March 22, 2009

I'm feeling a sense of returning confidence. That the worst has passed. That we're done with nuclear surprises. That the recovery is starting.

There will still be terrible news to come, especially on the jobs front. Our corrupt monkeys will still be f*cking things up. And companies will be releasing horrific Q1 reports.

But this downfall can't last forever. It's already gone on for more than two years. $40 to $50 trillion has been lost. Half of the wealth of the world has been washed away. GM still needs to go Chapter 11. Banks still need to fail. And the criminals still aren't in jail.

But at one point, we level off, and the recovery begins. And it is always darkest before dawn.

After Bernanke's $1.2 trillion money bomb, Geithner's new toxic asset plan that will be announced this week, the revision of mark-to-market and restoration of the uptick rule that comes the first week of April, and even the start of spring, and I see the recovery beginning soon, if it hasn't already.

And after two massive bubbles, I think there's a risk we'll see a third. 0% interest rates and trillions being pumped into the system is a dangerous game. Unless Volker comes back and takes control (again).

Yes, I have an optimism problem, that's well documented. But something feels different right now. And when all the sheeple are negative and hopeless, that makes me look the other way.

So what do you think? Are we on the road to recovery? Or do we keep dropping into the depths of financial hell?

I see green shoots. Even if that seems nuts.


Singular said...

NO WAY. It is only beginning. Haven't you seen the unemployment news? It is getting worse in America and everywhere else. It is only starting to make its impact felt in the USA now. The unemployment stats show the true situation - and I don't mean the government-doctored ones. I mean the anecotal accounts of friends and acquaintances who are all feeling the squeeze, their businesses struggling, going under, the layoffs, the uncertainty of keeping one's job in the near future, the belt-tightening, the trouble college graduates are experiencing finding jobs ... even little things like women wearing last year's fashions or the year-before-last's ...

The economy is about jobs. Without jobs, people do not spend, and the economy becomes 'constipated'. Eventually, if the blockage is not released, the nation dies.

Doomer Dude said...

The flood of bad news has abated -- unless you count the ongoing need for the Government to keep shoveling borrowed money at failed corporations. I guess this proves that you CAN buy happiness in some twisted sort of way.

It is not widely recognized yet, but despite crushing losses, the Republicans have actually won again. The managed to get a huge transfer of wealth accomplished while ensuring that nothing vaguely progressive like universal health coverage will ever pass because of the massive federal debt now and projected to forever remain on the books.

The big danger now is that the US Dollar really does become worthless as the nation slowly sinks beneath an ocean of red ink.

But yes, there is certainly a glimmer of optimism showing.

Anonymous said...

I certainly wish, I just think it is Spring...the season of optimisum

Anonymous said...

Not sure. I do see some of the banks getting more serious about getting rid of their inventory.

This week it was a a condo for $29.9 that represents an 80% discount off last purchase - FINALLY. Other short sale prices are being slashed, and I am starting to see auctions of commercial properties. We still have a long way to go in this regard, as here in FL there was not 1 piece of dirt that some dumb-ass developer didn't suck up, and some dumb-ass bank didn't lend on.

Miss Goldbug said...

Its been too years to us, but not for the majority of sheeple who just realized what's happening.

The last recession in 1991 didnt actually start to recover until 1997.

This recession/GD2 is much worse, and just getting started. We have a long way to go. Things are bad now, just wait until 4th qtr of 2009...

Its way too soon to be optimistic- we're coming out of the worst economic collapse since 1929.

Anonymous said...

The global demand for goods and services was fueled by the housing boom, by the subprime / Alt-A / Jumbo loans. The HELOCs took care of even more demand.

All that artificially propped up demand has vanished completely, and it does not and will not return.

Therefore, we are going to go back in a steady-state picture to a demand that is like the one around 1997 pre-housing and pre-new-economy bubble.

However, since such a great supply of houses, cars, junk stuff, electronics etc. has been built up in the last few years, we have to digest this supply first before we level off.

The demand that would give rise to some hope for growth must come from somewhere. I do not see from where.

The trillion dollar money bombs are totally lost in multi-trillion dollar holes that have opened up due to popping bubbles.

Dancer said...

Keefer, you are right overall,
on the general 'US' economy, I also agree that Gold is NOT the place to hide.
(there's always that butt. :-))
1)Housing fundamentals of P/E are still not there, although prices have been going in the right direction, remember that they shot up approx. 200% - 300% between 2001 and 2006, and the simple math still does not add up.
2)The Global economy specifically Europe began their downturn later then the US and have worse fundamentals, I believe things are still going to get very ugly across the Atlantic, but it wont have that much of an impact on the US; since China, India, South America, and even Africa will ultimately replace what Europe use to be.

Anonymous said...

And by the way - all those newly unemployed will not create any additional demand either. And the unemployed are growing in numbers of millions around the world. Their purchasing power also vanished. Unless they are back on the payroll again, demand is not going to grow either.

No green shots, Keith. Sorry. This is just a psychological bear market rallye of people saying "we have been in a downturn for too long".

Remember how long the upturns were... the downturns can last after such huge upturns also very long!

Anonymous said...

But but but

what changed?

What did we fix?

What problems did we solve?

Let's see...

1) cooked the country's books
2) sent one d-bag to jail
3) president dude does Leno

Ok, now I understand.

Hey, what time does Best Buy open?

Anonymous said...

Posted back in Feb.

Anonymous said:

"They want to buy all of those new cars sitting at the ports/car lots and destroy them. I think the article said; anything that gets 18 or less mpg will be smashed. Brand New Freaking Cars! W.T.F. Is ELF running the damn country now?"

Are we back to breaking windows because repairing windows counts as economic activity?

Another Anon said:

"2. Restore the Gulf Coast Wetlands and raze every structure within 1/2mile of the US coast."

Breaking windows is bad, but at least government should not subsidize building in poor locations.

"3.Sex education and optional free birth control for every reproductive-age person on earth."

Maybe hospitals should not be required to treat all who show up. If the state takes on the responsibility of health and welfare of all, at some point it will have to control reproductivity. Either we are individuals living free in a society or we are cogs in societies machine.

"4. Improve the flavor and texture of Soylent Green."

Too funny.

