Market meltdown...?!

Recession or Depression

"Nasty little recession", I would only hope so, but as I wrote back in posting #75

Today I wrote some friends and disbelivers;

Recession or Depression
Can these words even be used, particular the ‘D’ word??​

I've received a few emails lately that speak about the scary prospect that the Democrats coming into power will mean a rise in taxes….heaven forbid the Republicans warn!!

Maybe somebody here in Washington DC took a gulp of reality, rather than continuing to drink this same old kool-aide that Bush & Co have been passing around for the past 7 years.

How long can we continue this reckless spending without raising some taxes to help pay for it?

If America really wants to continue this foolishness in Iraq, we are going to have to step up to the big table and pay for it.



Lets see, just in the last 3-4 weeks alone, Bush & co have committed;

1) a $150 Billion dollar economic stimulus package, *

2) a $170-200 Billion dollar mortgage bank bailout, **

3) an undisclosed bailout for Bear-Stearns (rumored at $80 Billion plus)***

That’s $410 billion plus dollars. Where is this money coming from…out of thin air?? No, likely out of our future, and our kid’s future. And added to these sums are the soon to be voted on the latest Iraq ‘supplemental’ of $105 Billion, and the looming Medicare crises, etc,etc.


Now add in the latest news that Bear-Stearns is suddenly facing a ‘liquidity crises’ that only last week we were formally told was no problem This is one of the largest global investment banks and securities trading and brokerage firms in the world (seventh largest securities firms in total capital). It had to come to the Fed government for an immediate loan rumored to be in excess of $80 Billion to avoid bankruptcy. THIS IS BEGINNING TO SOUND LIKE ENTRY INTO A DEPRESSION rather than just recession. And now the Chinese bank that was going to invest a few Billion into Bear Stearns is reconsidering!!

I’m sure Bush & friends are going to find lots of reasons for our economic problems, and certainly none of those are a result of their policies. Lets see, if he can delay this long enough he may be able to escape down to Texas and sit there and blame the whole mess on the Democrats. But let me remind you who has been in control of ALL of the branches of government for the past 7 years….the Republican party, that grand old party.

And how about this question of oil prices. I’m sure that will be to blame as well. Lets see, why are oil prices so high?? Certainly there is the element of global competition for energy supplies, but I think if you really did your homework you would find that the primary reason they are so high right now is THE UNCERTAINITY of supply. Our foolish invasion of Iraq is why oil prices are where they are now. And who lied to lead us into this mess. Bush, and Cheney, and company.
__________________________________________________

***A Bear Stears Market

By James Grant
Sunday, March 16, 2008; B07

…excerpt….What makes these proceedings so frightening is that not only is credit in crisis but so, too, is money. There are well-founded doubts about the promises to pay money and about the nature and integrity of the dollar itself. So it was on Friday that the Frederal Reserve committed to lend undisclosed billions to bail out Bear Stearns, a top Wall Street purveyor of mortgage-backed securities and a leading lender to hedge funds. Where will the Fed find these dollars? Where it always, ultimately, does. It will have to print them, despite abundant evidence from the currency and gold markets that the world has just about all the dollar bills it cares to hold.

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/14/AR2008031403318_pf.html

Well, Bush-bashing aside, yes, we have a little problem, partly due to the deficit. And, hey, I like cheap underwear from WalMart, too.
It got a little out of hand, though, with high energy prices...then add the sub-prime debacle (hey, I like cheap financing, too), the securitizing of all those bad loans...
What we are now seeing, as a result of the unwinding of all the bad bets + the seized-up credit markets + Benny & The Feds having little-to-no results from lowering the overnight rate is the beginning of a major effect on the high-octane derivatives markets.
Bear was leveraged out over 32X. Morgan Stanley will post results on Wednesday, and they were leveraged out only a tick less.

It (hopefully) will not become a 'depression', but it most certainly will reach into every corner in every place on the planet. Think I saw a pundit remarking on World GDP heading down to 2.5%.
Not terrible, just gut-churning for a while.

My $.02
$.03 (inflation)

This had to happen sooner or later. The debt levels went way beyond the idiotic, somewhere in to the realm of the surreal.
I can't help but find it amusing that the same entities that were complaining about too much regulation and interference from government in years past are now getting bailed out by the government, your tax dollars and mine at work.

Really folks, there is no recession or depression. The bid for Bear Sterns went from an accepted $2 a share to $10 with only one bidder???? Oil is over $100 a barrel and I paid $3.27 a gallon for regular yesterday, yet OPEC says there is plenty of oil in the market and no need to increase production. Now before I hear from europe about how good we have it at $3.27 per gallon can anyone quote me the current price of gas in Dubei??? Last I heard it was about $0.12 per. Just because one of us is accepting being ripped off more than the other doesn't make any of us less foolish. We can't afford universal health care and social security will be broke in a few years, but we have the money to pay for the Iraq War??? (And hey, we set another record yesterday. 4,000 dead american children, dk how many injured. Oh by the way injured doesn't mean caught a staple in the finger here. But I digress). Oh I hear Bush's daughter will have a lavish wedding soon. Congratulations. Will she be deploying soon thereafter or will she follow her father's example from Viet Nam.
We spend $80,000 a year per housing prisoners, most of which are drug addicts and low level dealers yet we can't afford about $20,000 per to set up rehab clinics????
Here's the deal: How about we rehab the drug addicts and clear out those cells then fill them with all the "Greed is Good" folks, those tytans of industry and government who have been comitting grand larceny on a global scall. Oh yeah, they make the rules we play by. Here's my thought for the day: Hilary or Obama what's your thought on actually changing the system to really represent the people. Let's start with a new war. Take the money that's currently spent in Iraq and use it to prosecute ALL of the politicians and corporate execs who have ripped us off for the past 7 years. Forget that we'll look incompetant to the rest of the world for having let it go on. They already know we're fools. Show the world that the spirit of the Boston Tea Party is still alive in this country and that some of us will do the right thing simply because it is right.

Our Confusing Economy, Explained in Laymans Terms

...... a really good explaination (and in laymans terms) of what has lead us to our current economic crises, and where it might be leading us near-term and long-term. Well worth a listen....and scary when you think about it



Fresh Air from WHYY, April 3, 2008 · Perplexed by the U.S. economy? You're not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.

Greenberger is a professor at the University of Maryland School of Law and the director of the University's Center for Health and Homeland Security.


http://www.npr.org/templates/story/story.php?storyId=89338743



New Age 'Gambling' invades US Financial Markets
... ..while I was in Asia I resisted investing in their markets even while they were booming, as I felt they were too 'gambling' oriented. Listen to this 'betting atmosphere' that has taken hold of our USA economy

Fresh Air from WHYY, April 3, 2008 · Perplexed by the U.S. economy? You're not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.

Greenberger is a professor at the University of Maryland School of Law and the director of the University's Center for Health and Homeland Security.