Will Tax Bill Produce a Real Estate Debacle, or is a Boom Ahead?

Lately at Dohmen Capital, we are seeing how the Real Estate market now is somewhat reminiscent of the environment leading up to the Great Financial Crisis of 2008. However, we must keep in mind that there was a roughly two year lead time between the first signals of excesses and the crash of 2008.

Between 2008- 2009, many investors were burned, with the estimated losses equaling over 20 trillion U.S dollars.

Here Comes The Recession And Bear Market

Let me discuss one major error of most analysts you see in the media. It is about the Fed rate hike. There is a great misconception.

The majority of analysts tell you that the 0.25% rate hike by the Fed is not important. They obviously know little about how the Fed works.

But this is much more important than just a small rate hike. One has to know what it compels the Fed to do to achieve its goal.

Can China Reflate Its Economy?

Now the global institutions think it is better to issue warnings rather than continue hiding the big problems. Only Wall Street analysts still play the “let’s pretend all is well” game.

We hear all the time that China cannot have a crisis because it has $3.7 TRILLION in reserves. We disagree with that for several reasons. First, who has counted that? Is this Chinese accounting? It may have accumulated over the years, but hasn’t it been spent on extravagant and unproductive governmental projects, such as building cities where no one except the street sweepers live?

The Stock And Bond Markets: A Critical Time

A CNBC survey asked 14 global market strategists to give their year-end target for the S&P 500 index. The lowest forecast was for 2,150 (close on May 28 was around 2120.) Most of the other forecasts were just below 2,300, while a number were above that level.

We remember a Barron’s survey of top institutional money managers in early 2008, just before the global crisis. Not one of them forecasted a decline in the stock market for the year, but the year saw the greatest global crisis since 1929.

They were obviously all very, very wrong.

Japan In Recession: Warnings Of A Global Financial Crisis

The major central banks have pursued a “zero interest rate policy” known as ZIRP, since the financial crisis of 2008-2009. More than $10.5 trillion of artificial credit were created. Has this unprecedented policy, never before seen in history, caused sustainable economic recoveries?

The evidence says: “No way.”

No recession, not even the Great Depression, has seen such anemic economic growth. Looking at it scientifically, instead of as an economist, we must ask, “Have central bank efforts to ‘stimulate’ actually done the opposite?” Has ZIRP actually contributed to global deflation?

Recession And Bear Market Ahead?

from the latest article on Forbes.com

The almost unanimous view of economists just two months ago was that the U.S. economy would strengthen and finally have a real recovery this year. Earlier this year, the consensus was that GDP growth in the first quarter would be 2.5%-3%. Some estimates of Wall Street were for 4%-4.5% growth.
I was truly puzzled. Was I missing something?

China Shock!

Posted on The Street.com

(Editor’s note: This article was submitted on January 22 before the China economic data were released.)

NEW YORK (TheStreet) — International Business Machines (IBM) came out with a shockingly disappointing earnings report, with sales in China down a whopping 23%. It blames the lack of orders from the large SOEs (state owned enterprises). According to the Wall Street Journal, that consists of a 17% drop in sales of its hardware group last quarter, and “a stunning 40% drop in Chinese

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