Market meltdown: Global problem, global cure

What happened to all the profit that was the benchmark for the top floors’ salary? If it was only on paper, it should be realitively simple to put together a criminal, or at least a civil case against these parasites. The problem here is not just greed but corporate greed. They created a paper house of profit which did not require an intense amount of huffing and puffing to blow down. If the criminal cases were made, it might instill market confidence to see these top floor executives who cooked up the profits, led out of their offices in shackles.

What I am worried about is, what if China and the other countries we owe debt want paid off for their own economic safety?

… and then we see Fuld, former CEO of Lehmans, being
‘grilled’ by congress on our TV. What a great piece of drama!!! No police; no chains; . . . just a sad, sad face. He should get an Oscar for his acting. Did he offer to return his ill gotten gains? Oh, no! Did he offer to serve at soup kitchens for the rest of his life? What about all the people who have lost their life savings through his, and his mates, fraudlent behaviour?
What a shameful business!!
Once again it is all about mates sticking with mates and they all get to keep the millions they have ripped from the ordinary bloke in the street.
SHAME AMERICA

The economy can only get worse as long as we continue to print more funny money. This drives inflation up and the value of the dollar down. All remaining world currencies are based on the USD. has anybody seen Dubya lately? Did he jump ship or something? According to my calculations, there will be no more DOW if we Americans are planning on not doing anything drastic until the newbie gets into office. Somebody find Dubya and tell him that he needs to go and EARN his money; we ain’t bailing his ass out too!

Global stock markets are nearing a bottom; back in 2000 – 2002, the broader US indices fell about 50% top to bottom over a period of 30 months. Currently, US indices are approaching this fall in only 12 months (fast), from not very highly valued levels in 2007. Overseas markets have fallen much more. All stock markets can fall further, but the finance company stocks can’t fall below zero; they are already close. We’re almost at the bottom.

The economy will dip a little more. Consumers will spend everything that they make to survive, because they have to. Businesses will cut back, and some will close, but most will survive.

No more bailouts for Wall Street; if $700 billion can’t do it, we need to reboot the financial system and start over. We need to close the failing Wall Street finance companies; they are uninsured and unregulated. Set up a new finance system anchored by our 8000+ commercial banks that ARE insured and regulated and move on. Housing will correct back to normal prices by itself, and the rest of the economy will reach its own level of equilibrium. And, life will go on.

“The inmates have been running the asylum and now that’s ending.”

Not bloody likely.

A lot of those inmates escaped to the Treasury and the FED. Some of them are now being hired by the Treasury to administer the “Rescue Plan”.

RIGHT! China, a developing (nominally Communist) nation, is going to bail out the Capitalist West. Keep dreaming.

I got tomorrow’s Headline: “They — China and the OPEC nations — don’t need us, don’t trust investing in us, and don’t really like us.”

They did not like it when we lectured them on how to run the financial systems in the East (remember “Crony Capitalism”) and they have long memories.

Besides, can we now hold ourselves up as any kind of example for having some modicum of expertise or common sense?

The only people who got “bailed out” were like those guys who bailed when the bailing was good — and like those in government who will soon bail.

Listen, I know the government folks care. But they don’t know. They are experimenting. They are guessing like the rest of us. Like Paul. Like me.

No, the Rescue cannot work, IMHO.

It might partly alleviate some liquidity issues in “localized” situations, temporarily.

Some additional financing, based on new Debt, will get done.

Some payrolls will be paid; some mortgage payments will be made; some jobs will temporarily not be lost.

I keep repeating “Confidence is not the issue.”

Sure, as the system implodes, we are going to lose confidence.

But that is a symptom. If we could get the system to “behave” the way we prefer, our confidence would come back the next day.

I would not entirely focus on the stock market — that is open to manipulation (by the PPT and others). It is still the economy and jobs and what the quarterly reports say. See what happens during the Thanksgiving and Christmas retail seasons.

Coordinated actions? Might help a little bit for a little while.

But this is going to take time. This is a Sea Change and changing seas always takes time.

