Clueless in Washington as the credit contraction accelerates, and miserly banks do not share the money.

Martin D. Weiss, Ph.D. is publicizing the services of a foundation started by an economist named Dewey back in the Great Depression. It does Fourier type cycle analysis of trends in stocks, commodities, and national economies. It claims that in 2004 they predicted the top in the US stock market would be September 2007. This type of analysis is similar to artificial neural network solutions. Both predict that gold is currently in a correction.

This cycle analysis also predicts the US stock market has begun another downward correction that could take the market to a new low. But then it anticipates another Bear market rally. While this year may not be too bad, it predicts the stock market will not bottom until in 2012 after a series of declining bear market rallies. Basically they think the politicians and government regulators and economists are Clueless.

The WSJ reported that Congress international vacations (at taxpayer expense) are already up 50% since the socialist took control of Congress in 2006.

Market forces July 2

The Bear market rally is about to begin its second leg down. We expect three or four more small (<7%) down legs before we get another bear market rally. Fear and the underlying credit contraction are strengthening. The discount rate is close to zero so banks are making profits on their old loans. But still the new loans are not being made fast enough to replace old loans. Credit is contraction while the TARP funds are consumed on building a bigger reserve cushion for loan losses.

The money is not going where it was supposed to go… to make it easier to get a mortgage or to refinance. It is not that people do not want to refinance. The problem is that the miserly banks have such a profitable deal they think it is stupid to share it with mainstream taxpayers. The banks borrow at 0% interest and they want the homeowner to pay the bank 5.2% on the mortgage. To end mortgage defaults the mortgage rates have to fall to below 4%. But the socialist Obama administration seems clueless to this fact and the fact that the credit squeeze is getting worse and TARP is only building up reserves for a coming calamity that could be completely avoided. Obama is indeed turning this recession into a depression by stashing the money away in reserves for a depression when the money is needed right not to end the mortgage crisis and the recession.

Market Outlook
U.S. payrolls fell more than forecast in June; Unemployment rises to 9.5%. We expect U.S. stocks to slid now, sending the stock market into a third straight week of this correction. A worse-than-projected decrease in jobs added to concern that rising unemployment will grow the mortgage crisis until it is out of control. Treasuries are rising, while oil and gold/silver prices begin a correction as well.


Market volume collapsed 20% again on the market rise yesterday. It indicated the buying is still declining.


Last night most Asian markets were down: Hong Kong down -1.1%, Japan down -0.6%, and India is up 0.1%.

Most European markets were down sharply this morning in a range of -2.3% to -3.3% half way through their session.

US futures are down about 1.5% at the start today.

We will be cherry picking into the market during what we expect to be about two months of market decline.