The stimulus package as proposed is too slow. They need to dump money on everyone fast, like Bush's stimulus checks last year. They should double or triple the size and put them out quarterly. We need enough inflation to force wages to rise so the price of housing can level off and not lose another 50% of its value. If other countries central banks do not do the same the dollar will fall - but they will do much of the same or they will find themselves in depression. Fund it by "forcefully" borrowing from the Fed at zero percent interest with no maturity date.

Sadly, we will all be poorer materially, or maybe we are just finding out that we were not really as rich as we thought.

True money bombs away.


We are getting closer, but not there yet.

Anonymous said...

I say YES,YES! BUT only IF we live within our means.

I think for most folks recovery means just that, we recover and go BACK to our good way of life when the DOW showed 14000 PLUS and look back to this time period and called it "a bump in the road" with a chuckle.

No,No,No, we owe,we owe,we owe. the dow may go to 4000. We may not be able to pay on the debt with inflated dollars. Ask the Chinese and other lenders first or they may cut us off .

We need to produce something new and exiting like computers or the internet.

What about ROBOTS so the government can give us REAL money for FREE!!

Remember, only in America!!

Anonymous said...

I agree...

Now you can start what you wanted this blog to be in the first place.

The stock market is always 6 months ahead of the game. We'll see how that goes.

I feel that this Toxic Asset Buy Back Program will in turn give confidence to bank stocks once again. This week you will have a battle between the Bulls and the Bears.

Housing report on Monday should be "better than expected."
GDP will suck on Thursday...
But, this is where things turn..
Once the Banks "bottom", then everything should follow.

investorinpa said...

I am starting to agree with Keith...went out to dinner Friday night and there was a 1.5 hour wait. The GOOD restaurants were hopping, people were all about, and there was a "buzz" about things. Granted, it was the first day of spring, and everyone was getting their free Ritas Water Ice, but I think we can say a short/intermediate floor has been established. Retailers that haven't gone out of business yet probably won't go out for some time. Americans are actually tuning out the media right now and with their constant bad news about the economy.

Basically, there is nothing else bad that can happen (short of a terrorist attack or nuke or Katrina type event). Nothing in the market can bring it down. It would need to be an external force (war or riots). And for most Americans, 90% or so who are employed and more than 88% of homeowners who are not in foreclosure, life goes on.

Went2puke said...

I hope you are right, Keith! But I feel the panic is only going to kick in around June. The 2nd half of this year is going to be hell. Get ready for hyperinflation and China and the rest of the world running away from the dollar. Bernanke will lose control of his helicopter and won't be able to recall it back to its base. Ain't seen nothin yet!

Dr Doom said...

Didn't you watch Peter's video? The problem with Peter Schiff is that he has really bad timing...not that he is wrong. We still have many years to go and his words sill ring true...even if they have yet to come to pass. Our government hasn't changed. Obama isn't doing anything was Bush that acted like a drunken Democrat swimming out of the Chappaquiddick river. Yeah Gold could bee the next bubble and it is a shame Peter didn't hedge some of his clients money just in case. But overall I don't think he predicted the global problem (which I think was a huge oversight on his part) and the amount of government intervention to keep us all afloat.

There will be issues to come as pension funds will not be sustained and retirement accounts simply don't take care of the baby DOOMERS. Dr Doom is happy that his plan to screw over the hippy generation is coming to pass. The worst is yet to come and it will all be about things that we overlooked while we were trying to fix this issue. Kiss your retirement money goodbye! One of my co-workers (Obama Liberal...gawd I hate him) joke that we will not have a retirement and yet he is 50+ years old...I laugh since I know he will get screwed the worse since time is on my side...not his.

Anonymous said...

>Half of the wealth of the world has been washed away.



Anonymous said...

Of course it's getting better; we just kicked a huge bucket down the road.

At some point, it's going to become a concrete-filled barrel.

Buy stocks, folks; we are desperate to get as much of our retirement back as possible.

Anonymous said...

Put the crack pipe down.

Anonymous said...

"...We need...housing [to] not lose another 50% of its value..."

No Sir/Madam. Ask yourself a very simple question to clarify the issue:

Can house prices rise more than people's incomes; where does the money come from to pay off the mortgage?

If you belong to the school of thought that mortgages need not be paid(only flipped), then I refer you to what has just occurred and ask how you like the result.

Daphne64 said...

Keith, Keith, where do I even start? Spend some time reading up at and educate yourself on other aspects.

Look at household debt levels. Look at the size of the derivatives time bomb. Look at the US deficit and ask how anything but monetization could possibly happen to the multi-trillion dollar deficits we have coming up.

Look at how stupid the Obama administration is, as well as 99.5% of congress. Congress and the president need to be telling us to prepare to live at 35% of our present levels, and they need to start preparing to ensure that everyone gets fed something and has somewhere to stay. They need to start telling folk that anything beyond semi-basic medical care will be out of reach for many, and they need to tell the old that it's not fun to live into one's 90's.

Instead they are BORROWING and PRINTING money to spend - on any old kind of pork, not even on alternate energy or rebuilding infrastructure for a post oil world.

Look at the level of manufacturing in the US versus 40 years ago. Look at what percentage of THAT is auto related and thus due for a 75% contraction. Consider that in a steady state all wealth of a country MUST come from manufacturing, construction, farming, mining and drilling.

Our finance sector had a bubble. Not only is that bubble popped, there will be virtually no need for construction loans of any sort.

The winding down of jobs is only beginning. A lot of folk still work in restaurants, for example. A lot of clothing stores are still in business.

Most people with jobs have not burned through their credit lines or spent all their retirement money. That will change.

Then there is the earth: did you know that the 800 largest oil wells are depleting at an average rate of 9% annually???? That the oceans are projected to be fished out within 50 years? That water will be an increasingly scarce resource (for example the Oglalla aquifer WILL run dry in 30 years or so - buh bye irrigation in the great plains!)

Did you know half the worlds growing areas are in drought right now, and a food shortage might occur this year?

Have you forgotten those charts that show all those option ARM mortgages resetting?

You were just kidding about hoping we are near bottom, right?

Anonymous said...

Three more banks made it on the FDIC failed bank list that make 20 banks so far this year

* TeamBank, National Association, Paola, KS

* Colorado National Bank, Colorado Springs, CO

* FirstCity Bank, Stockbridge, GA

patrat said...

Spring fever.

Anonymous said...

