How Low Can the Stock Markets Go? Much Lower
For the last six months this author has been arguing that, in spite of the sharp fall in US and global equities there were significant downside risk to stock markets. Thus, repeated bear market rallies would fizzle out under the onslaught of worse than expected macro news, earnings news and financial markets/firms shocks. They way we put is very simple:
If you take a macro approach earnings per share (EPS) of S&P 500 firms will be – quite realistically in 2009 – in the $ 50 to 60 range (I say realistically as some may even argue that in a severe recession they could fall to $40). Then, the question is what the multiple, i.e. the price earnings (P/E) ratio will be on such earnings. It is realistic to expect that the multiple may fall in the 10 to 12 range in a U-shaped recession. Then, even in the best scenario (earnings at 60 and P/E at 12) the S&P index would be at 720. If either earnings are closer to 50 or the P/E ratio is lower at 10 then the S&P could fall to 600 (12 x 50 or 10 x 60) or even to 500 (10 x 50). Equivalently the Dow (DJIA) would be at least as low as 7000 and possibly as low as 6000 or 5000. And using a similar logic we argued that global equities – following the US – had another 20% plus downside risk.
These predictions were made when the S&P 500 was close to 900 and the DIJA was close at 9000. This basic macro approach was the reason why we argued that the latest bear market sucker’s rally – the one going from late November 2008 to early January 2009 – would fizzle out and new lows would be reached. Indeed, like previous bear market rallies of the last year this one went bust – falling over 20% – and the DJIA and the S&P broke below the 7000 and 700 upper limit of our range for US equities. With the DJIA and the S&P now well below the “7” range the next test for the markets may be 6000 and 600 for the two indices.
I have also argued that another bear market rally may occur some time in Q2 or Q3 of this year and may end up like the previous six. Indeed in the last 12-18 every time something dramatic happens (that leads to a lower stock market low) and the government reacts to it with a more aggressive policy action optimists come out and say that this is the dramatic and cathartic event that suggests that a bottom has been reached: they said that after Bear Stearns, after the collapse and rescue of Fannie and Freddie, after Lehman, after AIG, after the TARP was announced, after the G7 communique’, after the $800 fiscal stimulus package was announced last November (the onset of the latest sucker’s rally).
And after a while markets are again “shocked shocked” (to paraphrase the French police inspector in Casablanca) to discover that the macro news are much worse than expected in the US and abroad, that earnings news are much worse than expected not just for financials, realtors, home builders and consumer discretionary firms but also for most other non-financial firms, and that financial markets/firms shocks/news are worse than expected.
As repeatedly argued here these financial markets/firms worse than expected news are many: news that more and more financial institutions are effectively insolvent and will have to be taken over by the government; news that highly leveraged institutions – such as hedge funds – will be forced to deleverage further and thus sell illiquid assets into illiquid markets; news that even non-levered investors (retail, mutual funds, etc.) that lost 50% plus into equities are burned out and want to reduce their exposure to equities; and news that a number of emerging market economies are on the verge o a contagious financial crisis.
Why even small open economies such as emerging market ones matter for global risk asset prices? Take the case of Iceland, a small island of 300000 folks in the middle of the Atlantic: the local banks borrowed abroad 12 times the GDP of the country and invested it into toxic asset. Now the banks are bust and the Icelandic government is bust as the banks are too-big-to-be-saved: thus local banks now selling distressed and illiquid assets into illiquid global markets is having ripple effects on global markets.
So if a tiny Iceland can have contagious effects how much larger the contagion would be if a larger and more important emerging market were to enter a fully fledged financial crisis (Latvia or Hungary or Ukraine or Pakistan or Venezuela)? Even a mere rating downgrade of Ukraine a few days ago had shocking effect on financial markets in Emerging Europe and even in the EU ones.
Can we rule out another bear market rally some time in 2009? Of course not as there will likely be another one. As I put it in a recent writing:
Of course you cannot rule out another bear market sucker’s rally in 2009, most likely in Q2 or Q3: the drivers of this rally will be the improvement in second derivatives of economic growth and activity in US and China that the policy stimulus will provide on a temporary basis: but after the effects of tax cut will fizzle out in late summer and after the shovel-ready infrastructure projects are done the policy stimulus will slack by Q4 as most infrastructure projects take year to be started let alone finished; similarly in China the fiscal stimulus will provide a fake boost to non-tradeable productive activities while the traded sector and manufacturing continues to contract. But given the severity of macro, household, financial firms and corporate imbalances in the US and around the world this Q2 or Q3 sucker’s market rally will fizzle out later in the year like the previous 5 ones in the last 12 months.
What are the downside risks and the upside risks to these bearish predictions for US and global equities. On the downside we have argued here that there is at least a third probability of a L-shaped global near depression rather than the mere current severe U-shaped recession. If a near depression were to take hold globally a 40% to 50% further fall in US and global equities from current levels could not be ruled out. But in this L-shaped near depression the last thing one would have to worry about would be stock markets as more severe issues would have to be addressed (unemployment rates in the mid-double digits – 15% or above – and multi-year stagnation and deflation).
On the upside one could argue that the aggressive policy stimulus in the US and other countries will lead to a faster sustained economic and financial markets recovery that expected here. We have discussed why this “sustained” as opposed to “temporary in Q2-Q3” recovery is highly unlikely to take place. But the bullish argument for a non-bear market and early persistent recovery of global equities is based on a better than expected recovery of the US and global economy.
Earlier this year – at the peak of the latest bear market rally – I met Abby Cohen – the ever bullish equity markets expert at Goldman Sachs who predicted a 25% equity rally for 2008 and is making again a similarly bullish call for 2009. I asked her if we disagreed on earnings or on the multiple (P/E). It turns out that our forecast for earning per share for S&P 500 firms are similar: 50-60 range for me, 55-60 range for her. But she argued that a P/E in the 1012 range was too low as investors would ignore the bad earnings numbers for 2009: if a rapid recovery of earnings were to occur in 2010 and beyond investors would discount the 2009 bad number and assign to them a much higher multiple of 17 or even more.
The trouble with that argument is that, with the US and global economy in a massive slump and with deflationary forces at work it is hard to believe that a massive economic recovery will occur in 2010 thus lifting sharply earnings: even in a U-shaped scenario US growth in 2010 would be 1% or lower and Eurozone and Japanese growth would be close to 0%. Thus, with weak growth deflationary pressure would be still lingering thus putting pressure on profits, pricing power of firms and thus profit margins. Thus, even in a U-shaped scenario a rapid rally of equities is highly unlikely.
It is true that equity prices are forward looking and they usually tend to bottom out six to nine months before the end of a recession as equity prices are forward looking and they see ahead of the curve the light at the end of the tunnel. So the optimists seeing a recovery of growth in the second half of 2009 argue that equities should start to rally on a sustained basis now (or even six months ago). But this severe U-shaped recession in the US may not be over at the 24th month date (December 2009). Most likely the unemployment rate will rise throughout 2010 all the way well above 10% and the growth rate will be so weak (1% or closer to 0%) that we will remain in a technical recession for most of 2010 (36 months if the recession is over only in December 2010). Thus, the bottom of the stock market may occur in late 2009 at the earliest or possibly some time in 2010.
Also the “6-9 months ahead forward looking stock market view” is not always borne in the data. During the last recession the economic bottomed out in November 2001 and GDP growth was robust in 2002 but the US stock markets kept on falling all the way through the first quarter of 2003. So not only the stock market were not “forward looking”: they actually lagged the economic recovery by 18 months rather than lead it by 6-9 months. A similar scenario could occur this time around: the real economy sort of exits the recession some time in 2010 but growth is so weak and anemic while deflationary forces keep an additional lid on pricing power of corporations and their profit margins that US equities may – like in 2002 – move sideways for most of 2010 – with a number of false starts of a real bull market – as economic recovery signals remain mixed.
Thus, most likely we can brace ourselves for new lows on US and global equities in the next 12 to 18 months. Eventually a more sustained recovery will occur once we are closer to clear signals that this ugly global U-shaped recession is not turning into a L-shaped near depression and that the global economic recovery is clear and sustained. Until then expect very volatile and choppy US and global equity markets with new lows reached in the next months and the year ahead.
I was the keynote speech at the CBOE 25th Annual Risk Management Conference at Laguna Beach. The whole speech can be seen at the CNBC website in the following links:
3/9/2009 – CNBC - Roubini’s View (click for video)
3/9/2009 – CNBC - Roubini’s View part 2 (click for video)
3/9/2009 – CNBC - Roubini’s View part 3 (click for video)
168 Responses to “How Low Can the Stock Markets Go? Much Lower”
there was a similar article in the WSJ today predicting a likely sub-6000 move in the Dow in the coming months. however, as prof. roubini states, the Dow is among the least of our worries. double-digit unemployment, deflation, societal disintegration in emerging markets (mexico anyone?)…the list goes on. if you are worried about the dow, consider yourself lucky.
Burn Notice ???Previous Thread: “What would you do if you lost your job today?”Hmmmm. Do you find yourself stranded in a major American city, with no job, no bank account, and no credit?The solution could be to get yourself a cute girlfriend who loves it when things go BOOM!! Could be really useful when you’re trying to deal with a big pile of bills from Amex, BoA and your mortgage broker.PeteCAP.S. Sorry. I couldn’t resist!
Roubini: “The trouble with that argument is that, with the US and global economy in a massive slump and with deflationary forces at work it is hard to believe that a massive economic recovery will occur in 2010 thus lifting sharply earnings”Indeed, the problem is that the USA has not even commenced the re-structuring period that is necessary for our industry to come back to life. And likewise, the world has not even begun the real moves to establish a new base of global consumers.We are still in the early phases of the economic drawdown … still in the part where the old economic structures are breaking down and decaying. That’s just one reason why the Obama stimulus plans are actually not helpful. They are simply postponing the inevitable adjustment that must be made. The USA needs to take a big step in a new direction, but instead we’re shooting ourselves in the foot with stimulus plans that divert money into the wrong economic pathways.This is a very tough time for Americans who lose their jobs … because they next job they take (full-time or part-time) could also be threatened in a few months. Americans will have to get by in “survival mode” for a long period of time. The period of real adjustment is going to be a long, drawn out affair.PeteCA
The one thing I think I have learned from reading this blog is that all the “rules” of the business cycle have to be taken in context, and boy, has the context changed.All this recitation of what are meaningless phrases eg., we have not had “capitulation” so we can’t have a bottom in equities. What a BS anaylsis.Or the idea is to buy stocks when the PE ratio falls to below 15. The problem is, the rate of earnings decline may be accelerating faster than the rate of decline in stock prices. The PE ratio may be meaningless in this context.One thing is for sure, and that is I hate the uncertainty. To work your butt off and then wonder whether it will be pissed away sure takes away any incentive. Even if I had a reasonable expectation of getting a solid 1% return on my investments in terms of time and labor over a reasonable span of time I could live with that.
JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS – A L E R T – March 9, 2009 – Broad Money Supply Growth Slows in February, Suggesting Intensifying Systemic-Solvency Issues – Fed Likely to Monetize Treasury Debt – Other Than Crisis-Driven Dollar Demand, U.S. Dollar Fundamentals Are Sharply Negative and Deteriorating
…Thanks primarily to the short-term impact of sharp declines in oil and related gasoline prices in the second half of 2008, annual inflation in consumer prices (as measured by the CPI-U for January) effectively was zero. Such would be in the 3% to 8% range based on earlier reporting methodologies. Although both oil and gasoline prices rose in January, oil fell in February…The long-term problem for inflation is in strong growth in the broad money supply. Even with the current slowing of annual growth to around 9.9%, such is inflationary, particularly where monetary velocity (money growth turnover relative to nominal GDP) likely is neutral at present. Beyond the intensifying systemic solvency crisis, however, another factor may be at work.The slowing in nominal (not adjusted for inflation) annual growth reported in the fourth quarter GDP, and in the quarterly contraction reported for that period, may be accelerating and dragging on M3 growth in the first-quarter, with lowered loan demand. Where money supply times velocity equals GDP, by definition, and GDP is composed of inflation and inflation-adjusted growth. It is possible to have rising inflationary pressures with inflation-adjusted GDP contracting versus a growing money supply, which appears to be happening.Eventually, as discussed earlier, the Fed should succeed in boosting broad money growth significantly. That, and an eventual dollar sell-off, still should have inflation at unusually high levels by year-end. If dollar has turned to an outright dollar panic by then, the groundwork would be in place for the onset of a hyperinflation…
“If a near depression were to take hold globally a 40% to 50% further fall in US and global equities from current levels could not be rule out.”Yowzers!!! Enter furhter suffering and tragedy to come from the societal impact of the great delevarging / devaluation.My anger for the Bernie Madoff’s of the world grows daily. I work on that forgiveness thing throughout lent.
from the prior threadan interesting article from Henry BlodgetHow Low Can The Market Go?http://www.businessinsider.com/new-low-on-shiller-pe-12x-normal-trough-low-is-8x-2009-3
Anyone who hasn’t studied and internalized Bob Shiller’s plot of Long-Term Annualized Returns versus P/E ratio should go do so right now. When the S&P’s P/E was up around 25 18 months ago, the expected 20-year return on the S&P (based on historical data) was about -2% to 0% per year over 20 years. Now that the S&P’s P/E is about 12, the expected 20-year returns are between 5% and 10% per year.The real question, as NR points out, is how far earnings will fall, which could push those P/E’s back up. Four out of five companies in the S&P reported negative earnings last month. Shiller updates his spreadsheet regularly.
But extra question is to look at P/E’s for stocks on a global basis. Some of the global markets have been hammered a lot more than the US market (so far).PeteCA
this above quote is something i do not agree with. if unemployment (let’s also account for underemployment) hits 12+% then i believe the U distends and morphs into L and we are not out of our recession until 2012 or so and life in the good ol’ USA will never be the same. If D is anemic and S is reflecting this…………
I wondered why the market sold off a bit in the past few minutes – but see that President Obama is speaking – has anyone else noticed that just about every time he comes on the market sells off no matter what the topic.
Henry Blodget has proposed an even more bearish multiple. Looking at the major busts in 1929, 1966, and 1974, Blodget has showed that equities often overshoot on the downside to 5-8X earnings. In that case, Dow 4000 is possible. We could have quite .
But began with significantly larger P/E’s … It would be great to have a trustworthy reference for the earnings of various world indexes, akin to Shiller’s for the S&P. Anyone care to make some recommendations?
We’re in an L shaped depression, my dear professor. The early you state that, the more fame you’ll get. I am sure if McCain was elected, you’ll be advocating the “D” word already, but your friends in Washington kept you from being too negative (or maybe too realistic). Be yourself and you’ll be richly rewarded.
Roubini on CNBC sometime between 1pm and 2pm EDT today
By 2012: EPS on the S&P500 in the 30′s, and P/E ratio of 8.
What would I do if I lost my job today?First, I would pray. I would apply for my unemployment insurance. Then, if I had no savings, I would take a job, any job. Then, I would begin perusing the Internet and the library looking at Help Wanted ads in newspapers around the country. And consult employment agencies.I would look into renting a room or two of my home. If I had to move and couldn’t sell my house I would rent it out, and use the rent money to find some sort of shelter where I found a job. I would cut living expenses to the bare bones.But up front in my mind would always be the axiom that has served me well all my life: GO WHERE THE JOBS ARE. Don’t insist on squatting where you are.Let me tell you a story.In 1996, a young skilled craftsman was doing a small remodeling job for me, working for peanuts. He had apprenticed under his uncle, a custom-home builder par excellence. He had been out of work for two years. He was 27 years old, living in a rental with his younger brother in this coastal resort. Both were living on food stamps and his brother’s restaurant pay. He and others, in a down turn, had worked two years on a promise-to-pay by the builder of a contracted multi-million dollar home. But the builder declared bankruptcy after the house was finished — and paid no one. My young builder’s credit stopped cold because he couldn’t pay his bills. Thereafter, he couldn’t buy building materials on credit for future jobs. Work dried up.He languished two years.And this is what I told him: You love it here and want to stay. Then come back when you’re old and retired. Now, you must GO WHERE THE JOBS ARE.Now listen to this.WITHIN A MONTH he had a job with a builder in a large coastal city 80 miles away. He was given raises. At the end of a year, he met a young accountant; they married and moved to Seattle. She and he became self-employed as building contractors – she ran the business and the books, he did the building.And, then, his parents moved from New Orleans to Seattle to be near their two sons – and their families.NOTE: Don’t apply for jobs one at a time and wait to hear. Apply for as many jobs as you possibly can. Get professional help, from the Internet perhaps, in making your resume fit what employers are looking for from you. When you interview with a company, be sure that you have studied the details of the companies products and its current position in the market, including a detailed look at its website (you can probably be assured that the candidate before you and the candidate after you have).
Cleveland Commercial Loan Delinquencies Signal MoreMarch 9 (Bloomberg) — Cleveland and Detroit lead the U.S. in commercial mortgage delinquencies, a sign the housing crisis that brought down Wall Street is spreading beyond the residential market.Office, retail, apartment and industrial properties with mortgage payments 60 days late or more rose to 3.93 percent as of March in the Cleveland area and to 3.75 percent in the Detroit area, according to data compiled by Bloomberg. The North American commercial property delinquency rate is 1.1 percent, according to Standard & Poor’s.“There is really no part of the country being spared,” said Robert Bach, chief economist at Santa Ana, California-based broker Grubb & Ellis Co. “Cleveland and Detroit are just the first to feel the stress. They’re the canaries in the coal mine.”http://www.bloomberg.com/apps/news?pid=20601109&sid=as25TfJvijsM&refer=home
The Cute girl friend is what got a lot of us into this mess!!! Don’t need another one.
Here is the problem in a nutshell…people like Summers and self-serving statements like this….This guy is a trojan horse along with Geithner and Bernanke. With Economic Rasputans like this whispering neo-liberal failed ideas in Obama’s ear we are assured a painful downward spiral.“This notion that the economy is self-stabilising is usually right but it is wrong a few times a century. And this is one of those times . . . there’s a need for extraordinary public action at those times.”Summers calls for boost to demandhttp://www.ft.com/cms/s/0/5d8b5e18-0c14-11de-b87d-0000779fd2ac.html
1996, this ain’t.
“While the US and other western nations should return to living within their means in the medium term, everyone should raise spending sharply now.”How do they expect to do that? With the $8 increase in unemployement benefits? If they really wanted to do that then the plan(s) should have be created and executed by now.Right now people are going to resist increase spending EVEN IF there were good reasons to.And there are NO GOOD Reasons to.
Abby Cohen lives in a glass bubble if she thinks investors are going to assign a multiple of 17 or more to earnings.
Who’s not in a huge rush to raise their spending right after that:1) Great earned new job2) Huge earned bonus3) Huge earned raise4) Huge decrease in taxes
JESSE JAMES WAS NOT A CAPITALISTWe aren’t going to solve our arguments as people of goodwill until we can agree on the meanings of the terms we use. Fed Chairman Bernanke’s actions can’t be called capitalism and Juan Peron’s policies can’t be called socialism.I think we all can agree that a very desirable economic system was responsible for the explosive growth in America’s gross national product. And I think we can agree that free enterprise provided for that growth with government policies that both protected and allowed that freedom.When John Jacob Astor became Eighteenth Century America’s richest man with techniques such as buying the Indians’ beaver furs with trinkets and rum and selling the furs to European hat makers at a thousand percent profit, he primarily built Astor GNP not U.S. GNP. America grew, not from market exploitation like the Astors’ New York tenement enterprises or J.P. Morgan’s U.S. steel monopoly, but from the millions of honest workers and entrepreneurs whose efforts at building their own estates helped their neighbors’ estates grow as well.Capitalism is where the means of production are owned by private persons and operated for profit. Yes, Astor and Morgan were capitalists, but they exploited the opportunities capitalism offers by paying politicians to help them deny these opportunities to other men.John D. Rockefeller shut out competitors so he could force the public to pay any price he selected, rather than a price the market would set. Bill Gates pressures Congress so he can “lawfully” keep higher paid Americans off his payroll.Goldman Sachs, now, with paid politicians on board, literally picks the winners and losers in our economic society for its personal benefit. Perhaps that’s one of the greatest ever abuses of our system.Our economic system, capitalism, has produced our growth in spite of these incredible abuses. Private bankers use their property and power to make obscene profits…only after they have had laws changed and greased palms to shut out competitors and transfer the public’s money to their accounts.Was Jesse James a capitalist? No, whether you put on a mask, stop the train and ride away with the mail or you regulate a country’s currency to put inflation bucks in your pocket, the process is the same.Grand larceny is not capitalism!Finally, we must stop people from identifying these abuses with capitalism, the process that has produced America’s miracle. What a tragedy if they further close out the opportunities for millions of Americans, and millions as yet unborn.
