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Bailout May Not Work...
Before you read more about the bailout and we discuss its long-term ramifications watch this video on the banking/credit industry.
Now that you've watched the video, let's talk.
It looks like the financial wizards at the A.P. finally realized what we've been saying all along: A top-down bailout doesn't work! We need a bottom-up solution.
Read their belated words of wisdom and while you do so think about the video clip you just watched on how the banking/credit industry is run:
Washington's financial bailout plan is now law. So the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right?
Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again.The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good — and those that have come on the market because of soaring foreclosures — before home prices start appreciating.
Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly — from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.
"Housing traditionally does lead the economy through a recovery. I think it's going to be critical for a sustained recovery in this cycle, too," said Gary Thayer, senior economist at Wachovia Securities.
In my family we have a phrase for that, "No S*** Sherlock."
Look....the rich were stung by the massive de-regulation that they themselves had begged for and received. But we, the middle-class and the poor, were pinched even harder.
Why is this happening?
...because...
1. There has been an ongoing forty year assault on the middle-class and labor unions.
2. There has been a reversal of higher wages to lower wages--particularly in the last eight years.
3. There has been incredibly high high inflation for our basic needs with a President and administration who told us we could help ourselves and the country by "Spending and shopping...or the terrorists win."
4. The average person didn't understand how the banking system borrows money on credit to create loans and then creates more borrowed money in a vicious cycle.
5. We didn't understand how much the de-regulation had created an inflationary housing bubble that would burst and send home values to the floor. So we borrowed against the home we had to pay down debt, or we bought a home that was presented to us as a sure investment in your future! and we, the-oh-so-gullible, payed more than we should have for it!
And now the A.P. admits what we've been saying all along--although they more politely phrase it as "Wait and see..."--
But when you read the rest of the testimonies in the article from people who aren't buying homes or cars and can't get the loans, it's clear that the remedy to bad credit wasn't simply to give more credit to the institutions who created the bad credit!
The correct remedy was one they didn't even put on the table. The correct remedy would have required a concerted effort across the board, beginning with the people on the bottom who are facing acute financial crisis and job losses and wage reductions and who need the bail out to pay on those loans to the same banks who wrote up those loans.
Jobs, wage reductions, rising costs for the staples in peoples' lives have caused good faith loans to go bad.
It's the economy stupid! It's Main Street, not Wall Street--stupid!
From the same article, here's some vomit inducing stats on our economy:
Jobs are another big concern. The stranglehold on credit has choked companies big and small that depend on regular inflows of borrowed money to pay employees and stay afloat.The Labor Department said Friday that employers cut 159,000 jobs in September, the fastest pace of losses in more than five years. Experts say that number will grow as the effects of the credit gridlock course through the economy in coming days and weeks.
The nation's unemployment rate is now 6.1 percent, up from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.
The unemployment rate could rise to as high as 7.5 percent by late 2009, economists predict. If that happens, it would mark the highest since after the 1990-91 recession.
Boosting employment is critical to kick-starting lending because "if jobs are growing, then incomes are a growing, and if incomes are growing then people are consuming," Reinhart said.
Consumers and businesses have retrenched so much that some analysts fear the economy stalled or shrank in the third quarter that ended last week. The Labor Department report Friday showed wage growth for workers is slowing, meaning they'll be more hard-pressed to spend, especially for something as expensive as a home.
Many economists predict the economy will contract in the final quarter of 2008 and the first quarter of next year. That would meet the classic definition of a recession — two consecutive quarters of a shrinking economy.
So now we have one month until the election and three months until a new President is inaugurated. We are looking at mind-blowing job-less numbers, staggering grocery and gas bills, and a crushing weight of high pharmacy and medical bills. And to make matter's worse, we've had a sudden introduction into the world of high finance an banking by getting clubbed in the head with a bail out bill.
So what's a person to do when the D.C. Congress sends a longer-wider life-line to the wealthiest while they send a tiney-tiny thread to the bottom ninety percent?
Let's hear your thoughts on the bailout and the economy.
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favorite economic site - catching up now
http://economistsview.typepad.com/
I disagree with your economist that you posted slugbug.
I think de-regulation allowed them to inflate the original cost of the house. They did not have to loan 70% or 100% of the mortgage. But the fact is if you INFLATE it, the you're driving up the cost right from the get-go. And therefore, if you finance any amount of it, you're already paying more than what would have been allowed before.
Hey. So Wachovia, one of the places where my kid has a student loan, is going bankrupt and is maybe for sale to another conglomerate to buy up.
So...why does she still have to pay a loan to a bank that didn't uphold their obligations to be safe with their money and stay solvent? There's no escape for her. Why should there be for them?
Another reason a top-down bailout was ineffective! Stupid...stupid...stupid!