If you people understood anything about macro economics you would understand this can only end one way. You ignore the fundimentals (the data) talk about nonsense as if some clown like Obamma or Bernanke could flip a switch and magically create a real global economy rather than the ponzi scheme that developed because of massive imbalances.

Massive imbalances. Send the means of production to third world slave factories and build a massive system to exploit consumtion in the US. Note I say system and not economy. Debt levels 130 percent of income mean a bank on every corner housing and other asset crashes do to artificially inflated bubbles. As my freind said earier its all about the jobs dummy.

Within 6 months you will see the endgame. The NWO/Banksters will exicute their their seizure of all paper backed by all assets for five cents on the doller (oBAMMYYYYSSS PRIVITE BUYBACK OF TOXIC ASSETS WITH YOUR MONEY). The money they will use is yours, bailout money. Any fool could see this happening from orbit. No way for the little greedy pig to profit.

After that its over. No more fixes. The real power got what they were after, everything and they didn't have to spend a dime. They won't give a flying fuck about a program to create a job. It was always all about the banksters. No one will attempt create a real economy. The power now owns everything including you. Globalist fools and tools. Suffer you dumb animals.

PS Those of you you believe like Schiff in a real, productive economy were people go to work producing things your neighbor needs and buying what they need with the money. You are not dumb somthin for nothin animals.

Anonymous said...

Who needs a helicopter when you got a F150.

On the busy freeway, the suspects flung mostly $20 and $100 bills out of the truck's windows.

As the cash blew across lanes, motorists slammed their brakes in the middle of the road and scrambled to pick up the bills

"We saw people stopped on the freeway and running around,"

Mark in San Diego said...

Perhaps one of my last posts - I have gone over to the DARK SIDE - We bought a condo on Thursday - at "blowout reduced price" from the developer - beyond my wildest dreams of what we could afford when we moved to San Diego - downtown highrise with the works! We lowballed the developer with CASH and they took our offer. . .

I AGREE- when all others are now depressed, I was buying more Canadian oil stocks two weeks ago. . .why, because Canada is safe oil, and the USD is in the toilet, and oil is traded in dollars. . .my bet already paid off as both energy trusts PGH and PVX have gone up at least 10% since I bought. . and they pay a huge dividend. Also bought a few selected tech stocks at bargain prices (when those balance sheets folks). . .

Funny how buying a place now makes me see the bright side - yes, unemployment will continue up, yes retailers will go belly up, and NO, GM will "muddle through". . .I bought GM junk bonds at 13 cents on the dollar, and they are now 18cent. . .

SO my take - an "L" recover. . .sharp down, and then long slow recovery to a "new normal" (very slow economic growth)

Anonymous said...

Without GREED their can be no FEAR.

Now what is the path of less resistance.

Hedge Fund Apocalypse: Massive short squeeze on Citi could wipe out dinosaur funds

In a nutshell, dozens of hedge funds set up the pair trade in early and mid-February.

Then they were blindsided when the bank giant announced a preferred for common exchange offering on Feb. 27.

That offering effectively wiped out the short side of the pair trade by making it very likely the U.S. government should enter into the exchange, causing a decline in price of preferred stock.

But many funds were likely naked shorting the trade and so a massive scramble ensued to get shares to cover short positions.

This played a key role in driving up shares of Citi (Our Piqqem Sentiment on Citi remains neutral, holding at just under 200 points on the 0-400 point rating scale).

Tyler at Zero Hedge estimates that the minimum downside exposure held by those engaged in the pair trade was $5 billion and could go much higher depending on the final terms of the exchange, costs levied by brokers for locating and holding shares required of short trades, and price movements in both the preferreds and the commons.

Worst case? This could be another Volkswagen-like nuclear bomb for many well-know hedge funds.

Anonymous said...

Economic Forecaster Predicts "Greatest Depression"

'Nuff said.

GT Charlie

Anonymous said...

I want some of what your smoking!

image009 said...

You have no idea what you are talking about. There will be no "recovery". The entire system will collapse and only through violent revolution will we begin a new world system based on the principles of democratic socialism.

Ron Paul is right! said...

Nope, not buying yet. You go ahead and jump in the pool if you want, tell me how the water is. And if its nice, I may jump too.

Then again, I got out of stocks about a year too early, I'm not much of a gambler. My house, I've been here 13 years and owe less than half of original purchase price. Not in any rush to do anything there either.

I still think unemployment and deflation is going to hammer the market. In another 1-2 years I think we see bottom. Thats my call and I'm sticking to it. But I certainly don't claim to be all knowing or anything. Like I said, I am pretty conservative.

Anonymous said...

What is the difference between a bar rally and a bull rally.

Rally's Legs May Wobble If Gains Based On Short covering

Some of the recent rally in the market's most beaten-down stocks, such as financials, may be the result of investors covering short positions, raising questions about the long-term endurance of the move higher.

"I think particularly with the big rally in financials, we're seeing a lot of short covering," said Ken Tower, market strategist at Quantitative Analysis Services. "Fundamentals haven't changed enough for financials to really generate that much enthusiasm."

Investors who short a stock are essentially betting that its price will fall - - first borrowing the shares from to sell them, and then buying them back at a hoped-for lower price.

When the shares are returned to the broker, the difference is the short seller's profit. But if the price rises, as has been the case with many financial stocks this month, they are forced to "cover" their positions by buying shares.

Some of the companies that have rallied the most in recent weeks also are the companies that topped the list of most-shorted stocks.

Citigroup ranked third on the most-shorted roster among NYSE-listed companies at the end of February, according to the most recent data made available by New York Stock Exchange.

American International Group (AIG) was at No. 5, while the Financial Select SPDR Fund, Wells Fargo & Co. and Bank of America all were among the top 10 shorted stocks.

Shares of Citi and E-Trade Financial (ETFC) have risen 46% and 56% each this week.

Anonymous said...

Not a chance, because the fundamentals are still not sound. The damage done was just to large for this be a normal cyclical recovery. The good news you hear is nothing more than denial and a false hope that the gov't spending is fixing everything. We still aren't fundamental on house P/E, we still have rising unemployment, we still have a huge and growing federal debt staring at us in the face, and we just printed the first extra trillion to begin the destruction of the US dollar. Any recovery talk is just denial, short term thinking, or watching the dead cat bounce.

We will start recovery when we hit bottom. We will hit bottom when the fundamentals of the cause of all this are cleaned up. Housing prices to income levels, and the wiping out of the banks/entities holding the crap mortgage backed securities.

