Link: MoneyCentral – Current Environment

May 20, 2007: 11:58 AM CST

Bill Fleckenstein recently published two bearish articles both on the US and Global economy.

Here are a few quotes I wanted to highlight:

From Ignoring the Lessons of 1929:

The economic and financial landscape of 2007 bears striking similarities to 1929. …business began deteriorating in the spring of 1929, though the partying in stocks lasted until the fall.

Meantime, the stock market is powered by gargantuan speculative forces. With every day and week that passes, speculation becomes that much more intense.

The deteriorating economy is a process that has a long way to go, even though Wall Street tries to throw a party every day that bad news does not absolutely pummel it into submission. No amount of hedge-fund and LBO speculation is going to make the average consumer whole again. Thus, I continue to see no way forward other than a recession and, at some point, a dislocation in the stock market.

From Bad News:  The Bubble is World-Wide:

Money printing by virtually every central bank on the planet has created a synchronized global boom, gobs of speculation and complete disregard for risk. This will make the downturn uglier.

(Due to Leveraged Buy-out Mania) companies that are doing poorly have seen their stock prices improve, relative to better-managed companies, because they’re more likely to be acquired.

In the perverse way of markets, folks will probably only worry about economic weakness after enough debt has been piled on corporate balance sheets to make the downturn even uglier than it would have been otherwise.

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