As most of my regular readers know I am constantly trying to put the pieces of the puzzle together for P3. It is not that hard to forecast the impending doom of our economy given the multitude of really bad decisions we've made over the past many years (and especially recent decisions by our faithfully elected officials). In my blog below on the many employment issues that still and will continue to exist (5.7 MILLION out of work and growing) I tried to paint a fair picture as possible using many reliable sources. To build on the employment issue and the impending doom of the consumer, Mish has put together a fantastic writeup on the Vanishing Credit Lines for Consumers and Small Businesses.
OK so the banks that are in such good shape and have all that TARP money (remember they are "well capitalized" and the stress tests said all is well) to lend to help rebuild our economy are now cutting credit lines to the lifeblood of the American economy, the small business? What? Say that again? Oh, they are cutting credit to the general public as well? What? Say that again? So here is another major piece to the puzzle that impending doom is being delivered to our doorsteps. Just read the article and then add the unemployment issue to this debacle and you may start seeing the picture.
I'll add a quick side note here, if the savings rate nationally has gone from negative to over 4% that is another LARGE chunk of money taken out of consumption. Just thought that small tidbit of information fits in context with the credit and employment issues recently being addressed here. Those predicting that since inventories are at historic lows and a hiring boom will come to rebuild and resupply everything are wrong. Sorry. The tax payer is tapped out. The consumer is tapped out. The treasury is tapped out. PIMCO is tapped out. The Fed, well, just how much money will they print and then if they do....we're totally toast. Bottom line is it may be a decade(s) before we become the extreme nation of consumption we were just two years ago. They have put the patient on life support and nothing short of a miracle is going to stop this patient from passing on. Oh, OK, the patient will survive, but it may come out needing years of therapy and might need facial reconstruction to recognize its own self in the mirror in a few years.
I'll not go into the multitude of other issues here just yet. I'm keeping a notebook of links to build the ultimate case for P3. It's coming. I believe new market lows will be set eventually or at least they'll be tested. Just make sure you are ready. Enjoy this pop while it lasts, because by the end of this year or early next year the ugliness returns (IMO of course).
GL this week.
Your permabear buddy,
Shanky