I heard they are hiring 25 police officers in Ohio.
5)Huge increase in home value6)Great returns on 401Ks
No problem. Where do I send the bill?
Did you work as hard on your tips for the question, as I did?
The hypocrisy is unbelievable.It appears Barney Frank has been moving toward prosecuting “those who caused thismess”. What hypocrisy. I hope he has picked out his orange jumpsuit and selecteda cell for Greenspan. There is enough blame to go around including the halls ofCongress.
Just a polite way of pointing a gun at the public and saying, Hands up, suckers, we’re going to take your money.
ie- either give us your wallet nicely, or we’ll take it later anyway.
I sent a similar message to the DR three months ago. Nouriel’s aversion to the D word and reluctance to acknowledge the L shaped recovery has been puzzling to me. Maybe he is not Dr. Doom after all?
Work hard; tried that, got ripped off bybig business and big government paying for other peoples parties and problems.
been waiting to hear from you for several days, ptm. all i know is that when i pay $98.67 to the vet for a six months’ supply of Frontline Plus For Dogs 45-88 lbs. for flea and tick control, something is amiss.
I suspect that the D word is too violent to be used in public. Engineers, for example, tend to be conservative in their choice of adjectives, so that when the building falls down due to “sustained chemical effect” you can expect the rust was peeling off in big flakes. A severe U shaped recession is of course an L at the bottom of the curve.
ooks like this is going to be a rough time for girlfriends … even cute ones !PeteCA
To think of it unemployment has only increased (I predicted 9 percent by July and close to 11 percent by the end of the year), so mortgage defaults and loan defaults would increase. Secondly, home-values have another 15 percent to go. Thirdly, commercial real estate is beginning to unravel. Fourthly there is a financial crisis in emerging europe which could well affect US banks. Fifthly, there is a whole barrage of insolvent, zombie banks alive and no-one knows which are sound and which need to go. Lastly, companies like GM could file bankruptcy protect, which though not catastrophic, could add to the economy’s woes. I don’t see how the financial system can recover just in 6 months when above all is put together. Throwing money around is clearly not the solution, if the bad banks are kept alive, this will become an abyss and no amount of money printed will be enough.
Is that why he’s coming after me and my money? Pay up or else? I caused the mess? Hypocrisy is right.
Why does Geithner not have a staff????…because it’s easier to orchestrate a HEIST as the Lone Bankster….Excerpt:A report by a House oversight panel, which was described to The Washington Post in advance of its release this week, raises questions about a $8billion financing deal for Dubai by Citigroup (recipient of at least $45 billion in bailout funds); a $1 billion investment in India by J.P. Morgan(which got $25 billion from the government rescue); and a $7 billion investment in China by Bank of America (which got $45 billion from the bailout).”When the American people find that their tax dollars, which were supposed to be used to get us out of this financial crisis, instead are being used toship jobs and investments overseas, there will be outrage,” said Rep. Dennis J. Kucinich (D-Ohio), chairman of the domestic policy subcommittee for theHouse Oversight and Government Reform Committee. The report is a memo by that panel’s Democratic staff.Source:Oversight of Bank Bailouts CriticizedHouse Panel Faults Treasury for Not Forcing Firms to Reveal Overseas Dealshttp://www.washingtonpost.com/wp-dyn/content/article/2009/03/08/AR2009030802149_pf.html
What happens when the fat fox that guards the hen house starts prosecuting the theives?Him and his friends rip off everyone and then he gets to be the judge and jury? What a F*CKING scam.
As O’Reilly inadvertently once said, Barney Frank doesn’t care about the mess he’s made, he may WANT to go to jail.
$73 at healthypets.com
Liquidity trap in pictures:http://research.stlouisfed.org/fred2/series/EXCRESNS?cid=123http://research.stlouisfed.org/fred2/series/BOGAMBSL?cid=124The helicopter is the only option now, but helicopter money doesn’t circulate for long. As money flows through broken financial intermediaries (as it almost inevitably will), it is getting dumped in the vault. The Fed can’t increase the money supply to stave off a debt deflation spiral so long as financial intermediaries are hoarding out of fear.Until the banks are fixed, the economy will continue in an accelerating downward spiral.
I’m sorry, did you say an “L” or “hell” at the bottom? Seriously, in July 2008, Harry Schultz predicted a 20-year V-shape chart as a rough road map for our economic-monetary-banking future — we’re now zigzagging down to its 2018 bottom before we begin the long 10-year push back to 2028. Said Harry, “It is not a stock market chart, though that’s part of it. So are bonds. It also includes Western GNP averages & interest rate effects, wages, & your BP (buying power)–which is partly the flipside of inflation. BP matters most of all. Eg, if the stock mkt goes up 10% but real inflation is up 15%, U get poorer & must seek investments that net U more than U lose via the economics. If not, try to manage assets to shrink less than everyone else.”This chart may be as valuable as a Monet painting. It is a SOUP of all the things that will affect us. The chart formula is proprietary & hazy. Note the chart seems like 10years downhill, but it has up periods of 1-2yrs when things improve sharply, & the press/politicians will tell us all is well & so it will be briefly, & can be used like any bull or bear mkt rally, in many different mkts. But prudent people will be quick to take profits or apply tight stoploss orders. I explain below “why” all this will take 10-20yrs…”I don’t know what revisions Harry has made to the chart since last July…but it still appears a good road map into the future to me.
MAINSTREAM MEDIA’S SOLUTION TO A 32% HOUSING GLUT IN AMERICAAdd more immigration.See the horrifying proof:http://finance.yahoo.com/tech-ticker/article/204158/The-American-Economy-What-the-Jobs-Housing-Numbers-Really-Mean?tickers=%5Edji,%5Egspc,XHB,SPY,DIA,QQQQ,IVZThis brainless same old, same old flawed economic model of growing ourselves out of the depression is what caused the depression; and its obvious to me and most Americans, adding more immigration caused our problem today and adding even more will destroy America.All of the present stimulus money should go to creating good paying and longterm industrial base jobs with manufacturing in America again, that will get present American population out buying the 32% excess, in time [building roads, keeping teachers working, Medicaid help, etc, are not longterm jobs].Adding more immigration just weakens an already destroyed labor market; and the added immigration will just be living in cardboard homeless sheters anyway. How can they get a job to buy the excess homes, when there aren’t any jobs?What’s Diane smoking?
This is strange in that I usually find Professor Roubini to be right on with his facts but in the case of S&P 500 earnings he is way off.Please look here:http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLS…for data from Standard & Poors and here:http://www2.standardandpoors.com/spf/pdf/index/Earnings%20Measures.pdffor notes on how to apply that data.S&P makes it quite clear that “reported earnings” are what should be used normally as “operating earnings” are not what was used in the past.”As Reported Earnings: Earnings including all charges except fordiscontinued operations and extraordinary items, as defined byGAAP. This is the broadest measure of corporate performance of thethree considered here. It is also the traditional measure with a longhistory. It has been used for the S&P 500 and for company analysesfor decades.”Note from their earnings report that Q4 earnings are negative for both reported and operating earnings. That is with 98% of companies reporting. Every person I have heard lately is using operating earnings and Q3 earnings; why is that?The answer is clear: everyone is trying to paint a pretty picture as they have been doing for decades now. The time of reckoning is upon us, however, and we need to get back to the turth and that means using 12 month, trailing earnings, as reported. This gives us a P/E ratio of 40 for the S&P 500 at 700.Given that earnings are dropping and show no signs of rising anytime soon I fully expect the S&P 500 to drop to as low as 4,000 during 2009 and continue to around 2,000 in 2010, assuming that the economy does not improve.–Fredhttp://www.acclaiminvesting.com
This person is lucky it was 1996 and not this year, being a building contractor and all. You should pay attention to the fact that THERE ARE NO JOBS, ONLY LAYOFFS at the moment. I speak from experience.
You know, I’m getting close to the point where I consider it a traitorous act to pay taxes to these hoods who are using the money to destroy the country. If there’s a tax revolt to stop all money from flowing to these banksters and political cons, I’m with it!!!!!
He certainly is not, though his data is well worth paying attention to.But there is too much he misses. Just look at this earnings data direct from Standard & Poors: http://www2.standardandpoors.com/spf/xls/index/SP500EPSEST.XLSOur current P/E is 40, using as-reported earnings and is 14 using operating earnings. That’s with a current level of 700 for the S&P 500 and Q4 earnings – 98% reported.Notice the negative earnings for Q4.
praying didn’t get you a job circa 1996 and it ain’t gonna get you a job today.
A good quote from John Hussman in his March 9′th commentary:”The course of defending the bondholders of insolvent institutions is not sustainable. Do the math. The collateral behind private market debt is being marked down by easily 20-30%. That debt represents about 3.5 times GDP. That implies collateral losses on the order of 70-100% of GDP, which itself is $14 trillion. Unless Congress is actually willing to commit that amount of public funds to defend the bondholders of mismanaged financials so they can avoid any loss, this crisis simply cannot be addressed through bailouts. Bondholders have to take losses. Debt has to be restructured. There is no other option – but the markets are going to suffer interminably until our leaders figure that out.”There is a tangible change to a lot of financial commentaries at this time. Hussman is becoming more pessismistic (professional, but losing hope). Some other commentators are specially calling for a US depression.The market is again testing that 6500 level on the Dow today. This is a bottom on a short-term trading channel (it has no deeper significance). The Dow bounced off the mark at the end of last week. A clear break below 6500 could signal a more volatile and sudden drop to lower levels.Part of the market weakness is undoubtedly due to a lot of short positions, from banks and hedge funds that are shorting individual stocks (hedging losses), and individual investors in inverse ETF’s.But another factor could be … that investors have lost faith in stocks at this time – and are some people cashing them in to pay off personal debts. This means that indivduals are taking “hardship payouts” from their 401K’s, or cashing in any personal mutual funds that they’ve got, and paying credit card debt and mortages with the money.PeteCA
And who do you think is being bailed out on their home mortgages? And who do you think are the heavyweights in the statistics of those who don’t pay income taxes in America? And who do you think are the major recipients of Medicaid (now intermingled with Medicare) and relief for property taxes, utilities, food, child care, healthcare and education? And who do you think is the major recipient of “low-wage” immigrant labor subsidized by America’s displaced workers?And who do you think is covering up the statistics because our “right to know” is no longer PC?America is being overrun, and we are voiceless, without representation.
