31 Replies to “18 Month American Recovery Watch Remains On High Alert”

  2. My wife and I jobs are both indirectly linked to Ontario’s real estate market and right now it is dead.
    I say market value corrections are imminent which should lead eventually to higher mortgage rates down the road…

  5. The USA is morphing into something that will eventually look a lot like Africa under Obama … but then, what did you expect from an Marxist African?

  6. Kate, Toronto debt is at 212B, but the media feels it is of no concern to the public-yet, they find all kind of excuses to rail on Alberta Premiere and the oilsands instead of going after Mc Guinty.

  8. Can’t wait for that free healthcare. Oh yeah, and the govt to prevent those drug companies for making huge profits for little things like keeping people alive for an extra couple of years….
    Obama has my back…. and he won’t get off of it.

  9. Kate, this is a good theme, the “recovery alert theme”. It’s a great continuation of the “96 month recession alert” that went on during the Bush presidency, which was a recurring theme you had back then.

  10. Right Honourable Terry Tory: why would a market correction lead to higher interest rates? Most corrections lead to the opposite. The only reason rates aren’t going lower in the US, for instance, is that they can’t, they’re as low as they can go.

  12. It was a tax credit of $8,000 that caused the temporary spike in Q2 2010. Now the credit has expired, hence the drop.
    It’s amazing, though, that so many people fell for the tax credit. Why rush for an $8,000 tax credit, when you can wait a few months and watch prices drop by another 10-20%, which is at least $20,000 for a typical home.

  14. scf: I have never understood that either.
    Closer to home: Why would you borrow $500,000 to buy a house that was worth $250,000 2 years ago so you can take advantage of a low interest rate?

  15. Collectively, all the stupid legislation and Presidents in the past do not even come close to what this man has done. Add to that a debt of historic proportions that will reduce the USA to another Japan and hinder their economy for decades.
    When corporate America with an estimated two trillion dollars to be invested says no thanks and the bulk of your manufacturing capabilities are now off shore, you have a problem, a big one. Factor in the publics lack of trust in the banking and financial sectors and who knows where this is going.

  16. Nobody panic. The “green jobs” will be kicking in anytime now and turn the economy around. We’ll have more money than we’ll know what to do with.

  17. Interest rates go up when investors lose faith in the greenback and investors lose faith in the dollar when trillions of new dollars are created out of thin air by the fed. The more dollars created the less value each existing dollar retains so to keep the dollar from collapsing the government is forced to increase interest rates to entice investors to stay with the greenback.

  19. My Ontario based parents are snowbirds with a significant investment in porperty near St. Pete’s FLA. They love Obama and watch MSNBC and CNN and The View. All that good, solid information stuff. Despite my many attempts to re-educate them, they continue to drink the coolaid. I figure by the time they decide to sell, the place in Largo FLA will be worth about 12 bucks.

  20. I think recovery is where somebody says “hey the patient is alive” so they take off the sheet and have a look, decide the patient really is dead, and recover them.

  21. Contrarians always win in the long term. Always. Look at the crowd all going in the same direction. I see people are extremely negative. Good. It’s a sign that there will be money waiting to be made soon. I am setting aside as much money as I can and will buy index ETFs like crazy when the time comes (not now). And the inevitable incoming gold bubble burst… I’ve started to build a short position in gold. Retirement will be more comfortable.

  22. Its a race between an Obama economic recovery and Hell freezing over.
    Right now, the smart money is on Hell.

  23. “This is the recession Kate swore in the fall of 2008 did not exist?”
    Lloyd
    That’s about the dumbest comment I’ve read. Do you even know what a recession is?
    Lloyd=sheeple

  24. “Nobody panic. The “green jobs” will be kicking in anytime now”
    They’ve kicked in already! “Green Jobs” is code for Americans being green with envy when seeing good paying jobs leave for more competitive business environments.

  26. DOW: your comment makes sense. But the dollar is stable at this time. And there is another consideration: when the government raises interest rates, they worsen the effects of their debt, which hurts their balance sheet.

  27. Yup, you be right scf. That is why the US government is caught between a rock and another rock. They are broke and instead of cutting spending they continue to throw money around like water while the day of reckoning draws ever closer.

