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Here's Why the U.S. Rebound Will Be Stronger Than You Thinkcom

The U.S. economy may be experiencing a "V-shaped" economic rebound.

But it's not the conventional V-shaped rebound – where the two sides are about even. We may actually be looking at an extended rebound in which the right (recovery) side of the "V" extends way up high, like a checkmark.

Since that is way out of the consensus view – and seems impossible – it is something that you must consider as a real possibility. The great performance of corporate bonds this year is sending the same message.

What's the bottom line: All the talk about a slow, muddle-through economy in 2010 to 2011 may be rubbish.

Clearly, all the talk about a "double-dip recession" is likely off the table.

Let's take a look at exactly what's happening.

Stocks jumped over the finish line with flair on Friday, concluding the first weekly gain for the U.S. market since the start of September.

It was a relatively quiet trading session, as the news flow was dominated by word that U.S. President Barack Obama was awarded the Nobel Peace Prize. Stocks hesitated mid-session at the top end of the September trading range after U.S. Federal Reserve Chief Ben S. Bernanke said that central bank support for the economy wouldn't last indefinitely, but last-minute buying pushed securities higher.

In the end, the Dow Jones Industrial Average gained 0.8%, the Standard & Poor's 500 Index rose 0.6%, the Nasdaq Composite Index rose 0.7%, and the Russell 2000 rose 1.2%. For the week, the S&P 500 was up 4.5% – its best five-day performance since mid-July.

Financial and technology stocks led – though defensive groups such as utilities, health care and consumer staples also advanced smartly. Laggards were the groups that had advanced the most the previous few sessions: energy, materials and large emerging markets.

Volume was light, with just 990 million shares trading on the New York Stock Exchange. Over the past summer, there were only a few sessions that posted fewer transactions. Maybe we should blame the Canadians: Traders up north may have snuck out of town early to begin their three-day Thanksgiving holiday.
That brings us to the evidence for the "checkmark" pattern, V-shaped economic resurgence.

Let's call it the "Great Recovery."

The Great Recovery

What's the best way to follow a Great Recession?

How about with a Great Recovery …

According to the latest data from the Economic Cycle Research Institute, the economy is poised for its strongest recovery in more than 30 years. The monthly growth rate of its Weekly Leading Index is now sitting at a level that has not been witnessed in at least four decades.

That's big.

As most of you know, the ECRI weekly leading index is the only gauge of the economy that I have found to have real usefulness as a forecasting tool. Unlike the linear measures that most indexes use, it uses non-parametric measures to look around the corner and figure out what's coming.

It was early in calling the recession two years ago, and caught a lot of heat; and it was early in calling the recovery early this year, and has caught a lot of heat.
ECRI chief Lakshman Achuthan told Reuters that with the WLI at new record highs, "the economic recovery will prove to be far more resilient in coming months than most believe possible."

This evidence fits well into the envelope of views that I have expressed here repeatedly over the past few months: The path to recovery will be bumpy, with painful problems like stalled employment growth causing a lot of doubts and fears. But with governments and central banks pouring money into the global economy in unprecedented amounts via fiscal stimulus and low interest rates, we have a high level of conviction that the recovery is unstoppable, and that equities will continue to plow forward in anticipation of the fundamental improvements becoming more visible later.

Favorite positions to take advantage are still exchange-traded funds (ETFs) with heavy overseas and economic exposure. Right now that includes iShares Global Financial Sector Exchange Traded Fund (NYSE: IXG) and iShares Metals & Mining (NYSE: XME); on dips it includes iShares Emerging Markets (NYSE: EEM) and Vanguard FTSE World Ex-USA Small Cap (VFWIX). And after a brief period of underperformance, tech stocks might be ready to roll again, especially hardware like SPDR Semiconductors (NYSE: XSD).

Bears Still on the Prowl

But don't get complacent – not now, not ever – because bears are still on the prowl. They still think they are going to win, and they are just looking for the right time to attack again – when bulls are vulnerable. I know this because I hear from them all day long.