This is a mass movement from a Culture of Debt (and Death) to a Culture of Saving (and Redemption).

I am not being religious.

What will happen is a fast move to HANGING on to what you have (conserving).

This move from easy-go-lucky will cost jobs, and create more losses, both in mental and physical well-being terms.

But as Ron Paul says, it is necessary. And we should have hope.

It will lead to a more stable system, and one that can sustain itself.

But it’s the Getting from Here to There that will HURT.

This is because the Total Debt Load is just too high.

Sure, we may think we know more than the people during the Great Depression at the FED who tightened money, and like the federal government which RAISED taxes.

But remember, we may a LOT further along the UNSUSTAINABILITY curve than they were in 1929. Even though we have more tools and a lot of knowledge, we may actually be in a deeper hole.

Why? Because the same tools and “sophistication” that we rely on today to help us, ALSO gave us the ability to get in much deeper over our heads than they had the ability to get in over their heads back in 1929.

It does not matter where this problem first showed up. 

It would have manifested somewhere else if it had not shown up in the Housing Sector.

It just happened that this was the sector most “jump-started” by the FED’s own Rodney Dangerfield’s policy of Easy Money from 2001 to 2006. 

Of course that guy, who now gets no respect, was Alan Greenspan.  

By now, “Credit” is hard to get everywhere. Because IT CAN NO LONGER “pay its own way”.

By observation, in the past, many people have noted that in all paper-money systems, there comes a point, at which Everyone Starts to REPUDIATE Debt seemingly EVERYWHERE and seemingly at the SAME TIME.

There is good reason for this. 

It is that up until SOME point, if people take on new debt, it allows them to “marginally, create more order in their lives” — they have to later pay the debt BACK, but having a roof over their heads, having food in their tummy, having clothing on their backs – all of this is good and “productive” because these things allow you to go to work, make more money, contribute to society, pay back your debts, and help others, have children, educate them, and keep the system “going”.

BUT NOW the situation has CHANGED — there is SO MUCH debt that this process has broken down — it is no longer true that if you give the next person — via debt — a new house, a new car, a new wardrobe, and a new fridge with food in it, that this WILL HELP to create more “order” in the overall system. 

That is to say, every additional dollar of Debt now seems to cause MORE DISORDER, incrementally, in the overall system, THAN it is ABLE TO CREATE AS “ORDER”.

This is an overall system statement about Total Entropy or “disorder” in the system — at some point the “order” created is actually offset by a greater amount of DISORDER.

There can still be occasional, localized opportunities for Debt to be employed productively.

But as a general, overall system observation, such opportunities are FEW and FAR IN BETWEEN.

This means that most often, the person taking on that next dollar of debt cannot pay it back.

The system seems to recognize that it makes NO SENSE to extend more debt — in fact, the system seems to have a mind of its own on this.

The system now is seemingly in a STATE where it seems NOT to be AMENABLE to further “goosing” by the FED or by the Treasury. 

That is why this effort by the U.S. Federal Government probably will most likely not help — it is based on MORE DEBT.

Because we seem to be at that magic tipping point, where additional Debt may actually prolong the agony — we are giving electroshocks to a patient that is already DOWN. 

Now as always, I side with Peter Schiff. The recovery will be thrust upon us when other nations stop buying our treasuries and stop holding us dollar reserves. At that point, it will be up to us to “fix” the debt that we’ve incurred.

Yes, it will get worse. Simple solution — vote them all out; every single one of them at every level; when possible neither R or D; go for gridlock

WOW the Wall Street bankers brought a few stocks at the end of the day to make it seem like stocks went up.

I would advise anyone with stocks to sell tonight or tomorrow.

