IS THE SMOKE CLEARING OR IS THERE FIRE?

We experienced the most amazing bull market in history from 1982-2000, arguably to 2007.

AT end of 2000, the internet craze, Y2K scare, bulletin board stocks (penny) craze....were all coming to a bubbling top, we hit bottom in early 2003 with 1% rates we went right into the NEXT bubble......finance, real estate and debt. This made intenet, tech bubble look like childs play.

Never before had we experienced year over year drop in housing values. The secular trend of expanding credit had been vanquished, and the debt was piled so high it was choking the life out of the economy....make matters worse, most of the debt was now toxic.

The GAO fixed that in early 2009, dropping the mark to market accounting rule...now banks looked much healthier, but were they.

The GOV CAME IN AND BACKED OR BOUGHT ALMOST 100% OF all mortgages....2ndry market was killed.....gov and FED were the liquidity as the Fed's balance sheet doubled almost overnight.

It may FEEL like we've hit bottom, but nothing is as it seems.....and it doesn't appear sustainable.....stimulus alone cannot fix our ills.

Americans are dropping Life Ins so help survive, near 20% are getting gov assistance....after 2 bear markets back to back many have turned away from the stock market, and the money flowing into 401K's going to stocks is not what it was. MOST of the action supplanted with HFT computer algorithyms.

Important to note. Secular Bear Markets of the past, have ended with SINGLE DIGIT PE RATIONS, and 5-6% DIVIDEND YIELDS (s&P 500).......we are not there....SPX yields about 2.2% !!

When you consider what has been done to prop up the economy, we don't have much to show for it!...and that my friends is the very scarey part of it.

We cannot stand on our own 2 feet, and most of the propping has come and went....and at 0% FED funds rates and a doubling of their balance sheets,a gov running a 10% of GDP deficit..............what next?

D