Credit crisis adds to pressures on auto dealers
By BREE FOWLER, AP Auto Writer Sun Oct 5, 3:13 PM ET
NEW YORK - Hundreds of thousands of new cars and trucks that would have quickly made their way to people's driveways a year ago are now stacking up on dealer lots across the country, with potential buyers worried about whether they'll keep their jobs, be able to pay for gas, or qualify for a car loan.
ADVERTISEMENT
For auto dealers already suffering under the worst U.S. sales downturn in 15 years, the increasing cost of the credit they use to keep inventory in their showrooms means every Ford Focus and Jeep Grand Cherokee with a sale sticker in the window is chipping away at dealers' razor-thin profit margins every day and threatening to send more of them out of business.
Like the banks that have been collapsing under the weight of the credit crunch, auto dealers are highly leveraged, making them some of its first victims, said Sheldon Sandler, founder of Bel Air Partners, a New Jersey-based firm that helps car dealers find options when they want out of the business.
Ok. so this story is making me bawl.
via DK--foxsucks81: Amazing: Obama Helped Stranded Stranger 20 Years Ago
The Norwegian newspaper VG has reported a truly amazing story about a newly-wed trying to get to Norway to be with her husband, and the stranger who helped pay an unexpected luggage surcharge....
It was 1988, and Mary Andersen was at the Miami airport checking in for a long flight to Norway to be with her husband when the airline representative informed her that she wouldn't be able to check her luggage without paying a 100 surcharge:
When it was finally Mary’s turn, she got the message that would crush her bubbling feeling of happiness.
-You’ll have to pay a 103 dollar surcharge if you want to bring both those suitcases to Norway, the man behind the counter said.
Mary had no money. Her new husband had travelled ahead of her to Norway, and she had no one else to call.
-I was completely desperate and tried to think which of my things I could manage without. But I had already made such a careful selection of my most prized possessions, says Mary.
* foxsucks81's diary :: ::
As tears streamed down her face, she heard a "gentle and friendly voice" behind her saying, "That's okay, I'll pay for her."
Mary turned around to see a tall man whom she had never seen before.
-He had a gentle and kind voice that was still firm and decisive. The first thing I thought was, Who is this man?
Although this happened 20 years ago, Mary still remembers the authority that radiated from the man.
-He was nicely dressed, fashionably dressed with brown leather shoes, a cotton shirt open at the throat and khaki pants, says Mary.
She was thrilled to be able to bring both her suitcases to Norway and assured the stranger that he would get his money back. The man wrote his name and address on a piece of paper that he gave to Mary. She thanked him repeatedly. When she finally walked off towards the security checkpoint, he waved goodbye to her.
Who was the man?
Barack Obama.
Twenty years later, she is thrilled that the friendly stranger at the airport may be the next President and has voted for him already and donated 100 dollars to his campaign:
-He was my knight in shining armor, says Mary, smiling.
She paid the 103 dollars back to Obama the day after she arrived in Norway. At that time he had just finished his job as a poorly paid community worker* in Chicago, and had started his law studies at prestigious Harvard university.
snip...
More at kos link.
Yep. I believe there are angels among us! How many strangers have you helped out in a crisis by giving $100 to and to just trust that they'll give it back?
I know, I gave $25 to a person about a year ago. I actually ran to the ready teller to help him out. I don't know if I got taken or not. And a few weeks ago, I gave my last $8 bucks to someone who claimed he needed meds, but instead I saw him sneak into the Wendy's for food.
At any rate, Obama has a good heart and has lived by giving a part of himself (or his money) charitably.
Proud to be an Obama voter here!
I forgot to post the picture with the story from above.
Uh Oh. Looks like Ms. Corruption and Mr. Corruption themselves by bringing up another lie and smear tactic against Obama has now brought the truth back to them.
McCain's associations with the Keating five are now going to find some headlines once gain. And just on the heals of the second buy out of banks or creditors, his actions back then won't seem quite so harmless.
DK: Billary Redux
By the way, I have to say that Ms. Palin is behaving rather hypocritically and recklessly for someone who has already attempted to stifle the investigations into her own abuses of power. She's also stifled scientific research just like Bush has. And she's already had affairs too. (Though, I haven't seen her hiding in shame and attacked 24/7 for 3 weeks like they did to Edwards and his mistress! And though in the article I linked to the conservatives were bemoaning the personal attacks, these same people creamed Edwards and complained that the media was hiding the Edward's private life's activities. And of course we all know what they did to Clinton and his private sex life.)
Sparrow
I loved that story too!
Here is another one:
http://www.dailykos.com/story/2008/10/5/134256/929/566/620823
Read about the old blind vet who got to meet Obama
and another:
canvassing for Obama in Dallas, TX
http://www.dailykos.com/story/2008/10/5/12494/1977/623/620782
read about the ex-Republican who canvassed in Dallas and inspired a young black man to get a bunch of others involved
These are amazing stories!
By the way, I heard a rumor that young people from Alaska and TX were coming to WA and OR to live temporarily and register and vote. I didn't think it was true but we were kind of joking about it.