Rumors of China putting money into the sotck market are funny.

no doom and gloom here.

i hope it bombs. in a consumer culture in high capitalism, it’s the only way people learn.

at the present stage depression is unavoidable. stocks will tank to 30% of the peak in dow. banks are doomed and whoever is left will need to be nationalized. what i don’t know yet is what form would this take: are we talking about a 1930s style depression with broad based deflation or the insane govt authorities will bankrupt the dollar in the process and hyper-inflate everything. in other words are we heading toward the hoover/roosevelt years or we’ll become the next waimar republic. this is totally unpredictable. the odds favor hyperinflation: the majority of americans have no savings outside of the stock market but have mortgaged real estate. In addition w/o confidence the US govt may already be bankrupt with the only option of repaying its 10+t of debt involving running the printing presses until the dollar looks like a Waimar mark. Long term however the deflation scenario is better for us. Remember what happened with the Waimar republic – it killed its currency, then reborrowed under a new currency and left at the mercy of its lenders 10 years down the road plunged in a vicious depression that brought to power the Nazi regime. Yes the deflation scenario is what is better for all of us (that way we could at least spare ourselves the hyper-inflationary leg) and we’ll have some control over our fate in a depression. however (a) i am not sure whether at this stage we haven’t hyper-inflated already (understand Uncle Sam is bankrupt) and (b) even if there is still a chance for sanity I don’t know whether US govt officials have the political will to demonstrate such (do you know whether Paulson is in stock or in cash. in other words did he have to sell his goldman stake when he entered the government. i am only asking because if in cash there may be some hope….).

It’s going to take a long time to get out of this global credit crisis. This is the ultimate result of years of a negative US savings rate, some really bad regulatory policies, bad tax policies, and some really bad national government budgetary priorities.

This is going to get a lot worse before it gets better. God forbid there’s any significant terrorist attack right now or other significant international incident.

Osama has to be laughing in his cave, if he’s still alive.

I can’t believe we gave that man exactly what he wanted to see. I shake my head in frustration every time I read the business news. The people who led this debacle are traitors of the highest order.

This “negativity bubble” will just have to play itself out, thanks to derivatives, credit swaps, short selling, and all the other exotic financial instruments that reward short term thinking.

Regulators needs to take a hard look at market liquidity. Maybe reducing the casino mentality that pervades financing instruments these days will cause investors to look at the long term instead of hopping on the next bubble.

Those Wall Street financial geniuses should just come to Vegas, not invent exotic financial instruments. It’s a lot easier, less destructive, and you’ll get 99.5% of your money back over the long term. You even get free drinks.

I am amused (har-di har har) at the way every economic problem that is reported now is as a result of the “credit freeze”.

It isn’t that borrowers are so far in debt they can’t service what they have already.

It isn’t that 70% of our economy was retail sales of non-necessary stuff made by others.

It isn’t that real wages have dropped for a decade.

It isn’t that we over built houses while we were selling them for unsustainable prices.

It isn’t that our government is borrowing every spare $ out there to then lend to banks at 2% so the banks can lend it back at 3.43%

It isn’t that everyone has new everything, (Cars, computers, clothes, appliances.) as a result of easy lending and sales hype.

The entire world economy has been running for a couple of decades on the western world borrowing more and more money to buy more and more junk to throw away and buy more. THIS IS THE REASON for the current collapse. Because “someday” really does arrive and it is here. The lack of “confidence” in the system is a reflection of the fact that the system is a sham.

Combined with the fact that from the Great Depression on, we all know that when they tell us not to “run” the banks, that they wont protect our assets. They will allow the bankers to run with the cash and leave us with nothing but still owing our debts.

The lack of trust is earned. So earned. So is the lack of confidence.

The fools apparently forgot that to keep a confidence game going you can’t break the confidence. They did. We finally noticed.

What sort of confidence did Congress think it might inspire the markets with when it passed a bailout bill with 150B of totally unrelated spending to said “bailout”? Since when has bad leadership and decision making ever been inspirational.

