European / Asian markets plummet

[carincross]

Source: CNBC

"Major European markets were down heavily Monday, on persistent fears of a recession in the U.S. Asian stocks fell sharply as well, with Tokyo's Nikkei down nearly 4 percent, on Wall Street's dissatisfaction for the proposed US economic stimulus package. The U.S. stock and bond markets are closed for the Martin Luther King, Jr. Day holiday...

"The selloff in European banking shares accelerated late on Friday after U.S. bond insurer Ambac lost its vital triple-A credit rating from Fitch Ratings. The cut puts at risk billions of dollars of corporate and municipal bonds covered by the company.

"The DJ Stoxx bank index is down nearly 34 percent from its 52-week high, as investors fear that financial institutions have not yet revealed the full impact of the debacle in the subprime market on their books."





Read more: http://www.cnbc.com/id/22764323

---

Last Friday Jim Cramer told Chris Matthews on Hardball that the real financial problem involves the companies that insure financial institutes that have recently had to make huge write downs because of the subprime problem - e.g. Citigroup, Merrill Lynch, etc. He mentioned Ambac as a major insurer in this shadowy insurance market. As this article notes, Fitch Research downgraded Ambac Friday evening from its AAA rating. Mr. Cramer says the Dow could drop 2000 points if this insurance problem is not immediately dealt with! The Europeans and the Asians are taking note. And India's stock market has gone down over 10% today.

[Tesha]

1. I think it's probably a good thing our market is closed today. (NT)

[jordi_fanclub]

2. Good but not good enough... Germany is 7.10% down!!!

[BB1]

3. while europeans are losing money by the minute.

Just on the phone with a friend, he already lost a thousand euros, and my mom isn't even opening her bankstatements anymore. We're in for some very bad weather, are so, presumably, are you.

Now, where did I put all that gold I had lyin' around?

[ursi]

81. ...we are lucky, My SO stocked most of our home sale away in gold

...and in exploration company stock.

But we are wondering if good old Georgie is going to be coming for our gold like they did in the old days when things start collapsing all over.

[jonnyra]

4. But...we got checks comin...

I thought I read that we will have checks comin in the mail to make it all better? That'll fix it.

[Dr.Phool]

5. I'll use it to buy a tank of gas!

[fed-up]

7. once again our oil man leader finds a way to funnel money to the oil companies...nt

[Deja Q]

6. With their markets obviously depending on us, it won't do too much bad...

At least short-term... which is all anyone gives a rip about and for all the hemming and hawing about gen x and gen y wanting instant gratification, they aren't running the show.

Except that criminal from that web social calendar who got away with nicking pictures of all the staff in Harvard and used it as a stepping stone (where's Harvard's cut in the profits)...

[ozymandius]

8. US Recession Fears Sink Global Markets

Source: Associated Press

TOKYO (AP) -- Asian and European stock markets plunged Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.

India's benchmark stock index tumbled 7.4 percent, while Hong Kong's blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy, which has been battered by housing and credit problems. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

Concerns about the outlook for the U.S. economy, a major export market for Asian companies, has sent the region's markets sliding in 2008. Just last Wednesday, the Hang Seng index sank 5.4 percent.



Read more: http://biz.yahoo.com/ap/080121/world_markets.html

[ozymandius]

9. Wall Street Braces for More Volatility

NEW YORK (AP) -- With Wall Street falling precipitously almost by the day, investors are asking what it will take to revive it. Market experts are increasingly coming to the same answer: Time.

There is no piece of economic data, no corporate earnings report, no move by the Federal Reserve and no government tax plan that will be able to soothe the market's anxiety in the next couple weeks over the weakening economy.
.....

Upbeat financial results in the coming week from some of the large, multinational companies that make up the Dow Jones industrials -- Microsoft Corp., AT&T Inc., Johnson & Johnson, Pfizer, Caterpillar Inc. and Honeywell International Inc. -- could lead to some rallies. But no one should be surprised if the gains evaporate as soon as they developed.

Investors simply have too many questions to buy into stocks with confidence -- questions that are not going to be answered until all fourth-quarter results are in, and until Wall Street has a better sense of how the still-young first quarter is going.
.....

Last week brought exactly what investors feared: a wretched manufacturing reading from the Philadelphia Fed, dismal home construction data from the Commerce Department, a worse-than-expected profit at Intel Corp. and historic losses at Citigroup Inc. and Merrill Lynch & Co.

http://biz.yahoo.com/ap/080120/wall_street_week_ahead.html

[ozymandius]

10. Oil drops below $90 a barrel

SINGAPORE - Oil prices fell Monday in Asia as concern over the U.S. economy drove down regional stock markets and outweighed concern that OPEC will resist pressure to raise crude production levels.

Oil prices have now retreated more than $10 from a record above $100 a barrel early this year on worries a flagging U.S. economy would dampen fuel demand. Prices had gained Friday on hopes that President George W. Bush's economic stimulus plan would work.

But most stock markets have since reacted pessimistically, uncertain Bush's plan is enough to stave off a severe economic downturn in the world's largest oil consumer. Asian markets plunged Monday, with benchmark indices in Hong Kong and China both dropping more than 5 percent. On Friday in the U.S., the Dow Jones industrials fell 0.5 percent after Bush announced a $145 billion tax relief package.

http://news.yahoo.com/s/ap/oil_prices

The piehole effect worked its magic again.

[ozymandius]

11. China is not decoupling from U.S. economy: central banker

BEIJING (Reuters) - China's central bank on Sunday poured cold water on the idea that the country's economy can decouple from the United States.

China's exports will be badly hit if U.S. consumption weakens, Zhang Tao, deputy head of the international department of the People's Bank of China, told a financial forum.

Figures due this week are expected to show that China's gross domestic product grew more than 11 percent in the fourth quarter of 2007 from a year earlier, despite a deepening U.S. credit crunch.