Anonymous said...

"...investors will get involved again -- if the market can post several days/weeks of strength..."

Makes sense; watch carefully for higher prices to buy...

and lower to sell.

"...Most will miss the rally..."

Not us brother; we took it in the ass and lost half hanging on.

In for a dime, in for a dollar.

uncle ben's vice said...

"0% interest rates and trillions being pumped into the system is a dangerous game."

The economy is like a dying patient in the intensive care unit.

Dr. Bernanke has prescribed massive injections of morphine to ease the transition from life to death.

His remedy has 'numbed' the painful contractions, but the economy remains terminally ill.

The 'patient's' insurance limitations have all been exceeded - the policy has been canceled for years.

Dr. Ben has become an outlaw practitioner.

And patience with his practice is wearing thin...

Andrew from Russia said...

Welcome to 1930. I could not have put it shorter.

Anonymous said...

"...the recovery is starting."




Anonymous said...

Isn't Countrywide Gone

A unit of embattled insurer American International Group Inc. filed suit against mortgage lender Countrywide Financial Corp. in California federal court Thursday, alleging Countrywide misrepresented the health of loans that the company insured, resulting in massive losses.

United Guaranty Mortgage Indemnity Co. filed suit in U.S. District Court, accusing Countrywide of breach of contract, fraud, negligence, and unfair competition and business practices.

United Guaranty alleges Countrywide "abandoned its own underwriting guidelines to boost its market share and then misrepresented the quality of its loans so that United Guaranty would provide insurance coverage for them."

Lady Di said...

One more big drop down. It will happen when people are suckered into thinking that the worst is over.

Then, recovery... a slow and painful one.

Anonymous said...

It is not what they disclosed that you fear, but what they don't disclosed.

How many small banks are really safe.

Regions Financial Corp. is defending itself against several lawsuits brought in 2007 and 2008 by investors who say Morgan Keegan violated securities laws by failing to disclose it was investing their money in subprime mortgages and risky debt.

Anonymous said...

The change you are sensing is real, but it is not a recovery or the returning of confidence.

It is simply the acceptance of the new status quo that marks transition from Panic to Capitulation. The bad news is out in the open, and people are dealing with it. The huge drops in the DJ have ended. I have recently heard many boomers say that they'll never be able to retire. Life plans are changing, careers are changing, attitudes toward spending and investing are changing. Capitulation is everywhere.

We now start the long, slow, painful grind downward as unemployment increases, the DJ drops, savings run out, and more and more people start to internalize what it really means to live on much less income, to forgo retirement, and to rely on relatives and welfare. That is the road to Despondency and eventual Depression.

During Fear and Panic, you could at least sit back with popcorn and watch the fireworks. From here on in, it will be the unrelenting drip, drip, drip of bad news.

Hope must vanish completely before it will return again. That day is a long way off.

Daphne64 said...

I forgot one little thing in my earlier rant: global warming. The gigatons of methane are starting to be released, and so we are past the point of no return.

keith said...

The funny thing, this "green shoots" post feels sooooooooo wrong

It feels so contrarian

It feels so early

It feels wrong, wrong, wrong, wrong.

But my gut is telling me something different.

And it really comes down to the Fed hitting the pedal to the max, as he said he would, and this April 2nd mark-to-market change.

That's the big day. That's the day that historians will likely look back on.

But if M2M doesn't get changed, then oh, look out below. I also think Geithner may lay another egg this week.

I'm not saying go buy. I'm saying challenge group think here, challenge your beliefs, and at least consider that we may be bottoming. That after half of the wealth of the world has been washed away, that we may be about to turn a corner. That enough damage may have been done to get us back to some sort of equilibrium. And that this wall-to-wall economic collapse media coverage makes up for three years ago when Time Magazine had its Ga-Ga For Housing cover.

Anonymous said...

Part of the problem with using inflation to kick start the economy is that it can take away more jobs which will add fuel to the growing downturn.

But another problem is many people will not be able to afford food.

Scarcely a month before Iowa farmers begin planting corn, a standoff of sorts between farmers and fertilizer sellers is happening throughout the state at elevators and supply stores.

Farmers who want to add the nitrogen, phosphorous and potassium necessary for corn planting are staring at fertilizer costs that still hover around $900 per ton - six times what they paid before 2005.

Yet they're aware that the cost of natural gas, the basic catalyst to produce chemical nitrogen fertilizer, has dropped in price by about two-thirds since last summer.

They wonder why those reductions aren't reflected in the price of anhydrous ammonia tanks.

Wind Farmer said...

You've only just heard the overture.

Wait till the Malls close.

Anonymous said...

Daphne64 said,

gigatons of methane are starting to be released...

If we are past the point of no return then party like there's no tomorrow,

Drop your pants, like a Kennedy


Burn that fossil fuel baby!

Have a nice day!


Anonymous said...

Hey Keith ! Boy do i have an awesome bridge to sell you.
You were 100% wrong on Obama and you are 100% wrong here . This shit has only just begun..

keith said...

You mean in America the malls are still open?

Wow. - Elite Stock Trades said...

It's ALWAYS been about the OTC Derivatives - 1.1 Quadrillion of them. We can't print our way out of this. Until a good majority of these are purged from the system we cannot recover. If the printing press could fix this we would have ended nasty things like world hunger a long time ago. Central banks around the world have chosen to "monitize." Hyperinflation is unavoidable at this point. All "fiat" paper will become essentially worthless and the world will demand a gold or asset back trading currency. This is coming soon. Got gold??

West Coast Willie said...

Daphne 64 got it about right.

Keith, your argument is based on hope, gut and the magical effect of the elimination of mark to market.

Pull back a little outside the frame of your green blade of grass picture and you will see a homeless person about to pick it to put into a little salad.

Best case is that the rally will be extended a couple more weeks.

Anyone notice how the cocktail chatter now is all about 201ks, losing jobs, and shared misery?

Quite a change from the self-congratulatory, I cant believe how much my house is worth now, conversations that were the norm in this affluent neighborhood where I live just two years ago.

I think most people still believe things will get better contrary to your contrarian view.

Re gold, things are just getting started folks. Better get some of that "silly" shiny stuff before it heads north of 1,000.

Nimesh said...