Good for you, Fred. And thanks! Your verification supports the information upon which I was basing my decisions.
When you’re at the bottom of the pit, and you’re trying to think of ways to pull yourself out, it seem to me that one of the least useful suggestions, as suggested by some of these posts, is to give up. So far, the golden-plate tipsters, unless I’m wrong, sound like loafers and whiners. And in the spirit of the campaign season their slogan seems to be: Yes, We Can’t!P.S. If one of you should be out of a job and stumble onto an interview, try not to say, “ain’t.”
“Will” or “Can”?Marc Faber Says Government Actions Will Boost StocksMarch 9 (Bloomberg) — Government spending will spur gains in the Standard & Poor’s 500 Index after it fell 56 percent from an October 2007 record, investor Marc Faber said.“Equities could rally between here and the end of April,” Faber said in an interview with Bloomberg Television. “The government’s efforts will fail to boost economic activity. They can boost stocks. Stocks have adjusted meaningfully.”Faber said that although the S&P 500 may drop 27 percent to below 500 before the bear market ends, investors will make money over the next 10 years…http://www.bloomberg.com/apps/news?pid=20601087&sid=aeDRhNolpJIg&refer=home
It’s all so depressing I have run out of enthusiasm, but Williams’ numbers do a good job explaining why there seems to have been a lull in the storm recently.At least it seems we have a few more months to get solar panels, well pumps, seeds, etc.
Enough With the ‘Diversity’by Walter BlockMarch 9, 2009 — We have way too many faculty committees.Attracting and retaining a freshman class depends in large part on the reputation of the faculty. One of the measures of the latter is the quality and quantity of their publications.How sitting for interminable hours in silly and useless committee meetings will help promote that goal is beyond me.While I’m on the subject of academic committees needing to be disbanded, I vote for the Diversity Task Force.Late last semester they publicly and unjustifiably savaged me based not on what I had said or written, but rather on the basis of what a journalist said about me.Here is part of their statement:“In reference to the Times Picayune article, “A Tough Sell in the Market Place of Ideas” by James Gill dated Nov 26, 2008.“As Loyola University’s Diversity Committee, we are dedicated to promoting an appreciation for the valuable contributions of all, instilling in every one of our students a desire to pursue excellence and to be women and men in solidarity with others. We also hold to the Jesuit ideal of rigorous intellectual examination in the pursuit of truth and therefore, defend the right of academic freedom. However, it is our responsibility to respond critically to statements made by members of Loyola University that run counter to our commitment to inclusion and that marginalize women and African Americans, a majority of our community.“Professor Walter Block’s reductionist statements about the productivity of African Americans and women in the marketplace ignore critical factors and structural patterns of inequality. His flawed remarks are dangerous, fueling those with prejudices to confirm their biased views. We must recognize the reality of racism and sexism in our society, whose impact has had long-lasting consequences in the lives of African Americans and women.Affirmative Action/Diversity Task Force: Ted Quant, Lydia Voigt, Wing Fok, Lisa Martin, Al Alcazar, James Hobbs, Kurt Bindewald, Artemis Preeshl, Karen Reichard, Anthony Decuir”Note that their charges are buttressed with no evidence at all. That is, they do not directly quote any of my publications or speeches and characterize them as racist or sexist. None of them had attended the lecture James Gill wrote about in the Picayune.Nevertheless, they in effect accuse me of demeaning or deprecating our female and black students.I have been gathering letters from such former students of mine, asking in effect for letters of reference in this regard. So far, the result has been overwhelming: these accusations are entirely false.Wing Fok, one of the signatories to this document and a colleague of mine at the business school, wrote me saying that the burden of proof does not rest with this Task Force to prove racism and sexism on my part; rather, it lies with me to deny such charges.Nonsense.But even if true, why did not this Task Force then ask me to address them regarding the remarks I made at the speech I gave at Loyola College of Maryland?Most unfairly, these charges were brought before the entire Loyola University New Orleans community; I was denied a chance to respond.I am very grateful to The Maroon for giving me this opportunity to do.On Wednesday March 25, 2009, at 7 p.m. in Nunemaker Auditorium, Loyola University New Orleans, I will give (roughly) the same speech I gave at Loyola College in Maryland on November 6, 2008; this is the one that was seized upon for criticism by the forces of political correctness. Here, I will address the charges of this Task Force. In addition, I will elaborate upon theories that attempt to explain the pay gap between whites and blacks of some 30%.It would appear they favor diversity of gender, race, sexual orientation, ethnicity, etc., but not concerning intellectual matters.This article appeared in the Loyola Maroon.Dr. Block is a professor of economics at Loyola University New Orleans, and a senior fellow of the Ludwig von Mises Institute.
How Low Can the Stock Markets Go?@Bloomberg“We are tracking 1929-1930,” says Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley.The result: This contraction may leave a lasting imprint on the economy and society, just as the Depression did. In the wake of the devastation of the 1930s, Americans swore off stocks, husbanded their own resources and looked to the government for help. Now, another generation might draw some of the same lessons from the deepest economic collapse of their lifetime.“This is going to scar the collective psyche,” says Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania. “People will become much more conservative in borrowing, lending and investing.”http://www.bloomberg.com/apps/news?pid=20601110&sid=aNlx.TpHF5W4
Louise Yamada expect 6000 be 1st stop for DOW and 4000 be the 2nd stop.
I actually hope you are right, because I am in cash and if the S&P got that low, I might buy in.
You have a link somewhere to her latest, WAWAWA?I like this lady’s calm and accurate analasys as I like the more frivolous way of accurate technical charts analysis of Nicole Elliot.
Diane?Daine Garnick, Investment Strategist at Invesco, was graduated from Hofstra University on Long Island, New York, which has an emphasis on Jewish culture.Immediately following her high school graduation she went to work at Anchor Bancorp, Inc. Garnick began her career at Deloitte and Touche LLP. Her projects entailed derivatives product control for clients such as Bear Stearns, Morgan Stanley and Merrill Lynch. While she was on a project engagement at Merrill Lynch, she was hired to work in Merrill Lynch’s Equity Derivatives Research team. In 2001 she joined State Street Global Advisors (SSGA) as their Chief Investment Strategist. She left SSGA for Dresdner. Garnick is now the Investment Strategist at Invesco, one of the world’s largest asset management companies…Diane is the founder of the “Ladies in Red”, a group dedicated to raising the profile of single women at charity events, which are often organized around couples. There are branches in several cities, and the group tries to focus on women’s and children’s issues…Garnick is divorced and living in New York City. She has two daughters. When she reached the age of 21 she married a toilet salesman. 13 years later, when she was the Global Derivatives Strategist at Merrill Lynch, she divorced her husband. She became one of a growing number of successful business women who were required to pay alimony to their ex-husbands.http://en.wikipedia.org/wiki/Diane_Garnick
Mayan callender ends in 2012:)
Found it myselfhttp://www.cnbc.com/id/15840232?video=1054650849&play=1
Significant events where the words are far less powerful than the resultant action (political correctitude?):”Rod Beckstrom, a former Silicon Valley entrepreneur, said in his resignation letter that the NSA’s central role in cybersecurity is “a bad strategy” because it is important to have a civilian agency taking a key role in the issue. The NSA is part of the Department of Defense. (Read Mr. Beckstrom’s resignation letter.)”http://online.wsj.com/article/SB123638468860758145.htmlThere is much cause for concern here.Ho hum
and I just found the video at Fund My Mutual Fund, with these comments:http://www.fundmymutualfund.com/2009/03/louise-yamada-sheeeees-back.html….what does she see going forward?Unfortunately patterns in the S&P don’t translate into good news. Yamada sees a clear 10 year double-top and suggests we probably have further to fall.“Now that the 2002 lows have given way we have further to go, she says. “The first targets are 6,000 in the Dow and 600 in the S&P and the second target, I hate to say it, could be 4,000 and 400.”To support here thesis she points to trends that happened immediately following the Crash of 1929. Wealth destruction didn’t actually occur at the crash. It happened after a bounce in 1930 and lasted well into 1933.If you’re looking for a survival strategy Yamada says it’s important to be holding cash. “And if you get into this market make sure it’s with a trailing stop.”
this is the link, there are two media files of her interviw, 2nd interviw with Bloomberg is long and good.http://greenlightadvisor.com/glablog/2009/03/08/yamada-sees-44-of-nyse-stocks-under-10-as-shocking/
Criminal ActivityMarch 9 (Bloomberg) — Bank of America Corp., the largest U.S. bank by assets, and General Electric Capital Corp. raised a combined $16.5 billion today selling bonds backed by the U.S. government as they seek to hold down borrowing costs.Where is the outrage!!
