3rd day of stock losses

[Arraya]

[quote=FormerSanDiegan]

I agree with the brain rot comment.

However, I would submit that a small fraction (well less than 10%) of homeowners have defaulted on their loans thus far AND the result is that the entire economy is sucking wind because of it.

[/quote]

I agree it was the trigger. My point was it should not be that fragile and if it is that fragile our economic and political “leadership” sure as hell should not encourage the behavior that could bring the whole thing to it’s knees and be working on ways to make it more resilient. When in fact they did the opposite and exacerbated the problem.

This is a culmination of decades of bad policy or more appropriately, policy directed at benefiting a few at the top with absolutely no sustainability.

We gutted our economy with globalization, filled the hole with debt based consumption growth needing an ever increasing amount of new debt creation just to not collapse. We ran out of people in 03-04 and started giving loans to everybody under the sun just to keep the party going, it was just a matter of time until the house of cards came down. Subprime was the pinprick of a 30 year credit binge.

Now, due to the credit contraction dynamic from lack of trust and no capitial, banks are not lending and this is affecting businesses which have become completely reliant on debt just to fund operations, this is causing the layoffs–>layoffs to more defaults—>to more credit contraction. It’s going to be a viscous cycle and the inherent faultiness and hollowness of the model will become quite apparent.

The Checkbook republic is going down.

In other news:

http://www.cnbc.com/id/27641538

The United States may be on course to lose its ‘AAA’ rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

“The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system” and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

“In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off,” Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

On topic: With the US caught in a self-reinforcing deflationary death spiral and BK looming in the background on the doorstep of terminal world oil production decline I’m going to have to say the DOW is going much lower. In fact, I’d say we are going to a new economic paradigm that quite possibly will not be denominated in dollars. But that’s just me;)

[HereWeGo]

[quote=afx114]So if McCain would have won, none of this would be happening, right? Riiiiggght…[/quote]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.

That’s irrelevent, though. Perhaps the judgement is fully rendered at this point, but the market has judged Obamanomics harshly, as well it should. Bailing out the UAW, hiking effective corporate tax rates, and building more Big Digs and bridges to nowhere? Please.

[HereWeGo]

[quote=afx114]So if McCain would have won, none of this would be happening, right? Riiiiggght…[/quote]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.

That’s irrelevent, though. Perhaps the judgement is fully rendered at this point, but the market has judged Obamanomics harshly, as well it should. Bailing out the UAW, hiking effective corporate tax rates, and building more Big Digs and bridges to nowhere? Please.

[HereWeGo]

[quote=afx114]So if McCain would have won, none of this would be happening, right? Riiiiggght…[/quote]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.

That’s irrelevent, though. Perhaps the judgement is fully rendered at this point, but the market has judged Obamanomics harshly, as well it should. Bailing out the UAW, hiking effective corporate tax rates, and building more Big Digs and bridges to nowhere? Please.

[HereWeGo]

[quote=afx114]So if McCain would have won, none of this would be happening, right? Riiiiggght…[/quote]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.

That’s irrelevent, though. Perhaps the judgement is fully rendered at this point, but the market has judged Obamanomics harshly, as well it should. Bailing out the UAW, hiking effective corporate tax rates, and building more Big Digs and bridges to nowhere? Please.

[HereWeGo]

[quote=afx114]So if McCain would have won, none of this would be happening, right? Riiiiggght…[/quote]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.

That’s irrelevent, though. Perhaps the judgement is fully rendered at this point, but the market has judged Obamanomics harshly, as well it should. Bailing out the UAW, hiking effective corporate tax rates, and building more Big Digs and bridges to nowhere? Please.

[CA renter]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.
————————

Tax cuts don’t mean anything when there are no profits to tax.

There are no profits because the plankton that feed the entire world economy (U.S. consumers) are dying off at an unprecedented rate. They are dying off because housing prices stopped rising…and their access to tens or hundreds of thousands of dollars per year is no longer there.

The plankton needed access to massive credit because their wages have been falling/stagnant for many years (the “stagflation” situation was exacerbated by the cost inflation that resulted from all the credit expansion).

This was a CREDIT bubble, not a housing bubble. ALL assets were affected on the way up, and ALL assets will be affected on the way down. This goes for stocks, bonds, real estate, commodities, precious metals, etc. Look at the price movements of all these assets since 1982, and then look at the parabolic move from 2000-2007 (the stock market obviously declined during the dot.com bust, but rallied back rather quickly). Look at the credit markets over those years, and you will see a direct correlation.

Add to all this the unregulated derivatives that were betting on all these credit movements (by an order of magnitude…and then more derivatives that were indexed to the other derivatives, and so on…), and you will understand why we are where we are right now.