Then just now, across from our own house, we saw a truck with Alaska plates and it had a bumper sticker on it that said "to hell with the 48" and an Alaska flag. "Todd Palin the secessionist?" we said?
SB:
I don't even know what is being bailed out...
Anyway, from back when I was 11, a year or two before the Miami Dolphins had their perfect season:
http://www.youtube.com/watch?v=K_3Msuriy1w&feature=related
Waiting for the man....
More from Santa Monica in 1972 -- Ziggy Stardust:
http://www.youtube.com/watch?v=nIMC2SQev7g&feature=related
I've been listening to this variant
http://fr.youtube.com/watch?v=zgoQZ04T7sU
I'm burning the new Metallica for my friend Henry from Portland, who is up visiting, but that's a different type of sound entirely. They have kind of returned to their roots though. It's straight up metal.
On the "bailout" -- what is actually going on there? I get that the Secretary of the Treasury is being given a large amount of discretion to spend up to $700b to keep capital markets from freezing up, and I guess at the end of the day all assets so purchased belong to the US Federal Government (us?), but what is really going on? There is so much junk in the news. I still do not understand the mechanics of this "bailout" or how it will affect Main Street.
Chuck in Houston (where real estate did not crater, so far anyway)
What is actually being bought in this?
Or from another point of view I guess the question would be what is being sold.... I honestly don't know. But I do know that for many years I've understood that this home mortagage zero-down plus a loan to get set up was a pyramid scheme (just common sense and supported by the experiences of some of my grade school and high school friends). So if me and my buds could figure this out years ago, you can bet dollars to dimes that the savvier amongst us, from the high ground of Manhattan, have seen this coming for years and are now taking advantage of this chaos in the markets. That's my cynical take anyway -- and I have no idea as to what a corrective to this development might be.
Also, I do not have any sort of feel for how this crisis will effect the larger economy. In my line of work, I think the key will be the lack of investors willing to invest in oil and gas development due to the fact that parent institutions will simply shut-down lending until things sort themselves out. But so far there is no indication of that. Strange days indeed....
Chuck in Houston
http://www.youtube.com/watch?v=4Re0WvjyRhM
http://www.youtube.com/watch?v=BIAE-3aPRHk&feature=related
Zhal', chto ni b primer mne...
http://www.youtube.com/watch?v=Txl4bilzvro&feature=related
Chut' pomedlenee, koni:
http://www.youtube.com/watch?v=hWEOaosGDi0
Obviously nostalgic (Million alekh roz...):
http://www.youtube.com/watch?v=oIFmhye6fqw
Going back to 1976 with Alla Pugacheva:
http://www.youtube.com/watch?v=6M33FJpbq7o&feature=related
And one of the favorite Soviet movies from the late 60's early 70's (I think):
http://www.youtube.com/watch?v=dBm1h3LOD7Q&feature=related
And if a person wanted to go back beyond that another twenty or thirty years you end up here:
http://www.youtube.com/watch?v=mK2T2aPooy4&feature=related
Which, of course, has no relevance what ever to the thread topic (unless you think WWII was a bailout in some bizarre sense or another), but I just meandered back there from the point of view of popular music history.
Sorry!
Chuck in Houston
Well I did sing some Amy Winehouse at karaoke finally .. I Told You I Was Trouble
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGGMo21aihyg
The link above will reveal US treasury dept. is contracting out the management of the 700B ( actually several trillion ) in cash that the US taxpayer is loaning the United States Govt. The Treasury will allow the same people responsible for the disaster, to manage the funds allocated to recover from it. The Interest alone is hundreds of millions per day.
In a nutshell, the problem is credit collaterized by mortgages on housing and buildings that were not secured by enough cash to sustain the current drop in value.
For example the Bank loaned Joe 500,000 to purchase a house that was appraised at 525,000 in 2003. Joe's mortgage was sold by his bank to another bank, maybe domestic, maybe foreign, seeking to invest in the booming USA real estate market. Joes house went up in value and reflected the booming market.
Multiply this by several million houses and office buildings and raw land purchases in the last 5-7 years in the USA and Europe. there is now 7-8 trillion dollars in mortgages, secured by what appear to be 7-8 trillion in real estate.
However, Joe did not effectively put any real money into the house, which began to drop in value in 2007, Now the house is worth 450,000, secured by a loan valued at 500,000. Joe watched his house continue dropping in 2008, and is now worth 350,000.
There is no incentive for Joe to remain in the house or keep making payments, as the mortgage far exceeds the value of the house. It is financially more sound to walk away and let the bank take the house back than continue paying on the mortgage.
Now, ( oct 2008) there is 7-8 trillion in Mortgages, secured by 3-4 trillion in real estate. If the current trend continues, there will be 7-8 trillion of mortgage secured by 1-3 trillion in real estate. The difference will be made up by US taxpayers.
This is one scenario.