But Zhang said he saw mounting risks to U.S. consumer demand. He noted that retail sales unexpectedly fell 0.4 percent in December, while property prices were falling and rising petrol prices were crimping disposable incomes.

http://news.yahoo.com/s/nm/20080120/bs_nm/china_economy_decoupling_dc

[Tansy_Gold]

12. Comments from a lurker about fixes, symptoms, and underlying disease

I'm not a regular reader of the stock market threads, and certainly not an "informed" one. I've never taken a single economics or finance course, unless we had some in high school 40+ years ago, but if so, I slept through it.

So it's only gut logic that keeps telling me "the economy" most people are so worried about is NOT going to be fixed by the distribution of a mere $150 billion or so. What's really wrong is the system itself, and putting a band-aid on the open wound that's hemorrhaging $$$$$ is stupidity, folly, insanity, or whatever else you want to call it.

As Bob Herbert said the other day in the NYT, it's jobs that are needed, but I don't think he went far enough. Not just jobs, but productive jobs. Meaningful jobs. Jobs that not only put a paycheck in people's pockets but that put useful goods and necessary services into the economy.

If the administration dumps $150 billion in cash into "the economy," that's not going to bring back the housing industry or the trickle-down effect of the housing "slump," is it? I mean, there's been all this "wealth" created over the past 30 or 40 years, right, but it's all ended up in the hands of a tiny, tiny uber-wealthy few? By Reagan's rules, that should all be merrily trickling down to us peons, but we know it isn't, so WHERE IS IT??? Is it somehow tied up in the hands/pockets/offshore bank accounts of the uber-wealthy and thus removed from "the economy"?

Last night I started reading Shannon Brownlee's book about the medical-industrial complex (MIC), "Overtreated," and I was struck by the sympathy she expressed very early in the book for the notion that the MIC serves a vital position in the economy: people have jobs in the hospitals, in the insurance companies, and so on. The implication at that point was that to shut down or even trim the excess from the MIC in the name of good health care would be damaging to the economy and thus create another problem almost as bad as the health problems caused by too much health care.

And maybe that is going to be explored through the rest of the book, because she starts out by pointing out how many people have no health care or poor health care, because they live (and die) outside the MIC.

But I was still struck by the unspoken but obvious resolution: If EVERYONE had adequate but not inappropriately extravagant health care, the MIC would continue to hum along just fine. Instead of insured people getting a million MRIs but half of them being medically unnecessary, that equipment and those medical personnel would be available to serve those who are currently uninsured. The money would still flow, the jobs would still be there. And again, maybe Brownlee makes the same point later in the book.

Which is exactly why I think the fundamentals of the current "economic downturn" aren't being addressed by the administration or even most of the pundits: the wealth is there, it's in "the economy" in the sense that it hasn't somehow just evaporated. And it's not a matter of a one-time government infusion of cash; it's a matter of restructuring the nature of wealth flow.

As the markets fall, I see a reluctant realization that there is a point at which an economy -- local, national, global -- has to confront its basic premise. But I really don't know what I'm talking about, so I could be completely wrong.

I'm just

Tansy Gold

[TalkingDog]

13. Profit, profit, profit:

I think if we put our mouth where our money is, we could be the healthiest people on the planet.....


My Favorite Master Artist: Karen Parker GhostWoman Studios

[rzemanfl]

15. Whoa! I am emailing this one to everyone I know. n/t

[ozymandius]

14. You point to two fundamental issues.

Essential products and services have been "commoditized" in this country. Housing is a commodity. Energy is a commodity. Healthcare is also a commodity.

The second item is a fundamental change in our financial and wealth creation system. We as a nation have become reliant on investing and the movement of money, rather than actual work (manufacturing), to create sustainable wealth. I believe that hideous Adam Smith would be shocked that a nation would trade one avenue of money creation for another as we have.

[Tansy_Gold]

16. three phrases jump out at me:

fundamental change
reliant on investing
sustainable wealth

It seems to me, ignorant as I am, that we NEED a "fundamental change" in our financial and wealth creation system, because we've become so "reliant on investing" rather than on real work and as a result we can no longer "create sustainable wealth." It's just dollars moving from one brokerage account to another, from one hedge fund to another. It's being pulled OUT OF the economy.

Again, I could be entirely wrong on my thinking, but I tend to go back to the Enron mess as an example. Lay and Skilling and Fastow "created" wealth by hyping the company and the price (but not necessarily the "value") of the stock skyrocketed. But there was no underlying value to it. So when people who had $500,000 in their retirement accounts in the form of Enron stock and then "lost" it when Enron collapsed, they didn't really "lose" anything because they never really "had" anything, did they? But Lay and Skilling and Fastow had exchanged what they knew was worthless stock for real dollar$$$$ and socked it away in other things of real value: Lay's $24MM cottage in Aspen comes to mind.

The whole sub-prime housing scam is part of it, too. As the bubble grew, property became worth more and more and more and more, but that value was only ever on paper, wasn't it? I mean, a house and a piece of property are only worth what someone ELSE will pay for them, right? But when people -- some of whom were probably well-meaning and others were just trapped and still others were gaming the system -- started turning what was only paper money to begin with into hard cash, wasn't a fall inevitable? There was no real "wealth" being created, was there? It's all just electronic transfers of arbitrary values, isn't it?

And I say this as someone who sold one home at what may have been the peak of the market in the Phoenix metro area and bought another at the same time. So I got high $$$$ for my old house and probably paid 15-25% too much for the place I'm in now, but it doesn't really matter, does it? The real value is in that I have a place to live, a place to create the art that is SUPPOSED to be supporting me (ha ha ha ha ha ha ha ha ha), and room for guests/visitors/etc. And space, if crunch comes to crunch, to have a garden, raise some chickens, and so on. I'm not concerned about the "decline in value" of the property; the house I sold has declined too!

