economic crisis is now effecting the globe. markets just opened and Europe, NIKKEI, UAB, Japan markets are all failing. no indication that the DOW Jones has bottomed yet. will the DOW reach 4000? It seems likely at this point.


the future is uncertain ... who's @ fault? the blame is way bigger than a citizen level. its the whole "Consumer" culture . . . this is very bad.

10/8/2008 3:51:09 AM

people have lost touch with the concepts of saving, budgeting , and sacrificing

10/8/2008 4:01:23 AM

I'd say it's like

65% Wall Street
25% People living outside their means
10% Government de-regulation

Fixing any one of those would have prevented this shit.

10/8/2008 5:06:14 AM

Quote :

"people have lost touch with the concepts of saving, budgeting , and sacrificing"

Well, at least the people that did sacrifice, save and budget are spared from all this... oh yeah, they got screwed by all the people that didn't.

10/8/2008 7:09:18 AM

Quote :

"will the DOW reach 4000?"

I hope so! Huge buying opportunity!

10/8/2008 7:20:01 AM

Some may not agree but . . .

people should realize this isnt the end of the world (if it continues), in fact after its over we may, as a planet, end up happier with a more sustainable and fair system.

10/8/2008 7:38:20 AM

Quote :

"65% Wall Street 25% People living outside their means 10% Government de-regulation"

You forgot shady CEOs & hedge fun managers trying to fluff their balance sheets, manipulate the market, strong muscle the common man.

10/8/2008 8:50:21 AM

I was under the impression that that could be grouped in with Wall Street.

10/8/2008 9:14:04 AM

^^I thought we were talking about pre-crisis.

10/8/2008 9:23:40 AM

Quote :

"Well, at least the people that did sacrifice, save and budget are spared from all this... oh yeah, they got screwed by all the people that didn't."

Color me cynical, but the sad part is that the people who are ruining it for the rest of us won't change their ways. Crooked CEOs will somehow find a way to walk away from this unpunished (legally, anyway. Can't guarantee that the commoners won't be holding lynch mobs in the streets), and will proceed to reward themselves for all of the "hardship" that they've had to endure. The politicians who are in bed with them will never lift a finger. And the portion of consumers who took out loans they knew they could never pay back and maxed out credit cards they had no plans of paying off will continue to indulge in their selfish, short-sighted little lives.

And the reason the world will keep on spinning like this is because the first two groups know that Joe Q. Taxpayer will be there to bail them out, even if they have to hold Joe down and forcibly empty his pockets.

10/8/2008 10:08:30 AM

here is my expert opinion:

we're fucked.

10/8/2008 10:17:09 AM

Here is my expert opinion: recessions happen from time to time. It is not the end of the world when they do.

10/8/2008 10:22:12 AM

Quote :

"Color me cynical, but the sad part is that the people who are ruining it for the rest of us won't change their ways."

I dont think there is anything cynical about that, its the truth, and its already happening.

http://www.cnn.com/2008/POLITICS/10/08/politicians.meltdown.aig.ap/index.html

Quote :

"Lawmakers steamed over ritzy AIG retreat after bailout"

The hardest part for me is that the CEOs and the lawmakers (despite what they said) knew they were going to walk away with whatever they wanted with or without the bailout

10/8/2008 10:37:47 AM

Quote :

"even if they have to hold Joe down and forcibly empty his pockets."

its true. i can't believe that its in the best interest of the powers that be for us to be a viewed as nothing more than consuming cattle. Bush, "Go out and shop" after 9/11. its UNREAL.

and to hold Joe down and fcking rob him to pay for this is in the best interest of "Consumerism".


we've entered a terrifying age. this is dangerous.

10/8/2008 10:53:00 AM

Id have to agree, consumerism does play a huge role in getting us where we are now

so the solution is simple, stop buying things you dont need and especially things you cant afford (zomg thats unamerican!!!)