We are not even close to a recovery. As usual Keith, you have jumped the gun. Look, our nation is up to debt up to our eyeballs. Consumers, government and our businesses are way too much in debt. Thus credit is being pulled out and here comes the deflation train.

Also, for the past 25 years America has lived off increasing asset prices, NOT productive work. We are in a deep hole. Plus, you add to the fact that Social Security is inadequately funded and most Baby Boomers only have $60,000 saved up for retirement.

All of this spells disaster for our nation. But we will endure but as a people we will learn to live below our means.

RICO said...

The PTB are fertilizing last years crop of hybrid corn.

The seeds are dormant.

But their process of slinging manure makes for good theater.

The locals are still hungry for entertainment, but starving for results.

too much rope said...


Are you going soft on us? Seriously, I don't know that we are anywhere near that point. I'm agree there is a sense of the worst being over. But I think that is mostly there because, just like thinking your house will keep appreciating, the average American seems to think that wishing will make it so.

If this is the beginning of a recovery, it would allow this country a far, far easier reprieve than this decadent culture deserves, but we've always been pretty lucky in the past, so who knows.

Anonymous said...

Mark in San Diego,

You could have bought anything two weeks ago and it would be up 10%. Heck you could have bought Bank of America and it would be up about 100%. AIG would be up 150%.

The S&P500 is up 11%.

Anonymous said...

"...If you people understood freind said earier...exicute their their seizure...(oBAMMYYYYSSS PRIVITE BUYBACK...Suffer you dumb animals..."

What could be more painful than trying to slog through that?

KJ said...

Keith wrote "I'm feeling a sense of returning confidence"

Is it confidence or sheer hope? If its confidence, what's it based on? If it has no discernible basis, then it's hope.

Most people I talk to are worried about impending inflation, gas prices going back up, wages or hours going down.

But there's also a sense of muddling through because what's the alternative? So maybe it's pragmatic determination that your gut is sensing.

Anonymous said...

IT'S A LULL. That's all.

Grandma PKK

keith said...

Good feedback. I know I'm early with this gut instinct, but we'll see.

The M2M change on 4/2, if it happens, will be big. If it doesn't, that'll be big too. As in Greater Depression big.

And this battle between central banks to devalue their currency the most is also a big, big story. Watch the dollar this week.

I expect Europe to keep crashing, bad, as their central bank sits this one out, at the same time their governments are paralyzed and directionless, and their structure makes a bad thing worse.

Believe it or not, the one country on earth doing the most to dig itself out of this disaster is the US. Right behind them is the UK. So the two that caused it may come out of it first. China is also making some good moves. And Russia will recover along with oil.

That'll leave Old Europe and East Europe cleaning up the toilets. For a long, long time.

Anonymous said...

I thought the world wasnt going back to normal after what they had done?

If we recover NOW then those who should be learning some lessons will have learnt NOTHING

Anonymous said...


This Rolling Stone article is perhaps the single best piece of investigative journalism I have seen yet on the AIG Crimes against America....

In a nutshell??

We ARE EFFED, and Goldman Sachs is driving the bus off the cliff!!

Please post this link far and wide...we need to EDUCATE our citizens!!

Anonymous said...

What could be more painful than trying to slog through that?

March 22, 2009 7:07 PM


hp fan said...

At the center of a fierce tropical storm, there is a small area where the weather is calm, the sky is clear, and the winds are just light breezes. This area is called the eye of the storm.

We are likely now in the eye of the financial hurricane.

Go out and buy real estate, commodities, or stocks if you want but prices for everything will be cheaper a year from now.

The debt bubble grew for over 30 years. Unwinding will take decades not years.

Anonymous said...

You seem to taut that eliminating M2M is big and a good thing. For those holding the toxic crap yes, but eliminating it should also destroy and secondary market for securities. Would you buy on if you didn't know what the assets backing it were really worth or better yet, knew they weren't what they were listed at.

vanilla ice said...

God I hope the worst hasn't passed. I hope it's coming.

Anonymous said...

It is not widely recognized yet, but despite crushing losses, the Republicans have actually won again. The managed to get a huge transfer of wealth accomplished while ensuring that nothing vaguely progressive like universal health coverage will ever

Hey dork, Barney Frank and Chris Dodd are the ones that pulled the trigger and they are not repubicans.

Paul E. Math said...

'L'-shaped recovery.

Which isn't a recovery at all, really.

A real recovery won't occur until everyone has stopped looking for a recovery.

Keith, you are way, way ahead of this one.

Mind you, I do expect this stock rally to continue for a few more weeks for all the reasons you listed (Bernanke money bomb, dropping M2M, restoration of uptick rule).

Also, certain sectors of the stock market will benefit throughout the year from stimulus grants and subsidies. Watch for announcements of the alt energy grants to boost the entire sector.

I am also particularly interested in advanced battery companies. The industry is small and the companies are small, especially relative to the amount of money in the stimulus plan that is to go to these companies.

Disclosure: I own some AXPW (I'm down about 15% on it at the moment). Thinking hard about buying some ENS and XIDE - wish I had bought some when I bought AXPW.

friday said...

as usual - right on. been following you for 3 years.

its not over - and the recovery will be slow but just normal recession stuff to deal with now.

Anonymous said...

Keith, you've probably read that people tend to miss the bottom of a market, because the bottom is only recognizable in hindsight.

I have doubled my money on a couple $10K lots of stocks in the last two weeks. Huge insider buying at some firms showed me the light. These C-level people hardly made any buys all last year, and now they are on the move again.

As usual the wealthy are in the know and move early. The poor and middle class pile on later and make the richer richer.

I also sold all my gold last summer at $900/oz. Between what people were willing to say out loud about gold, and all the $5K/oz talk, I figured it was time.

mimi said...

I agree. However badly handled - total worldwide financial collapse seems to have been averted. It will by no means be a picnic and Wall Street and banking may never have complete faith restored - no sad thing in my opinion. Maybe it is just Spring - but there is definitely something in the air - maybe it's just money falling from Ben's helicopter. Time to stop pointing fingers and fix the broken pieces.

Anonymous said...




Chris said...

"The world will never be the same from what they have done"


"I see green shoots of recovery"

A little Bi-Polar Keithy?

Anonymous said...

But my gut is telling me something different.

Yep, I remembered when your gut was telling you to buy AAPL @ 140 last year. How has that turned out for 'ya?

