Letter: Economic signs point to long fall, not recovery

Friday, June 27, 2003 | 9:38 a.m.

Bill Bonner, publisher of The Daily Reckoning (an online financial and investment report), points to other ominous signs that the economy -- rather than recovering -- has a long fall ahead before bottoming out.

Among the signs seen by Bonner are those advertising bankruptcy counseling services. "Bankruptcy has become as popular as weight-loss," comments Bonner. "Bankruptcy rates are hitting records despite the best efforts of those who manage the economy. ... In addition to bankruptcies and unemployment, business profits as a percentage of GDP have fallen to their lowest level in about 40 years."

That would explain the corporate insiders' eagerness to lock in profits now, while investors -- enticed by the Bush administration's targeted reduction on taxation of dividends, and by the Fed's loose-money policies -- are lured back into a badly inflated stock market likely overdue for a catastrophic plunge.

Retirees living off their savings and retirement plans are "invested" in this plunge. That's what they worked for all their lives.

FRANK M. P ELTESON