Riviera Jitters Bring Investors Shivers
One of my favorite vacations was a trip from the French Riviera, along the Spanish coast ending at the Italian Riviera.
It is absolutely stunning and everybody seemed to live so well.
They wouldn't even let me enter the casino in Monaco without a James Bond type jacket.
Now I know why...
they were all living on borrowed money and well past their means.
Now they're all broke and if the market is right, Spain and Italy are heading on the same path as Greece, which will most certainly send shockwaves back to the US.
The US appears to be holding up better than most of the world due to the unprecedented stimulus from the Federal Reserve.
There is no real demand in an economy where the baby boomers, the bulk of the population, are well past their peak spending years as well as being indebted out the wazoo.
The QE programs have been keeping our economy on life support, but QE2 is due to start to wear off by the summer.
This will most certainly bring about a QE3, which will probably be the last.
It will help stocks initially, but likely will lead to a top in the stock market which is set to peak sometime this year.
At some point, everyone will realize that the ECB (European Central Bank) and US stimulus plans are not going to work to create a sustainable recovery, and government bond rates will rise, choking off the Fed's fuel for the printing Presses fire.
The economy may give the impression that a true recovery is underway, but without the massive stimulus, we'd be sunk.
The truth is that the workforce has dropped by 10 million jobs since July 2008 and has gained only 4 million jobs back.
The percentage of people of working age in the workforce has been falling for the last several years, from 63.
3% in January 2008 to as low as 58.
1% in May 2011 and is at 58.
6% currently.
At worst, over 7 million people have disappeared from the workforce! That is why Fed Chairman Ben Bernanke warned recently that the job market may not be as strong as recent job reports suggest, suggesting more free money was on its way.
Unfortunately these problems are not going away anytime soon as the massive global de-leveraging process accompanied with and demographic challenges discussed in Facing Goliath: How to Triumph in the Dangerous Market Ahead, have a firm grip on world economies, and won't let go for several more years.
Investors should focus on dividend paying stocks, corporate bonds MLP's and preferreds.
It is absolutely stunning and everybody seemed to live so well.
They wouldn't even let me enter the casino in Monaco without a James Bond type jacket.
Now I know why...
they were all living on borrowed money and well past their means.
Now they're all broke and if the market is right, Spain and Italy are heading on the same path as Greece, which will most certainly send shockwaves back to the US.
The US appears to be holding up better than most of the world due to the unprecedented stimulus from the Federal Reserve.
There is no real demand in an economy where the baby boomers, the bulk of the population, are well past their peak spending years as well as being indebted out the wazoo.
The QE programs have been keeping our economy on life support, but QE2 is due to start to wear off by the summer.
This will most certainly bring about a QE3, which will probably be the last.
It will help stocks initially, but likely will lead to a top in the stock market which is set to peak sometime this year.
At some point, everyone will realize that the ECB (European Central Bank) and US stimulus plans are not going to work to create a sustainable recovery, and government bond rates will rise, choking off the Fed's fuel for the printing Presses fire.
The economy may give the impression that a true recovery is underway, but without the massive stimulus, we'd be sunk.
The truth is that the workforce has dropped by 10 million jobs since July 2008 and has gained only 4 million jobs back.
The percentage of people of working age in the workforce has been falling for the last several years, from 63.
3% in January 2008 to as low as 58.
1% in May 2011 and is at 58.
6% currently.
At worst, over 7 million people have disappeared from the workforce! That is why Fed Chairman Ben Bernanke warned recently that the job market may not be as strong as recent job reports suggest, suggesting more free money was on its way.
Unfortunately these problems are not going away anytime soon as the massive global de-leveraging process accompanied with and demographic challenges discussed in Facing Goliath: How to Triumph in the Dangerous Market Ahead, have a firm grip on world economies, and won't let go for several more years.
Investors should focus on dividend paying stocks, corporate bonds MLP's and preferreds.
Source...