You Ain't Seen Nothin' Yet

Wait til the corporate debtors begin to default (beginning to happen right now), then you will see what a bottom is. Many little known private newsletters are warning today that in spite of the apparent full disclosure of bad debt by the banks.............they are (big surprise) lying.
Again.
Still.
More: all lenders are reporting mounting losses in their credit card and auto loan portfolios. And worst of all, the next big leg of the crisis -- the one that may show us the true bottom -- has just started.

The default rate is rising for high interest corporate debt (junk bonds). This will open up a cornucopia of potential write-downs that could make the home loan mess look like a pimple on an elephant's ass. See MSN piece HERE. There is a good and thorough take down of the entire "loan" infrastructure, and it ain't good. This thing could take a good six months to work out. Auto Loans, credit card debt, even preferred stock could be a shock to the system.

Don't Worry, Congress and the Fed Will Protect us: the conditions of both capitalism and democracy are that the people in charge will never do anything that might make them look responsible for anything. We are all assuming that this "problem" is like the last time, and they will do now what they either did last time or should have done last time.

This is not anything like any of us have ever seen. The entire financial structure of the world is toppling and the way to "fix" it isn't more cheap money (lowering rates). Cheap money is the main reason for the current situation. Quoth the Fed:

On average, the five recessions from 1959 to 1983 were 47 months apart, lingered 12 months and were associated with a 2.17 percent peak-to-trough decline in real gross domestic product. By contrast, the 1990 downturn came after 92 months of expansion, lasted eight months and involved a 1.26 percent decline in GDP. The 2001 slump ended a record 120 months of uninterrupted growth, lasted eight months and entailed a GDP decline of only 0.35 percent.

All the "safe havens" are in place, things like options, consumer spending, foreign sales, and so on. These new devices are known as "White Swans."

The Black Swans: and that is what we are looking at right now, are upon us. There is nothing in place to protect us from ourselves. WE have borrowed against our inflated home "valuations." We have taken on excessive unsecured debt (credit cards). We have purchased things that we cannot really afford and now can't pay for. Go HERE for a very good and calm over view. Oh, and don't forget China. They have "grown" through inflating their economy at an insane rate. They cannot sustain and their spending will drop precipitously ("Hey don't worry about them. All they have to do is start selling the U.S. Treasuries they own.").

Be sure to go to The Big Picture for copious (that's a shit load) links to various articles in lots of different pubs.

And THIS may sound strange, but listen up: Back in the days when I traded very heavy one of the people I followed was Marty Zwieg, who was the best market timer going. He did a seminar in which he said that his first and best indicator for tops and bottoms were the newsletter ads in Barron's each week. Those ads were contrary indicators: too many ads meant the market was topping and too few meant the bottom was in or coming in. Today there is are several pieces that say looking at the bullshit on the financial channels is a contrary indicator. There is even a piece that says FOX Business Channel came on at the exact top of the market. Don't laugh, these are very good indications of too much pessimism or optimism.

And THE worst of all: Britney may have turned bearish.