Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Kicking The Can!

Stock-Markets / Stock Markets 2011 May 14, 2011 - 06:24 AM GMT

By: Sy_Harding

Stock-Markets

The economic catch phrase of the year has become ‘kicking the can down the road’, applied to all the problems that are not being solved, but are simply kicked further down the road.

It’s an apt description, as it is exactly what’s happening.


But what else could we expect?

After all, the election is only 18 months away, and it’s well known in Washington that the most important factor coming into an election is the state of the economy at the time. So it’s normal for Washington to do whatever it must to make sure the economy and stock market are in good shape when election time rolls around again.

However, it’s different this time. Normally the economy and stock market perform poorly in the first two years of the Four-Year Presidential Cycle, as Washington allows any needed correction of excesses to take place then, rather than take a chance on them taking place in the last year or two before the election.

But the economy and stock market have been positive for the first two years of this cycle, with substantial stimulus efforts already expended to keep them positive.

So the question is whether kicking the problems further down the road can continue for the full four years without a hitch, that is for another 18 months until election time arrives.

It’s a lot to expect, and the indications are not promising.

For instance, the European debt crisis has popped up again to threaten economies and roil markets.

It first appeared a year ago when it became clear that Greece would not be able to meet upcoming payments on its massive government debt. Fears rose that the crisis could spread to other European countries with high debt levels, and global stock markets began to decline on the concerns. So the central bank of the European Union, and the International Monetary Fund, joined forces to kick the problem down the road by providing loans that would allow Greece to make its upcoming debt payments.

The crisis returned and the EU and IMF gave the problem another kick down the road, and then another. When it appeared last week that Greece was again on the verge of default, the EU and IMF came up with another $100 billion in proposed loans that will hopefully delay a potential default until late next year.

Meanwhile, as feared, the debt crisis did spread, to Ireland and Portugal. This week the IMF released a report saying it does not expect the bailout loans made so far will end Europe’s debt crisis, saying “Strong policy responses have successfully contained the financial troubles in the euro area periphery so far, but contagion to the core euro area, and then onward to other European countries, remains a tangible downside risk.”

Yet already we see the growing economic problems created by the austerity programs imposed on countries as requirements for the loans. Greece is experiencing labor strikes and public uprisings to protest the cuts in government jobs and benefits, while it was announced this week that the Greek economy has already dropped back into recession, with back-to-back quarters of negative GDP.

Meanwhile, nations which have been the leading economies, including Brazil, Russia, India, China, and Hong Kong, have seen their stock markets topped out since November, apparently in anticipation that their reversal of previous stimulus programs will result in economic slowdowns.

It is a potential warning for the U.S., where kicking cans down the road has been the most pronounced.

When the U.S. economic recovery stalled a year ago, and the stock market began to tumble, the Fed panicked and kicked the problem down the road with another round of quantitative easing (QE2).

Meanwhile, ‘austerity’ measures that will also be required in the U.S. to halt and reverse its record federal and state budget deficits, have been stalled by any means possible, no doubt hopefully until after next year’s elections.

Some of those delaying tactics have a look of desperation. An Associated Press article this week notes that the city of Newark, NJ, staring into a budget abyss, sold 16 city buildings to developers and investors, including the Newark Symphony Hall and police and fire headquarters. The article refers to proposals by state governments and/or municipalities in Wisconsin, Louisiana, Ohio, Pennsylvania, and Massachusetts to sell power plants, prisons, toll-roads, and government office buildings.

Such efforts provide a one-time chunk of cash, but give up the assets, and toll-road income, and require making lease payments to remain in the buildings.

But they do kick the problem down the road.

In Washington, Congress remains at an impasse on when and how to begin cutting the record federal budget deficits, with proposals from both sides seemingly intending to kick the can down the road with relatively small cuts in each of the next two years, and more substantial cuts delayed to the years thereafter.

Maybe they can continue to kick the problems down the road without a hitch. Let’s hope so.

Because Congress and regulators also realize that new regulations and control over the major ‘too-big-to-fail’ financial institutions must be put in place before the next financial crisis, but are also kicking that can down the road into the future, recently even removing and postponing some of the key new regulatory reforms hammered out only a year ago.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2011 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules