The Fear Trade: Global Economic Woes Trump GE, Google, Cheap Valuations

The DOW 8000 support level we’ve “enjoyed” these past few months will soon fail. We’re going lower.

As a new President has been elected, I thought I would write down some of the thoughts that a lot of people are having these days. If you made a TOP 20 list of dumb things we could do as a nation….we are pretty much doing all twenty. A nation might can get by with doing 4 or 5 of the things on that list….but all twenty? Any of the twenty would lower our standard of living, cause economic or social problems, and lessen our prestige with the rest of the World…but ALL TWENTY? When you do almost everything wrong…you get what we are getting. When you do all twenty…you get what we have today: Corruption, greed, deregulation, a laissez-faire attitude, social / moral decay, trying to police the World, the laziness of the 2 party system, ignoring the Constitution, government BY the rich FOR the rich, electing corrupt representatives, all of those are huge problems but…we have gotten away with a lot of those negative characteristics in the past…..why is the feces hitting the wind-creation device now? Wanna know why we are in trouble? America doesn't out-compete other countries in any field except generating debt. We have watched as the greatest power in the history of the World has given away that very power. We have become a nation of debtors, living in a debtor nation. We MAKE nothing noteworthy here anymore. All of those factory jobs that snook away in the 80s-90s have come back to haunt us. It began with NAFTA and has continued to the point where almost EVERY big-name US corporation makes the vast majority of its products overseas. There are very few JOBS for working-class individuals. We are making our nation into a “have” and “have-not” society. Where are the jobs that will sustain the lower and middle class workers of the future? There are only so many fast food and low level skill jobs to go around. And if you have one of those jobs….what do you REALLY HAVE? The growth industries in the United States are figuring out ways to get more people to take on more debt in ways they don't clearly understand. Then you get to book the difference between what the idiot consumer thought he was going to pay and what he is actually supposed to pay as an extra profit. America competes in victimizing its own citizens into making poor economic choices on a daily basis.. American corporations are profitable because they buy products or have them made in places where people are paid $2 a day or less. They make or buy products that cost $4 (like a sweater or jacket) that product is "branded" by a US company and sold to a foolish American consumer for $100. Then the banks get involved and the store pressures everyone to get a store credit card. "You can save 10% on this purchase and pay only $90 for the trinket Chinese slave laborers made for us for $4 if you charge it on this new store credit card!" The credit card carries 18% interest and the bank draws its capital to lend the $90 to the consumer to buy the $4 trinket by borrowing the money from our shadow government, Federal Reserve Bank, at 0.25% for a spread of 17.75%. That's what has become of the United States' economy. That's what all of these bailouts and stimulus packages are trying to resurrect. I don't think it's going to work and even if it did, it's a horrible system of victimizing 90% of the public by transforming them into debt slaves paying 15% or more of their annual income in interest for their whole lives. A majority of Americans probably pay more in interest payments than they do in federal taxes. So that's what I think of American competitiveness. It's an effort to harness the power of debt servitude and trade it with other fascist bank-government-industry nation states like China that trade super poverty wages and toxic cancer inducing worksites in exchange. IS THAT SYSTEM worth trillions to save? Have we finally lost our minds entirely? Maybe it is time for a revolution to end this nonsense. Enough is enough! It is very obvious that the financial elite now own and control almost every aspect of our country. GOOD LUCK to President-elect Obama…he is sure going to need I if he really wants to CHAGE AMERICA. Somebody needs t take a shot at it. Our Founding Fathers were found of saying that we should “burn down the White House every 100 Years”. They didn’t mean to actually set fire to the white House…but to not be afraid to start from scratch when what we are doing is failing. Maybe this is our time for revolution. Our country is morally and ethically bankrupt and has been for years. Getting involved in other countries affairs, WARS we shouldn’t be in, and paying no heed to the Constitution have all come back to bite us in the ass. Now we have “given away the farm” and are one the verge of economic bankruptcy also. Barrack Obama seems like he has good intentions and some good ideas. But this economic catastrophy is too far along to be pulled out of the ditch at the last second. Regardless, I like having the “smartest guy in the room” in charge for a change as opposed to the last eight years. He will probably be forced to re-enact New Deal type programs from the 1930s that have gone away (WPA, CCC) and increase some of the programs that have stayed in place (Social Security, Unemployment Insurance) some will argue that these programs PROLONGED the Great Depression….NOT help to get us out of it. Pumping trillions into the economy to keep it afloat will lead to Inflation (every dollar you possess will be less valuable). Now instead of the price of gas dictating prices (they way it has been for the last few years)…the overabundance of dollars in the market will drive up prices. But…it’s hard to say that we should sit around and do nothing. The road we are on doesn’t look good either. Unemployment is headed for 11-12% in the coming year, companies are filing bankruptcy at historic levels, ,people’s wages are going DOWN and will continue to do so with unemployment on the rise. We need to “RE-BOOT” our nation in almost every aspect. Sometimes you have to “hit bottom” in order to know that you need to change aspects of your behavior. Maybe this is our ROCK BOTTOM. mfranks@ednet10.net