So this proposed $800 "tax rebate" makes absolutely no sense to me. What WOULD make sense to me is a program by which real jobs are created, not burger-flipping jobs or let's-add-another-layer-to-the-health-insurance-bureaucracy-and-create-paper-pushing-jobs or let's-ramp-up-another-housing-bubble-so-we-can-put-PhDs-to-work-installing-cabinets-made-in-China-jobs.

If I hear one more person say it was the unions that busted Detroit, I'll scream. My ISO (insignificant other) pontificates on the auto industry on a regular basis, and his usual contention is that union wages, union fringes, and union retiree entitlements broke Detroit. He claims that each car that rolled off the GM or Ford or Chrysler assembly line had to carry $1000 extra in price to cover the guarantees of health insurance and pension that the unions had negotiated. My counter, and I don't know if it's correct or not but he usually just changes the subject when I bring it, is that it wasn't worker benefits that prompted all those recalls. We know it was greed for profit, greed for stock price inflation, that drove the U.S. automakers to cut corners, to start buying steel from Japan (thus killing the U.S. steel industry), to start cutting worker pay and benefits and so on. It was the unions, wasn't it?, that helped bring livable wages to union workers and many non-union workers as well, and wouldn't we have had a stronger economy right straight through from 1973 (when wages peaked in real $$$ terms) to now? Wouldn't we have a stronger working- and middle-class, maybe less poverty, maybe a better distribution of health care (that chart is a real eye-opener!), maybe a more equitable distribution of the real wealth rather than just the paper wealth, if we had more unions, more pressure on the "ruling class" to stop squeezing every drop of financial blood from the people who actually create the wealth?

Oh, I know, I'm in full rant mode. It's been a very, very bad night and morning personally, and I'm kind of using this forum to channel a whole lot of frustrations into something constructive.

Tansy Gold

[Ripley]

17. What a horrible rationalization.

If only more people were sick, the economy would bloom. That's like saying "if only there were more wars, there would be more jobs!"

The fact is that the MIC that book speaks of is a disgrace to this country. The AMA, FDA, FCC, Big Pharma and the Insurance giants work hand-in-hand to run an Amway scam on the American people and their federal institutions. Like The Mob, Pharms bribe the lackies (doctors, media, government agencies) in order for them to pimp their wares. Drug Pushers hailed as Saviors. More Americans are unhealthy because they take multitudes of synthetic drugs whose side-effects are more damaging to their health than if they used alternative methods to address the problem. People have been brainwashed into believing it is normal for everyone to be on some kind of "medication" from cradle to grave.

Counting on an unhealthy society or having "enemies" who want to kill us all in order for our "Economy" to survive is macabre no matter how Optimistically Reagan said it or how Knowledgeably a doctor in a lab coat says it or how Empathetically a Presidential candidate says it.

The Culture of Greed needs to be stopped. That's what has ruined our economy and is literally making people sick and killing them.

[Tansy_Gold]

38. Please, I think maybe we've misunderstood each other

I hope I didn't give the impression that I think an uncontrolled MIC is good for the economy. I don't, not at all.

My intention was to point out that Brownlee's point about the MIC providing paychecks (as opposed to real jobs) seemed to ignore the fact that a more humane, less greedy health care industry could provide NEEDED care to the under-treated and cut back on the useless, dangerous, but profitable over-treatment of others; and in doing so maintain a reasonable and necessary level of productive employment, thus not losing "paychecks" and creating real jobs.

I'm certainly not defending the greed and mega-profits of the existing medical establishment. Indeed, I agree with you that this whole system needs to be changed, and changed radically.


Tansy Gold

[Ripley]

70. Didn't think that was You, TG.

I was responding to the part of the book that we need more hospital jobs. Sorry if it came out the wrong way. I do believe we are in agreement. The system is set-up for profit and instead of encouraging preventative care, the Medical Business almost FORCES people to take pharms. I have personally experienced this recently and so has everyone else I know. I went in to an Urgent Care center last summer to get a renewal for my poison ivy script. Three different people (nurse, PA, Doctor) tried to give me a shot of cortizone I did not want. Then they were insistent on giving me a script for Claritin. Then they pushed free samples on me. All I wanted was my poison ivy cream. PUSH PUSH PUSH. In fact they acted shocked and indignant that I was taking responsibility for my health and chose not to follow their orders as if I were a prisoner. Too many people think doctors are Gods and don't even question them.

/rant

[Lorien]

50. Huh? Too much healthcare? There's a huge shortage of nurses and GP s in

this country. Hell, my dad is a psychologist who recently retired early because he couldn't afford all the insurance and fees needed to practice. He said that Riverside Hospital, where he had his office and a recent surgery, is badly understaffed due to budget cuts. I have not been able to see my GP in eight months because she's so overbooked. And try seeing a dentist in the near future! Three months is the average waiting time there. Excess MRIs? Hell, I can't get my insurance company to cover a SINGLE life preserving surgery or body scan.I don't know what country that author is living in, but it sure ain't this one.

[Ghost Dog]

65. But that's precisely Tansy's point, isn't it?

That too little of the money spent on or in or around the so-called healthcare system in the US (and it's a lot) is going into money-spinning and profit-taking schemes (eg. pill-popping); too little where it would really make a difference to the health of the majority.

[FarCenter]

68. Health Care is about 16% of GDP

Health Care is about 16% or nearly 1/6 of GDP?

What fraction of GDP do you think it should rise to?

[Lorien]

69. Does that include "health insurance"?

and can you post a link?

