HomeWe cannot borrow and recover. Borrowing is the cause of the problem. More borrowing will not solve it. I wish the Keynesians would understand common sense economics. Consumer economy is a myth. It is a way to put the American public to sleep while the multinational corporations pillage and plunder their wealth until there is nothing left.
Keep your dollars save. Do not risk your hard earned money in this expensive market. Past generations bought stocks much much cheaper. Why should you pay more??? Valuations in terms of dividends, PE versus bond yields do not add up. The risk is too much.
To explain the severity of the situation, we need 2 more charts next to our GDP charts. One is public debt, the other is private debt as a percentage of GDP. Here is a chart of total credit versus GDP. The credit bubble is clear.
http://www.kondratieffwavecycle.com/economy/deflation-how-to-survive-it/
2008 was just the warm up. We will have more and bigger crashes. GDP is up, but debt is up even more. It is a borrowed recovery.
The idea that the government can fix the economy is a myth. Social mood directs the markets, economy, politics. Government intervention only makes things worse. FDIC, FED, Fannie, Freddie are the cause of our problems. Free markets, small government, less tax was the way to go. The government does not have the vision for economic progress. They only make impossible promises and when things go south, they demand bailout at tax payer expense.
China is growing fast and this is only the beginning! The question for us the average person is this: Is it time to invest in China and Japan? Japan has been in Kondratieff Winter for a long time now and one wonders how soon the spring will come.
China's one child policy caused the demographics to be less favorable for growth compared to India whose population is exploding unchecked. So, the questions is how will China's stock market be effected? How soon will the current slump stop? While boomers will be selling American stocks, it may be wise to invest in Asia to grab a portion of their market growth.
http://www.kondratieffwavecycle.com/stock-market/is-it-time-to-invest-in-china-and-japan/
China is doing what United States has done when the World War started. US invested in it's production capacity and became the largest Industrial producer. We produced what the World wanted and we exported it. And we got rich. American market size helped with economics of scale. Now it is China's turn to do the same. As always, the questions is whether the growth is already priced in or not.