Empty Fortune Cookie

With China's recent moves in the depreciation of the YUAN and recent earnings misses by several Fortune 500 companies, the stock market is down almost 1000 points over the past 30 days. This will be the beginning of a game of economic chess, rolling into a US election year. If you follow the the market over the past two presidential terms, you will notice the development of the bubble.

The bubble is when a financial market rises during a presidential term yet collapses like a heart attack by the time of their exist. Example of the these bubbles started with the Dot Com Bubble with Clinton and the Mortgage/Banking Crisis with Bush. With Obama, this bubble will be about debt and boy does the US have a ton of it with an estimated 21 Trillion in debt and 120 Trillion in underfunded liabilities. Yet we continue to borrow, print and tax our way into a bigger hole.

Why is China so important in this equation? The US Owes China 29% of our overall debt structure with Japan coming in second at 15%. With the recent earnings reports looking weak, China depreciated the YUAN to block the US from gaining greater strength in the dollar. Therefore, as a counter punch we reduced our interest rates in effort to compete. But can we hold off this threat of a market crash or a global slowdown? History shows that a market correction of almost 50% or 9500 from our 18000 high.

Lets hope we can get intelligent financial people in office this time, instead of incompitent politicians who are only looking out for themselves. It sure looks like we'll need it, because this country can't afford to open an empty fortune cookie.