[Tansy_Gold]

76. I don't have a link but can quote

from Shannon Brownlee's book Overtreated: Why too much medicine is making us sicker and poorer:

"In 2006, we spent an estimated $2.1 trillion on health care. That's almost as much as the worldwide market for petroleum, and more than the United States spends on food. We spend more per capita on health care than the Chinese spend, per capita, on everything. Looking to the future, the Centers for Medicare and Medicaid Services predicts annual health care costs will hit $4.1 trillion by 2016, eating up nearly 20 percent of our gross domestic product." (p. 2)

"We devote nearly a third of our health care spending to administrative costs -- paper pushing, in effect. In 1999, that amounted to $1,000 per capita. Canada's single-payer system, by contrast, was a model of efficiency, spending only about 16 percent of its health care dollars on administrative overhead, which means our system wasted nearly $160 billion. Then there's the $30 billion in after-tax profits earned by health insurance companies." (p 3.)

Health insurance costs, therefore, appear to be part of the equation.

[FarCenter]

94. 16% of GDP would include all health care costs

Doctors, hospitals, diagnostic labs, health insurance, claims processing, malpractice insurance, pharmacies, drug companies, drug plans, etc.

http://www.nchc.org/facts/cost.shtml for G-Street lobbiest site.

http://www.kff.org/insurance/snapshot/chcm010307oth.cfm for Kaiser Foundations, says the share of GDP devoted to health grew from 8.8% of GDP in 1980 to 15.2% of GDP in 2003

http://en.wikipedia.org/wiki/Health_care_in_the_United_States Wiki says 15% and growing.

It is a horribly inefficient system that employs a myriad of people who are not doctors and nurses or other direct caregivers. It encourages treatment over prevention, and it encourages treatments, devices and drugs of dubious value.

[Ghost Dog]

61. Excellent, Tansy.

Do you know what economic strategies your top three Dem candidates are offering?

It doesn't seem at all apparent, viewed from here in Europe.

Could you summarise briefly for the sake of, I suspect, many readers of this thread?

[Tansy_Gold]

71. Do *I* know what the candidates are proposing?

Sorry, Ghost Dog, but I haven't seen anything coherent from ANYONE, let alone a candidate from either side, with the possible exception of John Edwards. And from what I've heard from him, there's less of a plan and more of a plea: Let's change things, change things dramatically. But not much on the how we're going to do that.

Personally, and again I add the sincere and serious disclaimer that I do NOT know what I'm talking about, I don't think any kind of radical change is possible unless and until there is a crisis. We aren't going to see any kind of legislation that limits CEO or hedge fund manager compensation, that raises taxes on the top 10%, that raises taxes on capital gains, that restores unions, that guarantees adequate health care, that ensures corporate accountability, or any of a hundred other measures that need to be enacted into law to reverse the slide into global oligarchic feudalism. We might get some relief if the Dems get control of the White House and a substantive majority in both houses of congress, but the real impetus won't be there without some kind of crisis.

I know less about physics than I do about economics, but isn't there some law of conservation of energy or something that a body at rest tends to remain at rest unless acted upon by another force? Well, it seems to me we've got a body at rest in terms of the U.S. government that isn't moving in any kind of direction to stimulate "the economy" in any meaningful way. And yes, I think a lot of the people in charge of policy these days are utter morons. I mean, how difficult a concept is it to grasp that REAL economic recovery is dependent on REAL jobs? But I don't see any change until a significant force in the form of real economic crisis -- the kind that seriously threatens the top 1% -- puts pressure on that unmoving object.

Furthermore, I suspect, being something of a student of history, that by the time the top 1% is threatened enough to act, it will be too late for them to salvage the status quo. By then there will be revolution, and it will not be pleasant.


Tansy Gold

[Ghost Dog]

74. "Let's change things, change things dramatically."

Yes, I'd gathered Edwards is saying that. Well, it's a start and he's absolutely right, isn't he? (rhetorical question).

The others are happy with the miserable (economic) status quo, huh?

Hmmm. 2+2=4.

Everything else you say I heartily agree with. It's very refreshing to read you 'getting it out of your system' and I do hope you're feeling better already. Is there a website for your artwork?

[ProudDad]

90. Kucinich is the only one with a PLAN

It's essentially the same plan that the countries with the best health care outcomes have adopted...Universal, Single-Payer Health CARE -- not health "Insurance"...

HR676...

[ursi]

82. thanks for this post ...I am going to head over to the local bookstore to get this book

...it makes too much sense!

[jonnyra]

18. Does anyone else see this:

"The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending."

...as something hatched by a bunch of ignorant, brainless twits? I mean my god...is this all these fucks know is tax manipulation? Is that their one and only answer to every-fucking-thing related to economics? No wonder the whole world economy is tanking...anyone with a half a brain can see we are being led by imbeciles who have no critical thinking skills, no imagination, no ability to handle even the slightest complicated issue. It either bombs or tax breaks. And thats ALL OF 'EM! Repubs and Dems alike. Fucking morons.

[kineneb]

47. "Beancounter" disease: make money, screw co., get out. Rinse, repeat.

See Enron and WorldCom for prime examples. The same is being done to the whole USofA:
1. suck as much money out as quickly as possible
2. leave company/country behind in steaming rubble
3. exit scene with ill-gotten gains
4. go somewhere else and repeat sequence

BushCo have done a fine job, for themselves. They (military/industrial/financial/medical/prison complex) got their money, and dismantled the remainders of the New Deal. Next step is to get the hell out and leave the rubble behind. Their money awaits them offshore- Caymans, Dubai, etc. I guess they are waiting for the Russians or Chinese for their next victims...boy, will they be in for a surprise.

[Skittles]

92. I see it

it is disgusting

[Lone_Star_Dem]

19. Will the cure be worse than the disease?

Politicians are scrambling to offer a stimulus package, and Fed Chairman Ben Bernanke is slashing interest rates. But they may be paving the way for a bigger calamity down the road.