Their main argument (from a fundamental perspective) continues to be that weak employment figures will undermine consumer buying during the holidays; consumers are saving more and spending less, and can't get bank loans; and companies are deleveraging. And then from a technical perspective, bears also harp on the lack of volume in this up move. But there are three key counterpoints:

First, employment is a lagging indicator, and may be in secular decline. We've been through this a dozen times so I won't lay out all the points. But the main idea you may recall is that companies first go overboard in hiring (2004-2007), then they go overboard in firing (2008-2009), then they start to enjoy having fewer employees to pay (2009), and only later do they realize that to grow again they'll have to start re-hiring (2010-2012). At this point in the cycle, investors give companies bonus points for cutting expenses, and that means reducing headcount. So don't look for real investors to penalize companies' shares during periods of reduced employment.

Second, consumer saving is paradoxically terrible for consumers and a boon for banks and businesses, which is another reason stocks have been buoyant. You see, when families start to save a lot they tend to put their money in a bank savings account for safety. They'll earn 1% if they're lucky. On the other side of that 1%, laughing like crazy, are bankers who then turn around and loan that money out to big business at 6%-plus, or buy bonds yielding 4% to 12%. The banks are making a killing on consumer savings, which is really sad, but it's the truth. This is one reason we are overweight banks in our ETF portfolio.

Later on in the cycle, when the Federal Reserve starts to deploy its so-called "exit strategy" and begins to raise interest rates, the "spread" between what banks pay for money and what they can receive in corporate loans will narrow. And only then will banks turn their attention back to consumer loans, giving a new boost of fuel to that leg of the recovery.

Third, the volume is relatively low. I believe that the reason for this is that because the public is just not on board with this new bull cycle – yet. I'm not going to go through the math of all the cash sitting in money market accounts. But all of you reading this today, who care about stocks and are taking matters into your own hands, are in the minority.

Most of the public just doesn't care. They still feel wounded and abused by the market during the decline last year, and don't trust their money managers, and don't trust the recovery. So until the public starts to feel more comfortable again – probably when the Dow Jones Industrials gets back to around 12,500, which is where it was in the summer of 2008 – volume is probably going to stay light. Just ask your friends at work if you don't believe me.

Week in Review

Monday: The ISM Non-Manufacturing index pushed back into expansionary territory with a reading of 50.9 for September. This is the highest level since last May.

Tuesday: The bulls were spurred on by word that Australia's central bank unexpectedly raised interest rates by 0.25% basis points to 3.25%, becoming the first industrialized nation in the Group of 20 country to do so. While higher interest rates will eventually dampen stock returns, for now it's a sign the global financial system is awakening from its long coma.

Wednesday: Consumer credit fell by another $12 billion in August as American households cut back on purchases and pay down debt. This builds on the huge $19 billion decline in July. It was the seventh consecutive month of decline. While consumer deleveraging is bad in the near-term, as it weighs on retail sales, the long-term health of the economy improves as debt levels return to more normal levels. According to Deutsche Bank economists, households are about halfway done with the deleveraging process. And the more families stash cash, the more they are unwittingly lending their funds to banks and big business at the ridiculously low 1% passbook savings rate.

Thursday: Retailers reported the first monthly sales gain since August 2008. Retail Metrics' September comparable-store sales index jumped 1.1%. The rise was attributed to fresh fall fashions and attractive promotional offers.

Friday: Thanks to a weakened U.S. dollar and cheaper crude oil, the trade deficit narrowed by $31 billion in August — slightly better than the consensus estimate. Remember that a smaller trade deficit is a contributor to economic growth, so this will help the Q3 GDP numbers.

The Week Ahead

Monday (Today): The Columbus Day holiday. U.S. stock markets are open but the bond markets are closed. Canadian markets closed for Thanksgiving.

Tuesday: The release of the latest U.S. Treasury budget will likely weigh on the dollar and send Treasury yields higher. September has seen a positive budget balance over the last three years, but we're poised for a $31 billion deficit thanks to diminished tax receipts and stimulus spending.

Wednesday: Retail sales for September are reported. Analysts expect a 2.7% increase on a strong back-to-school shopping season. The results will be an important gauge of consumer health in the wake of the government's cash-for-clunkers auto rebate program.

Thursday: An update on inflation with September's CPI numbers. Also, the October Empire State Manufacturing survey will report on factory output in New York.

Friday: Industrial production is expected to have increased 0.2% in September after a nice 0.8% increase in August and a 1% jump in July. Recent gains have been powered by restocking of auto inventories at dealerships. Plus, an update on consumer sentiment.

