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The market has experienced several day down turn. Some Wall Street experts are claiming the major down turn is in hand.Is the claim true? Probably not. With increased liquidity injection to the market, through PPT at 600 billion or so, FED is unlikely to allow major market crash.
My belief is market will see another 15% drop and end of year with slight plus, provided if euro sovereigh debt defaults will be contained. But this is the blips in the long term bear market.
Next two years will bring currency crisis to home. For interest payment on US debt will exceed critical 30% of tax revenue. I figured that since US tax revenue stood at 2.19 trillions, 30% will be 660 billion. Last year, treasury paid 386 billion of tax revenue for interest on the debts. This year at 14 trillion and 4% will bring interest payment at 560 billion (14T at 4%) and 2012 would be around 16 T x 4% = 640 billion. After that, it is show stopper.
We could raise tax revenue to decimate the economy, or we could declare debt default to sabatage the USD reserve currency status.
Market will tank and it will bring the economy to the chaos.
Can we raise the interest to firm up dollar now? Well, if that to happen, the government and FED will experience severe deflation that will also put the government tax receipt to nil.
2012-2014, what a dangerous time for the world history.....Call me the bear but I fail to see the light in the horizon. |
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