Another is Joes Wife was diagnosed with severe health problems, and her health insurance does not cover enough of cost for medicine and hospital expenses and therefore Joe must pay only partial house payment to afford his wifes medication.
As Joe begins to miss mortgage payments, the company begins forclosure and thus Joe is in real danger of losing their only shelter, and the investment Joe's family has in real estate.
These two scenarios account for almost all of the foreclosures in America and Europe, Up to about 6 months ago.
6 months ago the dominos began to hit the credit markets, which cut off credit for small business and credit cards. This forced business to lay off and cut back expenses, which forced employees to cut back expenses, which forced restaurants and car dealerships to cut back, which forced....and so on and so on.
It is a vicious circle that will not be stopped by current idiots in Washington DC. They do not have the political will nor the best interests of the US taxpayer in mind.
Op-Ed Columnist
Kiplin’ vs. Palin
By ROGER COHEN
WASHINGTON
Repeat after me: pigs can’t fly. Repeat after me: if you don’t work you die. Repeat after me: fire will certainly burn.
Perhaps these truths seem self-evident. But let’s face it, the whole Wall Street debacle, with its cost of some $700 billion to generations of Americans, was based on the fathomless human ability to disregard facts and believe in cloud-cuckoo-land.
Risk no longer existed. The penniless could afford a $200,000 house. Real estate prices could only rise. Securities full of toxic loans would prove benign. Debt was desirable, leverage lovely, greed great. Two and two made five. The moon was a balloon and streets were lined with gold.
How could it happen? That outraged question springs now to everyone’s lips. But from Dutch tulips to Californian dotcoms, great heists have happened and will again. No flight from reality is as sweet as the illusion that money grows on trees.
A friend wrote suggesting I take a look at Rudyard Kipling’s poem, “The Gods of the Copybook Headings,” in the light of current events. Written in 1919, when Kipling was 53, in an England drained by the Great War, which had taken the life of his teenage son, the poem makes sobering reading.
A copybook was a school exercise book used to practice handwriting. At the tops of pages, proverbs and sayings (like “Stick to the Devil You Know”) appeared in exemplary script to be copied down the page by pupils. The truisms were called “copybook headings.”
- more -
http://www.nytimes.com/2008/10/06/opinion/06cohen.html?hp
Today's Times Post in response to Kristol's Palin love letter..
http://www.nytimes.com/2008/10/06/opinion/06kristol.html
I don't see why Wright should be an issue at all, except to the low-IQ crowd that Republicans covet - given that this audience lacks the ability to see through the Neo-Cons various scams and power grabs.
The phrase "God damn America" goes back at least as far as William James, a far greater intellectual than anyone in Bill's failed but dangerous movement, in the aftermath of revelations of US atrocities in the Philippines during the Spanish American War. To criticize America when it is responsible for wanton acts, the kind that Reverend Wright likely has first hand knowledge of, is the soul of patriotism. In contrast, to spin away responsibility for crimes against humanity and Democracy, as Kristol and his like do every day, is the soul of treachery.
Listen, Bill, if the Forked Tongue Express wants to get down in the dirt, all I can say is "bring it on". Obama is young, and has the winds of change at his back. McCain is nearing the end of his career; his reputation will not recover from the stench of the dung he must expect to be hurled back at him in response.
Full frontal assault on number one of the Keating Five coming today.
It is about damn time!
Sorry I wasn't here SlugBug. Had to step away to cycle down and get some sleep.
Still not sure it worked. This may all be just a dream.
Good morning, Christy.
Take a look at this:
Chuck,
Thank you for replying to my thread article. I know the banking industry here has been relocating to...guess the state....
Texas.
So I'm not surprised that your housing market is fine.
Toolmaker,
I really appreciated that treasury article. Yes, I agree with what they're saying. Those two instances--plus job loss or lower wages. One of the schools in this area said to their faculty: "You wages are going done x amount or you won't be rehired to teach here."
That's laying it on the line, isn't it?
I think Mathews article is too cut and dried for what has happened in my state because it wasn't simply that unqualified people were getting 200k houses.
But...in 1985 when my hubby and I first bought our house, we were carefully vetted. And even after refinancing houses, we were still vetted. And buying/building this house, we believe we were carefully vetted! But, in retrospect, we thought we were being carefully vetted as was the value of the house. But we had no idea that they had inflated prices and also lowered the approval rating.
I'm not saying we're in trouble. What I'm saying is that the whole state is in a credit/housing crunch and most of it originated not because people who made no money asked for a nice house. We trusted the banks to look at our asset/debit/ and pay ratio and make appropriate choices--just as we did too.
Unfortunately, I don't believe we planned for such widespread outsourcing and job loss. I can tell you that I've had to research suppliers for my hubby's business a time or two and there's an amazing amount of them who do not manufacture in the US.
Christy and everyone,
The timing is perfect. Most of the previous six months, few have been paying attention to. But in this last month before the election and with the financial structure imploding--yep. People are wishing election day were today!
