Double Dip Recession: Why Dow 10,000 May Not Last | Our Finance
"Money frees you from doing things you dislike. Since I dislike doing nearly everything, money is handy." - Groucho Marx (1890 - 1977)
Now that the stock market has hit the magic Dow Jones 10,000 mark, it sure feels like a hard fought climb up to that milestone. Its still a ways away from 14,000 for the DJIA, which was once achieved in 2007, but as some of you may think were getting there. double dip recession
Double Dip Recession: Why Dow 10,000 May Not Last
But heres ...
the thing: like many other market followers, I am quite nervous about this development in the equity market. Sure, were supposedly in an economic recovery right now, but many people are still feeling the pinch of lost jobs, no jobs or upside down mortgages, as far as Ive noticed. As Ive discussed before, were far from celebrating here in the SF Bay Area: the California unemployment rate[11] is stuck above 12%, and as this interactive graph[12] shows, its only gotten worse over time.
Whats more concerning to me is this thing that some economists are warning about: the risk of a double dip recession for our economy. For instance, I heard about how Carl Icahn (a billionaire investor) has been addressing the possibility of a double dip recession due to continued rising unemployment, which could very well impact the coming retail season as people put a cap on their spending. According to him, were right on the precipice of another economic contraction (quoted from this Bloomberg article[13]). Here are some interesting points on this: Dow Jones 10,000 2009
The stock market going to 10,000 could simply be caused by investors realizing that we arent really going to the doghouse as badly as we initially thought. Good to know that so far, weve established the 6,000 level as the bottom. But really, is the Dow at 10,000 (or even 9,000) justified right now? Im definitely in the camp that doesnt think so.
As I review the fundamentals, I feel uncertain about this upward march in stock prices.
Were supposed to be recovering from the worst recession since the 1930s. Somehow, I expect it to take more work for us to pull out of the depths of this hole.
In September of 2009, unemployment went up to 9.8% nationally, the highest levels since 1983.
Can inflation be around the corner?
Whats fueling the markets rise? Improved earnings reports, apparently, but these are a result of business cut backs and company layoffs, rather than real growth.
So what do you think. How long will this mini-bubble last? Is anyone optimistic?
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On to other exciting things: lets check out whats going on elsewhere!
Her Every Cent Counts: Woohoo! I made it to this great list of female bloggers in finance![14] Definitely a nice resource for those of you who want to meet female money writers. :)
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