Arrival

Momentum seems to be underway to take the market below 8000.  Having the bad news being greater than the analysts' estimates only encourages the drop.  We are experiencing a time when forecasts do not carry much accuracy.  The bear did not hibernate this winter.  Be more risk averse.  I recommend that everyone be objective and stand back, knowing that what is occurring today on a global scale is a necessary purging.  Use your personal involvement to see inside yourself and what needs purging there.  

In continuing the behind-the-scenes viewing:

*  Russia and the Ukraine continue to deprive Europe of the gas that they rely on to fill 25% of their needs.  Ukraine faces economic collapse as Russia tries to squeeze this country by charging much higher prices per cubic meter.  Russia's monetary reserves are dissolving because of lower oil prices.

*  Will Israel go it alone and air strike Iran's nuclear facilities?  The news came out that they talked to President Bush last year and he said no.

*  Moody Investor Services estimates 300 global junk bond issuers will default; that's 15% versus 12% during the 1991 recession.  This environment creates a severe challenge for companies to raise capital to survive, let alone grow.

*  Citigroup is 'too big to fail,' yet that is what is happening even with $45B given to them from the $700B bailout.  They will break up in an attempt to save the pieces.

*  Bernanke said that more government investment in financial institutions are essential to maintain stability.  How much money is enough achieve this?

What looks unconnected is part of the same puzzle.  Like Chief Seattle said, we are all connected in the same big web.

One final note:  anyone who owns a home should consider appealing the value used by the state assessor's office in determining property taxes.  In my past, I did that once in California.  It took 3 appeals to be accepted.   

Resilency

The market is holding up well with bad news flooding the forefront of everyone's consciousness.  

I'm watching Putin in Russia warning that foes attempting to destabilize Russia will be suppressed, knowing he has his own agenda, being a former member of the KGB.  If he is trying to put this country under a police state, I think the economic situation will rule the day and minimize his control in doing this.  

Pension funds of corporations in the S&P 500 are underfunded.  They are being forced to decrease contributions and in some cases plan on closing the funds.  This is a clear sign of the long range affects that this current situation is having.  I happen to have a defined pensioned plan with General Dynamics, who bought GTE Government Systems where I worked for 13 years.  I can collect a monthly pension or lump sump when I'm 65.  This company seems to be healthy and thriving in this climate.  If it is there when I reach this age, great.  Otherwise, I'm not including it in any life planning.

More than 12 million home owners are under water; an estimate of $5 trillion in housing values lost.  In 2009, there is an estimate of another 25% reduction in housing prices, and it it to continue into 2010.  Even though low rates are being offered and people are saying what a great deal houses are now, consider offering 25% less for any house you may be serious about buying.  The 'present value' of houses is not being reflected yet.

Credit is continuing to be tight because the banks receiving the $700B bailout are buying U.S. Bonds and Treasury Bills.  Where is the management and pressure to force them to lend  the money as originally defined to the individual?  This is a sure sign that those at the top of government have no control in how the money is used.  Lowering the discount rate to 0-.25% is suppose to encourage them to move forward in this manner.  Time will tell.

Overall, the 'fall' is continuing all across the world.  Japan and Germany are pumping extra funding into the system.  The Belgium government collapsed after it failed in an attempt to bailout its financial group Fortis Bank.  If you look at the results of all of the actions, the truth is revealed.

As I have said repeatedly, if you can reduce your own personal debt, and be less tied to what is happening to the world financial system, you will be free to act in an abundant way when the bottoms are reached.

Look Behind the Scenes

The market plunges almost 8% today and the consensus is that the recession has 'officially' been announced and it started a year ago.  I don't agree with this since we all new that we have been in a recession long before it became official and the market has reflected this psychological impact.  I think something else is winding its way through the system that even the experts are unaware of. 

Look at Russia and Putin trying to convince the residents not to withdraw their money and send it to other countries for safety.  As a result of this action, the leaders are forced to spend less on military.  As I have said before, Russia will be reined in from spending aggressively on the military because the economic concerns will always take precedence.

The leaders of China are saying that they aren't keeping up technologically.  What are they really telling us?

What is the truth ?  I think the example given here plus other countries and what they are saying and doing lead a direct path to us to see why this market  fluctuates in the extreme.  It goes beyond the Bear having its way.  When I see it, I'll post it here.  If you see it, please let me know.