This has nothing to do with Obama…nothing at all. While there are politicians on both side of the aisle who are largely responsible for blocking regulation of these markets, it is the Republicans who came out publicly in support of massive deregulation of the financial industry.

[CA renter]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.
————————

Tax cuts don’t mean anything when there are no profits to tax.

There are no profits because the plankton that feed the entire world economy (U.S. consumers) are dying off at an unprecedented rate. They are dying off because housing prices stopped rising…and their access to tens or hundreds of thousands of dollars per year is no longer there.

The plankton needed access to massive credit because their wages have been falling/stagnant for many years (the “stagflation” situation was exacerbated by the cost inflation that resulted from all the credit expansion).

This was a CREDIT bubble, not a housing bubble. ALL assets were affected on the way up, and ALL assets will be affected on the way down. This goes for stocks, bonds, real estate, commodities, precious metals, etc. Look at the price movements of all these assets since 1982, and then look at the parabolic move from 2000-2007 (the stock market obviously declined during the dot.com bust, but rallied back rather quickly). Look at the credit markets over those years, and you will see a direct correlation.

Add to all this the unregulated derivatives that were betting on all these credit movements (by an order of magnitude…and then more derivatives that were indexed to the other derivatives, and so on…), and you will understand why we are where we are right now.

This has nothing to do with Obama…nothing at all. While there are politicians on both side of the aisle who are largely responsible for blocking regulation of these markets, it is the Republicans who came out publicly in support of massive deregulation of the financial industry.

[CA renter]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.
————————

Tax cuts don’t mean anything when there are no profits to tax.

There are no profits because the plankton that feed the entire world economy (U.S. consumers) are dying off at an unprecedented rate. They are dying off because housing prices stopped rising…and their access to tens or hundreds of thousands of dollars per year is no longer there.

The plankton needed access to massive credit because their wages have been falling/stagnant for many years (the “stagflation” situation was exacerbated by the cost inflation that resulted from all the credit expansion).

This was a CREDIT bubble, not a housing bubble. ALL assets were affected on the way up, and ALL assets will be affected on the way down. This goes for stocks, bonds, real estate, commodities, precious metals, etc. Look at the price movements of all these assets since 1982, and then look at the parabolic move from 2000-2007 (the stock market obviously declined during the dot.com bust, but rallied back rather quickly). Look at the credit markets over those years, and you will see a direct correlation.

Add to all this the unregulated derivatives that were betting on all these credit movements (by an order of magnitude…and then more derivatives that were indexed to the other derivatives, and so on…), and you will understand why we are where we are right now.

This has nothing to do with Obama…nothing at all. While there are politicians on both side of the aisle who are largely responsible for blocking regulation of these markets, it is the Republicans who came out publicly in support of massive deregulation of the financial industry.

[CA renter]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.
————————

Tax cuts don’t mean anything when there are no profits to tax.

There are no profits because the plankton that feed the entire world economy (U.S. consumers) are dying off at an unprecedented rate. They are dying off because housing prices stopped rising…and their access to tens or hundreds of thousands of dollars per year is no longer there.

The plankton needed access to massive credit because their wages have been falling/stagnant for many years (the “stagflation” situation was exacerbated by the cost inflation that resulted from all the credit expansion).

This was a CREDIT bubble, not a housing bubble. ALL assets were affected on the way up, and ALL assets will be affected on the way down. This goes for stocks, bonds, real estate, commodities, precious metals, etc. Look at the price movements of all these assets since 1982, and then look at the parabolic move from 2000-2007 (the stock market obviously declined during the dot.com bust, but rallied back rather quickly). Look at the credit markets over those years, and you will see a direct correlation.

Add to all this the unregulated derivatives that were betting on all these credit movements (by an order of magnitude…and then more derivatives that were indexed to the other derivatives, and so on…), and you will understand why we are where we are right now.

This has nothing to do with Obama…nothing at all. While there are politicians on both side of the aisle who are largely responsible for blocking regulation of these markets, it is the Republicans who came out publicly in support of massive deregulation of the financial industry.

[CA renter]

Maybe, maybe not. The fact that Obama’s plan is screwy doesn’t mean that McCain’s plan was wise, although the promised corporate tax cut might have had a positive effect on companies considering RIFs and slashing capex.
————————

Tax cuts don’t mean anything when there are no profits to tax.

There are no profits because the plankton that feed the entire world economy (U.S. consumers) are dying off at an unprecedented rate. They are dying off because housing prices stopped rising…and their access to tens or hundreds of thousands of dollars per year is no longer there.