Its true that what you spend money on this month will have more say in the system than your vote in November.

anyone that thinks change can come from the top is delusional (thats not a shot at Obama but more our government as a whole)

10/8/2008 11:01:19 AM

Reactionaries.

"Will the Dow hit 4000"? Are you retarded?

It's a global economy. Is this news to you? Have you never heard the term, "When America coughs, the rest of the world catches the flu"?

Europe is likely to get hit the hardest, followed by America and then Asia. But the sky is not falling. We'll see a nasty recession lasting through most of 2009 and maybe even a true contraction (depression), but markets will bounce back.

[Edited on October 8, 2008 at 11:28 AM. Reason : 2]

10/8/2008 11:27:35 AM

Along the lines of high-level corporate responsibility, general honesty, etc, comes an article from the NYT about a retired economist delivering bagels in the DC area. Pretty fascinating:

http://tinyurl.com/2ng8lr

10/8/2008 11:42:37 AM

That's a pretty amusing article. Funny how he says that he doesn't even bother with lawyers and telecoms anymore.

10/9/2008 12:37:29 AM

Yeah that was a good read.

10/9/2008 8:39:05 AM

guarantee this thread will be 100 pages. this sh!t is serious business.

10/9/2008 10:27:04 AM

the markets ALWAYS bounce back. when they do, everybody who decided to go crazy and sell is gonna wish they bought. the key to beating the markets... since I am an expert... is basically do the opposite of what the masses [stupid people] do. id start buying now if you haven't already and in 5 years, you'll be set. this isn't one of those get rich quick schemes, but hey, guess what, it took a little while, but i did!!!!!

10/9/2008 6:37:26 PM

Now would be a terrible time to buy into the market. You don't try to catch a falling knife. Let things stabilize, then start putting money into investments again. Sure, you may get lucky and catch it on the curve, but you may also get caught on the down and hammered hard. Obviously there are some good opportunities out there, even right now, but as a general strategy I would keep my money safe right now and wait for the volatility to pass.

10/9/2008 7:06:15 PM

If the knife is made of gold I should be able to afford a few stitches.

10/9/2008 10:35:28 PM

Now is definitely the time to buy. Just go back and look at the people who bought companies during the first crash.

10/9/2008 10:42:42 PM

gambling is illegal at bushwood sir

10/9/2008 11:38:41 PM

so like when is this economic failure thing gonna affect me?

10/9/2008 11:49:21 PM

last time i saw a mouth like that, it had a hook in it

10/9/2008 11:53:19 PM

Quote :

"will the DOW reach 4000? It seems likely at this point."

The Dow has a real book value, you know. All of the companies on it have intrinsic worth and that's due to the fact that they own real assets and real business interests. The last estimate I heard for the Dow's actual book value was around 6600 and I seriously doubt the index will fall much below that. When stocks start trading well below the book value of the companies, then you know the pessimism has reached insane levels of irrationality.

Not that it couldn't happen. I think at this point we just don't know to what extent the markets are being driven by purely irrational fear. It would be strange though, at least for it to last.

Quote :

"Here is my expert opinion: recessions happen from time to time. It is not the end of the world when they do."

This is not a normal recession. This one's a game changer.

10/10/2008 2:20:28 AM

Everybody loves capitalism until capitalism happens to them.

10/10/2008 2:50:04 AM

Well, should we all jump off tall buildings or inhale exhaust fumes to end the suffering?

10/10/2008 2:51:19 AM

Sure, you first

10/10/2008 2:55:09 AM

*Sigh* And socialism is your solution?

10/10/2008 3:05:41 AM

don't know what the solution is, but when people stop getting paychecks its going to be UNREAL. i don't see a plan for this turning around.

just throwing ca$h at it by the TRILLIONS and further decreasing interest rates is not the fix. we should have let those banks TANK and increased the interest rates to make cash harder to get, thus increasing its value.

we're depreciating the sh!t out of the currency now.

10/10/2008 7:46:31 AM

Quote :

"we should have let those banks TANK and increased the interest rates to make cash harder to get, thus increasing its value."

