Wednesday, October 31, 2007

The FED lowers rates...perhaps acknowledging the slowing economy...oil hits $94.50 a barrel.....but stock prices rise!?!?

Ok, so I'm going a little overboard with the graphic to the left....but it really does feel like a bubble economy we are in once again.

My only experience with bubbles was the 2001 Stock Market crash.....and guess what, I remember the issue being all these .COM companies gaining stock price and having absolutely no chance of making a profit. (some of their business plans just never showed a profit....or perhaps they would say "And then the magic happens")

The Federal Reserve has cut rates again.....I guess they see the economy sliding.

Then oil prices hit a new high of $94.50 a barrel, on their way to $100 per barrel.

So that's just plain slipping economy...wheres the bubble in that?

Not exactly there...because I think those things are the result of a general slide we are on. But the bubble isn't far away from all that.

So, IMHO the housing market is where our bubble resides today....we have a housing market that seems like a similar place to the stock market of early 2001.....except the slide isn't perhaps as quick as of yet.

Housing foreclosures have gone up big time, but they are still a small piece of the total market....but then housing sales are way down too, along with prices.

But the big problem I see is that I know of people who are upside down on their house, and don't even know it......and they "think" they have retirement money sitting between those four walls.

They might not see their problem until they do to retire.....then they will get hit square between the eyes. Then what?

But what of the people who have saved.....what about them?

Maybe that poster above isn't so far fetched.....we might be in for a massive push to "redistribute the wealth"......and we will probably do it at the ballot box.

It might not have made any sense to be a saver after all.....we are a consumer society.....and now we are consuming ourselves.

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