Good-Bye to All That
Submitted by Bluemoon on October 8, 2008 - 7:11pm.
I'm not generally a fan of the cut & paste & that's it, but there's quite a lot to chew over here without adding anything. I encourage people to ponder the nature of The Shock Doctrine more fully, as the future administration of such may not be in the hands of the usual suspects at all. For those who thought China & Russia had no overt stake in the Iraq War... I have news for you tonight: "not so much."
Sunday September 28 2008 - from The Guardian
A shattering moment in America's fall from power
The global financial crisis will see the US falter in the same way the Soviet Union did when the Berlin Wall came down. The era of American dominance is over
Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.
You can see it in the way America's dominion has slipped away in its own backyard, with Venezuelan President Hugo Chávez taunting and ridiculing the superpower with impunity. Yet the setback of America's standing at the global level is even more striking. With the nationalisation of crucial parts of the financial system, the American free-market creed has self-destructed while countries that retained overall control of markets have been vindicated. In a change as far-reaching in its implications as the fall of the Soviet Union, an entire model of government and the economy has collapsed.
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The Chicago School of Economics
Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.
Despite incessantly urging other countries to adopt its way of doing business, America has always had one economic policy for itself and another for the rest of the world. Throughout the years in which the US was punishing countries that departed from fiscal prudence, it was borrowing on a colossal scale to finance tax cuts and fund its over-stretched military commitments. Now, with federal finances critically dependent on continuing large inflows of foreign capital, it will be the countries that spurned the American model of capitalism that will shape America's economic future.
Which version of the bail out of American financial institutions cobbled up by Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke is finally adopted is less important than what the bail out means for America's position in the world. The populist rant about greedy banks that is being loudly ventilated in Congress is a distraction from the true causes of the crisis. The dire condition of America's financial markets is the result of American banks operating in a free-for-all environment that these same American legislators created. It is America's political class that, by embracing the dangerously simplistic ideology of deregulation, has responsibility for the present mess.
In present circumstances, an unprecedented expansion of government is the only means of averting a market catastrophe. The consequence, however, will be that America will be even more starkly dependent on the world's new rising powers. The federal government is racking up even larger borrowings, which its creditors may rightly fear will never be repaid. It may well be tempted to inflate these debts away in a surge of inflation that would leave foreign investors with hefty losses. In these circumstances, will the governments of countries that buy large quantities of American bonds, China, the Gulf States and Russia, for example, be ready to continue supporting the dollar's role as the world's reserve currency? Or will these countries see this as an opportunity to tilt the balance of economic power further in their favour? Either way, the control of events is no longer in American hands.
The fate of empires is very often sealed by the interaction of war and debt. That was true of the British Empire, whose finances deteriorated from the First World War onwards, and of the Soviet Union. Defeat in Afghanistan and the economic burden of trying to respond to Reagan's technically flawed but politically extremely effective Star Wars programme were vital factors in triggering the Soviet collapse. Despite its insistent exceptionalism, America is no different. The Iraq War and the credit bubble have fatally undermined America's economic primacy. The US will continue to be the world's largest economy for a while longer, but it will be the new rising powers that, once the crisis is over, buy up what remains intact in the wreckage of America's financial system.
There has been a good deal of talk in recent weeks about imminent economic armageddon. In fact, this is far from being the end of capitalism. The frantic scrambling that is going on in Washington marks the passing of only one type of capitalism - the peculiar and highly unstable variety that has existed in America over the last 20 years. This experiment in financial laissez-faire has imploded.While the impact of the collapse will be felt everywhere, the market economies that resisted American-style deregulation will best weather the storm. Britain, which has turned itself into a gigantic hedge fund, but of a kind that lacks the ability to profit from a downturn, is likely to be especially badly hit.
The irony of the post-Cold War period is that the fall of communism was followed by the rise of another utopian ideology. In American and Britain, and to a lesser extent other Western countries, a type of market fundamentalism became the guiding philosophy. The collapse of American power that is underway is the predictable upshot. Like the Soviet collapse, it will have large geopolitical repercussions. An enfeebled economy cannot support America's over-extended military commitments for much longer. Retrenchment is inevitable and it is unlikely to be gradual or well planned.
Meltdowns on the scale we are seeing are not slow-motion events. They are swift and chaotic, with rapidly spreading side-effects. Consider Iraq. The success of the surge, which has been achieved by bribing the Sunnis, while acquiescing in ongoing ethnic cleansing, has produced a condition of relative peace in parts of the country. How long will this last, given that America's current level of expenditure on the war can no longer be sustained?