(Fortune Magazine) -- The wobbly economy is overtaking Iraq as the issue weighing most heavily on the minds of America's voters. And Washington has noticed. The White House and Congress are almost certain to enact some kind of stimulus package. But like all such temporary, feel-good measures, it will generate a quick blip in growth that will quickly evaporate. In reality only one player has the power to do anything swift and decisive: the Federal Reserve. And its chairman, Ben Bernanke, has already made his intentions abundantly clear. Unfortunately, the cure he's prescribing may be worse than the disease.

Just how low will the economy go? There are conflicting signals. It's clear that the economy is losing steam. The plummeting value of America's houses is chilling consumer spending, layoffs are mounting, and banks and other creditors burned by the subprime crisis are far more reluctant to lend to everyone from small-business owners to private equity firms. But GDP increased by 4.9% in the third quarter, and economists estimate that GDP was still growing in the fourth quarter. Exports are strong, thanks to the weak dollar. The Fed did a brilliant job last summer by flooding the banks with money to prevent a full-scale credit crunch. Credit is far more expensive today, but it's also becoming more plentiful, as demonstrated by the falling rates on everything from LIBOR - the rate at which international banks lend to each other - to junk bonds. So while a recession is a real possibility, it's not inevitable - even the Fed is not forecasting one this year. And if we do get one, it may be brief and shallow, like the one we had in 2001 - with economic growth falling by perhaps half a percentage point for a couple of quarters, and unemployment rising from its current 5% to 5.5% or 6%.

By cutting rates early and often, Bernanke is acting as though a recession - even a mild one - would be a calamity that must be avoided at all costs. He has already reduced the Fed funds rate (which banks pay when they borrow from each other) by one point, to 4.25%, and promises to "take substantive additional action as needed to support growth," a pledge that Wall Street interprets as meaning at least another half-point cut at the Fed's meeting on Jan. 29, if not sooner.

Many on Wall Street back Bernanke. "I'll defend the Fed," says Bear Stearns chief economist David Malpass. "Part of the slowdown is the result of banks' tightening credit, and you help that by lowering the Fed funds rate." Mickey Levy of Bank of America agrees: "You need to lower rates to offset the drag on housing."

But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer.

http://money.cnn.com/2008/01/18/news/economy/cure.fortune/index.htm?postversion=2008012107

[GliderGuider]

20. There is a huge angry elephant stomping around the living room

All the guests are trying to be polite and pretend they don't see it.

The host is busily feeding the elephant to calm it down. That may work for the moment, but it also makes the elephant grow. And after all the food in the house has been fed to the elephant, you're left with a BIG, angry elephant and you're out of options.

I wonder when someone is going to take out a gun and shoot the damn thing.

I wonder how many guests will be crushed when it falls over.

[Pachamama]

39. I'm up here in Canada right now and everyone is just watching and shaking their heads...

...Love your Elephant analogy....it describes the situation perfectly and the Canadians I know here are the logical guests who are pointing out the obvious and trying to figure out how to take the elephant out, because they know that what happens south, affects them in the north. The Canadians I know just feel frustrated because they also feel like most (not all, because they know I see it) Americans just don't get it on so many levels.

Anyway, the people I'm around here in the Great White North aren't worried though too much...they know if they really had to, they can survive on Salmon and Moose and trading with their neighbors. But they are absolutely right about those in North America in the urban areas....

Sigh....the US Markets are closed today because of MLK birthday holiday....I'm afraid tommorrow is going to be bloody Tuesday on the US markets....I don't want to watch....

[zazen]

21. "setting stage for bigger recession"--like when Dem takes over?

"But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer."

I've never seen so clearly the pattern of their dismantling the New Deal and how we so desperately need that level of redistribution of wealth and priorities right now.

[MidwestTransplant]

40. It's not a small recession that's the problem, it's the credit crunch that could shut down the

economy. What they are primarily trying to do is create confidence in the system while also keeping some semblance of consumer confidence.

[Lone_Star_Dem]

48. Not an easy task that.

The pendulum is swinging back from the hubris exhibited by investors for the past few years creating a more risk aversion and fear based strategy (gold/treasuries, etc.). Meanwhile in the US, wages are flat and inflation is rising and people are falling behind on their debts at a record rate. Not exactly a conducive environment for a consumer spending rally.

I can see the potential here to stifle the global economy. What I don't know is how to avoid it at this stage of the game.

[Ghost Dog]

22. See also eg. here (hope to see many in the US waking up and talking about the situation):

(and I don't mean just from the usual Egocentric American, Intellectually Isolated, Screw The World and Suck It Dry perspective) - which of course does no completely apply to absolutely all Citizens of the USA.

Global shares tumble on US fears: http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=102&topic_id=3149215&mesg_id=3149215

... I draw your attention especially to my question at #9 there (which could equally be answered in this thread if preferred):

So can anyone tell me, in a nutshell, what strategies Clinton and Obama and Edwards are offering in the face of this global economic situation?

(And I mean this question because I honestly, although I try to pay attention, don't know - do they?). Thanks.

[TalkingDog]

45. I'm putting that on a tee-shirt:

Species: Corduscentri Americanus
We're Intellectually Isolated.
Let's Screw The World and Suck It Dry.

woo-hooo! I'll make a fortune! :P



My Favorite Master Artist: Karen Parker GhostWoman Studios

[Ghost Dog]

57. Humm. Is there really no easy answer to this question?

In a nutshell, what strategies are Clinton and Obama and Edwards offering in the face of this global economic situation?

[melody]

58. It doesn't even apply to the majority

The vast majority of the wealth in this country is controlled by very few hands ... and not all of them American. ;)

[DemReadingDU]

23. a pseudo SMW thread

gotta keep up with the financial news because the U.S. market closed today

[Ghost Dog]

56. Global Markets are not at all insignificant (and increasingly less so) to the US

(and to Dems in the US above all) as well as vice-versa.