The Stock Market is already down -300
Oh. Crap.
The DOW even.
-303.
-308.
Good Morning Sparrow! Hows school?
Good to know if this is a nightmare, atleast you are having the exact same one.
The only thing that could be worse than waking up to this nightmare, is waking up to face it all alone.
Dow tumbles below 10,000
Right now -386
Ummm. Crap.
-438 now -449
My guess is that we've entered a bear market in stocks that will last for about 2-3 years, and take the market down about 80% from its all time high. Assuming that inflation doesn't become a factor here, that suggests a 2010-11 bottom for the DOW of between 2,000-3,000.
There is simply too much bad news yet to come - not to mention the demographic component of Baby Boomers, having begun to reach retirement age, abandoning risk laden vehicles like stocks and moving their money to relative safe harbors, like banks (especially if interest rates rise).
As any experienced trader will tell you, stocks go up, not because of earnings or potential future profits, but because more people want to buy them than sell them.
As the Baby Boomers achive retirement age, given the risks that securities represent (especially given the extraordinary rise in prices over the last 15 years), this demographic impulse alone should be enough to drive prices dramatically lower. Add in the truly extraordinary challenges that America's debt will present to the next President & Congress, and corporate America's love of downsizing and outsourcing ...well, I trust that you get the picture.
I am dubious that the first stage of this bailout will work as advertised. But hopefully, once Obama takes the Oath of Office, something can be done to at least stabilize the housing market, and keep Americans in their homes.
I could link or post an excerpt from one of my previous astrological forecasts here, but I'm afraid that I've bored everyone to death by now with them...
Matthew, what about the actual value of the dollar?
What is going to happen to the cash we have on hand?
Matthew
If the stocks were going to go that low for only 2-3 years and then climb up, someone like me who is going to retire in 10 years should just hold on to all stocks held now (if in retirement account) and keep buying at the same rate because the "bear" years would present a good buying opportunity, if the stocks were held for the long-term and not dipped in to til retirement and then used gradually. Dividends would be reinvested the whole time. Using the investment philosophy of dollar-cost-averaging, the person should still be able to beat inflation.
Right now everything has essentially stood still since Bush got into office, averaged over time. I just sold all my stocks that weren't retirement and my profit over time was 8%, though they had gone down 40% recently. I took those out because the tax structure is different.
People should not have bought houses without bigger down payments, nor taken out ARMs, or zero-down loans, or for-crying-out-loud 50 year mortgages. No one really needs a "jumbo loan" and people did not need 2nd mortgages in order to get access to their "equity" (on paper) to redecorate, buy trucks, etc. Most people do not really need a credit card and there is no reason not to pay it off in full each month.
The bankers are getting richer but for years I have been driving past car lots that promise credit to those who barely have jobs. I myself was extended a mortgage loan when I was unemployed. Granted it was FHA backed and I had to pay for mortgage insurance. I was a sub-prime borrower and no one cared even 20 years ago. What they did do was severely limit the amount I could borrow, which they stopped doing later on.
My mortgage was sold five times. I wondered what the hell was going on. I was offered an ARM and thought - this is crazy - and rejected it. Sounded great up front, of course. Refinanced in order to get a lower interest rate. People just don't think. They could always consult with someone they trust who isn't the person offering them money.
Then there were the ads for giant sectionals and big screen tvs etc. - you could pay something like $11/month. At that rate - what would it take to pay something like that off? $300 years?
Why did people buy these stupid things? Status. Low self esteem. When I was in Thailand I saw that you could get "fakes" of all the status brands, Rolexes and so on. My friend's brother-in-law had no real money but someone extended him credit cards, many of them, in dollars. He and his wife bought a bunch of crap on credit - the REAL brands too. "No one else would know if they were fake, but I would," he said. Low self esteem.
His brother who is an immigrant shops with me at thrift stores and drives a used car. He realizes that the American Dream is a big farce any way.
Consumers have to protect themselves. Sure there was predatory lending but people paid too much attention to image and ads. I do not have to be an orthodoxly religious person to realize that there was a spiritual deficit that led people to worship at the alter of mammon. There have been studies on which cultures are happiest and most spiritual and they are not the richest or most materially-"blessed."
Even in Europe, people closed doors after leaving the room and turned out the lights - to save energy. I still don't see people doing that here. The minute gas goes down some they are driving around for pleasure again. This Christmas if they have credit they will charge again, for crap that's made poorly (quality has gone down over time - notice "jewels" on things are now plastic instead of rhinestone - probably contain lead as well)?
I just got an email from someone who says she will now support McCain because she blames Obama for the fact that the bailout passed. Well I think we got to this point because of the greedy consumer, the greedy banker and the greedy government.
Living on credit is fundamentally stupid.
Toolmaker
You explain it as my financial planner did - it seems to boil down to the fact that potential collateral (potential asset value in future) was used as current collaterol.
