Stocks

[xbarretx]

Originally Posted by Stewie

I agree that the market anticipates the economy down the road, but we're in an unprecedented mess that is really negative. Here's what I'm hearing by respected financial advisers. That eliminates anyone on CNBC or any "financial planner" that's been drinking the Wall St. Kool-Aid.

1) The dollar is going to .52 and Goldman Sachs just said $175 oil within two years. Those two go hand in hand.

2) The FED has started to monetize bankruptcy (see Bear Stearns). This could get really ugly, really fast and is VERY inflationary.

3) The credit market is much worse than the FED wants the general public to know to avoid a panic.

4) Today John Lipsky of the IMF told CBs to prepare for the worst due to the credit crunch.

5) On Tuesday the FED took worthless paper (subprime garbage) as collateral for $200 million. That was historic.

There's more but I'm out of time.

For the novice, think of the credit crunch as this. You have stock certificates of several companies in hand. When you bought the stocks they were worth $1000 total. Later you find out that the stocks weren't what you (or the market) thought they were. Now, no one has any idea what you own and it's probably worth alot less. You go to sell the stocks and there are no buyers (or they're offering $50) BUT YOU NEED CASH TO PAY YOUR BILLS and $50 doesn't come close to your needs. That's why all these banks need CASH from the FED. They're holding worthless paper and will go bankrupt without free money from the FED (paid by you with the hidden tax called inflation).

That's simplistic but hopefully it's helpful.

so make a run on the banks and invest in GE NOW?

if oil goes to 175 and prices get above 4.35 oil will get closer to rendering its self useless. Trust me if I lose my job (knock on wood) i wont buy gas...and as the rest of the world his recession neither will they. the oil is a bubble.. it will burst...not this year (depending on whom gets elected maybe mid 09)

times wont get that bad b/c the FED cannot simply stand around and put on magic sunglasses that makes inflation invisible to them. What WILL happen will be either be a correction sooner than later thus everything can begin to finally work itself out. or the FED will have no choice but to begin raising rates which initially will hurt the economy and help it at the same time as inflation will begin to fall and the oil bubble will burst.

the only reason for high prices would be a SEVERE lacking of oil...along the lines of PEAK OIL which IMHO already happened. When supplies are then "truly" constrained by means other than political jargon and conjecture then prices will be high. However, as OPEC continues to preach an over abundance of oil the fact remains that what goes up must come down. The speculators will loose BILLIONS and then the sun will rise and life will continue.

i like you reply, but that runs a fine line of worse case scenario (however likely it may be) if the general public builds concensus that what you stated was going to happen then it would be dire straits indeed

Rep for good response Stewie!