The thread Ozy started was incorporated into this one which started earlier. So should this thread started later by malaise be incorporated here:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2731578#2731726

It has more to say about what's happening in Global markets (as of this morning in Europe) today.

I shall alert Mods to this effect.

[DemReadingDU]

63. Thanks GD

lots going on globally

[mcscajun]

64. Threads from different forums are not eligible to be combined.

The thread you cite is within the General Discussion forum, not Latest Breaking News. It cannot be combined here. Have a good day. :)

[Ghost Dog]

73. Ah, thanks mcscajun.

It occurred to me that it would probably be much too late in the day to do so now anyway. :hi:

[54anickel]

84. Hi Ozy. Did you catch Moyers last week? David Cay Johnston was on hawking his

latest book. I only caught a glimpse of it so I'm hoping to have some time later tonight to pull it up.
Anyway, looks like it's a damned good thing our markets were closed for today....and I'm gonna miss tomorrow's action - dang!


http://www.pbs.org/moyers/journal/01182008/profile.html

[Tansy_Gold]

86. David Cay Johnston was also on NPR about two weeks ago

Definitely worth listening to. I think it was Fresh Air, the afternoon show.

[OhioChick]

24. Investors lose over $300 bn in six days (India)

Source: Economic Times India

21 Jan, 2008, 1742 hrs IST, PTI

MUMBAI: Investors on Dalal Street have lost over $300 billion (Rs 11,85,285 crore) in the last six days with more than half of the loss coming from Monday's fall of the benchmark index Sensex - its biggest ever.

The 30-share index Sensex today witnessed a fall of 1,400 points, tumbling below the 18,000-point to close at 17,605.35. The huge drop in the index was led by blue chip heavyweights - Reliance Energy, ACC, Bajaj Auto, DLF and Reliance Industries.

The Sensex has lost 3,222.1 points in last six trading sessions, while investors' wealth - measured in terms of cumulative market capitalisation of all the listed companies - has declined by Rs 11,85,285.46 crore.

The total market capitalisation stood at Rs 59,53,525.87 crore at the end of today's trading against Rs 71,38,810 crore before bourses began business last week on January 14.


Read more: http://economictimes.indiatimes.com/Investors_lose_over_300_bn_in_six_days/articleshow/2718488.cms

[Fresh_Start]

25. darn, there's go my diversification strategy

Japan is likewise down big

[Ghost Dog]

26. It's definitely going global, I'm afraid. Look for maximum resilience...

[Fresh_Start]

28. I knew it would go global

I just hoped it would be tempered in overseas markets.

I started moving way more conservative about one year ago as well as increasing my global components.
But I feel we are in for a very bad time.

[Deja Q]

31. In a global market, it's up or down for all

in the end.

[Deja Q]

30. Which is odd

I was going to buy a long telephoto lens and further my tertiary career...

And most of the camera lenses are made in Japan.

[Fresh_Start]

32. US consumer market is major importance to Japan

if the US consumer market contracts so do Japanese businesses

[natrat]

27. cash is king-but even the holding dollars kind of sucks. and gold seems pricey

[Deja Q]

29. Well, now they know what the folks on intersecting Wall Street know:

Don't get greedy.

[Ghost Dog]

33. Too right.

A fundamental principle right there at the rock bottom of all systems of fundamental Morality.

[grahamhgreen]

34. The money isn't "lost", really, it goes from one persons pocket to another.

[Ghost Dog]

35. Tell that to those trying to survive Zimbabwe's economy.

It is not true. Money gets created out of thin air, it vanishes into thin air. Something real, called 'Value', and also 'Quality', as in quality of life, gets lost in the process.

[Tansy_Gold]

79. And isn't that what happened with Enron and all the other

corporate collapses? The execs created "money" out of thin air, out of off balance sheet entities and limited partnerships and all that other financial hocus pocus. They "gave" employees nice fat pension funds loaded with stock worth hundreds of thousands, and those employees saw rosy retirements ahead. After all, they had all this "money."

But the execs knew there was no real value to that stock, so they sold it, dumped it, foisted it on unsuspecting "investors." Of course, they couldn't let the employees do that, or the price of the stock would drop. So they "froze" the employees' stock accounts, dumped their own for bundles of real dollars, and poof! all the "money" in the employees' stock vanished into the fantasyland it had come from.

Charlie Keating's Lincoln Savings did that back in the 80s. Overly simplified, the deal went something like this: Keating bought a bunch of bargain-priced Phoenix-area farm land with minimum downpayments. He sold one small parcel to a friend at a highly inflated price, all with money borrowed from Lincoln Savings. Using that sale to revalue all the other property, Keating borrowed more and more money based on the real estate collateral, but that collateral didn't really exist. He had made the money out of thin air. Oh, he planned to sell off some of the land for huge profits, but no one wanted to pay his inflated prices. And he was going to develop some of it, too, but he couldn't do it fast enough to recoup. And there were other shenanigans, all done with imaginary money. In some cases, Keating's schemes would eventually prove profitable (the Phoenician Resort and Estrella Mountain Ranch, to name two), but not fast enough to satisfy his creditors or keep the bank solvent.

The sad thing is that many of the super-rich are cushioned against catastrophic losses resulting from being suckered into this shit. I mean, c'mon, folks, the banks that bundled these sub-prime mortgages have insurance against the risk?? And now the risk is falling on the insurance companies??? Aw, gee, where's my sympathy? And if you're worth a billion and lose a couple million, you're not going to be out on the street. Oh, you may have to do without a $100k kindergarten graduation party for your granddaughter, but that hardly compares to the people losing their (only) home to foreclosure.