We are also now coming into the heart of the earnings reporting season. Companies that could see a lot of action and move markets include brokerage The Charles Schwab Corp. (Nasdaq: SCHW) and construction retailer Fastenal (NASDAQ: FAST) on Monday; Johnson & Johnson (NYSE: JNJ) and Intel Corp. (NASDAQ: INTC) on Tuesday; JP Morgan Chase & Co (NYSE: JPM) and Abbot Laboratories (NYSE: ABT) on Wednesday; Harley-Davidson Inc. (NYSE: HOG), Citigroup Inc. (NYSE: C), Nokia Corp. (NYSE ADR: NOK) and International Business Machines Corp. (NYSE: IBM) on Thursday; and Bank of America Corp. (NYSE: BAC), General Electric Co. (NYSE: GE) Halliburton Co. (NYSE: HAL) and Mattel (NYSE: MAT) on Friday.

[Editor's Note: New Money Morning contributor Jon Markman is a veteran portfolio manager, commentator and author. He is currently the editor of two investment-research services, Strategic Advantage and Trader's Advantage. For information on obtaining a two-week free trial to the daily commentary of the Strategic Advantage, please click here. Anthony Mirhaydari was the research assistant on this column.]

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Join the conversation. Click here to jump to comments…

  1. George | October 12, 2009

    Are you sure that the higher market values won't just be hyper-inflation in disquise? Surely that accounts for something.. You can't inflate the money supply without it effecting prices, right?

  2. jh443 | October 12, 2009

    While anything's theoretically possible, there will be no end to the recession until the root cause is fixed. (Hint: the root cause cannot be found anywhere on Wall Street)

    In order for a company to grow, it must sell its product. In order for their product to be in demand, there must be disposable funds that can be spent on it. Eventually this "trickle down" reaches the average consumer. Until people here in the U.S. are put back to work, the demand for non-essentials will not grow. Period.

  3. jh443 | October 12, 2009

    BTW – things have been so bad for so long, unemployment will turn out to be a leading, rather than a lagging, indicator.

  4. LES DENIS | October 12, 2009

    THE AMERICAN PUBLIC HAS BEEN RUNNING ON CREDIT
    FOR THE PAST 40 YEARS. AT THE SAME TIME MANUFACTURING HAS BEEN LEAVING THE COUNTRY….
    THE U.S. TRADE DEFICIT IS THE PROOF WE HAVE VERY LITTLE TO SELL TO OTHER COUNTRIES AND NO WAY TO PAY FOR THEIR PRODUCTS OTHER THAN FOR OUR GOVERNMENT TO SELL BONDS OR PRINT MONEY….AND THATS COMING TO AN END. YOUR BOOM IS PREDICATED ON NOBODY HAVING TO WORK IN THE U.S AND OUR GOVERNMENT HANDING OUT STIMULUS PACKAGES FOREVER…IT'S OVER…YOU GUYS CAN'T SEE AN HOUR AHEAD NO LESS MONTHS AND YEARS…..LD

  5. Willem Angel | October 12, 2009

    12-10-2009

    The moment someone cry-out, fire !, the sensative is so fragiel that without any thinking first reaction will be, away from the stocks…………. and than, the game is on again, upwards !

    so, the truth is, now this moment, as commercial facts, prooven, arent there it is what it is, a game i stock future value. Pretty good for monney makingbusiness people. Kind regards,

  6. Lex Willmott Australia | October 12, 2009

    I herd the Americans Oil industry say years ago, ,
    when they could not get down to drill oil deposits, at vast distances in side the earth,
    The American Industry oil said, lets just find other wells closer to the surface and get the hard stuff out when the price is better,

    Americans have always had a plan, Remember the Mayflower, Columbus,
    If you think Americans they will give up, Then just but some shares in American companies , there cheap,you will make money,
    As Americans never give up,
    I went to school with them, its ingrained into their make up, they do not give up.

    +6173102 3244 Lex Will

  7. Alex Semen | October 12, 2009

    Who dare to bet against me euro 250000, that this is the beter recept to the next big fall.

    I've never been wrong on my analysis on future perspectives.
    We wil see what will happend in 18 next month.

    Greattings

    Alex. S

  8. J R Smith | October 12, 2009

    I am neither a bull or a bear but I do have one question.

    " Where is all the subprime debt the Banks had in 2008/9 that nearly caused a collapse of the banking system"

    The stimulus package did not cover all of the debt…..therefore it must still be with the banks. If that is the case none of the banks can possibly be making any profit.

    Your explanation would be appreciated.