Power to the States”Echoing Nietzsche’s famous proclamation, several states are now declaring, in effect, “Federalism is dead.” For Americans, whose nation was founded on a belief in separate spheres of government power, this pronouncement may appear equally blasphemous. Unlike Nietzsche, though, these states believe in resurrection and hope to revive the once-sacred concept that is becoming increasingly obsolete. In legislatures across the country, state representatives have introduced bills demanding that the federal government abide by a frequently overlooked Constitutional provision: the Tenth Amendment.The Tenth Amendment reads: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the People.”Receiving shockingly little attention by mainstream media, at least 11 states have introduced legislation specifically demanding that the federal government live up to the dictates of this language: Arizona, Hawaii, Montana, Michigan, Missouri, New Hampshire, Oklahoma, Washington, Georgia, South Carolina and Texas. On Feb. 18, the Oklahoma House of Representatives became the first legislative body to pass just such a resolution. The immensely popular House Joint Resolution 1003 won by a margin of 83 to 13 and states “that the State of Oklahoma hereby claims sovereignty under the Tenth Amendment to the Constitution of the United States over all powers not otherwise enumerated and granted to the federal government by the Constitution of the United States.” Some analysts predict that approximately 20 other states will introduce similar measures over the next year.I guess the situation is pretty abysmal when states feel compelled to say: “Umm, excuse me, Mr. President. Sorry to bother you. Just wanted to let you know that there’s still a large and important sphere of power that you can’t enter. No, really, there is! Please don’t laugh. It says so right here.”These proposals come on the heels of the President’s $1 trillion economic stimulus package, which requires states to use the money for policy initiatives approved by the federal government. A particularly troublesome provision in the stimulus package creates a significant change in state unemployment requirements and repeals many of the welfare reform measures established in the 1990s. States fear that, once in place, these changes will remain years after the recession ends and after federal funding dries up. At that point, the provisions would fall under the even less popular category of unfunded mandates, which do exactly what the name suggests — they force the states to implement certain federal policies without providing the requisite funding.This criticism applies to Republicans and Democrats alike. In fact, a recent focal point of critics’ ire was the No Child Left Behind Act, pushed through by the Bush administration. More importantly, federal spending ballooned to new heights over the last eight years, and undoubtedly the failure to tame the Leviathan that is the U.S. federal government can be attributed to both political parties.Now it is clear that President Obama’s unprecedented $3.55 trillion budget proposal promises more of the same. Much more. Of course, the economy is not the only area in which the federal government asserted the newfound authority that magically appeared in the latter half of the twentieth century. Far from it. Through strained readings of the Commerce Clause and other constitutional provisions, the U.S. government was able to justify new intrusions into every realm of American life.Proponents of “big government” often rely on the increasingly popular argument in constitutional debates that the times they are a-changin’, and as a “living” document, the Constitution stands for something completely different today than what it stood for in 1787. For anyone subscribing to the latter view, the following sentences will appear comically outdated: “The powers delegated to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite.”James Madison uttered those words many decades ago, but I would argue that they hold no less relevance today. Indeed, his conception of federalism deserves even greater attention in a society that requires legislation from the states to remind the federal government that the Tenth Amendment still exists.The important question now is whether the burgeoning reform measures will have any impact whatsoever. If history has any predictive value, the federal government will ignore this movement and continue to grow unabated. Given the popularity of these measures, though, it is not too far-fetched to think that three-quarters of the states will join together in opposing the expansion of the federal government. At that point, they would have enough power to amend the Constitution. But what would that amendment say — “Please, please, please take the rest of the Constitution seriously”?If it does get to that point, you can expect to hear a few brazen dissidents begin to throw around the “s” word, which, as it just so happens, rhymes with “recession.” The media will dismiss these individuals as radicals and fear-mongers, and admittedly, such a suggestion is better suited as a wake-up call than an actual policy proposal. But ask yourself: Is it really that radical to oppose a government regime which has no practical limits on its power and no longer concerns itself with the one document that purports to create such limits? Maybe it is. The Framers, after all, were a radical bunch.http://cornellsun.com/section/opinion/content/2009/03/02/power-states
The stuff is just an organophosphate insecticide. Buy generic at Walmart, and you’ll save $90.
It’s depressing, yes, but there may be hope on the horizon. The economy may cleanse away the excesses created by the bankers and the corporations that brought on this disaster.In the meantime, do as an investor said a few months back on radio: “With the government in the market, this would be a good time to take several months off.”And as one of the main characters in John Buchan’s “The House of the Four Winds” said: “The present government must go, and at once, for it is too gross a scandal. If we delay, there will be a blind revolution of the people themselves.”In my area in Silicon Valley, for sale signs are beginning to dot every block. My friends, mostly in their late twenties to early forties, are losing their jobs right and left, or are afraid of losing their job. It is frightening. I have one friend who lost a job of many years in Chicago where unemployment is high, moved here for work two years ago, and hasn’t been able to sell his Chicago condo – which has dropped in value below the equity he has in it. He lost his job here two months ago, is paying for rent here and a mortgage there, and last night someone broke the windshield of his car, and stole everything worthwhile, plus his financial papers. In his consternation, my friend dropped and broke the screen of his laptop.Today, the tenants that he found a few months back to rent his Chicago condo, called and complained that repairs are needed and that the washing machine broke and gave him a two months’ notice.Question for Ben the Trillion Dollar Banker Bailer: What should my friend do?
What a good idea! Your’s and Guess’ post also inspired me to look around on the web — and that’s the last time I’ll be paying $96+ for 6 paks of Frontline Plus. Keep those tips and generics coming: maybe I’ll beat this inflation game, yet!! :>)
In a pressure cooker, with no release valve. And the lid’s about to blow!!
Oh, there’s all sorts of generic molecules masquerading as proprietary compounds these days. Ask for generics at the pharmacy too. I have the formulas for windex and baking powder too.
I would ask a question: a P/E of 10 indicate a yield from stocks of:1/10=10% (E/P). So this number would confront with a 10y Tbond of 3%. Maybe this indicate that also with lower earnings in the 2009 the stockmarket has a great upside potential?
This program has been going on since October. One of many Fed programs to replace the private credit markets.What all these programs do is to just add to the default risk of the government. Governmental entities are at default risk in many ways:- The FDIC guarantees many more deposits than its reserve fund can pay. Therefore it is just an implicit guarantee that the government will print money to pay in the event defaults exceed its reserve. These programs add to that (along with other new programs, such as TALF, whereby even hedge funds can access FDIC guarantees)- State guarantee funds for insurance annuities similarly cannot begin to hope to pay what is guaranteed in them.What bothers me is even so called ‘conservative’ financial advisors continue to advise people to seek out FDIC and state guaranteed annuities. They must realize somewhere in the back of their minds that such guarantees have at least some chance of being absolutely worthless in a really bad U.S. default scenario. Or, when the government decides to take it upon themselves to redistribute what people have in savings ‘in the public interest’. Remember how gold was confiscated in the GD? Suppose they decided your FDIC guarantee was only worth it up to a certain amount, and after that, well, the money is more needed elsewhere anyway.This is essentially what they are doing with debt now. If yours is paid or you are not in distress, in effect your payments are going to others who are not paying or who are in distress. This is because the banks will forgive some portion of their loans, thereby using money you have paid them to pay off others debts. The money they redistribute in this way has to come from somewhere. Guess what, it came from you. If they can redistribute debt in this way, why not savings as well?Its a slippery slope and we lost our footing on it a while back.
the active ingredients are fipronil (fluorocyanobenzpyrazole)and s-methoprene. I dare you to find a phosphorous atom anywhere in them!
If the financial system melts down, what does that mean on a practical, day-to-day basis? Will insured deposits (FDIC, SIPC) still be safe? Businesses will still exist and people will still go to work, no? I’m looking for serious responses here.
The toxicology studies on s-methoprene read like the descriptions of credit default swaps. Highly derivitive.
At last! The above article seems to have the look of the long-awaited blow for states rights. This is one of the most important movements on the horizon in years! More is being done to stop the increased central control of our government than many of us have realized.Thank God!
Thanks for the additional input. Is there a generic for fipronil or s-methoprene? Or, in your opinion, would an organophosphate work as well to control fleas and ticks? Or some other insecticide? Or is that going too far out on an unknown limb? Anyway, it looks as if the generic road is the way to go if one has to choose between dog food or flea protection. At least, my Bella thinks so.
Morbid said:”Christ said that the poor will always be with you. There is always a pecking order on the food chain. Embrace the limitations of our reality.”I say:Please embrace the unlimited potential of our ultimate reality.
Gratified to see my state listed already.Thanks for linking this!
‘Manchurian Candidate’ Starts War on Business:March 9 (Bloomberg) — Back in the 1960s, Lyndon Johnson gave us the War on Poverty. In the 1970s, Richard Nixon launched the War on Drugs. Now that we have seen President Barack Obama’s first-year legislative agenda, we know what kind of a war he intends to wage.It is no wonder that markets are imploding around us. Obama is giving us the War on Business.Imagine that some hypothetical enemy state spent years preparing a “Manchurian Candidate” to destroy the U.S. economy once elected. What policies might that leader pursue?http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=amhpOT5rlR1Y
For those that have multiple pets, you can buy the large dog size of Advantage and syringe out the amount you need for smaller animals, this works for cats also if you have multiples. Have been doing it for years, have never used Frontline.
Am recently back in contact with an old friend from school who’s husband sells protective material for metals industry (like things to put over steel when its shipped via RR.) He is telling her steel leads out of recession and steel was at the nadir last October. They are living on 60% less. I’m having a hard time buying that we’re on our way up. Also wondering what % steel goes for cars vs building. Seems we should see a crash in commercial real estate to really put the proverbial nail in the coffin of steel. Maybe the Chinese needed some steel after the earthquake or something and I know they needed alot for repairing the pipeline a while back. Just wondering about the economic drivers of that industry. I would think the stimulus would really help it with infrastructure spending but will it be a short term fix?
m & g,i agree. and would suggest one consider the possibilitythat the “poor” referred to in the quote is the povertyin the hearts and minds of all people and not a socioeconomic reference. this is a poverty we can resolve / solve.instantly. then take it from there.literal interpretations ? misleading!