Ge is a conglomerates,there are many business segments and one of is financial.........On their financial side of the business are doing badly,most of the segments are doing better........Buy GE on the Weakness a very good recovery play........Buy the Stock on the weakness a good potential.........

A realtor friend told me he sold 8 houses, NO MONEY DOWN, to a guy who, four months later, refinanced and took out $200,000 cash per house. Today, 3 years later, those houses are all in foreclosure and the buyer and his cash have left the country. What were the banks thinking?

Wake up people the goverment is only going to help the banks and big companys that give to them, not the tax payers that need it.

Yes, the Dow will work it's way down to 7500 in the next few weeks,then, begin an upward trend. I predicted this level 3 months ago. I hope I am wrong,but the financials are the big culprits. Still more garbage to be exposed at some of the large banks, and even some of the 11 larger regional banks. These are what is contributing to the daily peaks and valleys,(Sick cat bounces, not dead yet)!!! Jim Hsv Ala.

I'm going to buy GE at $5.00.

Can anyone confirm for me if Warren Buffet bought GE when the market first took a hit a few months ago? What is he saying now about his move?

GE is still expensive... They need to come down to the 1980's level, then you should buy!

Still waiting for the next major low which would be newest lows for this downtrend to occur on the major domestic equity indices. Technicians could be laughing at fundamental analysts as the fair or undervalued statements are bogus. Nothing can go high enough to be bought or low enough to be sold. I heard this undervalued statement in Spring 2008, and we can see how great that statement was. Both technicians and fundamental analysts look at the past to predict the future. Warren Buffett's investment in GE in September 2008 is looking great! LOL. I've personally been out of this market since the end of January 2008, and I've been very patiently waiting for the correct time to enter. We're not there yet, but I don't know when the bottom has truly occurred until a few days after the fact.

Mike f- we are of the same mind with the exception of your confidence in Obama. It is our fault we are in this mess and to date I have seen very little outcry from American citizens. That I think is sad.

Yahoo Finance User, Interesting about the guy who did a cash out refinance. I think this goes on with credit cards as well, where you could do an unsecured cash advance up to all credit limits on your cards, then file for bankruptcy. There should never be a way to go bankrupt. Basically, people are not being held responsible for anything in this country, which will lead to our demise.

We have not yet reached capitulation. Look for a 20+ percent move to the downside.

May be its time to grow up and admit that there are not miracles in the real life. There is not Santa Claus. Commercial aircrafts land without engines not loosing a single life not because a miracle but because of hard work of the pilot in at the cockpit as well as on the training simulator. A president, no matter how good he is, can not pull resolution from his sleeve for a long build crises. It’s going to be a long and painful hard labor to clean this up.

Henry, either you think the market is at or very a bottom and now is the time to at least start getting in; or, you think that the market is still going down and it is stilltime to wait. Please make up your mind. My personal opinion is that the market still has a way to go and S&P 600 is a best case scenario, not the worst case. Use Shiller's data and assume that a high single digit trailing PE is reasonable. Use current estimates of S&P earnings in the mid-40's for 2009. That gives an S&P in the low 400's. That's a simple fundamental rationale. Similar targets can be derived technically with Fib extensions and Elliott Wave. If we break the Nov 08 lows, it's hard to see what will stop the fall until the markets are truly "cheap" in the 400's.

REmember ... Markets generally turn at unexpected times. We are reaching a level where expectations will be lowered based on the prevalent "gloom and doom" in the media. When that happens valuations and potential dividend returns are currently positioned at extremely attractive levels. Expect a 400+ POP day and many disappointed investors and fund managers burning because they sat on their hands. Look out for Groundhog Day, an ideal time to come out of this hole!

Dano... this is why we get the opportunity to pay 30% on our credit card usage...

It doesn't seem fashionable to say it but this is a depression. If you adjust the unemployment numbers at account for the folks that aren't getting unemployment benefits anymore but are still looking then you get about 15%. It is still moving up.

G.E. will be priced right at $5.00

The earnings outlook for the SP500 is ?? $42. That doesn't bode well for the index, especially if it compresses to a 10PE.