Tuesday, October 21, 2008

THE SHOES ARE DROPPING: WHAT THE BAILOUT DOES'T COVER YET!

THE SHOES ARE DROPPING: WHAT THE BAILOUT DOESN’T COVER YET!

Keep a close eye on one the many sectors that WILL be hit hard

Retail will be abysmal this year because of cautious and emotional consumers. Being cut off from credit with many consumers simply maxed out the spending America depends on to support the many sectors of our economy will cause more havoc.

As I have been writing the worst is yet to come. The financial crisis is far from over and the world economy has to wake up to the fact that products, goods and services will be hit extremely hard over the coming year. What we don’t see yet is the massive bailouts for credit card debt, student loans, automotive, airlines, retail – on and on. The underpinning of our economy is consumerism. Without the American people’s support the many sectors of our economy will weaken assuring a worldwide recession at best.

The government’s rush to act to free up credit among banks and to save financial institutions was very necessary at this point in our history. The free markets needed to have the government intervention and the plan will provide some relief but it is far from enough. Even with the new stimulus plans being implemented the fact is consumers just can’t or won’t be able to afford large ticket items, luxury goods, traditional services and the retail pull back may be good for Wal-Mart but will cause major companies to collapse or be seriously damaged in the next year.

I am not a doom and gloom expert but a realist facing forward that believes strongly the US and the world for that matter is teed up for continued pain. The free markets will correct themselves and portfolio values will come back but this won’t happen for a while because many stocks will be battered as performance in sectors that require consumer spending just won’t get the necessary spending support. Layoffs, plant closings, unemployment, consumer confidence will exasperate the problems the economy already faces. So will the financial bailout be the solution? NO! there is more to come and as we borrow and print money to support the lofty plans in the financial industry more roosting will be upon us.

Watch the indicators and please pay attention to the future bailouts of more bad debt coming from the consumer sectors like credit cards and student loans at a minimum. When retail numbers begin to hit mark my words Wall Street will not be happy and continue to go up and down like a roller coaster. Also, if the Democrats to get into the White House and control Congress all bets will be off. The mere fact that Capital Gains and Business Taxes will be targeted especially focused on wealthy investors who keep the markets afloat and small business there will be a panic and major backlash – exactly what we don’t need at this historic moment in our economy.

I have offered a series of solutions at http://www.billyg.net/ contained in the I.O.U.S.A. NOT pamphlet that all listeners can read and gain an understanding of the issues and also plans that we all should hope get the ear of politicians.

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