The recent upturn in some of the indicators and the stock market is because of stimulus and businesses cutting expenses. This won't last. There is no stimulus left and nowhere else to cut except perhaps to go completely out of business and sell the assets - if you can find a buyer.
There will be another downturn. Then there will be more stimulus - the last gasp of stimulus, then one more upturn before it all turns south for good.
The books are being cooked right now by almost everybody, trying to make their enterprises look good so that they can get funding. But this can't last because it is all a shell game. Banks are bypassing mortgage relief and foreclosing on properties, then holding on to the foreclosed properties and keeping them off the books to look good.
Banks hold foreclosed properties off their books by not finalizing the foreclosure paperwork, hoping for an upturn in real estate so that they can resell them. The banks don't want to be closed by the FDIC, while the FDIC, which is about broke itself, looks the other way because they can't afford another failed bank. Who knows how many foreclosures are really out there.
Things are bad. Banks aren't lending for fear of defaults. Even though they are receiving zero percent interest funds from the government and loaning those out to only high interest credit cards - over 20%, they are not taking any other chances. For good reason, it is all going to crash and either they know that, or intuitively feel that something is not quite right.
Do you feel that things are okay and on the rebound? If you do, be careful of the next two years; 2011-2012 which will be the beginnings of the worldwide depression
Everything is being manipulated by big business and especially by big banking, and the government needs to stop giving them money and bailouts. Businesses and banks will eventually fail anyhow, so why not let the failures begin. To hold off the inevitable will not really help in the end game. In the end game the country is still going to go broke, the FDIC is going to run out of funds, and our savings and 401ks will be history not unlike GM or California.
Of course, the federal government can print money so we will not go broke technically, but when both milk and gas costs $19 a gallon, and your income has been cut in half, who argues about technicalities?
The reason that this is all happening now, and will inevitably lead to a depression, is because of credit, credit that got so out of control that gambling with our money became the norm on Wall Street. Out of control credit has finally reached the tipping point of no return. Greed has fallen on its own sword.
The good old days will never be back because the good old days were merely a fairy tale fueled by a paper empire of credit that inevitably had to be awoken from. And now we are waking up to the fact that everything will be on a cash basis for the next decade, as it should have been in the past.
This means that after some years at zero percent growth, the economy will eventually sustain a growth of 2 - 3% indefinitely. 2 to 3% is what can be expected without the false effect of credit, and all the years that we have cheated fate by using credit will have to be repaid. This will take time. This is karma, and it is as or more painful on the way down as it was giddy on the way up. Better to be stable.
You will have to save for what you need, and after saving for years, you will not have a tendency to squander your money at the first whim. Consumers will get smart fast, and all the boutique businesses that had no real reason to exist other than excess credit and leverage will disappear.
I hope that I am wrong about this because many people, especially poor and middle class people will suffer greatly. After it is all over, however, there will usher in another age, an age of true spirituality based on human understanding.
That's the good news.
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