There is such a thing as real money, and there's such a thing as phoney money. The crime, imho, is when the crooks create phoney money and convert it to real money, which they have in effect stolen from the rest of us who earned it.

Tansy Gold

[bushisdirt]

36. Monumental disaster ahead.

http://biz.yahoo.com/ap/080121/world_markets.html

[DemReadingDU]

37. Bloomberg: Futures

DJIA INDEX -468.00

S&P 500 -55.90

NASDAQ 100 -70.75

http://www.bloomberg.com/markets/stocks/futures.html

[Pale Blue Dot]

41. Holy crap.

Is tomorrow it? Or will some "miracle" step in and save us?

[GliderGuider]

43. DJIA Futures now down 514 points (11,592).

Tomorrow looks like Armageddon Day.

[ozymandius]

83. Never attempt to catch a falling knife.

Even short buyers would be well-advised to stay away from this one tomorrow. Even with someone else's money I would never go near a buy position. That would just look stupid.

[MadHound]

42. A lot of chickens are finally coming home to roost

This is the partially the result of a deferred recession that Greenspan engineered. As the tech boom/bubble started losing air, he dropped, dropped, dropped interest rates like a fiend, and all that loose cash looking for a home outside the tech sector found one in real estate and the financial sector. This allowed these two areas become bubble economies, and people not learning from the tech bubble, bought into them in a major way. Also, unlike the tech bubble, these were in areas critical to the economy. Housing is one of the critical driving forces in our economy, and the financial sector has been the leading economic engine for at least ten years. When those two go south simultaneously, we're in deep shit.

Secondly, thanks to NAFTA and outsourcing mania, we no longer have a well grounded, large, and stable manufacturing sector to help soften some of these blows. Notice that this stimulus package is all about giving out free money, whereas stimulus packages in the past focused on creating jobs, usually in the relatively stable manufacturing sector. Since that is no longer present in our economy, what are we left with?

Third, relating back to the above point, part of this crisis is reflective of the fact that we have traded in our manufacturing sector for a lower paying service sector economy. People who once were able to obtain solid middle class status in manufacturing have now become the working poor in a service sector economy, simply because it doesn't pay as well.

And couple with all of this is the fact that our economy over-relies on consumers to drive the economy. Unlike forty years ago, when saving was encouraged, and we sold to the world, we've now become the consumers, and to keep the economy afloat we all have to buy, buy, buy like mad fiends. The trouble with that is we're not getting paid well, and most consumers have finally reached their max on credit, having drained their houses and maxxed their credit cards out.

This is going to be ugly, really really ugly. Our house of cards was built on sand, and it is all coming down. People aren't going to stimulate the economy with eight hundred dollars apiece, they're going to pay off bills, and all that we'll be left with is another 150 billion in debt that this country owes. A vicious cycle is going around, and unless we figure out how to out of it quickly, we're going under for a long time. We need to rebuild our manufacturing sector, that is critical. Instead of having an economy based on consumption and service sector jobs, we need to start making things again and selling them. Otherwise this country's going to go under and be bought out by various other countries. We have a chance to do this in the alternative energy sector, but whether anybody is wise enough to pursue this, we'll see.

Meanwhile, start doing what you can to prepare. If you can, get out in the country, it is still easier to survive bad economic times in the country than in the city.

[spotbird]

44. That's what kills me about

the latest hate craze against illegals. Their impact is no where close to that of outsourcing, but no one talks about that crazy aunt in the attic.

[Ghost Dog]

75. Exactly. n/t

[lovuian]

46. Can we say a World wide Depression is upon us?

I think we can

I believe Americans are going to get a wee bit angry and desperate here

Government watch out
Unemployed and Poor and middleclass can't afford our healthcare its too expensive and terrible care
Iraq War is way too expensive and we can't afford it


When all the corruption is exposed the fury of the people will be immense

[TalkingDog]

52. I dunno..... flame retardant suits have been necessary in months past

When this subject has arisen. It has been called (and I quote)

"cockamamie shit"

"Chicken Littles"

"same tired crap"

"crazy"

"self-appointed oracles"

and less *ahem* flattering terms.

But we shall see, what we shall see.

I've got my own personal list of noses I want to rub in something. :freak:

My spelling stinks too.


My Favorite Master Artist: Karen Parker GhostWoman Studios

[muriel_volestrangler]

49. Closing European indices:

UK FTSE 100: -5.5%
Germany DAX: -7.2%
France CAC 40: -6.8%

http://news.bbc.co.uk/1/hi/business/7199552.stm

Ouch.

[Tiberius]

53. "The Stock Market Ruined My Life" video

Yikes, let this be a lesson kids... daytrading is dangerous!

WARNING: Lots of profanity as market melts down and guy loses $30k today:

http://www.youtube.com/watch?v=rCtQL5b_rCM

[mcscajun]

67. Well, now. HE certainly wasn't having any fun last night.

"This is how I spend my Sunday nights..."

He mentioned his life savings. GAK! You don't Gamble (which is what high-risk investing IS, a gamble) with money you cannot Afford to Lose!

Of course, Somebody has been buying everything that's been sold off last night into today. There are no sales without buyers.

[fedsron2us]

66. Ouch that must have hurt my Pension Fund.

My fear is that we are nowhere near the final stages of this crisis. I think we are going to see a number of substantial Bear Market rallies over the next 12 months as more and more desperate attempts are made to stave off the crisis. It is only when people start to realise the conventional fixes (i.e cutting interest rates) are not going to work anymore that the collapse will really come.

This is the inevitable result of the crazy logic of countries such as the US and the UK which have been far too enthusiastic in selling off of swathes of their industries and offshoring valuable productive capactity. As a consequence of throwing away jobs en masse they have forced down average real (inflation adjusted) wages to a level that the economy can only be kept going by massive borrowing, often from the very countries to which they shipped the industry in the first place. It was never going to be sustainable over more than one economic cycle.