  9. Tom Stiebler | October 12, 2009

    Very interesting stuff. John Markman is the only one i know of expecting a strong recovery.

    One bear point not addressed was the claim that insiders have been selling stock heavily. If true that would seem to imply that many companies are not expecting things to improve.

  10. George Pavlik | October 12, 2009

    The US economy (or lack of) is still based on debt!
    The markets are controlled by the Fed & Exec branch of the government along with the large government controlled financial institutions. Historically any "recovery" or venture funded with taxes and controlled by the state is destined to be short lived and sadly contribute to the problems.
    This country can only survive with a return to the principles envisioned by our Founders. Liberty, minimal government and a free market.

  11. Les Schroeder | October 12, 2009

    The reason that correct predictions get so much attention is because they are so rare. The majority opinion is, unfortunately, probably the correct one and we are unlikely to see a strong or noteworthy recovery. Foolish government policy making bears a major responsibility for the current debacle and so far there is little evidence that the government has learned anything about its contribution. Creating further debt will not get us out of debt.

  12. Myron Martin | October 12, 2009

    On the surface it would seem that Jon Markman is buying into bankers propaganda, i.e. that they make their money on the spread between the interest they pay on deposits and the interest they charge on LOANS!

    QUOTE: "They’ll earn 1% if they’re lucky. On the other side of that 1%, laughing like crazy, are bankers who then turn around and loan that money out to big business at 6%-plus, or buy bonds yielding 4% to 12%. The banks are making a killing on consumer savings, which is really sad, but it’s the truth. This is one reason we are overweight banks in our ETF portfolio."

    Nothing could be further from the truth, how can you LOAN a liability?
    Deposits are not an asset of the bank, they are a liability subject to withdrawal by the OWNER, however, under the iniquitous Federal Reserve Act of 1913 these liabilities of the bank are the foundation for their loaning activities which is "creation of NEW MONEY out of thin air" at a ratio of up to $20. for every dollar they hold in deposits!

    Understand this clearly, what they LOAN is NOT a percentage of their depositors money, that is pure fiction, they are simply ALLOWED TO (in defiance of the Constitution) CREATE new money at 20X1 leverage, (and sometimes more) so when people lose faith in this CON game and start to withdraw their savings, we have what is known as a BANK RUN and deleveraging such as we experienced last year.

    An honest Central Bank Governor (Graham Towers) testified to a Canadian Commons Banking Committee in 1939 very accurately that: "every bank loan is a new creation of money, and when it is paid back it ceases to exist" and anyone who wants to understand our present financial problems will find the answers within that statement.

    It is prima facie evidence and PROOF that our present banking system is the "mother of all Ponzi schemes" for the simple reason that ONLY the principal amount of a loan is ever created, but the DEBT PYRAMID created at all levels of society through compounding I-N-T-E-R-E-S-T is NOT, therefore it necessarily follows that as loans are paid back, say in the case of a 25 yr. ammortized mortgage, UP TO DOUBLE (on average) artificial currency is CANCELLED as it is paid back, than was originally created as the banks confiscate their interest!

    What this means in practical terms is that for this pyramid scheme (illegal in all other circumstances) to survive, there must be an exponentially increasing level of new loans to REPLACE the cancelled artificially created currency and pay the bankers interest which means an ever expanding DEBT PYRAMID that becomes a strain on any economy and leads to either hyperinflation or currency debasement or BOTH!

    It is HIGH TIME the "powers that be" recognized and admitted the failed experiment with fiat currencies combined with fractional reserve banking (since 1971 when we went off the gold standard) that has now ENSLAVED the WORLD to DEBT and restore CONSTITUTIONALLY based HONEST MONEY backed by hard assets.

    Politicians and bankers HATE the straight jacket that puts them in because they can no longer STEAL from the people with their slight of hand, promises they can only keep by continuous debt creation, and using inflation to hide their nefarious schemes.

    Sorry Mr. Markman, a viable, financially sound economy can not be built on a foundation of "phony money" created out of thin air with no substance behind it! The only part of the market that is likely to grow over the next few years is that of precious metals as fiat currencies continue to TANK. The U.S. dollar is DOWN 30% in purchasing power just since 2000, by contrast, gold that has a 5000 year history of having maintained relatively stable purchasing power in real terms is up something like 300% in the same time frame as the dollar declined!

