Readers: It's Not a Turnaround Yet
Earlier today, we asked our readers: "Do you think the turnaround has begun?'
So far, 61 readers have replied. The overwhelming majority answered -- either verbosely or succinctly -- "no."
There was some cautious optimism sprinkled in among the comments, which you can see here.
But by and large, most of you do not trust that today's Wall Street rally was the beginning of a real economic turnaround.
Here are your greatest hits, some of which we've edited and condensed:
Does the math; it looks bad:
-- "At 8,000 the market was close to being right-priced. At 9,000 the Dow is overpriced. The market will hit bottom during summer of 2009. The sub-prime foreclosures should peak by summer of 2009 since most of the sub-primes were taken out between 2004 and 2006. Those on 2/28 mortgages have seen their adjustable rates reset which means those most likely to default bought towards the end of 2006. Since it takes six months to a year between the time a mortgagee has trouble paying their bill to when foreclosure takes place we won't see the peak until perhaps the middle of 2009." (Ed.: A 2/28 mortgage has a low fixed rate for the first two years then "floats" for the remaining 28, tied to the interest rates. Mortgage payments usually rise significantly.)
'Dead-cat bounce:' A temporary recovery from a prolonged decline or bear market, after which the market continues to fall.
-- "This Dow run-up is nothing but a 'dead-cat bounce.' The stock market can't keep going straight down. The [short-sellers] have to take their profits, and that pushes the market back up for a while. We may well have a few thousand more points to go down before it ends."
Award for Most Poetic response goes to:
-- "In a word, 'no.' One flower does not make a spring."
This sums up what most are probably thinking:
-- "Yes, I think it has begun, but I think it will take at least two years. And it will take me five to 10 just to recoup my retirement losses."
Didn't know enough not to overspend, but knew enough not to buy a house:
-- "I think we're far from the bottom. I am a consumer who will only be paying my credit cards off for the next year-and-a-half...You see, I've been spending at a faster rate than I earn, and I have a strong suspicion that there's a lot of that going on...The economy simply cannot continue to grow at a pace greater than what people earn and can spend...What REALLY irks me though is any suggestion of helping homeowners that can't pay their mortgages. Exactly whose fault is that?...I KNEW that these ridiculous prices wouldn't be sustained and that the result would be negative equity. SO I DIDN'T BUT A FRICKIN HOUSE!!!!"
U.S. needs return of its manufacturing base:
-- "The fundamental problems with the economy are unchanged and there will be no real recovery until housing prices are allowed to reach their natural bottom and America starts producing something of real value, not just a bunch of fancy securities that our financial industry has peddled like snake oil."
-- "I hope so, but doubt it. I am mindful that the market turned around in 1930 following the 1929 crash, only to lose its gains in a long, steady slide between 1930 and 1933. We are likely seeing the same thing now."
Finally, we have to print this one. Touche:
-- "Why not ask an economist? How would the general public know based on one good morning of trading? Journalism has been reduced to telling people what to think one minute and then polling them the next." (Ed. -- We ask plenty of economists; we like to give you your turn here.)
-- Frank Ahrens
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