Quote:
Originally Posted by cantretire
Problem is - no one has the $ to buy the products.  |
And hence, we get to the core reasoning why I have my doubts about the sustainability of the current market!
It simply doesn't make any sense that the current market could sustain such a long bullish run, and at the same time, still have one of the most astonishing record lows in unemployment in American history. It doesn't compute until....
You factor in the fact that there is a massive amount of stimulus money being injected into our markets. Governments all over the world are injecting stimulus money-- borrowed taxpayer money that they do have to pay back somehow, especially Social Security-- in order to jump-start our global economy.
HOWEVER, the giant pool of investor money (a large portion being Sovereign Wealth Funds) that is pulled out of the markets and is sitting on the sidelines is roughly valued at more than $80 trillion US dollars! And yet, the global GDP of all the major governments around the world totals at "only" $15 trillion per year. Naturally, the stimulus money being injected is only a small portion of that total GDP, and it simply is not enough offset the amount of investor money that have been pulled out right now.
So, when I was predicting that the market was going to run flat, I was actually being optimistic and bullish, because if you stop and think about the numbers involved, how could anyone in their right mind think that the stimulus was going to be doing anything?
And yet, the market is a funny thing. After having beaten down and tormented by the chilly climate for so long, I guess bullish stalwarts were willing to take any shred of hope and run with it!
On the bright side, the governments don't actually have to fill in that entire pool of investor money. They only have to inject just enough to "jump-start" the market again; to make it enticing enough for investors to put their money back in.
But most haven't jumped back in yet because, when it comes down to it, they don't see increases in consumer demand yet. And how can anyone expect consumer demand when unemployment is as high as it is right now?
Now, I'm not trying to scare anyone here, because our economy is far from dead. It's simply shedding off a lot of excess baggage and grime accumulated through decades of wanton spending and borrowing. Hopefully, when we emerge from the other side, we will be a smarter, leaner, and more sober economy. It's either that or we slide back into our old, drunken habit of conspicuous consumption, and that's no way to get back on our economic feet.