    GOLD is the true measure of VALUE, not the dollar, gold has NOT become more expensive, the purchasing power of the dollar has simply declined, the masses have simply been brain washed and hood winked into looking through the wrong end of the telescope.

  13. Greg | October 12, 2009

    All you have to do is read the comments posted here to know that this article is bullcrap. This is a case of Technical Analysis being skewed by emotional pricing action. The (realistic) Fundamentals do not support the "Recovery" story which is currently being painted on the tape by wild eyed Bulls.

    It's just not there.

  14. Chris M. | October 12, 2009

    George Pavlik, in the sight that minimal government allowed banks to package crap and slcie it and repackage it again and again till they had sold it so many times that they were over leveraged 100 to 1 (and more!), HOW CAN YOU TELL that minimal government is the answer.

    Human nature tends to corruption when there is power, so there needs to be separate entities with power, when government is too close with businesses. It's a recipe for disaster.

    Government and business need to be as far as possible so each one defends it's interests to an equilibrium where society its benefitted.

  15. Bob Veigel | October 12, 2009

    John Markman lives in a world that I do not know. Higher taxes, more government rules and laws, a larger government, a more intrusive and controlling government, nothing in the wings that will add new and more jobs, a huge debt and growing daily, inflation in the future, 15 million unemployed and going higher, a government out of control and spending more and more, Cap & Trade, new health care bill, Social Security and Medicare out of control, additional restrictions on the private sector that make it impossible to develop new businesses and new jobs. And with all this news Mr. Markman thinks a recovery is on the way. Good luck. Maybe the tooth fairy is still alive.

  16. David | October 12, 2009

    This is all so much BS as long as we continue to allow the bankers to 'fractional lend'/ counterfeit trillions. We have 651 TRILLION in leveraging/counterfeiting that is still evaporating. NO amount of govt. throwing our money to the wind will equal that. Period. There will NOT be inflation for a heck of a long time.

  17. Doug Robb | October 12, 2009

    I have to agree with the majority of posts on this article and express my doubts about a big recovery in 2010. The dollar is much weaker than it has ever been, gold prices are at record highs, and the printing of fiat currency by the US continues unabated. Unemployment is expected to continue to rise and not even peak until 2010, and individual income has risen at it's lowest pace since the Great Depression. And the gov't. has added trillions in debt due to the bailouts and stimulus programs, which must be paid back at some point. Ad to that the continued drain on our economy from our deployments overseas, and the overall picture inspires no confidence for a sustained recovery. As Obama has said, "It took us years to gt into this condition, it will take us years to get out of it.

  18. Bob R. | October 12, 2009

    The stock market is not the economy.

    Millions of foreclosures, millions of people out of work, ridiculous cap and trade schemes being concocted, cash for clunkers, banker bail outs, dollar crashing, the list goes on and on.

    But the market, the so called seer of all things is going up. Guess what? It went up in November of 2007, hitting an all time high. Then in the next 15 months it crashed. If it was good at predicting the future, maybe it shouldn't have made 14K ahead of the worst financial crash in 75 years?

    All the people predicting that it is "over" appear to be the same one's that never saw it coming, didn't know we were in one, and now say it's finished. I'm sleeping much better now. (please)

    I'm guessing the 12 Trillion pledged or already spent, and the other programs they're working on for stimulus which according to the Governments own researcher will hit 23 trillion, is there because of this robust recovery?

    If so, then why not take it all back in, cancel all the programs? According to you, we're in some wicked Vee shaped recovery, surely I'd rather see that money go back into the treasury and pay down some debt.

    The fact is we're not in any recovery, we're in a cover up. Slap enough "money paint" on it and you can cover up a multitude of troubles. But the troubles haven't been fixed, just slathered over with fiat money printed out of thin air.

    Were in an economic bounce, simply because of all the money they're printing and debt they're monetizing. If that's all it takes to run a great economy, surely someone would have tried it before no? Oh that's right they did, it was Weimar Germany. I saw the movie, it didn't end well.

    There will be no recovery.

  19. James Yamaki | October 12, 2009

    I agree with you. We are at the beginning stage of a three to four year bull market. In the $SPX (S& P 500 Large Cap Index) INDX, the twelve month moving average (red line) shows a crossover in 2009 similar to the pattern in 2003. I expect the $SPX (S & P 500 Large Cap Index) (black line) to mimic a cycle similar to 2003 to October 2007, barring unusual circumstances. I appreciate the way you present your futuristic technical analyses. It is simple and done with clarity. Moreso, it is TIMELY because it catches a trend at the beginning stages of a bull market allowing the reader to act ahead of the crowd. Another investment newsletter that I subscribe is projecting a secular bull market like you, but he does not explain it as clearly as you do. Keep up your good work!