By all means Keith, jump in the rigged market. "They" are waiting for you. Be ready to lose another 20%, though. Oh and BTW, this must be the 4th time you're calling a bottom this year.

Anonymous said...

Ha! Am I the only one who noticed how after Bernanke dropped the bomb last week, the market only increased 90 pts, and then dropped 120 next day?

Oh yeah...seems like optimist.

i've had it said...


i can tell that spring fever has gotten the best of you! guess it's hitting earlier across the pond than it is here.

i wish i could be more optimistic, but my b.a. in economics, masters in finance, and a couple of decades in the workforce lead me to be pessimistic.

the positive statements from the government and bankrupt companies will continue for a while. all of this has been designed and planned over the past few weeks. after so many weeks of doom and gloom, they all got together and put the plan in place to boost confidence, starting two weeks ago. all of this led to the present rally.

yes, it will continue:

1) geithner will announce his plan to save the world this week,

2) mark to market will be repealed and uptick restored the next week,

3) the Fed or Treasury will announce another scheme the week after that.

4) the banks will report positive and doctored 1st quarter earnings the week or two after that,

and so on and so one.

this bear rally has more room to go. but not for long. the fundamentals are still atrocious...for america as a whole, particularly with BO's trillion dollar money bombs and multi-trillion dollar annual deficits.

the unemployment situation is dire; much more dire than the government says. and it is getting worse. i personally know three people in the tech industry, well into their careers, who are out of work...i didn't even see that with the dotcom bust.

the govt. is lying about food is through the roof. home builders are still building houses -- this was seen as a plus by the morons on CNBC but we know's just dumb builders trying to stay in business on borrowed money and a few greater fools out there who think the worst is over.

people are scared. very scared. more scared than they've ever been. they are changing their values and focus on "things". this has huge implications. it means they won't spend as much going forward, permanently. this of course will make the decline continue, regardless of whether the banks feel confident to lend. if people don't want "things" anymore or don't want new loans because of their fear of the future, then we ain't going anywhere.

geithner and ben can give all the money they want to banks but if folks have no intention of borrowing then they'll end up laying off their loan officers.

we don't even know what will happen with the alt a's, option arms, and jumbo primes over the next three years. if "tiny" tim's (geithner) plan doesn't fix this upcoming problem, and housing in general, then i don't see how we get out of this for some time, indeed.

again, all of this confidence building has been planned by our "leaders". they didn't tell us of course of their private meetings, phone calls, and emails to put it all together...but that's what they did in february.

but it won't work.

there are fundamental changes going on with people, and the carnage of this economic downturn is NOT over. moreover, the shift of economic power to asia will take place full force whenever a recovery does happen, hurting us even more.

nope, more pain to come...after this false rally ends.

i like the pic of the new shoot though. hope springs eternal...

...just not this year.

scooter said...

There will be no "recovery". Everything has changed. We've been living beyond our means for decades now. Time to pay the piper. 60 trillion in unfunded liabilities. Monetization of the debt and hyper- inflation dead ahead. This is the beginning of collapse of the American Empire. It's over.

patrat said...

"Quadrillion" of them.

Yep, I have heard the word quadrillion out of the TV a couple of times lately.
I hope this is not like when a credit card gets out of control...

patrat said...

Just a few thoughts and questions:
1. 50 percent of households make under 50K a year. About 25 percent make under 25K. How much house does 31 percent of that buy?
2. In Western Europe it is not taken for granted that you will own property in your lifetime. That's been the case for a long time. In Eastern Europe people were used to marrying and living in a room in their parent's apartments not too long ago.
3. When did it become so difficult for a man to support his family, that a wife had to work? What years, what circumstances? How did people survive before that?
4. It seems that there is a huge gap between what the average person can earn (without living on credit) and what the essential things like housing, health care and transportation cost. What is the solution to that?

patrat said...

Oh also, that 31 percent thing - if you make 21K a year and can therefore buy a house that you spend 7 K a year in payments on, what does that leave you to live on? 14K? This little rule of thumb only goes so far. There is a minimum threshold of money that you must have to survive. And as your income goes up, the rule is much less true also - if you make 34 million a year you can cover almost any mortgage with enough left over to feed several small towns.

Kent said...

I seriously doubt that we've seen the bottom. Banks have been beaten from bad investments but not from bad loans on the commercial side. Those represent the bulk of loans that 'bread and butter' (neighborhood) banks have on their balance sheets. Sure, some weak builders and developers have gone by the wayside, but the downturn in consumer purchasing (which has translated into business losses) has barely begun to be felt by banks - but WILL - as their commercial customers begin submitting their money-losing financial 2008 statements to their lenders. This is a multi-stage depression and we are simply seeing a passage form one stage to the next. Recovery??!! Let's talk about slowing down the hemorrhaging for a while first....

maximus said...


i agree that there must at some point be a leveling or at the least a decrease in the RATE of damage done in the markets....however I am hardpressed to believe it will be due to a government plan, but at this point anything's possible.

One thing that bothered me about your post is that you say half the world's wealth has wasted away--that is simply not true--it has been REDISTRIBUTED.

If you pay $100 for an item and sell it for $50 SOMEONE got that $100 and you only got $50 back--the $50 you lost did NOT disappear.

It's vital for people to understand this--there is someone else--a winner-- on the other side of these bets losing investors in stocks and real estate have placed, and it's clear they will keep steali..errr gaining against the average investor's losses until the average guy gives up or loses everthing....

Investors must keep following blogs like yours that stay on top of the trends so investors can learn to SCALE IN and TIME their investments better and not be greedy in trying to maximize gains or regain losses.

Continued success with your fantasic blog.


Dogcrap Green said...

Yeah Keith things are looking up just like they were in 1959 when castro brought Social Justice to Cuba.

patrat said...

I guess I am thinking about "the world cannot return to normal..."
What is normal?

Arlene said...

Sorry, Keith, I don't see it.

This is an L-shaped deflationary depression--with elements of our own 30's and Japan's 90's.

What would really drive a "recovery"? New products? New modes of living? New kinds of jobs? Where?

We're busy pouring what's left of "our" money into propping up vestiges of the good old days, on top of the unending ransom to various corporate criminals (ie, AIG, et al).

I would be happy to be persuaded I'm wrong. Nothing would please me more, but I just don't see it.

upthecreek said...

Sorry keith ...

