patrick.net

seaside says

Do you mind tell us what made you think that way?

http://dshort.com/charts/bear-recoveries.html?four-bears

If this were the 1973 bear market we'd be a month from semi-recovery that was created by raging stagflation and restructuring during the Carter malaise years.

If this were the 2001 bear market we'd be a month past the low as interest rates going from 8% to 5% and nifty outfits like WaMu, Countrywide, and hundreds of other subprime lenders were let loose with no adult supervision to drive the biggest debt boom this country has seen.

http://research.stlouisfed.org/fred2/series/CMDEBT?cid=97

Such a pretty graph.

Our recovery's been bullshit-driven so far. The 70s and early 80s problems were finally put in the past by Reagan's deficit spending, Volcker dropping interest rates, gas prices falling 50% in real terms, the rise of PCs, etc.

Government spending has already blown its wad and Congress is all but saying "no mas" to that. States are in even worse shape than the Feds if that is possible. The 99 week unemployment extensions are hanging by a thread in the Senate right now, if they don't pass it this month then millions of the funemployed are going to be pushed into the labor market ready or not.

Is there any good news on the horizon to appear this year or next? More emergency government spending? Even California's train thing is up in the air now. How about lower taxes? That going to happen?

Then we've got the Social Security system needing to start dipping into the General Fund years before expected, ~$50B this year alone.

Surprise!

Medicare is screwed now and is only going to get worse. Congress can't pass the ~$30B Medicaid handouts either. The Annual Report of the Social Security Board of Trustees is two months MIA and no doubt has no cheery news for the market.

How about the GSEs and FHA? Good news coming for these guys?

Looking at that chart above, the market is in a zone of No Support. You may remember that we passed through this level very quickly in 2008, with the Dow going from 10300 to 8500 in a week, then we had the continued fun through the following March to finally find the 6600 bottom. Any shift into negative mode now and traders will be looking to test THAT low, not the October 2008 lows.

Cheer me up. Where's the good news coming from? Show me the money.

For whatever resson, some of the biggest stock market one day drops (in terms of %) have historicly occurd in the fall (12 of the top 20). I could go as far as postulate the reason why this is the case but that's a whole different topic.

http://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

I don't have solid statistical reasons, so much as I have a general sense of things. I feel that we are not out of the woods, given the "on the ground" sings that I see (vacant storefronts, less trafic around the malls, few people hiring, etc.) are more or less where they were a year or two ago. People will start to "pay attention" again as summer winds down, only to realize that the fundamental problems are still there; the economy isn't appreciably better, despite the government throwing good money after bad trying to fix it. With that kind of a mindset, it doesn't take much to trigger a massive sell off. And the down going from say 11k to 10k in one day is not unrealistic.

@Troy.

Wow, that's big chart and tiny graph. I need bigger monitor. :)

Yes. This economy after 2008 so far has been driven by bullshit.
You said "never underestimate the power of bullshit" in the other thread, and I do agree with it. Add "too big to fail" and "too spoiled to get real" on top of it too. Someone may call recovery is recovery whatever bullshit is there. Some place like DC area looks like everything went back to pre 2008 era. You know full of gangs in starbucks etc. yeah, these people is trying their best to cut some costs... by skipping a dessert or something.

But I can not be sure about recovery yet. Because to me, our ecomony looks just like BP oil spill. They add a cap on it and said it's under control. But those problems that cause the spill haven't been fixed, and it is spilling all over at this very moment... just like our national debt.

Ok, let's leave it right there, think it is ok for a while.
But what worries me is this. What do we have in economy to lead next decade?

@ECCB

What I asked was your reasoning, not a solid evidence. So I heard you. The part I have a doubt is "pay attention" part. This country is largely driven by capital hill, wall street and sillicon valley. Don't know about sillicon valley though, other two places are never good at paying attention. So, we will see what's gonna happen. :)

By "pay attention" I am referring to my expectation that the mainstream media will start up with stories about "where we are now" (economically speaking) as the anniversary of the Lehman / Bear Sterns / panic of 2008 approaches.

Once the news cycle focus back on the economy, everyone will be talking about where things really are, good, bad or otherwise.