  30. Kevin: so my comment was dumb, wasn’t it. You’re either very young or you forget history of finance very fast, or you just don’t know anything about it. Instead of insulting without any substance, I would like to hear your argument that (of course) “this time is different”, that the buying low and selling high strategy won’t work as it always did. Or go ahead and just follow the crowd towards the cliff. (See if I care anyway.) And oh, did you get your swine flu shot?

  31. Alan:
    I’ve been studying financial markets for over 40 years. I’ll put my acumen up against yours anytime.
    Now, since you made a non-prediction, in that you neither predicted how much stocks would rise, or when, but just asserted that they will go up at some unspecified time in the future by some undetermined amount – way to go out on a limb, there, Alan! – it’s difficult to argue with you. (The old Wall St. joke is the art of making successful predictions is to give either a price or a date, but not both at the same time; you’ve taken it to new level by not providing either.) But, in the interests of fair play, if you think we’ve seen the third or “stripper” phase of the current bear market, you’re sorely mistaken. Of course there will be a time to buy stocks in the future (if there isn’t, it means the death of Western civilization will have occurred). But it won’t be soon (i.e. next 18 months at least), and it won’t be at anything near current levels (think 600-700 on the SP500, or down 50% from current prices). As usual, my caveat is that if someone like Iran or North Korea does something egregiously stupid, or some transformative new technology appears, things could change. Nothing’s written in stone.
    As for gold: It’s enjoyed a 15.5% CAGR since 1999, but not without a number of 10-25% declines along the way. From 1982 to 2000, the DJIA went from 1000 to 10000; I’m sorry, I didn’t hear you telling everyone stocks were a bubble in 1999 after a run up that was twice as long. And here’s what is different about gold, and stocks and the dollar: As we saw in the dot.com bubble, and again in the MBS/CDS fiasco, Wall Street can create new paper worth billions in days. Helicopter Ben can create billions of new dollars in seconds. The amount of new gold mined each year is about only 1.5% of the amount already mined. So the supply of gold isn’t increasing by much.
    What about the demand side? Well, we’ve seen the central banks of developed countries sell gold (topped by Gordon Brown’s monumentally stupid sale of Britain’s gold at the absolute market bottom) over the last decade, but in recent years, we’ve seen central banks in the developing world (India, Mauritius, Russia, China) buying gold. Almost 1 billion consumers in China can now legally buy gold, and some 800 billion consumers in India now have more wealth to buy it. Let’s do some arithmetic, shall we? Annual gold production: about 2,500 tons. 2,500 * 2,000 * 16 = 80 million ounces. Divide that by 1.8 billion Indians and Chinese, and it’s less than 2 grams per person, never mind the other 4 billion people on the planet. (And, of course, there are absolutely no cultural norms in China or India mandating gold as wedding or dowry gifts.)
    Once again, if you look at the charts, you don’t see anything indicating that gold is in the last, parabolic, phase of a bull market. The climb is steady, and studded with 20%+ corrections to shake out the weak holders. The ads on TV are not selling people gold (the coin replica ads you may see are gold plated blanks, with a minute layer of electroplate on top), but rather are asking people to SELL their gold. When you see ads asking people to buy solid gold Eagles or Maple Leafs or Kruggerrands on mainstream TV (e.g. “Glee” or “American Idol”, as opposed to BNN or CNBC), then it might be time to be cautious.
    Now, gold went down in late 2007 from $1,000 to $750, and again last year from $1,100 to $950, so if you’re predicting another of these corrections, I won’t disagree; I’m rather expecting it. But a “burst bubble”, in my definition, is an item that doesn’t recover its previous high for years. Look at the Nikkei – 36,000 in 1990, 10,000 today, two decades later. Look at the NASDAQ – 5,000 in 2000, 2200 today, a decade later. Those are burst bubbles. Gold isn’t anywhere near that.
    Finally, I’ve a friend at the Royal Canadian Mint. He tells me he could sell twice as much bullion if he could get his hands on physical metal. If you’re truly building a short position, I sincerely hope you are either a) very nimble and/or b) hedged, because if there’s a short squeeze and you have to deliver physical metal, you’ll wish you were in GenPop at Attica; the a**f***ing you get there will be less painful.

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