Paul as you have been saying things will only get better but as your respondents have been telling you the other shoe is about to drop and it has started to drop on us all. All I can say is I wish the majority of the American people would wake up one of these days and do some reading and research and not believe the 30 second sound bits we are all feed daily. This crisis is a crisis of confidence in our financial system and our leaders but our leaders in Washington have failed us. Do some reading but this mess has been coming for years and both parties in Washington have had their hands out to lobbyist who gave them money to look the other way while the times were good. Now that the mess has come home to roost they say it’s all Wall Street fault to deflect the actual source of this mess. Look at how the insane $700B package, which we had to pass, couldn’t pass until they added another 150B of goodies to it. So have we learn yet our basic economics’ 101 lessen that says take raw materials apply labor and create something new that others want and generates wealth which worked for centuries or will we still believe that taking $1 and turning it into $30, $40 and even $50 using leverage, speculation and all sorts of twisted schemes is going to save us. Well until we get back to the good old tried and true basics I think we will continue our down hill side and o’yea we outsourced all our Eco 101 work to China the next great superpower. Come on America rev up your spending and get out there and be patriotic and use those credit cards to get us deeper into debt. Our government has been doing it for years and look at were its gotten us.

The Bull Market is being fueled by “psychology and sentiment”. Absolutely, but the reason the market is dropping so much is that “psychology and sentiment” led the market into unsustainable levels. If the market is efficient at all stocks will trade at a level that reflects the underlying value of the company, including some reasonable expectation of future profits. For the most part stock prices have been too high for most of the last five years because of “psychology and sentiment”. I expect tha market to lose at least another ten percent before we see it turn around.

I call for early election and Bush admin resign after the election immediately!!

I hope this will help: China says it will help us. It’s probaly going to buy more US bond…

“Our economic fundamentals haven’t changed, and the economy is moving in the direction we expected,” Wen was quoted as saying by the state-controlled Xinhua news agency.

“The strength of our financial institutions has generally increased, and their ability to make money and withstand risk has risen. Market liquidity is ample and the financial system is stable and safe,” he said.

“This will help us withstand any negative external impact. We’re full of confidence in the development of the economy, and in the stability of the financial system.”

please if anyone has any money in the stock market please take it out now before Paulson steals it.

Also if you have any money in a major national bank take it out now Paulson is raiding those bank account now put the money in local banks. Paulson will be stopped soon before he can get to all the local banks and steal your money.

It just went from worse to total destruction. Paulson has just named his partner in crime Neel Kashkari from Goldman Sachs to over see the stealing of tax payer’s money from the Treasuary. WOW talk about a conflict of interest Neel Kashkari and Paulson set up the worst real estate ponzi scheme at Goldman Sachs and Paulson profitted 1.2 billion form it.

Paulson also warned Goldman Sachs of the coming danger and Goldman Sachs dumped all the toxic loans unto your and mine pension plans. Thanks Paulson.

We now have the fox guarding the hen house. I expect by next week Paulson and Neel Kashkari will have drained all the money out of the US Treasuary and into their personal bank accounts.

LOL this is so typical of the business world we are getting confirmed twice.

We deregulated ourselves back into the same crap that caused the Great Depression. Obviously, Wall Street pays no attention to history.

WHERE HAS ALL THE MONEY GONE THAT THE FED HAS LOANED THESE BANKS THROUGH IS “SPECIAL” LOAN PROGRAMS. THE BANKS ARE HOARDING THIS MONEY. THE BANKS ARE SUPPOSED TO LOAN THIS MONEY IN ORDER TO “GREASE” THE ECONOMY INTO JUMP STARTING AGAIN. THIS BAILOUT IS A FARCE TO LINE THE POCKETS OF THE BANKERS THAT HAVE CAUSED THIS CREDIT CRUNCH TO BEGIN WITH. LETS NOT FORGET THE OIL COMPANIES RAKING IN THEIR BILLIONS OF DOLLARS OF PROFITS. THAT HELP THIS TOO WHEN PEOPLE HAD TO MAKE A CHOICE OF BUYING GAS TO GET TO WORK OR BUY GROCERIES TO LIVE ON OR PAY THEIR MORTGAGE ON TIME.

THERE NEEDS TO BE AN UPRISING OF THE AMERICAN PEOPLE TO STOP THIS GOVERMENT THE WAY IT IS BEING RUN TODAY. THIS IS NO LONGER A DEMOCRATIC SOCIETY BUT A SOCIALIST SOCIETY.

