America is far from over our the debt hangover....I'll toast to that!
Market Update: 2008-09-26
Do you think the government is bailing us out of a mess? Think again. Actually, the Feds are attempting to borrow more money to try to solve our debt problem. Somehow it doesn’t add up; how can you solve the problem of too much debt by adding on more debt? I mean, if you are behind on your Visa credit card payments, can you solve your delinquency by opening a MasterCard and taking cash advances on the new card so that you can use that money to make the payments on your Visa card?
Want to see something scary? Check out the below chart of the U.S. debt bubble now compared to 1929 debt bubble which peaked at 270% of GDP. This chart only goes to 2005 when we reached total U.S. debt equal to 300% of GDP….now we are around 350%! Notice that after the previous debt bubble peaked in 1929 it took 20 years before the debt overload finally disappeared in 1950 (only after the U.S. economy suffered through 20 years of depression and stagnation).
So, do we have 20-30 years of misery ahead? I don't know, but I don't believe that one to two weeks of congressional hearings, committe meetings and Oval Office "we're in dire straits" speeches can prevent a bubble from popping. I do know that there are two simple rules to bubbles:
Here is the debt bubble chart: www.rense.com/general47/curr.htm
In short, I do not believe what is going on now in Washington is going to help America get over our debt hangover. There is more pain ahead for our economy and our markets (any rally will likely not last for longer than a few months). And for those of you who are wondering, I have not bought or sold a single stock or ETF this week, because I am not interested in trading on all this noise! I seek to invest in long-term winners, and this week has not changed my outlook other than the fact that it reiterates my belief that the U.S. markets and economy are not going to be the leaders for some time into the future, and that key international exposure is and will remain a significant part of my investment portfolio for many years to come.
We will know more about how this so-called "financial crisis" will evolve and how much the bailout won't really help us later. Until then, Happy Investing!
Gregory
Do you think the government is bailing us out of a mess? Think again. Actually, the Feds are attempting to borrow more money to try to solve our debt problem. Somehow it doesn’t add up; how can you solve the problem of too much debt by adding on more debt? I mean, if you are behind on your Visa credit card payments, can you solve your delinquency by opening a MasterCard and taking cash advances on the new card so that you can use that money to make the payments on your Visa card?
Want to see something scary? Check out the below chart of the U.S. debt bubble now compared to 1929 debt bubble which peaked at 270% of GDP. This chart only goes to 2005 when we reached total U.S. debt equal to 300% of GDP….now we are around 350%! Notice that after the previous debt bubble peaked in 1929 it took 20 years before the debt overload finally disappeared in 1950 (only after the U.S. economy suffered through 20 years of depression and stagnation).
So, do we have 20-30 years of misery ahead? I don't know, but I don't believe that one to two weeks of congressional hearings, committe meetings and Oval Office "we're in dire straits" speeches can prevent a bubble from popping. I do know that there are two simple rules to bubbles:
- Bubbles always inflate much higher than anyone ever imagined possible.
- Bubbles always burst and everything comes crashing down!
Here is the debt bubble chart: www.rense.com/general47/curr.htm
In short, I do not believe what is going on now in Washington is going to help America get over our debt hangover. There is more pain ahead for our economy and our markets (any rally will likely not last for longer than a few months). And for those of you who are wondering, I have not bought or sold a single stock or ETF this week, because I am not interested in trading on all this noise! I seek to invest in long-term winners, and this week has not changed my outlook other than the fact that it reiterates my belief that the U.S. markets and economy are not going to be the leaders for some time into the future, and that key international exposure is and will remain a significant part of my investment portfolio for many years to come.
We will know more about how this so-called "financial crisis" will evolve and how much the bailout won't really help us later. Until then, Happy Investing!
Gregory
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