The guru's of the present financial crisis, Nouriel Roubini and Robert Shiller, are saying that the present financial crisis may continue for another six months. They cite the psychological mood during the Great Depression when people were gripped with "fear," a fear that prolonged the depression and which President Franklin Roosevelt addressed.
People are not seeing job creation or an improvement in the economy. Consumer sentiment is deteriorating. The stock market is falling again. Specifically they cite:
- Consumer confidence fell to 49.3 in June from 54.8 in May.
- The economy shrank 5.5% in the first quarter.
- The savings rate reached 6.9% in May, the highest since 1993.
- Home prices in seven metropolitan areas fell .7% in April.
If you have ever traded the bond market you will understand the current debate about the stimulus program. When first interest rates were lowered, traders would run up the bond market. Then after a big rally and a pullback, they would start the rumor of another rate cut and that would rally the market again.
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