WHEN YOU SEE THE STATE OF CALIFORNIA and the rest of the nation.

fix its pensions problems.. then and only then I may see a ray of hope.

and besides how will we ever pay for the huge budget defecit unless we start another War

Angry Leprechaun said...

Not buying it.

Keith, when you supported Ron Paul, you made predictions on thought using your brain, then you drank the kool-aid and now you make predictions with your feelings of hope. Start using your brain again please.

We are throwing more debt at this mess. It won't fix anything. We are broke.

Recovery will start when basic fundamentals are returned to. If you make a buck you can spend a buck. If you make two bucks you can spend one and save the other. But if you make one buck and spend three your down. We are way down. said...


The sprig of green confirms to be you are subconsciously enjoying the most fundamental seasonal affect on the human body, spring. The time when the sun rises in the sky and enough bright light comes thru your eyes causing the body's natural melatonin level to drop.

When that happens, you feel oh so much better than during the darker days of winter. That's what your feeling, even expressing it with a show of a sign of new spring growth! Unfortunately, certainly nothing about the fundamentals of the economy have changed anything one bit.

If you are to look at nothing more (among the dozens of other shoes to drop out there) than the tsunami of continued first time unemployment claims, you see what is laying the foundation for a serious dislocation later in the year. That, when the first large wave of extended benefit periods run out.

From there on out, it's off to the races, and not in a good way.

We are without a doubt entering a period where we're gonna have to make things work among just ourselves, cuz, the PTB are creating an unsalvagable mess out of this.

Anonymous said...

"You seem to taut that eliminating M2M is big and a good thing. For those holding the toxic crap yes, but eliminating it should also destroy and secondary market for securities. Would you buy on if you didn't know what the assets backing it were really worth or better yet, knew they weren't what they were listed at."


Don't bother. Keith's drunk the Kool-Aid on mark to market.

Anonymous said...

"Believe it or not, the one country on earth doing the most to dig itself out of this disaster is the US."

Really, Keith? Really? What great, new products and services are we inventing or selling to the world?

If printing and spending money was the path to prosperity, then Zimbabwe would be the wealthiest country on Earth.

patrat said...

Oops I made a mistake - I should have made the numbers more the same.
The person who makes 21K and pays 7K (31% of his imcome) to housing doesn't have enough to live on.
A person who makes 21 million, pays 7 million for housing (31%) still has 14 million left over and has more than enough to live on.
That's what makes the 31% rule only true for a certain class. So if a real estate agent says you can do this because you are only paying 31% of your income, beware of it. It depends on your income.

keith said...

Contrarian folks. Think outside the groupthink.

Give it some thought. Challenge your beliefs.

Think a few years back, when people were standing in lines to buy condos. And Time Magazine had its Ga Ga for Housing cover.

Remember how those days felt?

Now take the EXACT opposite, and that's where we are today. There is no other news now besides this crash. It's everywhere. Shoe shine guys and bartenders are talking about gold, and a Great Recession. It looks like every company on earth will fail. Half of the wealth of the world has been washed away. It's tough to find anyone who thinks we'll recover anytime soon.

It's as contrarian today to be a bull as it was as contrarian to be a bear three years ago. And I'm not talking stocks, I'm talking any asset class.

Give it some thought. I'm not in the bull or bear camp with both feet myself. But I'm considering the idea that all the sheeple are now going one way, and I don't like being with sheeple.

First thing this morning is to figure out the dollar...

Mitesh Damania said...

If you didn't live like there was a depression around the corner, you're going to feel some serious pain!

keith said...

Here's Schiff:

"The Fed is going to destroy the value of the dollar," said Peter Schiff, president of Euro Pacific Capital. "It's going to end in a run on the dollar, and we won't be able to consume anymore."

Given a weak dollar raises commodity prices, Schiff recommends buying foreign stocks, gold, silver, oil and agricultural products, and dumping currencies. The perma bear has been predicting the demise of the U.S. economy for years.

Anonymous said...

Shoeshine guys and bartenders are "talking" about gold.

Ask them how much they own.

Zip Zero Zilch Nada

Anonymous said...

A nice read that tells us between the lines why we are still not at the bottom yet.

Denial, greed and a basic understanding of fundamental economics are still the norm.

Anonymous said...

Blogger Mark in San Diego said...

Perhaps one of my last posts - I have gone over to the DARK SIDE - We bought a condo on Thursday - at "blowout reduced price" from the developer - beyond my wildest dreams of what we could afford when we moved to San Diego - downtown highrise with the works! We lowballed the developer with CASH and they took our offer. . .

I AGREE- when all others are now depressed, I was buying more Canadian oil stocks two weeks ago. . .why, because Canada is safe oil, and the USD is in the toilet, and oil is traded in dollars. . .my bet already paid off as both energy trusts PGH and PVX have gone up at least 10% since I bought. . and they pay a huge dividend. Also bought a few selected tech stocks at bargain prices (when those balance sheets folks). . .

Funny how buying a place now makes me see the bright side - yes, unemployment will continue up, yes retailers will go belly up, and NO, GM will "muddle through". . .I bought GM junk bonds at 13 cents on the dollar, and they are now 18cent. . .

SO my take - an "L" recover. . .sharp down, and then long slow recovery to a "new normal" (very slow economic growth)

March 22, 2009 4:20 PM<<<<

gee mark what if the re market in sd has not reached the bottom yet? what if it continues downward and you are upside down on your investment? did mexicans build that condo project? did you see one white man working on that job? ever? did you check to see that it was built according to code in every way? to me, condos are just glorified apartments. i really do not understand how anyone can live like that, but hey, that is just me. one final note, is it difficult to get to the stairway in case of a fire?

Anonymous said...

As someone else pointed out, are we sure Bernanke wasn't seeing "green chutes"?

Mammoth said...

Nice Picture, Keith.

That reminds me – isn’t it time for Tulips to return right about now?

Devestment said...

Yes, it is all very predictable. The entire scenario is playing out as if dictated from a play book. This is why at some point the pendulum will swing and interest rates will soar. The cash investment will be king and money will run from gold into treasuries. What does it cost an ounce to mine gold? Where is the P&E for mine operations that will dictate supply meeting demand?

BG said...