The plankton needed access to massive credit because their wages have been falling/stagnant for many years (the “stagflation” situation was exacerbated by the cost inflation that resulted from all the credit expansion).

This was a CREDIT bubble, not a housing bubble. ALL assets were affected on the way up, and ALL assets will be affected on the way down. This goes for stocks, bonds, real estate, commodities, precious metals, etc. Look at the price movements of all these assets since 1982, and then look at the parabolic move from 2000-2007 (the stock market obviously declined during the dot.com bust, but rallied back rather quickly). Look at the credit markets over those years, and you will see a direct correlation.

Add to all this the unregulated derivatives that were betting on all these credit movements (by an order of magnitude…and then more derivatives that were indexed to the other derivatives, and so on…), and you will understand why we are where we are right now.

This has nothing to do with Obama…nothing at all. While there are politicians on both side of the aisle who are largely responsible for blocking regulation of these markets, it is the Republicans who came out publicly in support of massive deregulation of the financial industry.

[lonestar2000]

[quote=CA renter]This was a CREDIT bubble, not a housing bubble.[/quote]

I agree partially, all the investment money that drained out of the tech bubble created a huge pool of loan money, at the same time interest was still way low. This had the net effect of inflating prices of all big ticket items as people were ‘flush’ with excess cheap money and they spent like there was no tomorrow.

Once underway, housing became a bubble in itself, blowing it way above what even the credit bubble could pump into it.

Thus, we now have two very big bubbles deflating, which is bringing nearly everything else down with it.

What a wild ride!

To get back on topic that started this thread, Thursday was quite a comeback rally, and Friday was a continuation, right up to the point where people pulled out to put their money back into cash for the weekend.

The question is, whether we’re in for a continuation of the rally next week, or are dropping further down the slope? My gut tells me we’ll be headed further down, but I seem to be a contrary indicator of late, so it may be good advise if you bet against me LOL.

[lonestar2000]

[quote=CA renter]This was a CREDIT bubble, not a housing bubble.[/quote]

I agree partially, all the investment money that drained out of the tech bubble created a huge pool of loan money, at the same time interest was still way low. This had the net effect of inflating prices of all big ticket items as people were ‘flush’ with excess cheap money and they spent like there was no tomorrow.

Once underway, housing became a bubble in itself, blowing it way above what even the credit bubble could pump into it.

Thus, we now have two very big bubbles deflating, which is bringing nearly everything else down with it.

What a wild ride!

To get back on topic that started this thread, Thursday was quite a comeback rally, and Friday was a continuation, right up to the point where people pulled out to put their money back into cash for the weekend.

The question is, whether we’re in for a continuation of the rally next week, or are dropping further down the slope? My gut tells me we’ll be headed further down, but I seem to be a contrary indicator of late, so it may be good advise if you bet against me LOL.

[lonestar2000]

[quote=CA renter]This was a CREDIT bubble, not a housing bubble.[/quote]

I agree partially, all the investment money that drained out of the tech bubble created a huge pool of loan money, at the same time interest was still way low. This had the net effect of inflating prices of all big ticket items as people were ‘flush’ with excess cheap money and they spent like there was no tomorrow.

Once underway, housing became a bubble in itself, blowing it way above what even the credit bubble could pump into it.

Thus, we now have two very big bubbles deflating, which is bringing nearly everything else down with it.

What a wild ride!

To get back on topic that started this thread, Thursday was quite a comeback rally, and Friday was a continuation, right up to the point where people pulled out to put their money back into cash for the weekend.

The question is, whether we’re in for a continuation of the rally next week, or are dropping further down the slope? My gut tells me we’ll be headed further down, but I seem to be a contrary indicator of late, so it may be good advise if you bet against me LOL.

[lonestar2000]

[quote=CA renter]This was a CREDIT bubble, not a housing bubble.[/quote]

I agree partially, all the investment money that drained out of the tech bubble created a huge pool of loan money, at the same time interest was still way low. This had the net effect of inflating prices of all big ticket items as people were ‘flush’ with excess cheap money and they spent like there was no tomorrow.

Once underway, housing became a bubble in itself, blowing it way above what even the credit bubble could pump into it.

Thus, we now have two very big bubbles deflating, which is bringing nearly everything else down with it.

What a wild ride!

To get back on topic that started this thread, Thursday was quite a comeback rally, and Friday was a continuation, right up to the point where people pulled out to put their money back into cash for the weekend.

The question is, whether we’re in for a continuation of the rally next week, or are dropping further down the slope? My gut tells me we’ll be headed further down, but I seem to be a contrary indicator of late, so it may be good advise if you bet against me LOL.

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