We tried that from 1929-1933. It led to the Great Depression.

Quote :

"we're depreciating the sh!t out of the currency now."

Inflation is projected to drop considerably over the next few months.

The dollar has gained quite a bit against the Euro over the last month.

You were saying?

10/10/2008 10:24:51 AM

Quote :

"This is not a normal recession. This one's a game changer."

If by game changer you mean the government has made it one, then you are right. But this isn't even the worst market malfunction as 1987 is still worse (22% drop in one day). That one was also driven by bank collapses.

As such, the current events are not unprecedented, and we got through that one without wrecking the country. I don't know why everyone is assuming this time is so much worse. Open the floodgates on immigration and wait. Home prices will stabilize, writedowns will occur, and everyone can go home.

That said, a few rules do need to change. Buyers need to be held liable if the foreclosed house sells at a loss. And, Fannie and Freddie need to be disbanded (not now, but two years from now).

10/10/2008 10:27:19 AM

Quote :

"Open the floodgates on immigration and wait."

That is actually a great idea for stabilizing home prices. And since our current immigration policies and proposals simply reward people who cut in line, a temporary or phased opening of the borders would be a great way to fix both problems in the short term.

10/10/2008 10:33:21 AM

I think this much worse than 87.

87 was one bad day and then a bounce back. We've lost about 17% this week and a secular trend downward.

Also, the notion that Fannie and Freddie are in some way responsible for this crisis needs to be cut off. I understand people have their biases for or against government but these issues are serious and going to ridiculous roads is not helpful.

The only effect that Fannie and Freddie had on this crisis was to mitigate it. Agency debt is the only thing that is still selling. Agency backed mortgages are the only ones that are still flowing to consumers. Agency debt is the only asset that is not falling. Agency mortgages are the only ones that are paying off at anywhere near model-forecasted rates.

In what way would we be better off without Agency backed securities?

While I try to make a point that this crisis is not just subprime it is important to remember that subpime and Alt-A were a big part of it. Subprime and Alt-A are by definition loans that are not backed by Fannie or Freddie.

10/10/2008 10:38:40 AM

Quote :

"87 was one bad day and then a bounce back."

I wasn't there, but according to Greenspan's book credit markets were frozen solid for almost a month after that one day. Interbank lending was non-existant and it was all the Federal Reserve could do to keep banks lending to customers, much less each other.

10/10/2008 10:43:07 AM

^ Well, the 1987 crash was certainly more than one bad day of trading. Stocks took their biggest dive on a single day, yes, but they didn't fully recover until 1989. I guess that's relatively quick considering the size of the drop (especially compared to the length of time it took to recover from the 1929 crash), but it certainly isn't over night.

10/10/2008 10:56:11 AM

THIS IS WORSE THAN ANY OTHER TIME !!!1 this sh!t is alarming . . . the only way to patch this up that I can see is to globalize the economy and open up the borders between Canada and Mexico.

10/10/2008 11:13:37 AM

question what do you think globalizing the economy will solve?

10/10/2008 11:19:57 AM

10/10/2008 11:32:09 AM

The canadian-mexican border is a tough one to guard in the first place, since no one knew it existed.

10/10/2008 12:03:48 PM

Economy Pwnt. Stay home.

Quote :

"Italian Prime Minister Berlusconi said political leaders discussing idea of closing world's financial markets while they 'rewrite the rules of international finance'... MORE"

http://drudgereport.com/

Game changer indeed.

[Edited on October 10, 2008 at 12:29 PM. Reason : ...]

10/10/2008 12:28:45 PM

Quote :

"I wasn't there, but according to Greenspan's book credit markets were frozen solid for almost a month after that one day. Interbank lending was non-existant and it was all the Federal Reserve could do to keep banks lending to customers, much less each other"

Quote :

" Well, the 1987 crash was certainly more than one bad day of trading. Stocks took their biggest dive on a single day, yes, but they didn't fully recover until 1989. I guess that's relatively quick considering the size of the drop (especially compared to the length of time it took to recover from the 1929 crash), but it certainly isn't over night."