Just a pesonal opinion.The financial system is in the process of melting down. The problem is that the western banking system (USA, Europe, UK) is insolvent i.e. bankrupt. Ordinary people appear to be just finally realizing this, and wondering what they should do with their money that’s currently in a bank.The FDIC does not currently have enough money to likely cover the banks that will go under in the next year or so. Therefore, most likely the FDIC will ask the US Treasury for a handout to beef up their reserves to cover bank failures. In addition, the FDIC has been increasing the dollars that banks (in America) contribute for their emergency fund. This is upsetting the good bansk, who don’t see why they should pay for the bad banks. I doubt seriously that the US Gov’t will allow the FDIC to go bankrupt, because they know this would start a mad panic (a run on the banks). But it could take time for you to get your money back – if your bank fails. Therefore, do your homework and figure out a bank near you that is still reliable. Move your money there! In this way, Americans will do the system a favor (that the Fed is not doing). The good banks will (hopefully) win the battle over the bad banks.Some businesses will make it – and some won’t. Right now practically all businesses are trying to cut costs … by laying off some workers, cutting overhead, and trimming every expense you can imagine. Things are already tight, and they will get much tighter.The published unemployment rate in the USA is about 8%. I expect this to climb to at least 10-12%. In reality, this will mean that at least 20% of our workforce either has no job, or only a part-time job.These are very tough conditions that most Americans have never lived through before. I’ve never seen them in my lifetime (my grandmother used to talk about it, though). You need to think and plan economic “survival”.PeteCA
I’m no expert, but have been working to educate myself since 2007 when it became clear to me we’re heading for some major trouble. This blog has been a great source of information and I’m very grateful to Prof. Roubini and all who post here. Thank you!When it does melt down I expect “normal” financial transactions to cease for a period of time — probably a week to maybe as long as month while the govt. attempts to take control of the machinery, assess the true extent of the damage, and begin to bring it back up again in a limited way. This will almost certainly effect all electronic transctions — ATM’s, debit/credit card terminals in retail locations, payroll deposits, insurance payments, etc. One should keep enough cash on hand to get through this period. One should also expect a lot of shell shocked folks to be in a desperate situation because they didn’t prepare for the near-term impact. After I’ve taken care of my own family I hope to be able to help friends who get caught by surprise.If the shutdown goes longer than about a week, I expect interruptions in deliveries of food, gas, etc., because there will be issues in processing payments among suppliers. This is more challenging than than loss of currency because it’s literally the stuff we need to survive. So even if you have currency it will become increasingly difficult to find the stuff you need.As far as funds in banks, investment accounts, etc., I expect those to be covered up the the FDIC limits, but you’ll need thorough documentation and a lot of patience to be made whole. Anything over the FDIC limit goes away. I believe even if the damage is beyond anyone’s wildest expectations the US govt. will back the FDIC insured deposits rather than risk social upheaval on top of economic collapse. But it will come at a very high price, through the govt. printing presses. What at this point is looking like a deflationary trend would probably turn quickly into hyperinflation, and at that point those who’ve been laying in physical supplies of precious metals will be protected to some extent. Everyone else has big problems. This will likely result in social unrest and extreme political pressure to address social needs and provide a glimmer of hope for a better tomorrow. Based on historical precedents in those kinds of situations, I’d be very concerned about what might arise. This goes double for other parts of the world that are less politically stable and highly exposed to the same dynamics going on in the US.Again, I’m as clueless as the next guy about predicting the future, but these are common themes as I’ve notices as I try to figure out how to plan for a potential catastrophe that unfortunately seems to be increasing in likelihood.So, I’m trying to stay a step or two ahead, do what I can to get ready without causing my family undue concern, taking care of my health – exercising, eating well, and maintaining a positive attitude. That’s about all I can do and in a weird way the increasing clarity of the situation — despite the extremely serious implications — is somehow reassuring.Best to you and all the contributors/readers of this blog. God bless.
That is a good summation and analogy.Collectivism being where production and distribution are owned by a central body.
Take a look at the chart in the article at the following link:http://www.caseyresearch.com/displayCcs.php?e=trueYou tell me. In your opinion, are retail sales in the USA probably headed down or up? Quite seriously, it looks like we’re nowhere near the bottom of the cutback in consumer spending at this stage. And why? Because Americans all across the country are deeply involved in the process of paying back all their (overextneded) debts. And until this is done – don’t expect much of a recovery.So the steel idea … likely a false hope.And your concern about crashing commerical real estate – very valid.PeteCA
“On the downside we have argued here that there is at least a third probability of a L-shaped global near depression rather than the mere current severe U-shaped recession.”But darling! If your x-axis plots time, you must have an “L” before a “U”, so the “U” can’t be current if we’re worried about a future “L”,or are we back to the future or forward to the past or something dreadfully space-time and Hawkingish?And what’s with the heavy, almost Sov-like sarcasm, sucker this, sucker that, and the hilariously redundant “bear market sucker’s rally.”You called it all beautifully, and nobody with any smarts would rule out 500 on the S&P, but slow down a little. Keep that marvelous brain from tripping over itself, and its owner from appearing to have been captivated by the role of Cassandra.
We are seeing a transformation of the economy from the Industrial Revolution. That transformation could be a long decline or hopefully into a new revolution, one in which others have called the Hydrogen Revolution, as presented in the book “Eating the Sun.”Why this revolution?Presently, the total energy consumption on planet earth is 13 TerraWatts (TW) per year. When the rest of the planet catches up, it will be 40TW, –as long as Americans reduce their energy usage by a third (If the rest of the world all use energy like us, it would require 100TW.). So at present rate of energy extraction, we would need 27TW of power to meet demographics in the next 20-50 years.Our planet, via photosynthesis, generates roughly 130TW per year. Human implemented photosynthesis (wheat, rice, soy, sugar cane etc) is roughly between 15TW to 30TW.30 years ago, scientist at UC Berkeley was able to induce algea to produce pure hydrogen by interrupting the photosynthesis cycle. Recently, MIT figured a way to generate hydrogen using an inorganic catalyst: http://www.technologyreview.com/energy/21155/So what we need is a combination of organic and inorganic photosynthesis to generate hydrogen as an energy source (with of course oil, nuclear, solar, wind, geothermal).Why hydrogen?When it burns you simply have water, no CO2 left over. At present amount, the CO2 in the air is 375 PPM. About 100 million years ago, it was 600 PPM. However, the rate of increase was spread out over millions of years. At the rate of generation by humans, we would get there in less than 100 years. The problem with generation of 600PPM in the atmosphere is that there are effects we had best not find out.So by generating hydrogen we can win on three issues:1. we would be in the lead again, as we were in the last 100 years in the Oil Economy. This will ensure that the dollar will remain the reserve currency, and of course the growth of the dollar must be tied to the energy produced by the US rather than generated by financial engineers on Wall Street;2. we would be able to generate enough energy to meet the needs of the planet in the next 20-50 years3. we would be able to reduce the rate of increase in CO2.Yet, I have not heard or seen anything from our government on anything similar to this.Hence, as long as there are no visions (and plenty of tax cheats, liars, and embezzlers) from our leaders on (a) how to fix this cancer in the financial system, and (b) how to maintain our lead in the world, people will have to resort to a hand-to-mouth type of existence.
You are absolutely right, ex VRWC. I so admire your clear thinking.I can’t help but think that the sheeple are all eventually going to be caught like deer in the headlights, plaintively bleating, “what has happened?” as they return from their Florida/Arizona/Mexico winter vacations. Truly we are living in DisneyWorld.
South Dakota passed their resolution today, but for those of you who are excited about this, you need to realize that none of the states are trying to pass anything that has the force of law – everything is just a “resolution” or that states version of a resolution. And at last count, it’s over 20 states that have put forward this type of measure.there’s definitely some discontentment out there. who knows how far this can go?
The most important things we can do are:Make sure you have a plan B for the necessities of life. Support local farmers and CSA. Plant a garden. Drive a point well and get a pitcher pump. Get a wood stove. Get stronger locks on your doors.Get involved with your community, with like minded people around you. With neighbors. Invite them over for a cookout, help them fix their lawnmower. Make friends. We will not make it to the other side on our own.
When are we going to get off our dead asses and put a stop to this? Blogging will not cut it. We had better do something. We are going down as I type.
“Therefore, do your homework and figure out a bank near you that is still reliable. Move your money there!”Any suggestions on how to do that homework?
At least it’s a start. That’s more than we had before this mess.
Hi Prof. Roubini,Mr. Market might agree that the question is: “How Low Can the Stock Markets Go? Much Lower” but the even better question is:How much more valuable can the valuable stocks get? Much more! What can we say? They’re now hiding in plain sight!Enjoy the ride!P1AQL
Have you read any of Deninger’s recent “Bezzle” blogs? If so, wouldn’t your comment that possibly “investors have lost faith in stocks at this time” make a lot of sense?Personally, I always thought that the stock market was overvalued from all that cash in mutual funds chasing equities & bonds. And I always expected a giant demographic “cash out” from the boomers as they hit retirement age. Unfortunately, the Bezzle beat them to it…
I just saved my Job!There had been no indication of layoffs where I workedother than the generally bad economy, but a few weeks ago I spoke to my manager and volunteered to work a half day on Saturdays and a small percent cut in pay.Well, unkown to me, they had already had a fairly big list of people they were expecting to cut which included me and after being the only one at all to step up and volunteer, basically it saved my butt!
aaaahh you know russian roulete?? yes??you survived the first round, that gun is goin round in circles!!youre a good gambler??
Oswald Spengler once wrote that there was nothing poor about a small cottage with a well kept garden. While Aristotle deemed a certain amount of wealth is essential to happiness, I suspect that he would agree with Spengler as to how much property was really necessary. Me, I’m looking forward to building my small cottage on my northern property, and also to putting in my small, well kept garden.
pjb,just for clarity, rod beckstrom used the term “civiliangovernment agency” which the journal reduced to “civilianagency”. the “government” part of the term eliminated. perhapsinsignificant as one could assume an “agency” is governmental,but not necessarily. still, it seems odd and somehowunwholesome to contemplate the quality of snooping onpeople, perhaps there should be a law against it?i personally have no objection as ” every bodies gotsomething to hide ‘cept for me and my monkey”.. but i’m not the point! and neither is my monkey.my opinion is that rod b. is probably correct in his concern,however, this train too has left the station and disappearedinto the darkness of night and into some distant and foreignwall, leaving no survivors, save one, somewhere in a cave.the mythical cave creature who will outlive that guy withthe cigars, talk about a “fish tank”. sheesh…..November 29, 2006.http://nswbc.org/Op%20Ed/Part2-FNL-Nov29-06.htm.The Highjacking of a NationPart 2: The Auctioning of Former Statesmen & Dime a Dozen Generals.By Sibel Edmonds.“The real rulers in Washington are invisible and exercise power from behind the scenes.”- – Justice Felix Frankfurter.”It used to be the three branches – congress, the executive, and the courts – that we considered the make-up of our nation’s federal government. And some would point to the press as a possible fourth branch, due to the virtue of its influence in shaping our policies. Today, more and more people have come to view corporate and foreign lobby firms, with their preponderant clout and enormous power, as the official fourth branch of our nation’s government. Not only do I agree with them, I would even take it a step further and give it a higher status it certainly deserves.Operating invisibly under the radar of media and public scrutiny, lobby groups and foreign agents have become the ‘epicenter’ of our government, where former statesmen and ‘dime a dozen generals’ cash in on their connections and peddle their enormous influence to the highest bidders turned clients. These groups’ activities shape our nation’s policies and determine the direction of the flow of its taxpayer driven wealth, while to them the interests of the majority are considered irrelevant, and the security of the nation is perceived as inconsequential….”so it goes…
some fast flicks on steel ~ interesting when combined with your school chum’s hubby’s remark that “steel leads out of a recession.” On that remark, looks as if we’re still headed downward…WSA: January 2009 Crude Steel Production[Steelonthenet.com] Brussels, Belgium; 20 Feb 2009 – World crude steel production for the 66 countries reporting to the World Steel Association (worldsteel) was 86 million metric tons (mmt) in January. This is 24% lower than the same month last year. All major-steel producing countries showed a two-digit decrease in crude.http://www.metricmetal.com/steel_industry_news.htmU.S. Steel earnings up, outlook downJanuary 28, 2009 –On the heels of record profits in 2008, U.S. Steel Corp. is bracing for a rockier earnings climate this year.On Tuesday, the company reported record profits of $2.13 billion for 2008 despite its fourth quarter earnings dropping $611 million below the previous quarter.The lower fourth quarter earnings are the start of a downward trend that likely will be repeated in the current period, company officials said…”We expect an operating loss in the first quarter (of 2009) as results continue to reflect the extremely difficult global economic environment,” Surma said. “We do not know when conditions may improve, but we are well positioned to fully participate in a market recovery when it occurs…The company said it is making aggressive efforts to maximize liquidity and reduce costs and will take additional actions as market conditions warrant.After idling the hot end of its Hamilton, Ontario, Works in November, the company consolidated its steelmaking operations because of market conditions. It also idled Keetac, an iron ore mining and pelletizing facility in Minnesota, Great Lakes Works near Detroit and Granite City Works near St. Louis. The actions affected about 3,500 union and nonunion workers…http://www.nwitimes.com/articles/2009/01/28/news/top_news/doc74031347427d0fdb8625754c000d7967.txt
Just one thing? I thought the FDIC is a U.S. government corporation, so I was under the impression that it was also backed or somehow guaranteed by the U.S. government. Is that a misconception? Would the government allow its own creation to fail?Aside from which, the FDIC insurance rubs me a bit raw anyway. People lose lots of money with a failed bank, and they’re made whole with everyone else’s money (as well as their own, if they’re taxpayers), even though everyone else had nothing to do with the bank failing. Sorry, just a personal vent.Good luck with all that you’re doing. Sounds like you’re on the right track! Best to you, too.
