IT'S A MATTER OF CONFIDENCE

The market is controlled by the FED now.

Anything the FED announces, the market reacts to.

In other words, the US has now transitioned into a state-run economy.

Once the necessary tapering takes place and the US taxpayer figures how much debt these jackasses have saddled them with, the day of reckoning will come.

Guaranteed, it'll be ugly on the street and in the markets. Let the job of cleaning up the mess begin in the 2014 mid-terms.

It's the economic equivalent of whistling past the graveyard.

Yeah well, never underestimate the power of confidence or lack thereof...

Many times in history, wars and battles have pivoted on this aspect.....the Roman Empire staggered on for centuries just on confidence....

Especially in the 20th century, nation states have expended vast resources to bolster their peoples morale and erode the morale of the enemy.

No person or army is defeated by killing him/it....the defeat is in the soul....

The broad US equity market has been a low quality, overvalued POS since 2000 when I went purely to best of breed Canadian TSX60 dividend stocks, eliminating currency risk along the way. The present Dow and S&P500 levels are unjustifiable, as the article correctly points out, beefed up on low bond yield and other debt alternatives. The Dow could easily go down to 7 or 8K in the next 2-3 years when rising interest rates become the catalyst for declining confidence. The European and Asian equity market are no bargains either.

When, not if, the pension and medical entitlements here and in the US hit us hard going forward, our economic productivity will drop, inevitably leading to inflation, inevitably leading to higher interest rates. That process is now underway with the oldest boomers turning 65 last year. IMO it will slow accelerate despite central bankers' attempts to restrain interest rates , but their predetermined course is up, by at least 3% within 5 years IMHO, but nobody can say with precise certainty.

As for awaiting financial Armageddon, not so fast. We survived the 70s and 80s with 18%+ interest rates, albeit with a giant baby boom generation coming into the economy and consuming their buns off; but we do have rapidly growing technology across the broad economy. It won't be an easy road but we'll get through it, albeit with anemic growth. The next 12 months should prove interesting.

Yes, we're looking at short to medium term, significant, corrections in bond, equity and real estate markets - make no mistake. When is always the question, it's nearly impossible to time this stuff. But there are some no brainers, like Canadian blue chip since 2000 and possibly soon, holding cash. I fear that, sooner rather than later markets will take a serious hit, including my beloved value Canadian rental rentals.

Cash will be the undisputed king soon but how soon is anyone's guess. It might turn out to be the best investment one could ever make.

Investors prefer paper to real estate? Damn fools. Anyone buying U.S. government paper is simply an idiot. In banana republics, which the U.S. is trying to emulate, real estate is the number one investment of the rich and government paper is the last.

Martin Armstrong's brain got damaged when he was beaten almost to death in prison. His pronouncements since that time have seemed a little tilited.

Liberals, 'progressives', whatever they are, are now praising the stock market and cite it as an example of how wonderful Obama's handling the economy. Scary.

I remember vividly having a 14% first mortgage in the early '80s and thinking I got a deal. People seem to think this could not happen again. It does not have to get that bad. Think of how many people would lose their homes, their stocks, their jobs if rates were to go up just 3% - 5%, and that could very easily happen over the next couple of years. The stock market is an illusion..

The Zimbabwe stock market kept going up as the Zim dollar collapsed.

There will be a bust.
There will be a "cash is king interlude".
There will be massive inflation.
The corrupt rent seeking insiders and their friends in
government will become wealthy beyond comprehension.
The rest of us will live in poverty and misery while
carrying large bundles of banknotes to government
controlled outlets offering rationed low quality price
controlled bread.
Just like Mexico. Or Egypt.
Fools will vote for Marxist idiots spouting nonsense.
Under different meaningless trendy labels.
Again and again.

The public stock market is for small timers and suckers. The smart money is in prviate equity funds.

“In spite of these troubled conditions US Stock Indexes struck All-Time HighIn spite of these troubled conditions US Stock Indexes struck All-Time Highs”

Do you sense ministry of truth in action?

In the early 1970s we had a small fruit farm acreage near Queenston, Ontario. Our neighbour lady, she was Polish and met her Czech husband while both were working for the Germans, told us one day that a Polish nobleman of her village sold his land in the 1930s for a lot of paper money. A few years later he had lost it all because of the inflation.

the 87 billion a month being created by the fed is going into the bond market and wall street. it is false economic activity.

CT, agreed, TSX60 dividends still good l/t investments, but nothing will escape the coming correction, hence my comment that cash may be the way to go. Those stocks will simply be better value later, like real estate, in the following flight to quality. WRT our debt, I believe Canadian private debt is the more serious problem right now, though unfunded actuarial pension and medical liabilities are the worst issue, as the US will find out if Obamacare succeeds and the American taxpayer becomes liable for these massive liabilities.

One can only hope the CBC's Neil McDonald, who apparently has completely lost his mind, is right that the GOP's Tea Party will stop Obamacare's congressional approval.

All corrections are followed with comments about "decades" of down markets, such as people invested in 1929 taking until the 50s or 60s to break even. Whatever; this is the time money is getting made - when the street is greedy, be fearful, when the street is fearful, be greedy.

Life will go on with slower growing markets, higher inflation and interest rates. Bargains await those who can get past thinking Armageddon is here or coming. History doesn't back up those arguments. Canada, the US and particular Great Britain had much higher levels of public debt after WW2, the fact there were good reasons for this doesn't alter that fact. Taxes were finally reduced in the 60s, ironically in the US by JFK, and growth ensued.

Yes, the elitist entitleists will rant and rage and possibly riot. The danger is the voters will panic and elect a northern Obama. I think that unlikely when voters actually make their choice and the debt piper has come calling in the US in 2015 and beyond.

If by chance JT and Hillary et al lead western economies, then even cash will get inflated away unless we see significant deflation because central banks crowd out savings. Either way it's not going to be good. The progressives are wrong, we are not part of government and we did built that. Governments have massive resources but the people will chug along doing their thing, working, raising their families and trying to make better lives. That won't change in the coming economic harder times.