From an economic forum I often visit:


(People are discussing the Fed's 1/2 percent Discount Rate cut)

I think this is just another band-aid on a big problem. Wall Street is praising Bernanke like he's a God.

The fact remains (in the US), people are being laid off in large numbers, forclosures are still in their early stages, global inflation is going higher, people are not going to rush back into homes, lenders are not going to give easy loans, people are not going to rush out to buy new cars 2 years after they just bought new cars, consumer spending is slowing, good jobs are still leaving the country, we are still being invaded by illegal 3rd world people en masse, the fiat dollar is still a fraud, and the stock market, derritives, hedge funds are still a giant Ponzi scheme that only operates on new money coming in, because all the real value has been siphoned off for the elite's lavish life styles, mega mansions, jets and yachts...outside of that, everything is great!

The credit market problems and coming economic dislocations strongly suggests that a major bear market is now underway.

But the bears are always saying that, in every year of a bull market. When it does turn south for an extended period, then coincidentally, they appear to be right. But they mostly have been wrong. Calling Black Monday a 'bear market', is semantics. And it really wasn't. Then the so-called, 'industrials', lost 23% of their value. For something similar to occur, now, the same index would have to fall below 11,000, from the recent high of 14. The Hong Kong market lost almost half its value in about a week.

And we've seen Fla real-estate booms, in the past. One did coincide with the start of the Great Depression, no doubt. But then that Depression was prolonged by foolish FDR policies. There was similar speculation. And the scammers got caught.

All such 'corrections' appear similar, and 'trickle' into industries in a similar way. There were more than banks and real estate invested in real estate, even back in the 'primitive' 20s. It's the scope that matters.

While those who couldn't service their debt are being winnowed away, those who can are still able to qualify for loans. This is something even real estate agents are now eager to say, to remind people that if one can legitimately take out a loan, repaid at say 30-40% of income at most, and able to make the down, then they can get a loan as they will, at perhaps even lower than 6% fixed depending on terms.

The danger would be if that credit became difficult. This was the cause of the dot-com bust. Investors burned on such speculative investments to fast-talking, jargon-laden Harvard MBAs, refrained from any investment. Businesses had great difficulty continuing financing, acquiring even maintanance loans. The dot-com bust wasn't about the dot-coms. And many are doing just fine, now, and have taken over all the highrise real estate in Silicon Valley. It was about the banks and investors, who stopped investing.

If that were to happen again, the economy would of course be affected in the same way, again. It's not clear if we're heading in that direction. The bears will say we are, and that any upturn is 'irrational exuberance', etc. But I still say that a recession is yet a year and half, to two years away.