I'm not sure if this has been mentioned in these comments (I don't have time to read all 92), but the next shock to the system is the credit card defaults. So, I'm not sure if it's over and we have turned a corner. People are drowning in debt and they can't HELOC anymore to save themselves or they have lost a job and never had a cushion. This is the next shoe to drop.

i've had it said...


you said:

"shoeshine guys and bartenders are talking" about gold...just like housing in the bubble days..

remember one thing: they are just BEGINNING to talk about it. when the shoeshine guys and bartenders began talking about buying condos seven years ago the bubble went on for five+ years after that! and they were right about it, for those five years.

so, if we look at them talking about gold the same way today, then we've got five+ years of recession ahead of us before the upturn.

Anonymous said...

"Shoeshine guys and bartenders are "talking" about gold.

Ask them how much they own.

Zip Zero Zilch Nada"

...and? During the tech stock bubble lots of people talked that didn't own. Same with the RE bubble.

People actually owning doesn't indicate it's about to fall. It's when a poor person tells you that 'x' is 'the way' to get rich.

You don't actually expect someone making $6/hr to go out and buy an oz. of gold, do you?

Brandine said...

Saw a headline over at Drudge. Something about Obama being interviewed on 60 minutes, I think. Seems he was laughing and joking about this terrible economy and the interviewer asked him if he was "punch-drunk".

It's funny to our president that the country is being looted and people are hurting. What does he really care? He's not doing without anything. He's one of them.

Anonymous said...

well keith it doens't matter what the sheeple are doing. we are in unchartered territory. we have never seen this stuff in our lifetimes. so how can anyone make any predictions. considering all of this is manipulated anyway, what difference does it make? the goal. to destroy the united states. it is that simple. let me say it again. we are dying. we will never return to business as usual. this is a event that is being staged at this particular time to bring on the new world order and its one world government. keeping that in mind, will make you , think outside the box so to speak. so like a heat seeking missle, locking on to the target, always stay focused on what you need, not what you want. for the days that are coming will be filled with race wars and strife, and this is planned. we will be under martial law and this is planned. they wish to take all weapons. this is planned. as i have stated before. the time for talk is over now. but the real question is , just who will make the first move, those in our government who see these things as they are and want to do something about it(on the inside) and the people on the outside, or the government and its many useful idiots who bow the knee to the neocon agenda? that is the question.

Anonymous said...

at the above link was discussed the following matter.....

Dull Side Of Gold

But gold's move up has gone too far too fast, warns Janice Dorn, a veteran gold futures trader and founder of She expects the yellow metal to drop by $100 an ounce or more to $850 over the next few weeks.

"This will occur as those who 'just had to get in' because gold looked so good and can only keep going up, will jump out very quickly as soon as it starts to tank," said Dorn. She recommends those holding long positions to sell into strength.

Economic weakness has softened commercial demand but strengthened psychological demand.

"The physical lack of demand for gold has to take hold, and we may see it move more in line with other commodities," said Dan Cook, senior market analyst at IG Markets.

maybe its just me, but what planet are these idiots living on? has anyone went out and tried to buy gold or silver coins lately? lack of demand for physical???? are they out of their vulcan minds???? i think they are trying to say that physical gold and paper gold are the same. they are not. and never will be.

Anonymous said...

So now you can delete that sidebar list full of potential riots around the world, Keith. Good times are here again.

Everybody's rich: $4,000 Macbooks, $25k Harleys, $60k BMWs, and $700k McMansions will be flying off the shelves soon, right? Right?

The big deal financial collapse that Keith has been announcing as the end of the world for years, lasted only 6 months, according to him and the market. No soup kitchen lines, no riots, nothing...

DOPES was right. Hey DOPES, create a blog because you have more credibility.

Anonymous said...

It's as contrarian today to be a bull as it was as contrarian to be a bear three years ago. And I'm not talking stocks, I'm talking any asset class.

Excuse me but you have to get out of your Wall Street/London bubble to look the real world once in a while.

People are bears because they're getting pay cuts of 15% or more, because unemployment in California has just reached 11% (real is more like 20%), the "E" in P/E is totally fake by using trailing numbers.

Sure, Turbo Tax Tim & Bernanke can fix the balance sheets by creating off thin air trillions in debt that helps only their master bankster and no one else, they can also bring the PPT to pump the market as they announce the heist, parade the Messiah on the screen and covers 24/7 to make all the idiots feel fuzzy inside, then call MSNBC and The New York Times to make it look official with big fluffy headlines.

However, the fundamentals are still rotten to the core.

The market has gone what, 20% since the last slump this year? But how much down is the average portfolio and net worth for the last 3 years? 30%, 40%, 50%, 60%, plus inflation?

Funny how right before April 15, as BO ratings sink, and after Dodd & Co are getting grilled by public opinion, Turbo Tax Tim and Bernanke get busy and Mr. market takes off. Funny how that works.

Is it really a contrarian when all the crooked talking heads on CNBC have been calling a bottom and good times for the last 12 weeks? I thought being a contrarian would be buying with both fists when those freaks are throwing in the towel.

Not sure but I still believe that this is the perfect time for a gigantic fleecing of the contrarian-wannabes, an ideal time for a true Capitulation. I'm still holding for a REAL capitulation, since I no permabear either. Perhaps it will never come, as I haven't seen or experienced one so far.

Anonymous said...




JAWS said...

That's just basic hormone loss.
If you live long enough, it happens. You must be older than I imagined.

This still hasn't even gotten to the ugly part.

Anonymous said...

Anon March 23, 2009 6:48 PM:

Why should I go out to buy gold when I can get it in the convenience of my home on Kitco or eBay?

Have you considered you can't find any at your local dealer because they are unloading on the pawns in this game? Or that they are purposely holding back to give the impression of demand? Do you remember 'They aren't making any more land' when less than 10% of the area in America is actually developed?

Anonymous said...

We went from the end of the world to everything's hunky dory inside of 4 weeks. It doesn't work like that. I look around Phoenix at areas people would actually want to live, I don't see anything cheap. Best case its 3.5x income for the area.

If you believe after the biggest downturn in 70 years there won't be any overcorrection, you are very optimistic. Plus commercial real estate and credit card debt hasn't hit the fan yet.

The stock market might trade in a range of +/- 1000 for the rest of the year, I could believe that. But for the average person, there won't be any big rebound soon.

Anonymous said...

It'll be easy as pie to call the bottom. Just look for ground-breaking ceremonies on the new World Trade Center building.

When the concrete starts flowing, that will signify the end of the Depression.