Stock Market Comeback? I Think Not.

I don’t think we should be too fooled by the occasional stock market bounce — U.S. stocks are most likely headed back to their 2009 lows.

The recovery we have seen has been mostly bought and paid for by stimulus money. And it hasn’t done the job. Not enough new private sector jobs have been created. We now have a record, unpayable federal deficit. And with no new stimulus around the corner, what is left to bolster the markets…nothing.

Why?

Despite everything Washington has tried to do, something like 25% American workers are still struggling to get by with a reduced paycheck — or no paycheck.

Consumers are tightening their belts. Americans have a high level of discretionary spending. We may not totally admit it, but we do. And when things get tight, we have little choice but to exercise discretion in our spending. This does not bode well for a sustained economic recovery.

The housing slump is still with us. New home sales are down and foreclosures are increasing again. No jobs and credit tough to get, where can the housing market go?

Many, if not most, U.S. states are drowning in debt and have unfunded pension obligations that must be paid first as I understand it. Where will that money come from? Cuts, cuts, and more cuts.

I think that Americans and investors abroad are looking over at whats happening in Europe and have that sinking feeling that we are not immune to such things over here. When these investors will no longer lend us money, we will have no choice but to print more and that spells inflation and high interest rates.

The bottom line is it is time to look at all this and see what you can do to weather the storm. Don’t wait too long. What you do now will determine whether this impending crisis will make you poorer or make you richer.

Bob

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