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What a great start for the markets!

Considering we are in a depression.

                Utopia for the Bulls today running wild on Wall Street.  Only 550K people lost their job previous month and somehow that’s good news.  The economy is short on creating 630K jobs per month but who cares.  The jobless recovery is a reasonable thesis and blinded optimism will grab whatever straw you hand to them in difficult times.   Besides, Bernanke has said everything is okay so it must be, we know he is never wrong.  The existing home sales also came in better than expected at 4.89 Million (many bank owned at 50% off).  That’s only a few million less than the record of 7.1 million in 2005.  But we should really put it in dollar terms to be more accurate.  About 1.6 Trillion was spent in 2005 versus 538 billion projected for 2009 on housing.  That’s a lot of cash taken out of the RE industry.

                But none of this matters thanks to Goldman Sachs.  The market maker has complete control of where the market will end up.  With Billions funneled to GS from AIG, they had enough capital at hand, access to cheap capital at low rates and huge leverage to float the market whatever direction the bets were made.   The one thing that GS cannot change is that upbeat news is followed with dramatic increasing rates.  The slightest hint of the end to the recession will be followed with another sucker punch to the economy.

                Here is where I and the experts disagree…They think we will reach a bottom for the economy at the end of 2009 followed by a weak recovery.  I think that we reached a short term bottom on Marched when they eliminated Mark to Market accounting but our recovery will end with an unexpected crash in 2010 or 2011.

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