Remember the days when Greenspan would "surpirse" the markets with a
half point move in Fed Funds, and NEVER even "telegraph" his
intentions in advance? Hmmm.....that was a while ago!
TODAY, THE FED IS LOCKED INTO BABY-STEPS THAT ARE ANNOUNCED REPEATEDLY AND IN ADVANCE JUST TO AVOID "SHOCKING THE MARKET."
But why the BIG change?
Well, the markets have been dull as day-old dishwater for several
years now. Basically it's been hurry up and wait, and a frantic trip
to nowhere of late.
In our post bubble economy that is probably well advised and expected.
Fortunately, we've had war, elections and politics to distract us
from the dismal HOUSE OF CARDS that Greenspan's Bubblenomic
Economy has morphed into.
(Has anyone seen Jeb Bush? Has he been to theUkraine recently?)
Anyway;
WITH THE DOLLAR HANGING FIRE, AND GREENSPAN LOCKED INTO HIS BABY-STEPS QUARTER POINT RATE HIKES FOR---WELL, A LONG LONG TIME TO COME.
THE MARKETS ARE JUST NOT REAL ATTRACTIVE NOW.
I'm amazed that another REIT crash hasn't happen yet. I mean, a 5%
ten year bond will be very competitive vis-a-vis a leveraged REIT IN A DECLINING REAL ESTATE MARKET!
Perhaps you caught Ben Stein on Wall Street Week recently when he
opined that he still "Loves REITS!" My God, REITS are on the EVE OF
DESTRUCTION! Ben Stein should warn us when he's being "humorous," and
keep his self-serving investment advise to himself.
In 2005, I expect the BOND CRASH of last spring to come back; THIS
TIME FOR REAL.
GREENSPAN CAN'T STOP HIMSELF FROM RAISING RATES NOW;
BECAUSE THE DOLLAR IS JUST TOO WEAK. EVEN THE RUSSIANS ARE DUMPING THE DOLLAR NOW!
See the Bloomberg Currency Link in our group's LinksSection.
AND, A WEAK DOLLAR WILL EVENTUALLY FEED INTO THE OIL
AND COMMODITY INFLATION THAT WE ARE SEEING TOO MUCH OF ALREADY.
WORSE YET, NOW EVERYONE IS DUMPING THE DOLLAR! AND JAPAN'S BOJ SEEMS OMINOUSLY QUIET IN THE CURRENCY MARKETS LATELY.
IF ASIA GOESANTI-DOLLAR ALL HELL BREAKS LOSE.
LASTLY, DUBYA'S INSANE AND INANE PRE-ELECTION PLAN OF MORE PORK, MORE WAR AND MORE TAX CUTS....ARE.........
WELL, LET'S JUST SAY UNIQUE IN THE ANNALS OF POLITICAL ECONOMY!
VERY LIKELY 2005 WILL BE A YEAR OF MULTIPLE CRASHES!
THE DOLLAR! THE BOND! REAL ESTATE!
THESE ARE JUST "TEXTBOOK" CRASHES WAITING TO HAPPEN!
AND FINALLY, I THINK STOCKS WILL "JOIN THE FUN" IN THE SPRING OF
2005;
AS THE AMERICAN CONSUMER SNAPS INTO THE FETAL POSITION, MUTTERING REPEATEDLY: "NEGATIVE EQUITY. NEGATIVE EQUITY!"
THAT, GENTLE READER, IS WHAT HAPPENS WHEN YOUR GOVERNMENT'S POLICYCHOICES BECOME AN ECONOMIC HOUSE OF CARDS......