An American retreat from Iraq will leave Iran the regional victor. How will Saudi Arabia respond? Will military action to forestall Iran acquiring nuclear weapons be less or more likely? China's rulers have so far been silent during the unfolding crisis. Will America's weakness embolden them to assert China's power or will China continue its cautious policy of 'peaceful rise'? At present, none of these questions can be answered with any confidence. What is evident is that power is leaking from the US at an accelerating rate. Georgia showed Russia redrawing the geopolitical map, with America an impotent spectator.
Outside the US, most people have long accepted that the development of new economies that goes with globalisation will undermine America's central position in the world. They imagined that this would be a change in America's comparative standing, taking place incrementally over several decades or generations. Today, that looks an increasingly unrealistic assumption.
Having created the conditions that produced history's biggest bubble, America's political leaders appear unable to grasp the magnitude of the dangers the country now faces. Mired in their rancorous culture wars and squabbling among themselves, they seem oblivious to the fact that American global leadership is fast ebbing away. A new world is coming into being almost unnoticed, where America is only one of several great powers, facing an uncertain future it can no longer shape.
-John Gray is the author of Black Mass: Apocalyptic Religion and the Death of Utopia
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The Real News
Pepe Escobar reporting via youtube: At almost $1 trillion, and counting, the Wall Street bailout will cost taxpayers as much as the Iraq war. Barack Obama squandered the chance to lead with an alternative plan to the Wall Street bailout. Instead both Obama and McCain pushed for a plan that's not only deeply unpopular but potentially as costly as a new Iraq war.
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A calm-ish word from Steve Clemons & James K. Galbraith:
Interviewing Galbraith on the Economy: It's Not the End of Days*
*However, one wonders since Obama seems loathe to even utter the word "Democrat" just how this rather blank slate of a potential President will exactly enact FDR-like reforms. Is he a closet socialist? One can only hope. He certainly hasn't got my vote until I hear more. MUCH more.
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I am neither bitter nor cynical but I do wish there was less immaturity in political thinking.
Franklin D. Roosevelt
Mad4Clark says,
'Obama is simply an Obamacrat, and as such will do whatever is needed to ensure re-election............. and no more.'
I noticed that during the debate, Obama said,
'During my first administration ...'
He hasn't even been elected yet (although momentum does seem to be moving his way), and he is already planning his second campaign/administration?
A longer session detailing what we need to do & somewhat soothing & calming, without sugarcoating the road we must pursue.
About the Obama comments- I have less than zero confidence & even less faith in him, etc. & he will not be getting my vote or support (nor will McCain)- for dozens of reasons of which I am not going to go into here.
However the point of this diary at least is to gain some perspective & see the forest for the trees- i.e. our problems are gargantuan & far huger than one figure.There are so many interesting insights & statistics & lenses in this talk, I'm learning a lot from it & hope anyone listening may also. It is truly illuminating, at least to me.
I guess it's a loan. Today, I went to lunch at a place that normally is packed and has a wait. Today, there were empty tables all through the lunch hour. It's a sign of the times. Still, among my friends, nobody feels panic over the stock market. I think that's a good thing. No point in freaking out, because there's nothing we can do about it anyway.
Russia's petrodollars at work - or, more appropriately, a handful of Russian oligarch's petrodollars at work. Having traveled to Russia in 1991 & having been more recently through Iceland's airports, at least, where a pint of beer or a cappuccino is near bankrupting, it's just strange to consider such a thing.
when a dollar was worth a gazillion rubles. Times have changed. Still, during the cold war, a ruble was probably worth $5 if you could change money with Russia. It all swings back and forth. Speaking of prices, gas is under $3 here today. I hope that is a continuing trend with people doing what they are doing to drive the price of oil down down down. Or better yet, just keep more of it in the ground. Somebody gave me a hat today that says Clean Coal.
I don't care one whit how unpopular the Paulson-Congressional rescue plan is at this point. I care if it's going to work, at least to some degree.
I've heard a lot of reasons why people oppose the plan and anyone who voted for it. Most of those reasons have nothing to do with the causes of the crisis. They're just emotional responses from people who don't understand the structural problems.
I'm too ignorant to understand the causes, too, except at a very simple level. We're going to have to rely on people who do understand the causes, because it will be they who will have to solve the problems.
Stan Davis
Lakewood, CO
"We're no better than our own sense of humility."
I don't understand all the ins and outs of it either, but Nader makes sense to me here. It seems congress could have done more in regards to regulation with this bill.
