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I Say Lower Rates Below 0%!

  
Analysis, Education
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Richard Russell can write:

“The big advance from the May 2009 lows was a bear market rally. The good economic news of the last few months were a mixture of hopes, BS government statistics and rosy propaganda from bleary-eyed economists and the administration. There’s no point in my going over all the damage — the plunge in the NASDAQ, the crash in the Stoxx Europe 600 Index, the smash in the Morgan Stanley World Index, the gruesome fact that at 1071, the S&P 500 is 24% below its level of ten years ago. The damage in dollar terms is reported to be $5.3 trillion. That sounds to me to be a sh– load of money. And the tragedy is that our government has spent two trillion dollars in a vain attempt to halt or reverse the primary bear trend of the market. I said at the beginning, “Let the bear complete his corrective function.” One way or another, it’s going to happen anyway. Better to have taken the pain and losses — than to push the US to the edge of the cliff. Now with the stock market crashing, the national debt is larger than ever. In fact, it is so large that it can never be paid off, regardless of cut-backs in spending or increases in taxes. Had Obama or Summers or Bernanke understood this, they never would have bled the nation dry in their vain battle to halt the primary bear trend. As I’ve said all along, the primary trend of the market is more powerful than the Fed, the Treasury, and Congress all taken together. Our know-nothing leaders have boxed the US into a situation that is so difficult that, for the life of me, I don’t see how we’re going to get out of it. Well, there’s always one way — renege on our debt. Can a sovereign nation renege on its debt and in effect, declare bankruptcy? Sad to say, I think we may find out. One basic force that the world will have to deal with is deflation. This is the monster that Bernanke is so afraid of. To fight inflation is easy — you just raise interest rates and cut back on the money supply. But deflation is a totally different animal. Interest rates are already at zero. The money has been passed out by the trillions of dollars. The stimuli have been issued. What can Bernanke do in the face of deflation?” (more…)

Follow Trends

  
Analysis, Education, US Market
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From Richard Russell:

Primary trends can be likened to the power of the ocean tides. Build a sand castle against the ocean tide, and the first wave will wash your castle away. Build a cement wall against the tide, and in a matter of years the cement wall will be reduced to sand and rubble…primary trends, one way or another, go to completion. Or to put it another way, a primary trend will go to completion, no matter what..I said from the beginning, “let the bear market fully express itself.” One way or another it will express itself regardless of the wishes of Washington or the Fed or the Treasury. Interfering with the primary trend will just drag out the situation and make it worse — it will be turning a menace into a Frankenstein…According to Dow Theory, neither the depth nor the duration of a bear market can be predicted in advance. In this bear market, the Dow could fall to 4,000 or 400. I honestly don’t know the answer. In my experience, primary trend tend to carry further than anyone expects. I do know this — yesterday the following broke below their June lows — the Dow, the Transports, the NYSE Composite (which includes ALL NYSE stocks), the S&P Composite, the NASDAQ and the Russell 2000. Any way you look at it, that’s bad action. Maybe just as bad, new lows on the NYSE surged to 164. Hundreds of stocks are breaking down, and even more are hovering just above their 52-week lows. The lower depths of this market are opening up like a giant graveyard. It is said that in a big bear market, stocks return to their original homes — Wall Street.”

Can it happen? Yes. Does anyone know for sure? No. Follow trends.

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