Poor baby. Here’s some help. If you have a “current severe U-shaped recession” you are at a point where you know the recession is already over, i.e. it has already gone down and up again. If you have an L-shaped recession, it can become a U-shaped if the economy rebounds in time. But no U before L. So, doncha think the professor’s statement is a bit odd, eh?Sov-like sarcasm? Sorry, I date myself. You had to have been there reading Pravda during the cold war. I may be completely wrong, but the good professor is beginning to sound like he’s HARANGUING, as if he were the SCOURGE of Kapittlism, as if he’s gone from fetchingly DOUR to annoyingly HEAVY, almost as if he’s WILLING it instead of observing it all. Which is why I think he says dumb things like “bear market sucker’s rally.” Ever hear of a bull market sucker’s rally? Please! Or maybe he’s just typing as fast as he can and doesn’t edit — which tells you something else.Your serve.
Go to the link below, and scroll a long way down the page. You’ll find a list of the strongest and weakest banks in the USA. Tomorrow I’ll try to post a link to the bank ratings evaluator, so you can evaluate your own bank online (with updated info).http://images.moneyandmarkets.com/reports/Event/1010QA/QA-followup.html#_Toc211675100PeteCA
I somehow disagree with Prof. roubini’s inflation forecast. We’ll see asset deflation for the next two years (thats expected); the 2009 last quarter CPI nos. will be rather surprising. Going forward thereafter, we’ll see CPI nos. constantly rising for the next 4-5 years.
look at these dead beats….Issuer Name Probability of Default Rating Corporate Family Rating Outlook Total Rated Debt Outstanding (in billions) Industry SectorLoading…Allison Transmission, Inc. B3 B3 Negative $4.60 Automotive: PartsAMR Corp. Caa1 Caa1 Negative $1.62 Transportation Services: AirlineBuilding Materials Corporation of America Caa1 B3 Negative $1.55 Manufacturing: Finished ProductsChrysler LLC Ca Ca Negative $9.00 Automotive: PassengerCitadel Broadcasting Corp. Caa3 Caa2 Negative $2.29 Media: Broadcast Tv & Radio StationsClaire’s Stores, Inc. Caa3 Caa3 Negative $2.59 Retail: Department StoresDana Holding Corp. Caa1 Caa1 Rating under reveiw $2.08 Automotive: PartsDole Food Company, Inc. Caa1 B3 Negative $1.51 Natural Products Processor: AgricultureEastman Kodak Co. B3 B3 Negative $2.10 Technology: HardwareFord Motor Co. Caa3 Caa3 Negative $31.55 Automotive: PassengerFreescale Semiconductor, Inc. Ca Caa1 Negative $10.20 Technology: SemiconductorGeneral Motors Corp. Ca Ca Negative $38.56 Automotive: PassengerGeorgia Gulf Corp. Caa2 Caa2 Negative $1.98 Chemicals: Commodity ChemicalHawker Beechcraft Acquisition Co. B3 B3 Negative $2.85 Aircraft & Aerospace: EquipmentIdearc, Inc. Caa3 Caa2 Negative $9.29 Media Publishing: BooksLear Corp. Caa2 Caa2 Rating under reveiw $2.30 Automotive: PartsLevel 3 Communications, Inc. Caa1 Caa1 Rating under reveiw $1.87 Telecommunications: WirelineMichaels Stores, Inc. B3 B3 Negative $3.93 Retail: SpecialtyOSI Restaurant Partners, Inc. Ca Caa1 Rating under reveiw $2.11 Restaurants: Family DiningR.H. Donnelley Corp. Caa2 Caa1 Negative $3.48 Media: Printing – HoldcoReader’s Digest Association, Inc. Caa3 Caa3 Negative $2.21 Media Publishing: Newspapers & MagazinesRealogy Corp. Caa3 Caa3 Negative $7.56 Services: ConsumerRite Aid Corp. Caa2 Caa2 Negative $6.80 Retail: Drug StoresSource Interlink Companies Inc. Caa1 Caa1 Negative $1.63 Media Publishing: Newspapers & MagazinesSwift Transportation Co., Inc. Caa1 Caa1 Negative $2.98 Transportation Services: TruckingTenneco Inc. B3 B3 Negative $1.83 Automotive: PartsUnivision Communications, Inc. B3 B3 Negative $10.09 Media: Diversified Media – FcUS Airways Group, Inc. Caa1 Caa1 Negative $1.60 Transportation Services: AirlineVisteon Corp. Caa1 Caa2 Negative $3.20 Automotive: PartsWestern Refining, Inc. B3 B3 Negative $1.40 Energy: Oil – Refining & Marketing
You see that other link posted nearby …TheStreet.com Banks and Thrift RatingsThat’s the link I was looking for. You can find your own bank on that evaluator … if you’re a little patient and work with it a bit.PeteCA
Thanks for the condescension.I wasn’t being sarcastic, I was being serious.I am not any kind of econ major, history major, or any other kind of major, and I know enough about the markets to fit in an eighth of a thimble. But I appreciate you taking the time to educate me.
Thanks for the posting. Dole Foods headed for trouble??? I better stock that canned pineapple in my pantry while I can still get the chance. PeteCA
petshed.com in australia – no script required. $56.95 – several years customer.
Unfortunately a PE of 6-8 with a 40-50 seems very possible.S&P from 240 to 400
How brilliant, dear one. How obvious…now! Of course one must do an “L” before one can make a “U” turn. But, in a SOUP this messy, it IS hard to know if one has backed into the future or forwarded into the past, or if one is simply bubbling and imploding in a Greenspan S&P500 Dream Machine. I do sense we floated by Bernanke lingering somewhere back in the 30s, trying to fast forward to bypass 2009 on a $9 trillion bicycle. Somewhere in a fog…Ah, well. Perhaps the professor can slow a bit if it would make your ride more comfortable. But you must trust your pilot. And, not to be a Cassandra, but we HAVE known for more than a year that we’re “coming in on a wing and a prayer.” And no longer sure about the “wing.”And something to ponder on our way down. There IS a sucker born every minute, and they DO so love bear rallies!
Steel plant manager of our acquaintance says their orders dropped by half last month. The are laying off people and another steel mill in the vicinity is shutting completely.
Everyone loves a team player. Good advice for all. Congratulations, and best to your company! I’m sorry for all your fellow workers and hope things are better soon. But tonight, we celebrate!!
Just stumbled on another comparison, maybe this helps. Shiller used Graham’s method (using a full decade of profit data) and arrived at 13.2 P/E level, therefore assuming the market could fall by another 25-30%, full article here:Graham measured equities against a decade of profits to smooth out distortions, a method that shows the S&P 500 trading at 13.2 times earnings, according to data compiled by Yale University Professor Robert Shiller. At the bottom of the three worst recessions since 1929, the average ratio fell below 10. To reach that level, the S&P 500 would sink another 27 percent.Source: http://www.bloomberg.com/apps/news?pid=20601213&sid=aJ5hxhuxW61g&refer=home
What in the world could have happened to Dole? Reader’s Digest I can understand. Very, very sad — all collateral damage to be laid at the feet of the Wall Street Investment Bankers, and Summers, Rubin, Graham and B.Clinton, who made it all possible.
oooohhh. Now that’s for me!!! Muchas gracias!
Its official… Its L-shaped. China adopting “beggar thy neighbour” policieshttp://www.ft.com/cms/s/0/ccc48c1e-0d13-11de-a555-0000779fd2ac.html
ain’t nutin but me usin’ my preacher slang for ya. ain’t no need for no job interviewz i b rich and i ain’t prayin cause aint nutin to pray to. now that may be a tautology right there.
“A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murder[er] is less to fear.”- – Marcus Tullius Cicero.http://nswbc.org/Op%20Ed/Part2-FNL-Nov29-06.htm
“Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their “current” net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.”http://www.mcclatchydc.com/homepage/story/63606.htmlHo hum
Dear HALIt’s so obvious, isn’t it? Unfortunately the PTB have a vested interest in maintaining the reliance on petroleum based existence. Until they are prepared to dump the Petroleum lobby, you will not see any development on this front.The alternative energy technologies have been available for mass production for years.
