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Dec 6th, 2017
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The campaign-obsessed press never saw Wall Street's calamity comingThe arrival of Black September on Wall Street focused an unwanted spotlight on the cracks in the United States economy, not to mention free market capitalism. In terms of journalism, Black September also highlighted deep deficiencies. Namely, how the mainstream media went AWOL for much of 2008 in covering the U.S. economy and the state of the financial markets. I cannot say I was surprised, but I was interested that, even a week after Black Monday, there were few magazines on the news-stands with much of anything on the crisis. Granted, there is usually a week between issues, but really! No one foresaw this coming? I did.... The magazine that I love to hate, that beat the drums incessantly for the Iraq War, that tells middle-managers what to think, the Economist, was virtually a financial-crisis free-zone. And they are the experts on economic matters? Or was it that they did not want the suckers to see it coming? __________
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Barrick Gold rises three percentBarrick Gold Corp., the biggest bullion mining company, climbed 2.9 percent to C$39.91. Chairman Peter Munk said the bailout of credit markets will erode the value of the dollar and support gold prices.
Barrick's standing as the largest gold producer and owner of the world's largest gold reserves will make it easy to attract buyers for its debt even as credit tightens, Munk said. The stock has surged 42 percent from a three-year low after Barrick raised $1.25 billion on Sept. 9 in its biggest offering of U.S. bonds. Back in the real world today: The smart money knows that the US dollar is toast. Even Buffett's come-hither ploy could not stop the Dow from falling 29 points today, but it did help to slow the slide. _______________________
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Even Buffett's come-hither ploy could not stop the Dow from falling 29 points today, but it did help to slow the slide. A whole 29 points!!! Say it ain't so.... the market is crashing... it went down a whole 29 points.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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The Five Stages of CollapseStage 1: Financial collapse. Faith in "business as usual" is lost. The future is no longer assumed to resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out, and access to capital is lost.
Stage 2: Commercial collapse. Faith that "the market shall provide" is lost. Money is devalued and/or becomes scarce, commodities are hoarded, import and retail chains break down, and widespread shortages of survival necessities become the norm.
Stage 3: Political collapse. Faith that "the government will take care of you" is lost. As official attempts to mitigate widespread loss of access to commercial sources of survival necessities fail to make a difference, the political establishment loses legitimacy and relevance.
Stage 4: Social collapse. Faith that "your people will take care of you" is lost, as local social institutions, be they charities or other groups that rush in to fill the power vacuum run out of resources or fail through internal conflict.
Stage 5: Cultural collapse. Faith in the goodness of humanity is lost. People lose their capacity for "kindness, generosity, consideration, affection, honesty, hospitality, compassion, charity." Families disband and compete as individuals for scarce resources. The new motto becomes "May you die today so that I die tomorrow" (Solzhenitsyn, The Gulag Archipelago). There may even be some cannibalism. ____________
Last edited by numan; 09/24/08 11:51 PM.
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[
This is the main problem and this is the reason I don't trust the government to do a good job with this. Banks have already written down a lot of losses on those loans and if they will now sell those to the government at face value when they were originated then I think that is plain wrong. I agree that would be VERY wrong. And as I understand it, that is not what is now being considered.... ie to take these loans at original face value. I like what Warren Buffett suggested today, although I'm not sure precisely how it would work... Let's say a bank has $50 billion in 'toxic trash'... put $2 billion of it on the market, and whatever markdown % it gets from the market, is the same markdown % the gov pays for the remaining $48 billion (which, of course, would not be $48 billion). Some kind of safeguards should be in place so no one 'games' the auction, but it sounds as good or better than anything else... it preserves the market valuation model, but does not create a low-biased market by flooding the market with the 'toxic trash' all at once. My question is, though, are about the derviatives - arev those being bailed out also, or just the underlying actual mortgages and/or securities? And let's make sure that no one tries to pretend a 'credit swap' is a 'security'! It's not, it's a bet, plain and simple. I read that the credit swap were so wrong, because it allowed people to take positions on the health of a security without having any stake in it - these things were made up out of nothing, literally! I don't know how it can be true, but apparently there is 500 TRILLION $$ of derivatives, compared to less than 75 Trillion of actual real estate, and 100 trillion in all stocks and bonds of ALL companies - WORLDWIDE. And, the way it was explained, this 500 trillion came into existence in the same way it would be if ANYONE could take out a fire insurance policy on YOUR house... the value of the house could be only 100k, but there could be bets on it that it will not burn down (or, for the shorts, WILL burn down!) to the tune of millions. Hmm. I think I'd be a little nervous living in said house! How in the world did these 'obligations' come to exist, without appropriate regulation and oversight?? Oh, right, McCain the Deregulator, in charge of the Commerce Committee which, as he puts it John McCain, just one week ago
“I understand the economy. I was chairman of the Commerce Committee that oversights every part of our economy” Never mind that he's wrong, but even to any extent that he's even partly right, isn't he indicting himself?? See it for yourself: McCain doesn’t know what his own committee does.Sheesh. You know, now I'm not so sure if Congress should pass ANY kind of bailout... anything done along those lines, especially rushed, stands a good chance of being worse than the problem it is purporting to solve. A side benefit would be, with McCain's campaign 'suspended', we wouldn't have to watch all those lie-filled adverts.
