[Loren Schweizer]

"There are lies.
There are d@mned lies.
And then, there are statistics"

--Mark Twain

[Ju52]

"the only statistics you can trust are those you falsified yourself"
Winston Churchill

[outmywindow]

Is the party over?
______________________________________________
Toronto stocks in biggest intraday drop since 2001
Mon Jan 21, 2008 12:39pm EST


Market News
Oil falls below $89 as stock markets drop
European stocks fall 5 percent on U.S. recession fears
Gold hits 2-week low as euro weakens broadly

By Scott Anderson and Jonathan Spicer

TORONTO, Jan 21 (Reuters) - Canada's main stock market index plunged to its lowest level in more than 14 months on Monday, following a rout in overseas markets, as persisting worries over the wellbeing of the U.S. economy sent investors running for the doors.

By early afternoon, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was down 553.73 points, or 4.35 percent, at 12,183.39. Earlier in the session, it had fallen as much as 617 points.

[brian eiland]

Originally Posted by outmywindow

Is the party over?

A good friend and myself have been forecasting this 'perfect storm brewing' for better than a year now. We just continued to not understand why it didn't happen earlier...probably because of all of the money being thrown at our US economy by the HUGE warspending. But wait a minute, where is that borrowed money coming from???...out of thin air like the rest of Bush's spending spree.

And the stock market guys gave themselves another bunch of HUGE bonuses again this year....what a great bunch of farsighted fellows up there in New York. Maybe a few of those crooks will jump....

[CanuckBoater]

This was a harsh day on Toronto Stock Exchange. I understand New York and other American trading was closed for holiday.

Wonder what tomorrow (Tuesday) will bring?

[brian eiland]

Originally Posted by brian eiland

A good friend and myself have been forecasting this 'perfect storm brewing' for better than a year now. We just continued to not understand why it didn't happen earlier...probably because of all of the money being thrown at our US economy by the HUGE warspending. But wait a minute, where is that borrowed money coming from???...out of thin air like the rest of Bush's spending spree.

And the stock market guys gave themselves another bunch of HUGE bonuses again this year....what a great bunch of farsighted fellows up there in New York. Maybe a few of those crooks will jump....

Originally Posted by Loren Schweizer

There is a tiny possibility that the U.S. will experience a nasty little 2008 recession, early '70s vintage.
Europe feels it, too.
China's Shanghai Index, recently on a real tear, takes a deep dive.
Same for India's over-bought Sensex.

Result: sub-$75 USD oil.

Remember the Asian monetary crisis less than ten years ago?

Fearless prediction: gas in the two-buck range in the U.S. as a Christmas present this year, with folks laughing at all the Prius drivers.

Put this in your time capsule. Whoever gets closest (I bet $2.09) wins a prize.

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

The Perfect Storm (economically)
So does that mean we should treat it as just another little unconsequential blip, and nothing too serious, as does the majority of this Washington crowd that continues to drink the same kool-aid??

We have the gathering of the 'perfect storm' with big energy price increases, housing market failure, lost of manufacturing, and the coming lost of a great portion of creative IT. We need to get some different kool-aid to drink.

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...403318_pf.html

[Loren Schweizer]

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)

[Codger]

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.

[NYCAP123]

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.

[brian eiland]

...... 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/s...oryId=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

[Loren Schweizer]

Originally Posted by brian eiland

...... 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. [quote]


[rant off]
Full disclosure: I usually find NPR's take on business matters to be freighted with leftist agenda and liberally (ha!) sprinkled with errors of omission-of-fact.

Michael Greenberger, on the other hand, in the WHYY interview, was surprisingly evenhanded and offered up a very sucinct explanation of how credit-default swaps work, and their role in our current economic malaise.

[rant on]
Toward the end (39 minutes), though, the "Ethiopian-in-the-fuel-supply" (thank you, W.C. Fields) became apparent with Greenberger's answer to NPR's Terry Gross' question regarding what happened to all the "lost" moolah.
Why, some people made big money on those bets (the swaps), he said, as he went on to excoriate Goldman Sachs and other 'speculators'.
The money did not just disappear. The smart took from the stupid, and that is "bad" according to the perfessor.
Adam Smith is rolling in his grave. While there is talk about more government regulatory reforms coming, don't hold your breath...not in this election year, anyway.
By next year, The Markets, as Mr. Smith explained roughly two hundred years ago, will morph (sans regulatory changes) as the "losers" of these kinds of bets...will no longer wish to sit at that table. Of course, now that the world is no longer awash in liquidity, there will be less likelihood, desire, and/or need to make a buck with highly leveraged 'speculation'. Folks have wised up. Maybe.

Derivatives (remember Orange County over twenty years ago? No? May I interest you in some AAA-rated CDOs today, sir?) will shape-shift into some other financial instrument. Or not. They, like zombies in some grade B horror flick ("Attack of the Shadow Bankers!"), apparently refuse to die.

Free markets adjust. Investment in brick-and-mortar in the U.S. has gone, Joe DiMaggio, to be replaced by Gawd knows what new ideas Wall Street springs on us.

And, that is what p****s off the good perfesser.