One could not have asked for a better New Year's Day present than what equities dished up today. Starting strong, the pause was brief at 10am awaiting the reports for the day then there was no stopping this market. I actually thought for a minute, that my DJIA 10.800 prediction of last year would become a reality by only one trading day late. Alas, it was not to be but there is always tomorrow and that would be only 2 days late.
Reality is what it is, and euphoria makes us forget about what is looming ahead. No matter how one slices the pie, it eventually gets divided and consumed. So, we must pause at some point and ask the question "From whence the next pie will come?" because without the answer, we are riding in a balloon very high aloft.
Even if you think we are recovering nicely with construction spending, manufacturing and other so called growth signs we keep clinging onto, we cannot deny the debt we have accumulated which will take decades to repay even if we received it with zero interest. To put it simply, government will not repay this debt but they are looking at the source who will, and the source is US. Not the USA but us. Via, what means?
At some point government will kick into high gear looking for any means to cover their spending habits. Unfortunately, even with so many hopes pinned on a Republican Congress, it is reality that cutting government spending by 20% is still less likely and cutting it by 50% is just plain dreaming. But that is what we need in order to avoid what is coming like a freight train down the track.
Maybe once the freight train hits, the people will again awaken to the fact that no matter what you want your government to do for you, there is only one way to pay for it:
Sorry to put a damper on such fantastic day and such a Happy New Year. Of course if you don't like it, you can continue to subscribe to Mr. Fantasy.
Keep on Trading, Living and Dancing
The Daily Pick - $DJI
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