisis here, or one that's under way?
Yes, it might end, but I don't see how it could with all the debt that needs to be worked out of the system. Getting rid of that public and private debt would be the end of life as we know it-- one where the world depended on our consumer markets to buy their products.
The result of this might eventually be good, but not because we had a recession, but because we recovered from one.
The 2 banks that failed yesterday were acquired. There will be more failures, and I assume most will be acquired.
Yes our consumers drive our economy (70%+ of the GDP), but the growth of the BRIC (Brazil, Russia, India & China) middle classes will help drive global growth for our products. 2nd qtr results for many of the U.S. companies were actually decent, albeit lower expectations, due to growth overseas.
We go through these cycles every X number of years in order to flush out the excess.
When market sentiment is so bad, you know we have reached bottom, and we are almost there.
One thing for sure, the economy and markets have been fighting gravity pretty hard. This crisis and downturn are going very slowly. Maybe it's a combination of safties built in or something that has changed behavior enough-- like antidepressants and anti-anxiety drugs.
Market sentiment and consumer sentiment sometimes don't mirror each other. Market sentiment will be bad enough, if and when, we have capitulation, i.e. the DOW drops 600 points in one day, which in a demented way would be a good thing. Frankly, I am not seeing strong negative consumer sentiment. It's not great, but where I live, the freeways are still gridlocked, Costco is packed,and the malls are busy. Go figure.
I've given up listening to those so-called pundits on CNBC. Put 10 economists together and you get 10 different answers.
This so-called crisis will pass, and we will be on to the next newsworthy topic du jour.
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