Two day rallies in the stock market are fine . They even make some of us feel a little less dazed .
The desperate , who have seen their life savings cut in half, might feel compelled to chase the short term rallies. “Maybe this is the big rebound! Hurry, we don’t want to miss the chance to double up on our portfolio(dollar cost averaging)”
My dear friends…do not DO NOT chase these technical rebounds. They are not real, and they are definitely not a long term turn around.
I’m sure President elect Obama has exuded magical confidence, but sorry to say, there is no magic fix . Spending and raising taxes are not the necessary cure. We have a series of complex situations which are evolving and changing almost daily.
Before we can relax and get back to normal, we must realize that there is no normal. The rules that have governed our economic decisions for the past 30 or 40 years are dead . The rules do not apply any more.
Our life style and standard of living is gone. Changed. Never to return.
The worst of this financial disaster is still to come. The current upheval and resultant slow down is the warning alarm, not the main event.
Prior to the credit meltdown and banking freeze, we were already in serious trouble.
With the current bailouts totaling well over $ 1 trillion, we are facing several new problems, some short term, some that will unfold during the next decade.
Current problems revolve around personal debt. Credit cards and student loans.
The banks have been inching up interest rates. They currently are in the + 20% range.
Student loans are very low interest rtes, and current unemployment problems has caused many of these to fall into default.
Perhaps the biggest Gorilla in the financial room is the onrushing Social Security obligation.
75 million baby boomers are beginning to turn 62 to 65. The initial trickle has begun, but the next few years will see this flood grow beyond our ability to fund the obligation.
More specifics will be posted later.