Tuesday, September 30, 2008

Next Stop: Dow 25,224 -- ERNT! Wrong answer!

The Dow is about to crash back to 10,000 in late 2008, about 50% of the projected 19,581 in 2009 predicted by Brian Hicks in 2007. Even far, far below the 17,252 predicted by 2008.

How can a "professional" be so wrong so big on such a huge topic?

Brian, care to publish a mea culpa maxima?

~ * ~

Now, check me if I am wrong here, but who realistically thought that the market was going to skyrocket to those levels unless we underwent a period of massive uncontrolled inflation?

Listening to NPR tonight, I believe a guest on Michael Krazny’s Forum made some salient observations. Considering the rate of inflation, the value of money lending in a period of deregulation led to utterly risky financial give-aways. The cost of money was less than 0%. You actually made money just borrowing it. And, without regulation, they let anyone have it.

Now? It’s spent. Like some wastrel drunk cousin who bought a car with your credit cards and crashed it into the tree on the way home. You owe the debt. We owe the debt. Each one of us.


But, of course, we don’t have a brand new car to show for it.

I’m sort of glad, in a perverse way, that the US government refused to pick up the Wall Street bar tab on this one. Not that I look forward to a period of economic crisis as people are going to lose their homes, but it was sort of an “enough is enough” message. Fiscal prudence and responsibility has to start somewhere. Taxpayers are burdened enough as it is.

2009-2010 are going to be economically hazardous times. Make no mistake. Global economic crises can lead to wars, famines and the deaths of millions. At this time in history, though, we need to face the reality of what we truly have before us: a Dow crashing towards 10,000, and possibly likely to stablize somewhere around 8,000 - 9,000 in 2009 to 2010. Not a rosy, bullish picture racing towards 20,000 - 25,000.

My great personal cares and sympathies to the familes around the world suffering in poverty and economic crisis because of the recent Wall Street woes. Hold on folks. The rocky ride is just beginning.

On behalf of Global Understanding,

-Peter Corless.
650-906-3134 (mobile)

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