Saturday, January 19, 2013

Business Cycle vs Market Cycle

I believe we can use the past to data fit and predict the future. However, the older the information, the less useful they are.
* The economy conditions changes. We did not have most today's regulations in the depression. Examples abound.

* Business Cycle follows Market Cycle. It is not true as the Market has fully recovered from 2008 and the Business has not recovered.

* Employment is one of the major metrics in Business Cycle. Our economy may recover without recovering employment (unemployment + under-employment).

Why? The world is more globally connected. The corporations make more money by shifting jobs to any other country.

* QE, printing money, foreign loans (to China...), reserve currency, debt ceiling all mean the same: Live in a higher living standard that we can afford.

When Uncle Sam uses all the tools to maintain our living standard and being the world policeman (a paper one when our economy is screwed up beyond repair), he is running out of tools. Each tool is a temporary fix but a long term trap.

* The shale energy could save the entire US economy and another war could do the opposite. You cannot find this info from any charts and data.

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