Stocks: Oil price, gas price, stocks, unemployment and bubbles - looking like 2008 again

[smithtg]

I did some research and looking at trends with the S&P, gas price and oil. I read some articles too that suggest 4 buck gas is the breaking point. I personally think we willl that before June and into the summer. This looks just like 2008 and then wham the stock market bubble burst and we got TARP and all the other government stupidity from that.

This time the recession (which never really ended) will be deeper and unemployment will start to look like Greece. I read a good article yesterday about how the MSM and gov't have spun the unemployment numbers in ways that are just downright stupid (but make it look good)

http://danielamerman.com/articles/2012/WorkB.html


Obama will either pull off an October surprise and 'save us all' or this election will be dirty and life changing.

thoughts on 2012 versus 2008?

more people are seeing this train wreak coming, but not that many more IMO

If things are taking a dive by the GOP convention, we need to fight like hell to get RP nominated

 

[qh4dotcom]

The Austrian economists are not predicting a bubble to burst that will bring prices down...they were predicting real estate prices to collapse in 2008 and that brought prices down on so many commodities. On the contrary, they are predicting the next bubble to pop will increase prices.

 

[Romulus]

I think you might be right...

 

[smithtg]

The Austrian economists are not predicting a bubble to burst that will bring prices down...they were predicting real estate prices to collapse in 2008 and that brought prices down on so many commodities. On the contrary, they are predicting the next bubble to pop will increase prices.

thats true implosion/SHTF if prices keep going up with no ceiling. stock prices will still tank because of robotraders that will win on the way down

 

[cubical]

The Austrian economists are not predicting a bubble to burst that will bring prices down...they were predicting real estate prices to collapse in 2008 and that brought prices down on so many commodities. On the contrary, they are predicting the next bubble to pop will increase prices.

Well deflation/inflation is relative. There could very well be deflation, but most Austrians believe it will be met with fed money printing, thus it won't last long. We are beginning another artificial business cycle right now. Industy is getting signals all around that there is plenty of savings in the economy, when in reality we are maxed out with debt and as soon as the fed takes away the punch bowl, down we will go. If the fed "never" takes it away we will turn into Zimbabwe.

 

[Brian4Liberty]

This looks just like 2008 and then wham the stock market bubble burst and we got TARP and all the other government stupidity from that.
...
thoughts on 2012 versus 2008?

more people are seeing this train wreak coming, but not that many more IMO

Yep, people are talking about this... may become self-fulfilling prophesy.

Near term stock market deflation is very possible.

 

[Brian4Liberty]

bump

 

[awake]

The "recovery" that people are witness to is completely Ben Bernanke made. Once the inflation kicks in, his magic trick will be busted along with those washed out by much much higher interest rates. The false political recovery is just that - a lie. An election cycle doping and duping of the less aware people in our society.

 

[smithtg]

people who believe the economy is related to the stock market prices are dumb and will be duped again when the market crashes and the job losses are worse than 2008

if the recovery was so good I wonder why I havent seen a raise in 4 years

 

[Zippyjuan]

Stocks always run ahead of the economy- they are usually priced based not on current value but on future expected values. And when the economy does actually begin to accelerate, stocks will start to rise more slowly- the gains having already been priced into them. Stocks don't necessarily reflect where the economy is right now- but where investors think it will be. They buy a stock becasue they think it will be worth more in the future- or sell it because they don't think it will be worth more.

The value of stocks and the price of oil don't really tell you much about how the economy is doing. Gas prices are up enough for people to complain about (like winter weather) but not enough to dramatically change their behavior such as driving a lot less or buying a better mileage car.

 

[Zippyjuan]

people who believe the economy is related to the stock market prices are dumb and will be duped again when the market crashes and the job losses are worse than 2008

if the recovery was so good I wonder why I havent seen a raise in 4 years

How often did you get a raise during better economic times?

 

[oyarde]

Folly , unemployment numbers now are still worse than the great depression , there are currently , at least 6 people available for ea job , then , it was five , it will never , get better without drastic spending cuts , which will not happen in my opinion.