  20. Bob R. | October 12, 2009

    The stock market is not the economy.

    Millions of foreclosures, millions of people out of work, ridiculous cap and trade schemes being concocted, cash for clunkers, banker bail outs, dollar crashing, the list goes on and on.

    But the market, the so called seer of all things is going up. Guess what? It went up in November of 2007, hitting an all time high. Then in the next 15 months it crashed. If it was good at predicting the future, maybe it shouldn't have made 14K ahead of the worst financial crash in 75 years?

    All the people predicting that it is "over" appear to be the same one's that never saw it coming, didn't know we were in one, and now say it's finished. I'm sleeping much better now. (please)

    I'm guessing the 12 Trillion pledged or already spent, and the other programs they're working on for stimulus which according to the Governments own researcher will hit 23 trillion, is there because of this robust recovery?

    If so, then why not take it all back in, cancel all the programs? According to you, we're in some wicked Vee shaped recovery, surely I'd rather see that money go back into the treasury and pay down some debt.

    The fact is we're not in any recovery, we're in a cover up. Slap enough "money paint" on it and you can cover up a multitude of troubles. But the troubles haven't been fixed, just slathered over with fiat money printed out of thin air.

    Were in an economic bounce, simply because of all the money they're printing and debt they're monetizing. If that's all it takes to run a great economy, surely someone would have tried it before no? Oh that's right they did, it was Weimar Germany. I saw the movie, it didn't end well.

    There will be no recovery.
    Sorry, forgot to add great post! Can't wait to see your next post!

  21. Jeff Pluim | October 12, 2009

    Mr. Markman is not looking at the big, BIG picture. The Chinese have been supporting the US buck because they have such a huge reserve of USD's. That only makes sense. They don't want to devalue their USD reserve assets. But at the same time, they are divesting themselves of those USD reserves to the tune of almost half of their USD reserves over the last 6 months. They have been lending money (USD's)to major Chinese corporations in order to turn those reserves into assets, as those corporations go on buying sprees, that will be worth something when they stop supporting the USD and the USD tanks. At the rate that the Chinese have been getting rid of their US bucks, it should only take another 5 or 6 months until their USD reserves are below $200 billion. Just watch what happens to the USD and consequently the USA economy when that monumental event happens. The Chinese will stop supporting the USD because it will no longer serve them to do so, and in fact they will be in a stronger economic position globally when the USD drops like a rock and they are not holding any of those useless bucks. The USD will be like the Russian ruble. No one will want them because they wil be no good outside of the issuing country.
    When the Russian economy went down several years ago, they were still able to meet their international financial commitments by selling off their gold reserves. When they did that, the flood of gold into the market pushed the price of gold down to around $300 per ounce.
    The only saving grace that I can see for the USA is the large gold reserve that the country has. If the price of gold approaches $2,000 per ounce, count on the United States Government to start dumping its gold reserves in order pay down its debt. When that happens, and I don't see any other long term options here, then the price of gold will drop dramatically, as when the Russians did the same thing.

  22. Sebastian | October 12, 2009

    How many cliches can one fit into an article? See above. "Employment is a lagging indicator…" Well, the author forgets that there is a profound difference between financial markets and the general economy.

    Every broad economic indicator is negative: unemployment and under-employment continue to rise; the college educated workforce is getting older and being replaced by dumbed-down, tweetered-out kids with no attention span and millions upon millions of imported, uneducated, agrarian peasants; the dollar is being set for a formal devaluation; the debt is unsustainable, period; the empire is over-stretched and morale as low as during Vietnam; the political class is so out of touch they are calling for a national security force; the middle class is shrinking to Third World levels; self-government is being replaced by welfare and internationalism; entrepreneurship is being squeezed by transferring vast amounts of wealth from the productive segments to the "too big to fails;" political corruption is so commonplace we don't even bother reporting, e.g. the marriage of K Street & Wall Street…on and on.

    And yet we are supposed to believe that a bounce in the stock market – unadjusted for inflation – signals not only a recovery but a strong one? No – there is no recovery.

    This is the decline of Empire America. We can still make money as individuals, but the nation is doomed.