That is nuts. We have to hit bottom, I guess. Not a good time to panic and sell though. I always said I'd panic if the DOW went below 10,000. I didn't know about it til a minute ago.
I don't feel panicked though because it's not all about money. I would feel panicked if the polls for President reversed. Psychologically, need to see Bush not have a third term.
The worse the economy the better for Democrats.
(in terms of winning)
Now here is what creeps me out. McCain would make massive cuts in Medicare and Medicaid.
http://www.dailykos.com/story/2008/10/6/85027/4196/977/621421
There would go my job.
5 trillion in value has been erased from stocks worldwide in the past year. The MSCI World Index of 23 developed countries lost 28 percent through Oct. 3, the worst annual performance on record dating back to 1970. Investors in the U.S. face their first annual loss in six years after the S&P 500 dropped 30 percent from its October 2007 record.
The S&P 500 is still valued at 19.5 times profit from the past four quarters, according to data compiled by Bloomberg.
http://www.bloomberg.com/apps/news?pid=20601103&sid=azLxsHf1icRs&refer=us
Read about Witch Palin and her Booing audience in Florida
http://voices.washingtonpost.com/the-trail/2008/10/06/in_fla_palin_goes_for_the_roug.html
Note where one of her admirers yells out "Kill him!" about Obama.
Then think about when the debates are and how feeble old McCain is out campaigning in NM today when he should be boning up.
It's got to be All About the Economy.
The financial headlines are trumping the Palin Crusade headlines.
I hope it's the same on TV. Gloves are off as far as rebuttals - Troopergate is proceeding, LA Times has opened up the POW stuff, the Rolling Stone article is viral, and Keating 5 is out in the open, also Sarah's own Witch Doctor Pastor.
This stuff is the infotainment equivalent of the Inquirer and the public has a certain "fascination with the abomination" but none of that puts food on the table or pays the bills.
Barack is a quicker study - even wingnut Krauthammer is admitting it. I am looking forward to the debate.
Didn't want to read finanical stuff today but I am. Looks like everything my Financial Planner told me Saturday when he called to ask my permission to take all of my money out of equities that wasn't retirement (it wasn't alot but it had shrunk, though as I mentioned, ok over long-term) - now it's equities that took a hit.
As he explained - the papers are saying the same thing - banks can't loan each other money fast enough - it's hard to get credit - everything runs on credit so it's kind of freezing up - there isn't enough liquidity (money flowing that isn't tied up) - governments in Europe as here are having to pump money in to keep things going - they're having to buy bad assets and sell what among them has value - same as here. It's a global thing. If alot of the "collaterol" was housing potential value, and housing actual value will still continue to drop, it will take til late next year or 2010 for markets to "rationalize" - that's the most optimistic picture, I suppose.
To me, it's much more important to get Democrats in than to worry about my own money. They are better advocates for people who are not filthy wealthy so I did just write out a check for the Obama Minute and for Chris Gregoire and to DNCC via Max Clelland and to Wexler - those were small. I don't put money in a church collection plate and I won't eat today even though it's my day off.
http://www.politico.com/news/stories/1008/14302.html
Obama to hit McCain on Keating Five.
Slugbug, the problem is that if you bought near the highs in 1929, it took you two decades to get your money back.
There is little prospect that stocks will immediately go back up once a bottom forms. The DOW ranged between 800 and 2000 for most of the 20th century. Dow 2000 was a big deal; Dow 3000 was equally so. But then the bubble began to expand.
Part of that bubble, some argue (and I agree with their evaluation) involved a demographic component - the baby boomers' desire to begin investing for the retirement that they had so long ignored. Obviously, there were other currents involved. Any simplistic analysis is fated to miss the nuance of what is likely a complex phenomenon.
I have also argued that irrational exuberance was embedded in the zeitgeist of the times - and now that this zeitgeist is changing, irrational pessimism is likely to take over. Business conditions might improve, but as with our parents generation, a generation that came of age in the Great Depression, the memory of the bust phase of the economic cycle may permeate Americans perceptions for far longer than the period of actual economic adversity.
One of things I specifically expect is that when underlying conditions improve, people's perceptions of that improvement will likely fail to fully mirror this improved reality.
I also think that this new zeitgeist will have important political implications. The key here, from my point of view, will be to insure that any dramatic change in American economic or public policy begins in the human center - in our shared collective perceptions of what the right and proper role of government is in the 21st century. In that sense, Obama may well prove an ideal leader - since he already in attuned to the ideal of building out from the center.
From my point of view, the real challenge an Obama Administration faces isn't from the right, but from the radical center - those angry, frustrated, resentful Americans for whom Lou Dobbs currently serves as a convenient focus. Obama needs to actively co-opt this movement if he wants a second term as President. He needs to channel their energy and anger - while hopefully moderating it through introducting real world solutions for their underlying concerns.
