There is just too much uncertainty which will continue this volatility at least thru the election and probably into January. The DOW will continue to decline along with the rest of the markets for another good 3-6 months at least. This is a recession modeled after the old 19th century financial "panics" (what recessions used to be called). We haven't seen a recession like this since the 1930's. Right now Paulson and Congress haven't done much of anything except rearrange the deck chairs on the Titanic. There is still TRILLIONS of dollars in bad debt instruments outstanding with no plan on how to digest these losses. Still up in the air indeed. This administration is truly reminiscent of Hoover's floundering which magnified and intensified the 1929 crash into a full blown depression.
Deflation is very, very likely at this point. When trillions upon trillions of dollars of money simply VANISH, prices must fall. People and businesses simply have no money (or credit) to buy anything but essentials. We are seeing it now in plummeting commodity prices. It is my theory that prices are going to have to fall to about 1990 levels to match the average person's buying power since our wages have not caught up to this spectacular cataclysmic price bubble induced by Greenspan. I graduated college 20 years ago and graduates today are starting out at only 10% above what I did! I believe Bernake is absolutely aware of these things and is simply trying to manage a slow spiraling down rather than a Hindenburg type landing. Slow means a recession of 1 - 2 years.
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