He was on the Situation Room yesterday. Here's a snippet of the interview:
RALPH NADER (I), PRESIDENTIAL CANDIDATE: Thank you, John.
ROBERTS: You've got, on October the 16th, a planned protest out there in front of the New York Stock Exchange. You're going to be illuminating your criticism, your displeasure with this bailout plan. You say that it's a disaster.
But let me ask you this question, what does a disaster look like? Because this bailout plan hasn't yet taken effect.
NADER: Yes, but the international markets, including the New York Stock Exchange, have rendered their verdict, haven't they?
They've lost confidence in it. It's not directed toward the right subjects. We should be helping prudent firms and prudent investors first, who are afflicted by this Wall Street orgy of excess and speculative behavior, to quote Richard Fisher, the Federal Reserve official in Dallas.
And imagine he himself said this all comes from an orgy of excess and speculative behavior.
ROBERTS: But are you rendering judgment on this...
NADER: But the way to have gone...
ROBERTS: Are you rendering judgment on the bailout plan too early?
NADER: No.
ROBERTS: You know, they haven't bought up the first of these toxic securities yet.
NADER: Yes, but I know what's in the bill, in the law. And what it is, they're going to unload basically junk paper called distressed assets. It's far better if they inject the capital into these banks and investment banks and other institutions and gave the taxpayer ownership, as it was done, in effect, with the Chrysler bailout in 1979.
So if these companies revive and they make profit, the taxpayer is made whole. There is a provision in the bill like that, but it's so porous that everybody on Wall Street says it's not enforceable.
But it's what they left out, John. They left out in this bill -- and the Democrats and Republicans are both responsible -- no re- regulation of the financial securities industry or regulation of the wild orgy of derivative speculation. No tax on derivatives to make the speculators pay for their own bailout. One tenth of one percent tax of $500 trillion in transactions this year...
ROBERTS: But they have (INAUDIBLE)... NADER: ...will produce $500 billion.
ROBERTS: But they have promised that that regulation will be coming. It's probably going to come with the next administration. But what they wanted to do was get this bailout passed now.
NADER: Hey, they gave away the store first and then they're going to try to bring the sheriff later? It doesn't work that way. Wall Street was over a barrel.
Washington had Wall Street over the barrel. They could have had this re-regulation. They could have had shareholder power enhancement to control the bosses. They could have had disclosure. They could have had all kinds of things, because Wall Street wanted that bailout. Instead, Wall Street stuffed Washington into the barrel and rolled it. And it's not going to work.
(Emphasis mine)
More here.
The truth will set you free. But first, it will piss you off. ~Gloria Steinem
It's a cycle that's been evident since the beginning of recorded history.
And I would suspect that with each rise there was the expectation that there would never be a fall, but history tells a different story.
Did we really think we could buck that and stay on top forever?
Of course we did. As did Greece and Rome and Spain and England, et al.
There really is nothing new under the sun...it's just that this time it's "us" not "them". This time it's "now" not "then".
It seems the "Supers" always manage to make the same mistakes. There's a long list of mistakes that have been repeated time and time again that can all be summed up by a saying most children have heard at one time or another..."You're getting a little too big for your britches."
America, especially in the past decade or so, has gotten too big for its britches" and like all the rest will pay the price for same.
The world will not end with this fall just as it didn't end with the fall of the others.
The world will change and change drastically for a time as things sort out. China will likely become the next "Super Power" and there is little that can be done to keep that from happening.
We will adapt. We will have no choice.
We will learn that we don't have to have all the power, all the influence, all the money to survive.
It won't be easy. It won't be pleasant. But it will be another circuit of the cycle of life.
with anything you've added. In an academic (and in our recent case, literal) sense, sure, pride goeth before a fall. It always does. But I will certainly mourn our ability to shape, versus cope with, our collective future.
It's not that the ascendency of China or India need be feared, but they both bring issues to the table that must be grappled with, particularly sub-human wages, terrifying environmental depredation & in one case, institutionalized torture. OTOH, consumer culture drives so much of the bad dynamic. But then, thanks to Bu$hInc, who are we to speak of institutionalized torture?
But despite the fact that humans seem obsessed, or programmed with some kind of internal collective beehive prime directive to build pyramids then knock them down & a long succession of empires have risen & fallen, I can & will definitely mourn America's greying temples, as well as the turndown in prospects for millions of people who work hard & play by the rules & watch helplessly as their standard of living slips away while bearing the burdens of more & more stress & worry. Nature takes its course but America has been brought to her knees by multinationals & gross mismanagement, make no mistake.