  23. Paul Coote | October 12, 2009

    Bank,s propensity to capitalize on customers deposit does not auger well for sustainable development in the General Economy. Banks do not create wealth directly, they are the beneficiary of businesses and persons who create wealth, by producing something of real economic value.
    Until people are put back to work, and credit is again available, we cannot speak about a rebound.

  24. Don Kennedy | October 13, 2009

    There will be a bigtime recovery once the federal government stops liquidizing the economy and the Fed sets up a growth plan monetary policy. When will the 120 TRILLION DOLLARS OF UNFUNDED ENTITLEMENTS be funded and by whom. When will our monetary policy start funding capital investment by the billions so livable income jobs by the millions will be created?????????????,,, Explain to the people Mr. Markman how GDP becomes real growth with the economy having over 80 Trillion dollars of debt sitting on its back. The economists you are dependent upon for advise are the same ones who supported Marxist/Keynesian economic solutions for America which solutions have failed in every nation that has used those 'THEORIES' IN THE PAST!!!!!!!!!!!!!!!!… Markman you espouse 'VOODOO ECONOMICS'!!!!!!!!!!!!… TIME WILL TELL WHEN THE BEAR MARKET ENDS AND A BULL IS RUNNING AGAIN. IT WON'T BE BEFORE 2018 BET ON IT MARKMAN. PUT YOU MONEY WHERE YOU MOUTH IS!!!!!!!!!!!!!!!…

  25. Michael W. | October 13, 2009

    What a difference a day makes. I woke up and the same nightmare is ocurring only now, they are telling us it's almost over.

    Trillions of dollars must be paid back and who will pay it back, our granchildren.

    I talked to my 5 year old grandson and asked him what job he wanted when he was big? He said a, "fireman" with enthusiam!!

    I wondered at the time if he will have enthusiasm when he is risking his life to protect the ones that are in the old folks home that put our country in so much debt 20 years from now?

    We better do a better job now so the future generations don't abandon us for our poor choices.

  26. layman | October 13, 2009

    so the question for a common man is

    what is going on?

    whether to buy the idea of " economy recovering "?

    all informations is messed up and confusing.

    whether to bet on EURO or USD?

    what will be dow jones 6 months from now?

  27. Guruprasad V | October 18, 2009

    How funny? In the top of this article- I'm seeing an downloading material which says " Why US bailout won't work"? and below that I'm looking this article. Everyone are analyst in this world and you're one among them. I think we must wake up orelse you'd bluff to whatever extent you want?

  28. Market Sniper | October 18, 2009

    Common error. Mistaking an economic recovery based on stock values. We have the Wall Street perspective, carefully nutured by a well oiled perceiption manipulation machine and we have The Main Street perspective. Sort of like the guy caught by the wife in bed with another woman..who ya gonna believe here? Me or your own lying eyes?..show me the growth engine. Do not ask for much just ONE. This market is being driven by bailout money. No wealth bering created here. Dow 10K big deal. Based on the 1913 constant dollar, the DOW is now somewhere between 300 and 400. Welcome to fiat fairyland where nothing is ever as it seems.

  29. MrKnowitAll | October 18, 2009

    The fact that most of the comments on here disagree with this article makes me agree with it. All of you fools who belive in the fear your creating I have only this to say. The conspiricy is on you. The information about the fed and the dollar declining is designed to keep you on the other side of the coin. You all say gold is a thing of value. Accourding to who? Who makes it valubale. YOU DO!! Cause you belive it to be. Its actualy a totaly usless metal.. Soft, Not as conductive as copper or silver… ohhh but its so shiny. And its held its value. Shure it has cause the you think its shiny. Now your all being rushed into the precious metal craze but you will all lose your shirts. Fact is this. Banks lend money. 651 trillion to be exact. Ficticious accourding to the comments. And so what if it is. As the world economy grows so will every thing else. More banks more money more fuel for the fire that is capatilismn. And yes the conspericy to keep you afraid is working… Always on the other side of the coin eh. THEN SHORT… take all your faith in fear and short. You will again loose it all… The market will go up and up until all curencies are equal.. Then the gold backed dollar will be introduced globaly. Then all the gold reserves that are unrevieled will pop up and gold will be worth a dollar. again. If you see a trend and people talking fear. Bet against it. Its a good way to stay rich.
    Happy Tradeing.. and sorry for bad spelling….
    I type as fast as I can.

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