Thursday, March 12, 2009

A Few Days and All Forgotten

It is amazing how quickly people forget what is really going on in the world. The stock market staged a remarkable rally this week. It is on its best run in the last few months. Many are speculating that the seeds of recovery are at hand.

Of course, they are forgetting that last week saw the market obliterated. The same financial institutions that are fueling this rally were the culprits then. What is the truth?

I, for one, do not believe that we suddenly solved the economic crisis in a week. There is a lot wrong with all that we are seeing. Unemployment is still going to head higher. The political scene is a mess with Obama spending like there is no tomorrow. At some point, hyperinflation is going to become a serious problem. The banks still have billions in toxic assets on their books. Confidence is still at a low. And, the housing market, the thing that started it all, is still in doldrums. Therefore, what really happened in a week.

The answer: nothing. A CEO came out and said his company was doing well (Citi). Of course, we should remember we heard this same mantra last year. Didn't everyone tell us how stable Frannie and Freddie were just before they were taken over? At the same time, the heads of all the banks we spewing optimism during the economic collapse. So, why are we to believe them now.

At present, I am betting that we are in for a quick and hard downturn. There is nothing to indicate that things are getting any better. A couple of harsh days in the market will remind everyone that the facts are terrible. The world economies are going downward.

America seems to have a short-term memory. We fail to remember the lessons of yesterday. The economic crisis is still weighing heavy upon us. Nothing the government is doing is going to solve this overnight (if at all). Personally, I believe we are in for a period where they only made things worse.

In closing, remember where we were only a week ago. Rome was not built in a day. At the same time, this recession will not turn until we suffer a whole lot more pain; regardless of what the powerful tell us.

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