Castigat Ridendo Mores
(laughter succeeds where lecturing fails)
"Those who will risk nothing, risk everything"
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Pooh-Bah
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John McCain, just one week ago
“I understand the economy. I was chairman of the Commerce Committee that oversights every part of our economy” So, if we take John McCain at his word, he was chairman of the committee that was overseeing this whole mess as it developed? In any case, I have not heard that the "bail out includes derivatives. As I understand it it is mostly focused on the "securities " that are comprised of large numbers of bundled mortgages.
"It's not a lie if you believe it." -- George Costanza
The whole problem with the world is that fools and fanatics are always so certain of themselves. --Bertrand Russel
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old hand
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numan :
Thanks for the "5 stages"...
a good subject.. all by itself.
I'd tie it in with the concept of finite wealth, to finish the circle.
In another post, I posited five steps as:
1. Deflation
2. Inflation
3. Deflation
4. Hyperinflation
5. Revolution
Yeh... apples and oranges, but not really.
Part of a continuum...
Life is Good!
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Numan,
Where is the market update for today?
Oh, you only post when it goes down... and you wonder where I got the impression that you cheer only when something goes wrong or in the case of the market, it goes down.
In general, people that only cheer when things go wrong make me sick.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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Kap, I am sorry that you get sick so easily. You will need your full strength in order to survive the next year or two. Sorry my update is late. I just got home. I have a life outside these forums. In the real world today: Weak data flag 'sinking' US economyUS demand for durable goods and new homes plunged in August, and weekly jobless claims surged: a triple dose of bad economic data.
Orders for durable goods decreased by 4.5 per cent last month to a seasonally adjusted $US208.5 billion ($250 billion), the Commerce Department said.
New-home sales dived 11.5 per cent to 460,000, the lowest mark in 17 years, Commerce said in a separate report. The Labour Department said new claims for jobless benefits jumped by 32,000 on a seasonally adjusted basis to 493,000 in the week ended September 20.
"The market has taken three straight punches to the jaw today," said Patrick Newport, an economist at Global Insight.
Still, the Dow Jones Industrial Average closed up 196.89 points, or 1.82 per cent, at 11,022.06 on [misplaced] optimism about a deal in Washington to bail out Wall Street.
Durables are manufactured goods designed to last at least three years. The report was much worse than Wall Street expected; economists had forecast a decline of 2 per cent for August. The 4.5 per cent drop was the sharpest since 4.7 per cent in January. It followed three consecutive increases. Orders in August fell in virtually every big category.
"The economy is clearly in a sinking spell, and this report does not offer any signs that that's going to end anytime soon," said Hugh Johnson, chief investment officer of Johnson Illington Advisors.
Forward-looking indicators within the report, durable orders excluding the transportation sector and orders excluding defence, both plummeted, down 3 per cent and 5 per cent, respectively.
A barometer of business equipment spending - orders for non-defence capital goods excluding aircraft - decreased in August by 2 per cent, after going up 0.4 per cent in July.
"This was an ominous report," said Mr Newport. "Nearly every shipments and orders category posted a loss."
Demand for durable goods in the transportation sector decreased 8.9 per cent.
Orders fell 6.2 per cent for machinery. Primary metals tumbled 9.3 per cent, the biggest drop since 10.8 per cent in April 1993.
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Kap, I am sorry that you get sick so easily. You will need your full strength in order to survive the next year or two.
Sorry my update is late. I just got home. I have a life outside these forums.
In the real world today: So with all those weak numbers the market still went up... And about those numbers... New constructions starts being low, well, I want that. I want that number to be non-existant for the next 6-9 months until the whole backlog of unsold properties on the market are sold.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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