Wednesday, April 29, 2009

Sometimes bad news is really bad news
Tom Smith

Wait. Wait.  Did it move?  Just a little?  Do you feel something?  See that slight shift in the soil?  Could it be a green shoot?

Nope.  The GDP numbers are bad, really bad.  If I were a short term investor, I would be so out of this market.  I personally feel, as Miss South Carolina might say, that the economy is going to get a lot worse before it gets better, if it gets better.  The banks are not getting fixed, credit is not flowing freely, taxes are apparently on their way up, and both a carbon tax and health care "reform" are looming disasters. These are not things that promote investment.  I suspect we are in the economic equivalent of the phony war period.  Just wait.  But I could be wrong and I hope I am.  But kid not yourself.  These GDP numbers are awful.

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Tom Smith


In some of the Southern States, wouldn't "green shoot" be a sign of bad health?

Posted by: dearieme | Apr 30, 2009 2:51:14 AM

Well, the economy is getting better, in the sense that Q2 GDP will be down 1-2% annually instead of 6% like Q4 2008 and Q1.

In past recessions such an improvement in the second derivative has been followed by continued improvement and recovery. However, in the Great Depression, not so.

Which historical episode do we resemble is the key question for investors ...

Posted by: pj | Apr 30, 2009 1:04:02 PM