Melt up how long will it work?

[william the wie]

The rise in the stock market is generally attributed to QE II. The things that can derail it are:

The rise in bond yields based on the inflation estimates of bond funds and ratings agencies. This factor is already present.

Disinvestment by Sovereign Wealth Funds. This factor is also present already just not very important yet.

An end to QEII. Depending on how QEII is defined it is scheduled for closure June (new cash) to September (based on reinvestment of portfolio returns).

So the stock market will crash this year the questions are when and how far will it decline? But more importantly with real estate still crashing, bonds crashing and stocks ready to crash will precious metals become a bubble with the DJIA selling for less than one oz. AU?

 

[Neubarth]

The simple fact of the matter is that when Bernanke raises interest rates the banks will have to pull their money out of the stock market to return it to the FED. We should see a market crash at that time. How big it will be, I do not know.

 

[Baruch Menachem]

I think the fed is going to make the same mistake the Japanese made all through the last 30 years.

This is going to be a long term depression.

 

[william the wie]

I think the fed is going to make the same mistake the Japanese made all through the last 30 years.

More like 20 years.

This is going to be a long term depression.

We should be seeing some traction by 2015 and a general recovery in the 2020s. The big problem is that since the 1960s the product life cycle has outpaced political adaptation. And the signs are everywhere on this:

The featherbedding contracts for railroad firemen go way back to the 40s and 50s, loss of jobs in the steel and auto industries go back to at least the 70s, and computer programming is also becoming an endangered occupation.

The entire publishing and bookselling industry will leave the economy as music has already pretty much done and video is likely to join the exit soon.

The threat of existing bio-fuels and improved drilling techniques are already keeping oil prices within tight bounds in real dollar terms.

Current political ideologies do not deal well with these changes at all so political instability will increase.