WSJ: IS INFLATION BAKED INTO THE BUDGET PLAN?

NYT center-right columnist David Brooks: Our myopic leaders and "Americans actually have a falsely mild view of this crisis." Charles Krauthammer shares a similar sentiment in "Bonfire of the Trivialities."

NYT: "HAS THE ECONOMY HIT BOTTOM YET?"  Again, know one can know for sure, at least not until you have long ago reached it and are solidly on your way out, but this provides some decent guideposts.

Some key points:

1. Stock market usually hits bottom before the economy does.
   
2. Many investors remain on the sidelines. How can you tell? Because, "money market funds have swollen to $3.8 trillion, up from $2.4 trillion two years ago. And the cash banks are holding in their vaults and at the Federal Reserve has more than doubled in the last nine months."
   
3. A succinct description of deflation: "They earn less and the value of their businesses and homes has fallen, yet they still owe as much as they did before."
4. Stocks would likely not rise until deflation ended and businesses could charge higher prices to pay off debts.  This may be happening.  3 indicators that often signal that economic growth and inflation are on the way: increases in the prices of copper, corporate bonds and inflation-protected Treasury securities.  All three are higher today than they were in November.
   
5. All the indicators suggest you should be buying stocks and not selling.  (I guess some are but what does that say if the "indicators" say buy and not many are?  People think they may fall even farther?)
6. Home prices: Inflated home prices are based on metrics comparing owning to renting and median family incomes.  More real-world, are we at the point where a double-income household can afford a starter home and qualify for a mortgage?  If not, you're not at the bottom of the housing market.  These dynamics are more local, than national.  The current dismal market will only be resolved by lower prices, easier lending and an improving economy.
7. Consumer spending has rarely declined post-World-War-II and when it has, it bounced back quickly.  The current recession is severely testing that article of faith. Personal consumption fell by about 1 percent in the second half of last year — the first sustained decline since 1980. Consumption will be slow to recover because debt-saddled Americans are saving more or paying down debt. 
   
8. The savings rate — the amount of money consumers did not spend — jumped to about 3 percent late last year, from practically zero.  Postwar average = 7 percent. When this rate begins to flatten, spending should then rebound as pent-up demand gives way. 
9. Auto sales and home building tended to lead recoveries.
   
10. Increase in international trade is another early indicator that consumer spending here and abroad has hit the floor and begun to rebound.
    
11. Another indicator for a bottom: When we stop behaving like children in the backseat of the car asking their parents, “Are we there yet?”
    

"IS IT ANY WONDER WHY THE MARKET CONTINUES TO SINK?": IBD lays out many reasons why the market has been in a freefall.

MOTLEY FOOL ASKS "IS THIS THE MARKET BOTTOM?": Of course, no one knows, they just want to pull you in with a title like that.  Lotta love for Buffett, but they do make some solid points:

1. It's very difficult to time the market bottom.
   
2. Market timing isn't necessary to achieve great returns.
   
3. Stick to a proven stock-buying strategy. 
   

You can't time the bottom, but many think we are close.  If the stocks are "cheap" and you are willing to be patient, then this is probably the buying opportunity of a lifetime.

As a friend of mine said, this is a time to pick the survivors and then be willing to be patient.  When things turn around, the survivors will perform well and you should be rewarded.

Another interesting insight from the article is:

Remember, we're now 14 months into this recession -- not at its starting point. So for the sake of symmetry, let's ask how long it actually took new money invested 14 months into the Depression (January 1931) to break even. According to number-crunching I've done using rare Ibbotson Associates data, the answer is less than five years. And an investor who continued to purchase stocks on a monthly basis would have broken even in little more than two years.

Not a get rich quick strategy, but those days are over (at least until the next bubble) and that whole mentality is a big part of what got us in to this mess anyway.