The Fed's monetary stimulation this fall will impact the U.S. economy in a few months. This will fuel higher inflation, higher interest rates, AND higher stock prices during the second half of 2008.
That makes the second half of 2008 a brief window of opportunity for profits on cyclical stocks.
But the surging inflation during the second half of 2008 will force the Fed to reverse gears and revert to monetary restraint to prevent an inflation spiral that would destabilize the nation politically and economically. The Fed will time their restraint so that its impact (about 6-8 months later) will be felt AFTER next year's elections to protect Republicans campaigning for re-election.
That means the U.S. will enter 2009 with roaring inflation and interest rates, accompanied by aggressive monetary restraint to stabilize the economy. Because the Fed has now lost all credibility as guardians against inflation, inflation expectations will be very hard to quell in 2009.
This means a very deep and painful economic downturn sometime during 2009/2010--along with a sharp sell off of cyclical stocks.
That is why 2008 will not be the beginning of a traditional business cycle. Instead it will merely be a trading window for those willing to take higher risks.
This is not the stuff for widows and orphans. Ordinarily, I would stay out of stocks in 2008 and look for better buying opportunities in 2009-2010. But this time, I am inclined to "join the hunt," purely for the challenge it presents.
(But, being a conservative investor, I will NOT go 100% in stocks in 2008. This is something entirely different than "playing the business cycle.")
Your so right on again,, the first casualties in Iraq were 4 baptist missionaries trying to convert muslims in exchange for water. I can't figure who they got over there without the GOV's help...I'm sure they were flown with the military at Gov taxpayers empense.
I agree with you completely... The GOP knows they're doomed, but they are going to pull out all the stops by supporting the market and pulling strings at the Fed to lower interest rates even more in hopes of making the economy look strong, thus enabling them too maintain a stronge enough foothold in the gov to assure their Faith Based Inititive groups of continuing to recieve tax dollars to achieve their religous mission of converting the world to Chrisitanity... As the Bush administration as already funnelled over 7 billion to them.....That's a big bone to take away from even a pit bull. And these SOBs are crazier than any dog.... The GOP religoius whackos know they're gonna keep their asses kicked in NOV...But they too know, that after the election, when they take away all the support,the inevitable crash will result in a good chance to take back over in 2012..Remember, these guys are religous nutcases, who think they're empowered by GOD to RULE to world. They make the Taliban look like kids on Romper Room..We talking Southern Baptist here..who's home is 20 miles from Bush's ranch. Why do you think he goes back there so often? TO RECIEVE HIS NEW MARCHING ORDERS...
<<< They make the Taliban look like kids on Romper Room. >>>
I don't see a nickles worth of difference between the two groups. They differ only in their power to carry out their extremist agenda of oppression.
America made a very big mistake granting the religion wackos political power in 2000. It has ruined our economy, made us a nation of war criminals, and has thoroughly corrupted our public institutions--not to mention making toilets at the nation's leading airports unsafe.
The entire civilized world looks at the U.S. in bewilderment. They shake their heads in disbelief that Americans have allowed this to happen to themselves.