Consumers and Businesses are Not Spending Enough

Because consumers and businesses are not spending enough money to keep the economy growing the government will clearly be required to do the spending itself. Neocons and Republicans will argue, stupidly, for "free enterprise reigning" and that "bail out will socialize our country". Logistically all of this is untrue.

We are a consumer spending driven economy, for whatever right or wrong reason. U.S. economist Jan Hatzius estimates that private spending will drop by at least 6% of GDP over the next two or year. To keep that retrenchment from yanking the economy downward into real depression, the government will have to step in. Recent supply side economic thinking has been that stimulus was pointless have been proven dead wrong. Supply siders argued that American citizens would see through it and restrict spending to prepare for tax increases or spending cuts. When Emperor Bush provided stimulus, however, in 2001 stimulus DID work short term, as Americans were not far sighted enough to figure out their taxes were being raised in other areas. Now, more and more Americans realize they were defrauded, and the tax incentives or "cuts" they received were fraudulent, as their own cost of goods (property , state, and sales taxes) rose, and the net cost of products they bought increased. In other words, we spend the money we get back paying off credit card debt,and not spending more.

It is very important we realize that this recession is not "from a book." Typically by the time economists historically agree a "recession" is defined it's half over. Now, we're faltering between recession and depression and almost all economists agree that we will have only a prolonged return to health, and many economists now have a changing definition of "health." This means they have no fricking idea what's going on.

The market yesterday hit highs of 8611, and lows of 8207. Study this range around your Dow projections. We continue to believe two way trades may be possible, with the put overextended, but another bottom test potentially occurring.

Lastly, I would like to build a bit of disrespect again. Remember slimey old Halliburton, the only bidder for Iraq reconstruction. Seemed fishy? Shameful?

Now watch the Bank of New York Mellon, which is acting as our restructuring agent for the government bail out. Note it was all done before Bushy left office, note that Paulson is worth 850 million and used to be an option trader.

Have suspicion and begin your due diligence. Analyze who some of the players are that the Republicans put in key positions to flow this money out. You'll begin to see a "game has been played", and it will now be up to Obama to sort out the slime.