WELCOME TO THE UNITED SOCIALISTIC STATES OF AMERICA

we are in for the storm of the century. the crisis has more to do with consumer confidence, the availability of credit and interplay among the big boys. yet, we see consumers holding back, credit scores tanking, fico score increases for any type of loan and the hoarding of cash. with the stock market erasing 100’s of billions of dollars worth of equity week to week and 401k plunging to new lows daily, we see genuine panic starting to set in.

the next round will bring all the global biggies down as has started over the weekend. cash is unavailable for business inventories and now california and massachusetts (line up guys) have begun to seek fedaral help with their finances. car sales are pitiful, housing is locked down and our major financial centers are dropping like flies. WAIT…mccain to the rescue…….thanks ever so much for pushing through the bailout.

oh well, lets try the old reliable………God….HELP US!

“Not worth a Continental” ring any bells?

What is Thompson smoking? The developing markets to bail out the developed markets.

LOL it is in the best interest of the developing markets to totally trash the developed markets. They do not need us they are able to build things for themselves unlike Europe and America who need cheap labor from developing countries to make things.

LOL right China and India are going to help America and Europe by buying all their bad debt?? LOL

We are so going down hard. This is going to make the Great Depression look like the Great Economic Expansion.

There will be one super on earth next year and it will not be America.

The markets/economy will not improve until G8 central banks work together to to craft a new financial system. A path to the end of US sovereignty. Of course we will have sharp rallies during this long-term bear market.

Globalization/a new global system is the theme to watch people. What does that mean? Your standard of living will go down…

The only thing that will stop this is a politically active middle class. Remember how they cracked down at Seattle/Davos in 2000? Yeah, it always was about jobs, wages, and globalization. Now, the bursting bubble is the invitation to complete the job.

…At least they have a sense of humor; Paulson put an intern in charge of the “bailout” facility.

It will continue to get worst. Every 6 weeks, I keep hearing the “worst” is behind us, yet more problems keep surfacing. Even to this moment, no one really wants to take responsibility of how we got in this mess, so how do you expect “anyone” to get us out of the mess. It will be a “forced” process by all to get us out of this mess and boy is it going to be expensive!! Stay tuned…..

The reports constantly indicate that there is a lot of money on the sidelines, being hoarded by banks who don’t trust anyone, including each other, to lend it. Therefore, the credit freeze. Banking institutions are the cause of a lot of this and are quickly reviving their well deserved image of being greedy charlatons, insensitive to the impact of their ruinous behavior.

What happened to the magical bailout solution? Why are the markets down over 900 points since the Senate voted on the pork-laden monstrosity? This market will continue it’s downward spiral until people quit being delusional about money and credit.

To answer you question more directly, maybe a DOW between 7500 and 8500. But we still have a lot of piper to pay, so who knows.

I remember a few years ago when people around me said “real estate will keep going up because god only made so much of it.” I just smiled and nodded and thought to myself what a really stupid statement. I knew at that point that we were heading down this road. I just can’t believe how long it took to get here. I live in one of the most populated areas in the country and guess what I see driving to work, trees and more trees. Sometimes I question the intelligence of our country.

LOL

The Dow Jones Average is headed towards 2000 if it is lucky. The ponzi scheme of Wall Street is over and it’s time to crash worse that 1929.

The party is over. If anyone has not taken their money out of the stock market now is the time to do it.

The Wall Street bail out is merely a Wall Street banker bail out so the bankers who also got caught up in this mess will get their money back.

Way to go Wall Street bankers withhold loaning people money until the Feds give you 700 billion (after all Paulson is hiring the same people who got us into this mess to clean it up LOL). Now you are taking the tax payer money and running.

LOL take your money out of stocks and major banks and put it into local banks. Please do it before all your money is gone.

Money is just an abstract means by which we allocate goods and services. It is also a store of value. I think what we are seeing is an increase in realism as to what the world owes us.

Nobody would put a minimal amount of food in a refrigerator and expect to open it to find it completely filled with food a few days later. Yet we tried this with tech stocks, and now housing. Now we are behind the 8 ball and there is no easy fix. Even my 7 year old gets this.