I don't think there is any doubt that this is the worst credit freeze since the 30s. TED, LIBOR-OIS, and excess bank reserves are all at record levels. Letters of credit are not being honored. We are two steps away from the point were demand deposit will fail to clear.

However, when we look at equities, the difference is that in 1987 we had a big capitulation day which people still argue about why it happened and then the bleeding stopped.

I'm not arguing that somehow equities came back to their orginal level immediately. In that case it would have been a statisitcal aberation and nothing more. But the bleeding stopped. I think I do remember and I see it on your graph that the Friday before was pretty bad as well, but after Monday the trend pretty much resumed.

We are on 8th straigh day of losses and there is no particular reason to think it will stop. I mean one down day does not predicit another but we do not see the kind of action that would suggest that computer trading is out of control or that there was a big margin call that had to be answered, etc. This is just straight trading. Heck, until yesterday we didnt even have shorts in the financials.

10/10/2008 12:38:58 PM

how did this apparently slip by the radar without a blip?
http://www.politico.com/news/stories/1008/14346.html

The guy that Paulson appointed (without confirmation) to oversee the distribution of the $700B is a 35 year old former Goldman Sachs banker!

W.T.F.!! It's already bad enough, and hasn't gotten enough press, that Henry Paulson went straight from being the CEO of Goldman Sachs to being the Treasury Secretary, who then took $700B to funnel back into his old company and their competitors. But now he's hired another GS employee to actually distribute the funds?! And a 35 year old one at that, who graduated business school in 2002?

my. god. ..... the people running this country are more crooked than I had ever thought.....

10/10/2008 11:25:28 PM

Quote :

"He graduated from the Wharton School in 2002 and went to work for Goldman Sachs, where he advised companies on global mergers and acquisitions as head of the bank’s IT security investment banking practice in San Francisco."

Look, yeah it sucks, but it isn't like he was some big wig at Goldman Sachs. GS is one of, if not the, biggest investment firms in the world. Not surprisingly, a lot of people in the financial industry have worked for them, or have ties to them in some way. He worked mergers and acquisitions at GS, which had pretty much nothing to do with the current economic crisis.

I'm not a fan of the bailout, but I don't see this being an issue.

10/10/2008 11:34:07 PM

my point is, it's already bad enough that the Treasury Secretary came straight from being CEO at Goldman Sachs, where he apparently nearly ran the place into the ground (with the results of his actions showing up 1.5-2 years after he left, i.e. now) then turned around and insisted that he needed a virtual blank check to give back to, in part, a company he used to run.

But now, he has to pick an #2 guy to actually oversee the distribution, and he picks a guy from his old firm? I know GS is huge and has many of the best bankers in the world, but does that just not reek of cronyism of the worst kind? Do you not think he could have shown just a hint of good faith and found someone from a company that he didn't run 2 years ago?

And furthermore, he picked a 35 year old, basically fresh out of business school guy to do it?
Hey, guess what - I got my MBA in 2002 also, the same year Kashkari did. Maybe he should have picked me!

[Edited on October 10, 2008 at 11:47 PM. Reason : .]

10/10/2008 11:47:21 PM

http://djiaunder9000.ytmnd.com/

This is needed here

10/11/2008 5:31:10 PM

Quote :

"The last estimate I heard for the Dow's actual book value was around 6600 and I seriously doubt the index will fall much below that. When stocks start trading well below the book value of the companies, then you know the pessimism has reached insane levels of irrationality."

A significant portion of the Japanese market was trading below book at the end of last week. There is certainly fear there but there is also the issue that if profits are about turn negative the outlook for book value is negative.

Book value will only be the minimum if one can and wil liquidate the company, but that is not typically possible.

That having been said I don't see stocks going much below 7500. I mean even at current prices the market looks juicy. The problem is going long in this environment means sacrficing liquidity.

10/11/2008 5:43:01 PM