A wild lurch to the left is as likely to be resented by these voters as a wild lurch to the right.
http://mailcenter.comcast.net/wmc/v/wm/48EA41CB0003EA5C0000613422070009539D0A9C0A079D090B?cmd=Next&no=1029&sid=c0
Health Care Destruction
Matthew
Dow has gone 3000 to 7000 to 11,000 back to 7000 and up to 14,000, back below 10,000 in the time I've been investing. There have been five big "corrections" of 20% or more since the Depression, acc/my financial planner. He is trying to find out what probably percentage of this latest fiasco is a "correction" vs new factors introduced by all those stupid "fake collaterol" borrowings involving fake equity from theoretical housing value that were used by banks as though it was actual money.
I am not worried because I am not in debt. If we fall, the financial planner falls too. He knows that so will do best he can. Same goes for our Treasury and the greedy bastards who run Wall Street. (& I'm sick of hearing "Main Street" vs "Wall Street" as they are intertwined just as "domestic" and "foreign" are - haven't people heard of globalization?)
I am going to go back to attacking that bastard McCain.
Apparently 60 Minutes explained the bailout - I haven't watched it but probably will.
http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml?source=newsletter
McCain strategist
If we keep talking about the economic crisis, we're going to lose
http://www.huffingtonpost.com/2008/10/06/mccain-strategist-if-we-k_n_132179.html
Bring on the debates!~
Down 761 and still falling...
Maybe they should tear up the bailout bill and start over! The Markets are obviously voting NO to Paulson's bailout plan.
Hmmmm....in the rush to the bailout, isn't it interesting (complete sarcasm) that Lehman steered money to the execs before declaring bankruptcy according to the latest Congressional information.
A.P.
Also, I heard on the Hartman show from Congressman Sherman that the administration told them they would have MARSHAL LAW if Congress failed to pass the bailout last week.
yes.
Marshal Law!!!
Think of it this way. Today is a time to pick up bargains.
People keep sending me emails about an imminent week long shut down of banks - no credit, no cash. They are encouraging runs on banks and sell offs of stocks. It's a panic.
I Googled around and it is emanating from the Ron Paul return-to-gold-standard people.
It's martial. My husband heard Thom Hartman too. Could be because Bush II was, after all, the businessman president.
I think they would have guarded the banks if there started to be runs on the banks. As for Wall Street, if the declines are too precipitous, they actually stop trading.
Asia went through this already. Europe is going through what we are and the UK too. People need to start saving more, using less credit and not buying things they can't afford with money that isn't backed by anything.
That includes the government.
The silver lining is that this is like an alcoholic sitting at the bar and the bartender cuts him off.
FiveThirtyEight.com, the polling site, is currently predicting a 51.2% to 47.2% popular-vote victory for Barack Obama over John McCain. FiveThirtyEight.com, with all its fancy charts and methodology, has only been around since March. 7-Eleven has been around since 1927. It has accurately predicted the outcome of the last two elections on its 7-Election.com site. What are their current numbers? Obama 57%, McCain 43%. How it works is simple. You buy a cup of coffee at 7-Eleven and choose whether you want it in a McCain cup or an Obama cup. Simple. The current results appear on a nice interactive map at the site.
The irony is that the economy is tanking. Someone just sent me an email saying to withdraw all cash and cash in stocks because all banks are failing tomorrow. I think that's a bit extreme, but I do see that a McCain campaign rep has said McCain can't win unless the focus can be taken off the economy. On Google News, despite McCain and Palin's attempts at distraction, they are being trumped by bad economic news.
(see also CampaignFreak.Com)
(photo taken in NYC on Wall Street in 2006 by D. Grieser)
Dow Falls Below 10,000
Michael M. Grynbaum, The New York Times: "Wall Street stumbled again on Monday as the banking crisis expanded its grip on the world economy, sending stocks sharply lower around the world and pushing oil prices below $90 for the first time since February. The Dow Jones industrial average lost more than 300 points in early trading, falling below 10,000 for the first time since 2004. The Dow closed at 11,143.13 on Sept. 26, before the 777-point plunge last Monday, which means the index has fallen more than 1,100 points or 10 percent in slightly more than a week."
Wall Street Follows the Path of the Steel Industry in Pittsburgh
Dean Baker, Truthout: There is a joke circulating on the Hill these days. 'What is the technical term for a Wall Street investment banker who supports free trade?' The answer, of course, is 'liar.' In spite of the $700 billion bailout package, Wall Street is going the way of the steel industry in Pittsburgh. The financial industry in the United States is hugely bloated and hopelessly uncompetitive in international markets. In this way, it shares similarities to the US steel industry in the late 70s, except Wall Street is much more poorly situated."
Looks like DOW recovered so down 370 but we haven't gone this low since 2004. Global selloff but that still means there will be money sitting on the sidelines which can pour back in when investors decide they want more return potentially than in money markets etc.
I don't believe it's time to pick up bargains. We're not done falling. Or on the other hand, perhaps the values will pick up as election day nears.