 

[devil21]

Cramer was extremely bullish on equities tonite and was just plain telling everyone watching to go long on everything.

That's usually a contra indicator for me but it's an election year and the Fed will print to keep things afloat and keep the markets looking good or at least stagnant until the next administration takes over (Obama or not). Then the Fed can threaten the next administration if they don't appoint who the bankers want as Chairman. I don't see any bubbles being allowed to burst till January. Then it's on the new administration's hands anyway and the next bubble to burst will be massive. Whether it's bonds or equities won't matter and Ill still be happy with my PMs.

 

[Zippyjuan]

Folly , unemployment numbers now are still worse than the great depression , there are currently , at least 6 people available for ea job , then , it was five , it will never , get better without drastic spending cuts , which will not happen in my opinion.

In the Great Depression one in four was out of work. The average family relied on a single wage earner- if he was out of work, the entire family was out of work. Many families today have two working so if one is out of work, the family still has income. There were also no unemployment benefits to cushion those out of work in the depression. It isn't easy today- I am not pretending that it is, but it is certainly not worse than the Great Depression.

Another number to compare:
http://seekingalpha.com/article/119862-1930s-unemployment-vs-today-it-s-about-people-not-percentages

The number of people affected at the peak of the depression was 13.5 million unemployed vs today's official number of 11.6 million.

It probably does not need to be pointed out that the population of the US today is much larger than it was in the 1930's.

More comparisons:
http://www.economicpopulist.org/content/u3-and-u6-unemployment-during-great-depression

A frequent meme propounded in the economic blogosphere is that U6 unemployment, running near 17% now, is a truer measure (and there are good reasons to believe it is), so that means we have unemployment already approaching Great Depression levels of 25%. Left out of the comparison is the fact that U3 and U6 measurements didn't exist during the 1930s. So, is the 25% unemployment peak for the Great Depression a fair comparison to U6 unemployment today?

N. Andrews compared historical versions of unemployment statistics with the modern U3 and U6 versions, published as "Historical Unemployment in Relationship to Today" , has an answer. He writes:


For the period of 1900 - 1947 we have two unemployment statistics available, Unemployed Non-Farm employees and Unemployed Civilian Workforce. These two data sets pose a challenge as they were developed during a period of ever-changing data collection methodologies. The data in the sets has been adjusted by the sources listed in Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970 in an attempt to sync the data sets with the methodology that was put in place as of 1940 and was the basis for methodologies since. We can compare the two available data sets ... and we see that the Unemployed Non-Farm employees and Unemployed Civilian Workforce measures of unemployment appear to be a close analogue of modern U3 (Unemployed Civilian Workforce) and U6 (Non-Farm employees).

Based on that research, he was able to generate a mathematical formula to calculate U3 and U6 unemployment for the entire period since 1900. He found that at the peak of the Great Depression, U3 was 25.2%. U6 was 37.6%.

Here's the resulting graph:

 

[JuicyG]

Cramer was extremely bullish on equities tonite and was just plain telling everyone watching to go long on everything.

That's usually a contra indicator for me but it's an election year and the Fed will print to keep things afloat and keep the markets looking good or at least stagnant until the next administration takes over (Obama or not). Then the Fed can threaten the next administration if they don't appoint who the bankers want as Chairman. I don't see any bubbles being allowed to burst till January. Then it's on the new administration's hands anyway and the next bubble to burst will be massive. Whether it's bonds or equities won't matter and Ill still be happy with my PMs.

Here`s the tricky part. They can`t print exactly because it`s an election year. If they start printing, gas prices will skyrocket and kill the economy, thus having opposite effect to one intended. Brent is already at 125$ and going up. Some say it could reach 300$ in an Iran war scenario. It would be total mass murder to slap QE3 on top of that.

Bernanke`s still saying printing is in the cards for this year because he wants market to believe it, but that`s about it.

 

[Brian4Liberty]

Well, it looks like the drop is right on schedule...