Still Not the Bottom: More Reasons to Short

A year ago on January 30, 2008, I declared "Victory for Bears." I said:

What have looked like "panics" in February [2007], August [2007], and last week have been prices beginning to approach reasonable levels only to have bull market conditioning cause people to buy the dips.

That was right. Now we are in a bear market rally that has caused amnesia and so people have forgotten that the economy is terminal.

California
If they're sensible, over the next few weeks legislators will find enough flexibility to finish their work on a solution the state desperately needs. Otherwise, state Controller John Chiang said that he will have to start paying California's bills with IOUs in February.

Arizona
November sales tax collections were down (13.3)% compared to November 2007
November individual income tax collections were down (14.8)% compared to November 2007
The job market in Arizona continues to weaken... a decline of (3.1)%, the largest year-over-year reduction of the Arizona work force since July 1975.

No Capitulation Yet
The same Wall Street strategists who told investors to buy stocks in the worst year since 1937 are even more bullish than a year ago, predicting the Standard & Poor’s 500 Index will rise 17 percent.

rich writes:
I don't think that a year from now anyone will be saying that: 1) the recession is over; or 2) the U.S. led the way out. The U.S. economy just keeps digging itself deeper into a hole. All the stupidity and false optimism is a leading indicator of nightmares.

O'bama proclaims:
America's economy as "very sick" and has said that the situation was worsening

Politicians are paid liars, and the president does not say the economy is very sick unless it is actually swirling the drain.

The current projections are for $42.26 for 2009. That makes the forward P/E 22. That doesn't look like value at all, when the historical average is closer to 15.

I own MPG puts:
There is no relief in sight for Orange County, where subprime lenders and title companies once dominated the market but are now shedding space because their business has dried up, and big banks are now shrinking because of a wave of mergers. The vacancy rate has soared from 7 percent at the end of 2006 to 18 percent