No exactly Warren Buffett.......

[El Presidente]

» » I would have to say that I am in the corner of those (few) who would

» rather see a good correction now as opposed to one in 2009/10

» »

» » This is not specifically a US centric problem. European property prices

» are falling. Housing slowing. 18 months-2 years behind the US cycle.

»

» Hmm... I do like your insight. Though I do not agree with "the need for a

» big correction" viewpoint... IMO, and given that the players in the markets

» tend to behave like a herd, a big correction is likely to lead to a global

» meltdown akin, or even worse, than the 30's (because there are more

» things going wrong now than in the 30's... even the possible stimulus that

» a war could bring due to government expenditure is spent). IMHO, a big

» correction a-la 30's, would lead to an economic implosion: more

» foreclosures and massive write-offs, an explosion in unemployment and,

» shortly after, crime... it can lead to collapse of banks, hedge funds and

» large businesses (and with it the pensions/retirement-funds of the

» boomer-generation)... I reckon that it would end up in a global convulsion

» that could last at least a decade.

»

» Though it appears that the US Fed is trying to arrest a recession, I

» believe that they can only hope to achieve a gradual economic contraction

» (a less than three year recession and bear market)... significant rate

» cuts could reduce the number of future foreclosures (with new reset dates

» approaching) and could enable US manufacturing to be more competitive

» (unfortunately not with China 'cause their currency is virtually pegged to

» the greenback), and hopefully avert an explosion in unemployment. One

» would hope the US consumer spending would be more moderate, though the

» inflationary role of the oil price is the dark horse...

»

» Interesting times indeed...

I don't disagree with you Zuma but a couple of points disturb me which do need correcting within the Global economy:

1. Wages growith has not kept up with inflation. Property prices in Europe and Australia (not sure of US) are now at their highest (proportional to income) in history. All this while interest rates are still proportionally low. At some time it is going to blow.

2. Property Trusts have been a scam for some time (having been involved in this business). Inflate the price of a shopping centre (valuers don't want to be put off the panel)...everyone takes huge commissions...and flick it into a Property Trust flush with Superannuation Funds. At some time the true value of these assets is going to be realised and it is going to blow.

3. CDO's, Monoline insurers. Private equity firms purchasing assets but reliant on cheap funding and continued economic growth to pull off the necessary returns. Talk about a stimulus to equity markets!

To thrive they need an environment of low interest rates and market growth...permanently. When this environment is threatened....they seek Market interference from regulators? How sustainable is this?

Having said all that I have been in the market over the past three days for solid returns. I will be out today for I can't predict a week forward in this market let alone what is going to happen overnight and I would prefer to follow the DOW and European indexes as opposed to playing them sight unseen on a Friday our time and being exposed to a Monday rout. But I am a day trader....gambler ;-)

[zuma]

Don Presidente, I thoroughly agree with your perspective... and I only wish that would have more time and money into short positions. We are living a traders' market for sure...