OTOH, there's many risky companies out there and the risk is increased due to all the deregulation and quazy-illegal activities. I don't believe we've hit the basement yet.
Also, your money guy may want to make money too. But he's also been part of the problem and didn't see this coming. So...basically. We're all screwed or maybe it's a good time to buy up but you could still get screwed.
Oh well...
Guy is saying on Wall Street video that sell off occurred because it was realized that the bailout would have to be 3x as large to work and it will take 45 days to have an impact. By then credit could pretty much freeze up - banks are hanging on to the assets they have. That is probably where the rumors about runs on banks are coming from.
I do think it's a time to pick up bargains because the market has been as low as 7000 and as high as 14,000 in the time over which I'm averaging. It's a matter of averaging the cost of a share over time. So when shares are worth less, you can buy more of them with the same investment. If companies go out of business, that's bad, but that's the beauty of mutual funds. You are diversified so have less risk. It's not cherry picking. It's not market timing. Stay in over the long term and leave the money alone as much as possible, reinvest dividends. This is a crisis but I don't believe it's the end of the world. Sarah Palin believes in end of the world. I believe more in things like extinction of mammals due to people like her.
I tracked down the source of some of the scare stuff I am being sent.
http://www.marketoracle.co.uk/Article6587.html
There are thousands of financial advise letters out there, preaching everything from doom and gloom to ways to profit off the misery of others.
Personally, my advice would be to go to cash - and maybe even buy Savings Bonds. That's my bias, and it's been that way for quite a while. But I'm not a person who sleeps well when my assets are the fire.
Jim Cramer: Time to get out of stocks
Financial guru warns that investments could lose 20 percent of their value
By Michael Inbar
TODAYShow.com contributor
updated 9:16 a.m. ET, Mon., Oct. 6, 2008
Bullish investors should turn into shrinking violets as the stock market continues its shocking downward spiral, CNBC’s “Mad Money” host Jim Cramer told Ann Curry on TODAY Monday.
In what Curry called a “dramatic statement,” Cramer emphatically urged any investor who has money they may need in the next five years tied to stocks to pull their dough out.
“I thought about this all weekend,” Cramer told Curry. “I do not want to say these things on TV.
“Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”
While the animated Cramer is known for telling investors the best prospects for earning money on the stock market, he’s now saying retreat is the best position in the face of some of the worst financial news in decades. The bank lending default crisis that put financial firms around the country on the brink of collapse could bring “as much as a 20 percent decrease in the stock market,” Cramer predicted.
- more -
http://www.msnbc.msn.com/id/27045699/
Olbermann getting ready to nuke Palin in a Special Comment.
WHAT? WHAT? WHAT???
Press kept under a watchful eye
CLEARWATER -- Constantly under the watchful eyes of security, the media wasn't permitted to wander around inside Coachman Park to talk to Sarah Palin supporters. When reporters tried to leave the designated press area and head toward the bleachers where the crowd was seated, an escort would dart out of nowhere and confront him or her and say, "Can I help you?'' and turn the person around.
When one reporter asked an escort, who would not give her name, why the press wasn't allowed to mingle, she said that in the past, negative things had been written. The campaign wanted to avoid that possibility Monday.
http://blogs.tampabay.com/breakingnews/2008/10/under-the-watch.html
Christy
That creeped me out. I made it into a diabolical blog post. I'm collecting imagery around this time of year that they evoke. (click on my name)
This fits too - he's very "Quasimodo" or "Igor"
doesn't work - try link http://silencedmajority.blogs.com/silenced_majority_portal/2008/10/press-kept-unde.html
Palins’ Un-American Activities
Imagine if the Obamas had hooked up with a violently anti-American group in league with the government of IRAN!. By David Talbot
Oct. 7, 2008 | “My government is my worst enemy. I’m going to fight them with any means at hand.” This was former revolutionary terrorist Bill Ayers back in his old Weather Underground days, right? Imagine what Sarah Palin is going to do with this incendiary quote as she tears into Barack Obama this week. ONLY ONE PROBLEM. The quote is from Joe Vogler, the raging anti-American who founded the Alaska Independence Party. Inconveniently for Palin, that’s the very same secessionist party that her husband, Todd, belonged to for seven years and that she sent a shout-out to as Alaska governor earlier this year. (”Keep up the good work,” Palin told AIP members. “And God bless you.”)
http://www.salon.com/opinion/feature/2008/10/07/palins_unamerican/index.html
Ok. So I may not be able to watch the debate. Hope there will be updates here for me to read later.
Busy, busy, busy........
This last month is going to be donnybrook. It is going to absolutely crazy. We didn't have that much going on at work today, so I spent much of the day arguing for Obama on one forum, then another, then another. Man, my head is ready to split right now!
But I am becoming ever more convinced that Obama is going to win this thing. As these monsters continue to exploit these WMD, however, God know what kind of country he's going to inherit.