"You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey
The "Great American Land Grab" of 2008 is well under way as Timothy Geithner, president of the Federal Reserve Bank of New York, accurately predicted at the annual Bilderberg conference in Ottawa, Canada in June 2006.
These comments by Geithner prompted one unidentified Bilderberg attendee to say, "“stupid Americans deserve their fate.”
Two years later, the predictions Timothy Geithner have come true.
With speculators getting creamed, the real estate market in turmoil, energy prices sky high, consumers laden with debt, there is no way we are at the beginning of a sustained upward trend in the stock market.
If I were you-let me rephrase- I am not interested in spending any of my cash on stocks until we get around 11,000 on the DJIA. At this level, the DJIA would be down greater than 20% from the October 2007 highs.
Don't be fooled, the welfare checks (economic stimulus package?) being passed out by the government will be great for companies selling beer, cigarettes, tattoos, food (grocery stores), but I don't think it will benefit much more than that.
The other shoe to drop in the financial sector will be the repos of vehicles from cash strapped consumers who don't have enough money to make their car payments.
The "stupid Americans" (not my words- its the Bilderberg guy above) that used their homes as ATM machines, bought more home than they could afford, speculated on real estate, bought three cars instead of two, and paid $200 for a pair of $5 dollar sunglasses are now poor.
After years of greed and questionable lending practices, "stupid lenders" are now having their hats handed to them also. "Stupid Wall Streeters" that repackaged sub prime loans as safe and viable investments are now puking up ABS's-CDO's-SIV's.
Peoples selfish desire for money, wealth, and foolish possessions are coming back to bite them in the butt. By time its all said and done, there will not be much to chomp on.
As Warren Buffett has said, "When the tide goes out, you'll know who has been swimming necked".
The only hope for consumer and the economy is a massive government bailout for real estate, and the credit markets. Rumors have circulated that FHA will take millions of sub-prime mortgages off the hands of lenders, and the second rumor is the possible rebirth of the "Resolution Trust Corporation" that bailed out the real estate crisis in the 1980's.
While I believe solutions like these are in the works, the timing of implementation is the million- I mean trillion- dollar question.
There is a lot of good news among the bad. First, bear markets and corrections do not occur when times are good. It is, believe it or not, the bad times that allow investors to buy stocks on the cheap. Eventually, when the economy recovers, those with the courage to buy during the tough times are handsomely rewarded.
This time will be no different.
