Wednesday, July 9, 2008

Stock Market Crash

The real crash in the stock market has not hit yet. I predicted 10,000 to 11,000 earlier, but I am adjusting that now. At this point there is no telling how low the stock market will go. An indicator of the trouble we are about to see is the drop in consumer spending in the U.K.. The citizens of the U.K. have stopped buying and are bracing themselves for the worst. There are now price wars on televisions as that industry tries to unload their inventory.
Why is this bad news for the U.S.? The answer is simple. The U.S. has seen a spike in purchases by foreigners, but now cheap flights are no longer available to the U.S. and shipping costs have skyrocketed. Now the tourist will not travel as far and the ones that do come will not buy big ticket items. Since the U.S. economy depends on this income and the signs are that Europe is beggining to tighten it's belt, you can expect sales for U.S. companies to slump in the coming months causing more layoffs, which will precipitate an even bigger drop in the stock market.
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