In 1664, when Brodheads took New Amsterdam and called it New York, Wall street was just a fence that crossed Manhattan from the East River to the Hudson. In fact, one night Captain Daniel Brodhead from Yorkshire, England, the second in command of the Nichols expedition, pissed on the Wall after a night of drinking Dutch swill, and chasing Dutch whores. Now, Wall street traders do lines of coke, have thousand dollar sluts and piss on the 401Ks of America’s seniors. Meanwhile, Obama and Yellen curtsy one another. In addition, Paul Krugman is in a complete state of denial and self loathing. Then again, it is all relative. Once Wall Street harvests the Dow again, America’s economic stratification will be like socialist London circa 1960.
Many of us remember how the Y2K fiasco staved off the Dotcom bust until Bill Clinton was out of office. Then we were treated to the dangling chad episode in Florida followed by the Dotcom bust, 911, and then the collapse of the Dow in October 2002.
Then the Fed lowered interest rates and the housing bubble began. The Dow would grow from 7500 to over 14,000 in just 5 years. Two months after Barack Obama took office in 2009, the Dow was at 6600 because of the collapse of a massive housing bubble. So, the interest rates were lowered and mortgage rates hit as low as 3.5%. This created another housing bubble as well as a Dow that would hit 18,272.
While the GDP crashed at the end of both Bush 41 and 43, under Obama, the economic messiah, the GDP grew from 14.54 to 16.30 without the wide fluctuation boom bust cycles of a Republican administration. This while 300,000 boomers a month retire for SS, and Medicare. Should the stock market tank once again, senior citizen non discretionary 401K supported retirement spending shits the bed. In addition, the wealth affect is gone for the short term.
If the Dow loses almost 2000 points when Yellen leaks a possible .35% prime increase, what happens when interest rates go to Bush levels or even Clinton levels? Then, when interest rates are higher, the interest payments on $20 trillion in national debt begins to climb and eventually double. triple, and quadruple over time. What have they got us into?
Under both Bush administrations, the US economy went into a death spiral. So voting for Jeb Bush would be a special kind of stupid. The USA has yet to be treated to the Obama economic death spiral. Where does the buck stop?
It has been over 6 years since the Dow hit 6600. In addition, the Fed engaged in 6 years of quantitative easing to include toxic asset repurchase and bond repurchase. At the height of it all, the Fed would be channeling a trillion dollars a year into open ended quantitative easing. Not only that, Americans could not get more than a fraction of a percent for savings accounts. This has forced copious Americans to invest in the stock market. Now the stock market is extremely over valued.
If the Dow had another collapse, how far would it fall? Would it lose 40% of it’s value like 2002? . Would it lose 60% of it’s value like 2009? If the Dow falls 30%, it will hit 12,600. If it loses 50% of it’s value, and slides like 2008, over the next 18 months, the Dow will slide to 9000. Many stocks have insane PE ratios and only pay a 1% dividend like NIKE. At a traditional P/E ratio of 15, NIKE would be at $60 a share and no more. Another question is how many China stocks are hidden in the 401Ks of America? I mean when a country nationalizes the stock market and then lowers its currency, doesn’t this suggest that China stocks are worthless?
Should the stock market collapse, all Barack Hoover Obama will be known for is: expensive free health care for those that pay zero taxes; expensive costly health care for those that do; marriage between a man and a man, and Solyndra. Oh and kissing the ass of Cuban dictators, helping Iran finance a nuclear weapon and harvesting racial division. If Bush set us up to fail in 2008, Obama has set us up for a massive correction because of inept monetary policy. The next president will inherit a damn mess of debt monetization, low interest government bonds, massive serial deficits, and $20 trillion in national debt. All because the federal government is a massive cash sucking parasitic leviathan that nobody has the stones to deal with.
Has Obama’s monetary policy come home to roost, and will the 401K system survive? As for me, I got out 3 weeks ago.