What amazes me is that so many in the world of finance feign surprise now it is all beginning to unravel. Surely it is the inevitable conclusion of the story they have been writing over the past decade. They are the authors of their own destruction.

[Lorien]

51. Here's an idea; stimulate the economy with JOBS, not consumer spending!

Hell, when US consumers spend it's usually on crap from China, so it's not going to help us much at all.

If I were running for President this is what I'd propose to save the economy:

Get the hell out of Iraq ASAP. Spend that $120 Billion on a new National high speed MagLev rail system with light rail connectors. Develop the areas around major train depots using the new urbanism designs that place mixed income homes and apartments within walking distance of retail, restaurants and office space. These measures would create tens of thousands of new jobs and make Americans more mobile, less dependent on foreign oil and our roads would be less congested. To really cut our energy use, I'd build 100 square miles worth of solar panels (a recent article stated that that's how many would be needed to power the entire US), with the eventual goal of making home energy free or nearly free for the poor, disabled,schools, etc. Added benefit; cutting greenhouse gases.We could do both and STILL spend less than we have on the Iraq war!

[boricua79]

54. run for President...you have my vote already!

Great policies! :patriot:

[Lorien]

55. Lol! Thanks!

But I'd also propose ending Corporate personhood, ending subsidies for corporations who outsource jobs overseas, and making corporations pay their fair share in taxes,and Universal Heath care, so I'd never get a minute of airtime on "our" networks. ;-)

[Ghost Dog]

77. Hey, get yourself on Edwards's team, Lorien, and fast!

(And/Or let's hope someone on his team is reading this thread and has his ear).

As per 100 square miles of solar: right on. Check out solar furnace technology, as well as panels. And put in more and more efficient wind turbines.

Well-distributed, in a country with as many diverse climate zones as yours, you're well on the way to covering everything. Nevertheless, constant baseload supply could be much improved by expanding hydro where it fits well into the environment and developing offshore wave and current technology (and there are plenty of other ideas out there looking for what r&d requires (which means finance but not just finance)). Geothermal may be expensive but I'd love to see some developments there which would help lower setup costs (and would be of great benefit here in the (for now, dormant with the occasional rumble) Canary Islands!).

All this and what you describe above would not only provide the advantages you have indicated: you would find many export opportunities (in competition with the rest of the world, of course - to which you would be providing new (and this time more healthy) stimuli). Hell, some people in some parts of the world could even find themselves coming to believe in the possibility of one day descrying that mythical beast, the "Good American" abroad in the world, no longer attempting to bestride it but instead integrating with it in a far more ecologically and socially as well as economically-sustainable manner.

And spend, spend, spend on the best possible access to and quality of education for all.

Um. I suppose I'd better add :rant:

None of this is at all impossible. This is not a Utopia but is entirely feasible and indeed necessary, like any genuine Revolution. The situation is deadly serious. All it requires is an awakening and for (a lot, but they are a mere handful, really) of big heads to roll.

Thanks for listening.

edit: MSM is the first priority target, of course. Openly declare (metaphorical) war on it.

[Ghost Dog]

93. Um, self-correction: Obama. After further research:

It's Obama.

[bikebloke]

59. An extrapolation of the old saying...

Give a man a fish and he eats for a day.
Teach him how to fish, and he eats for life.

[XemaSab]

62. Build a man a fire and he's warm for the day.

Set a man on fire and he's warm for the rest of his life. :P

[Ghost Dog]

78. Set a man on fie and he can inspire others. n/t

edit: dust out of the Sahara blowing strongly over here tonight. Gets in keyboard.

[Ellipsis]

87. LOL Great line!

[Tansy_Gold]

60. Whoa! You're making too much sense!

:sarcasm:

There are a lot of us who agree wholeheartedly. Unfortunately, our "a lot" isn't enough. . . .. yet.


Tansy Gold, looking out at all the sunshine that could be put to such good use, if only. . . . . .

[Ghost Dog]

72. Find fresh analysis from The Economist magazine here:

Flashing red (double-entendre I hope (and expect, knowing The Economist) - that is, red in the European Left usage, not in that of your GOP)

Jan 21st 2008
From Economist.com
Why markets in Asia and Europe are tumbling

For much of past year equity investors knew those salient facts but chose instead to take comfort from three more bullish factors. First was that the Federal Reserve would rescue both the markets and the economy, as it has done so often before. Second, even if the American economy faltered, the rest of the world (particularly Asia) could take up the burden of producing global growth. Third, given the global picture, corporate profits could stay high.

All three assumptions are now coming under question. Although the Fed may cut rates this month, it can take 12-18 months for the effects of monetary policy to boost the economy. On the issue of decoupling, it is not clear that either Europe or Japan can escape America’s gravitational pull. The latest data on Singapore (slowing exports and a decline in fourth-quarter GDP) suggest that other parts of Asia might not escape either. It is significant that emerging markets, which had been outperforming their developed brethren in recent months, are now starting to underperform. On Monday Hong Kong suffered its worst loss since September 11th 2001. As they review the evidence of decoupling analysts are cutting their profit forecasts.

/... http://www.economist.com/daily/news/displaystory.cfm?story_id=10555699&top_story=1

[ursi]

80. ...and the walls came tumbling down!

More on the way in the upcoming months!

[Doctor Cynic]

85. In Japan, the Nikkei is down almost 5%, and the first hour still hasn't ended!

[SlowDownFast]

88. IT'S HAPPENING!

WORLD MARKETS ARE CRASHING!

LOOK OUT BELOW!

[ProudDad]

89. WooooooHooooooo!!!

What's bad for the "Markets" is good for humanity!!!

:woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo: :woohoo:

[ckramer]

91. This indicates the bottom of stock market

There will be a rally tomorrow I should hope.