The ‘fish-tank’ perspective of the observer of the economy must be sending patterns to its owners that while one Party gets all the available cash, credit and relief (Banks, etc.), the other Party (masses) gets less while it also hints that the resources are not infinite.The question begs then that, when that moment is reached that all the resources have been exhausted on one side of this equation and have been thoroughly secreted by the other side and placed where sunshine is prohibited, will there be any energy left to quarantine these grande financial institutions (those that are broke and bankrupted: see above) and do what was required of them in the first place?I think not!However, the current stimulus initiatives that are doomed to failure are a new process – a new Cause, that will bring many new surprises – to some, but not all. Readers should note the new predictions of civil unrest that are now popping up in the Internet World and originating with some fairly heavy thinkers. Nothing new really, except the credentials of the authors. Better late than never.Ho hum
The combination of agricultural shortages (ie.california water rationing, boom and bust in food commodities effect on farmers) and monetary expansion is predictable.Its going to be a hell of a summer.
The most important things we can do are:Make sure you have a plan B for the necessities of life. Support local farmers and CSA. Plant a garden. Drive a point well and get a pitcher pump. Get a wood stove. Get stronger locks on your doors.Get involved with your community, with like minded people around you. With neighbors. Invite them over for a cookout, help them fix their lawnmower. Make friends. We will not make it to the other side on our own.
You folks are hooked on HOPIUM.The whole question in life is Who Eats Whom!
Approaching The Humpty Dumpty ThresholdHumpty Dumpty AnimationIn Case You Are Wondering Who This Is – It’s YOU!Dear Professor,Please feel free to use the humpty dumpty business in any of your economic outlooks – I lay no claim on this verbiage – it belongs to all of mankind.
Occasionally I wander back and read past views of the professor. Read within the context of a sea of contemporary analysis they only grow in stature. I would be drifting with the tide without this blog.I have learned to take all market timing advice (including the good professor’s) with a pinch of salt. Observing the successful ones I think Taleb would posit “they were lucky”.The bearishness of Roubini’s present view I caution should not be interpreted as timing advice. On Nov 19 the readers of RGE read ‘With major US equity indices free falling over 6% today Wednesday, ending below their October lows and now being back to 2003 levels the latest bear market sucker’s rally is now officially over.”If you were active in the market you might have decided as I did to ‘play the market’ only to see the S&P rally over 17% in the following 6 weeks.…”trust in God but to tie up your donkey first?”
You may have saved your job, but what about your life? It sounds like you are an indentured wage slave.
http://www.businessinsider.com/meredith-whitney-over-half-of-consumer-credit-card-lines-will-be-yanked-2009-3No jobs, no credit, no money… what will they do? start shutting off electric, water and phone on millions shwen they dont pay?Wait the new credit card reform act goes into effect in july 2010. that will help – lol….. more planning by the PTP to screw us all…People need to stand up and be counted…. or by Mid 2010 this will be a police state in this country….
Did Jesus whisper that to you – in a dream? Is that how you “know” you’ve got that sussed, Morbid?
Why the USA will be – SHOULD BE – the First Global Economy to experience a total collapse, any day now during the next few months:1. Americans ain’t dumb – well, not all of them.2. I will bet against the “slicks” of Wall Street and with the ‘Old American Constitutionalists’ – like Ron Paul3. Nobody could be possibly so stupid (except the slicks) to believe that there will soon NOT be a global economic collapse; that Pope Ben and Tiny Tim even have the faintest idea as to what is going on; that the World will decouple from the USA and live happily ever-after(leaving the USA at the bottom of the dog-pile).4. Enter the ‘old American establishment’:Decision A. Preempt the global economic collapseDecision B. Let all the other World economies fold on top of the USA,Decision C. Orchestrate the whole global economic collapse debacle (quite easy as this is where it is at) but remove the USA from the bottom of the pile,Decision D. Utilize ‘old American establishment’ resources to override all the “slick” programs to availe the USA to not only preside over the recovery but to effectively re-orchestrate its effective new structure.5. The ‘Old American establishment’ will reassert itself to remove those “nasty little elements” within the body ‘elite’ (and hopefully put them in jobs cleaning toilets: read neocons and the like ilk) and perhaps even elevate Ron Paul to where he should be.6. By preempting the global economic collapse, the USA can rebuild a new global structure as only this Nation has the resources to do so -as long as they drop those that are currently leading the collapse, er, FedRes and Treasury, et al.Question: Why not?The full qualitative intensity of ecstasy of the taste moment which only lasts for a millisecond – one needs only to know when to bite.Technology is the key to the future but power needs to be entrenched in fundamental values which the “slicks” do not possess or are even aware of.Ho hum
Walmart is bad for jobs, the economy and other buisness (small and large). this bill needs to pass. it sends the signal we are through with low wages, treating people like crap and importing junk from china.WRITE YOUR CONGRESSMAN to PASS THIS if you agree..http://www.businessinsider.com/wal-mart-downgraded-on-card-check-fears-2009-3
Here’s the thing, several people I know have had either pay cuts or are doing the extra work left when others are let go or both.They didn’t volunteer but agreed to it none the less when the company made the decisions. The difference being some were laid off. The company made the choice for them, the company chose who to lay off and who to cut pay and who works extra.So in this environment, we all are gamblers whether we like it or not. Is there another round, maybe. Will it be only the luck the spin, maybe. Pretty clearly things aren’t looking good for this year but at the least, I bought some time.
Apologies for the condescension. I took the “Huh?” as sarcasm, of course. If you stick w/ the analyses on this site you’ll be trading your thimble for a bucket in no time, at which point you’ll be as ignorant as the rest of us!
Let’s be realistic here. We already pretty much have to work until we are too old or sick to work anymore. It’s not likelythat many are going to retire at say 45 even before this shit storm hit.Wage slavery refers to a situation where a person is dependent for a livelihood on the wages earned.I don’t have a trust fund. I don’t rely on the government. I don’t have investments that pay a liveable return, hell they don’t pay any return now.Yes, I am a wage slave.
Ooh! Ooh! I have been served! What an enchanting reply! Indeed, it is a messy old soup. Was that 1973 that just floated by? And I hesitate to criticize a man who has been really and truly right about THE fundamental thing, but I feel like the small boy I once was banging over a dirt road in a hurricane who knows where the road likely ends and therefore still whines “Are we there yet?” and who also suspects Dad is punishing this lack of patience by hitting the ruts a little harder than necessary. Ah well.And I DO so love those sucker rallies and playing tricky with puts and calls, but in the long run it just makes one feel so, so, so …PARASITIC.
The basic problem is FDIC maintains a balance of ~ 1% of insured funds and given the magnitude of the insolvency they may not have enough to cover. My gut tells me the modest increase in reserves they’re making now won’t be enough to cover a full meltdown in which many of the major banks are found to be insolvent and taken over (a possible result of the “Stress Test”)So, that leaves a few options: 1) print more $$$ to cover all insured amounts; 2) institute a bankruptcy-like process where creditors get in line for a portion of the insured amount; 3) institute a maximum amount of coverage per individual that goes across all insured/insolvent banks.If scenario 1 it adds fuels to the inflation fire and the $$$ you do get will be worth less. If scenario 2 you won’t get back all of your $$$ but at least inflation won’t take as much of it immediately. If scenario 3 smaller creditors are made whole and larger creditors with funds spread across multiple banks just get a portion of what they’re owed, in a tax-the-rich approach.I may be off the mark, and would be interested in hearing what others think because it is a very important question.I found a pretty good overview on Wikipedia: http://en.wikipedia.org/wiki/Fdic
FDIC exposure to insured deposits and DIF reserve ratiosA March 2008 memorandum to the FDIC Board of Directors shows a 2007 year-end Deposit Insurance Fund balance of about $52.4 billion, which represented a reserve ratio of 1.22% of its exposure to insured deposits totaling about $4.29 trillion. The 2008 year-end insured deposits were projected to reach about $4.42 trillion with the reserve growing to $55.2 billion, a ratio of 1.25%.As of September 2008, the DIF had a balance of $45 billion. Bank failures typically represent a cost to the DIF because FDIC, as receiver of the failed institution, must liquidate assets that have declined substantially in value while at the same time making good on the institution’s deposit obligations. In July 2008, IndyMac Bank failed and was placed into receivership. The failure was initially projected by the FDIC to cost the DIF between $4 billion and $8 billion, but shortly thereafter the FDIC revised its estimate upward to $8.9 billion. Due to the failures of IndyMac and other banks, the DIF fell in the second quarter of 2008 to $45.2 billion.. The decline in the insurance fund’s balance caused the reserve ratio (fund’s balance divided by the insured deposits) to fall to 1.01 percent as at 30 June 2008, down from 1.19 percent in the prior quarter. Once the ratio falls below below 1.15 percent, FDIC is required to develop a restoration plan to replenish the fund, which is expected to involve requiring higher contributions from banks which deal in riskier activities.“Full Faith and Credit”In light of apparent systemic risks facing the banking system, the adequacy of FDIC’s financial backing has come into question. Beyond the funds in the Deposit Insurance Fund above and the FDIC’s power to charge insurance premia, FDIC insurance is additionally assured by the Federal government. According to the FDIC.gov website (as of January 2009), “FDIC deposit insurance is backed by the full faith and credit of the United States government”. This means that the resources of the United States government stand behind FDIC-insured depositors.” The statutory basis for this claim is less than clear. Congress, in 1987, passed a non-binding resolution to this effect , but there appear to be no laws strictly binding the government to make good on any insurance liabilities unmet by the FDIC.
Funny, last I noticed there is nowhere to go where there are jobs. Right now the only one in my household with a job is my daughter. We could sell the house, but why do that if we have to go rent somewhere and pay the same money to live and STILL NOT HAVE A JOB. Until you are in this situation, you have no business telling the rest of us what we should or should not be doing.
What we are facing in America in a veery near future?Because of financial house of cards made by wall street banks and destructively massive bailouts by the government and Democratic congress, we will progress to:Financial collapse – Banking collapse – Economic collapse – Currency collapse – then finally political collpase.I hope I am wrong, but I am scared.
First I would’nt even start looking for a job. I don’t like working, jobs are scarce, so I’ll let people who like working a chance.Instead I’ll first try a little bit of free-lance drug trafficking, it seems there’s a huge markup between wholesale prices in Brazil and selling prices to retailers in Europe. risky?sure but as any bonehead investment adviser will tell you, no risk no gain (you take the risk he gets the gain). And risk is fun too (hanggliding, snowboarding, motorbike, outsmarting the police, etc.
Remember some guy published a few years ago a book titled “The end of history”? Seems he got it wrong. History’s back, at least it can’t be less boring than tv series or cnbc
1901761 beers on the wall.
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