I'm not nor have ever been hellbent on needing to see America be a superpower in any way. It will be a relief not to go around starting fights we can't finish & never needed to be engaged in.
We've have watched the hastening of the inevitable end of empire at the hands of a political party taken over by a small extreme minority group in the 90s who gloried in taking down an (flawed, yes, yes) American president focused on the greater good. One who was also concerned about the wider world- all this, in a paroxysm of New World Order glee, thinking they'd scored some kind of great victory meanwhile installing cronies & corrupt office holders whose loyalty was never to the actual country itself & who gladly co-opted & contracted out & crashed aging systems-that Iraq & Enron were two ends of one bankrupt philosopy executed by the same hands, etc.
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
Thats how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Leonard Cohen, Everybody Knows
with your sentiments and yes, I too will weep for my country.
Sadly we, as a nation didn't heed the lessons of history...and especially so since the advent of GWB and crew...history to GW is the place where we will all be dead so who cares. Typical arrogance from him.
I really wish for more...but right now more doesn't seem to be on the horizon...maybe just over the horizon it waits?
If only...
If only Wes could have run...
If only we could have the president we were promised as kids.
Sigh
http://www.youtube.com/watch?v=XrihttN0Fe8
Because it never hurts to learn the names and faces of your masters!
ms I read somewhere that the attendees are actually representatives of the real masters. The real masters of the universe are not present.
The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism - ownership of government by an individual, by a group, or by any other controlling private power.
- Franklin D. Roosevelt
get a new POTUS that didn't appear to aspire to be a moderate Republican in precisely the same vein w pretended to be one. For starters.
You know. Uniter (ha!), bipartisan, dogwhistling to the right. Vague. Teflony. Charismatic leadery. Blank slatey. 320 million blind men & an elephanty.
I fear a sickening slide into a Reagany-Tony Blair-like Kool(aid) Americana.
Forty thousand headmen couldn't make me change my mind
If I had to take the choice between the deafman and the blind
I know just where my feet should go and that's enough for me
I turned around and knocked them down and walked across the sea ~ Steve Winwood
It may have taken nearly a decade to accomplish- but Bilderbergers were the first to call for a one party America - who knew they intended to maintain the facade of the two party system? :) Now THAT's clever!
I think the one component that will differentiate it from Reagan-Blair World is the weakened IV drip drip state we'll be in when whoever inherits it takes the throne... er, takes office.
Crumbling empire being so much less sexy than thriving empire.
Here are some social effects of the implementation of Milton Friedman style economic policies in Russia under Yeltsin:
Excerpts from “The Shock Doctrine” by Naomi Klein Chapter 11, page 299:
“In the absence of major famine, plaque or battle, never have so many lost so much in so short a time.”
By 1998, more than 80% of Russian farms had gone bankrupt, and roughly seventy thousand state factories had closed.
In 1989, before shock therapy, 2 million people in the Russian Federation were living in poverty, on less than $4 a day. By the mid 90’s 74 million Russians were living below the poverty line , according to the World Bank. That means “economic reforms” can claim impoverishment of 72 million people in only eight years. By 1996, 25% of Russians --almost 37 million people--lived in poverty described as “desperate”.
In 2006 the government admitted that there were 715,000 homeless kids in Russia, and UNICEF has put the number as high as 3.5 million children.
During the Cold War,widespread alcoholism was always seen in the west as evidence that life under Communism was so dismal that Russians needed large quantities of vodka to get through the day. Under capitalism, however, Russians drink more than twice as much alcohol and they are reaching for harder painkillers as well. Russia’s drug czar, Alexandr Mikailov, says that the number of users went up 900% from 1994to 2004, to more than 4 million people, many of them heroin addicts. The Drug epidemic has contributed to another silent killer:in 1995, 50 thousand Russians were HIV positive, and in only 2 years that number doubled: ten years later, according to UNAIDS, nearly a million Russians were HIV positive.
In 1992 Russia’s already high suicide rate began to rise. In 1994, the peak of Yeltzins”economic reforms” saw the suicide rate climb to almost double what it had been eight years earlier. Russians also killed each other with much greater frequency:by 1994, violent crime had increased more than fourfold.
-snip-
Make no mistake about it--we are undergoing our very own “Shock Doctrine” right here in the good ole USA.
How do you think we will fare? Well?
Get that puppy if you haven't read it yet and then as a chaser (because it is a bitter pill to swallow) take a shot of COEHM (Confessions of an Economic Hit Man).
That one two combo should easily render you catatonic for at least a week! :-)
But at least you'll be in the know.
When I was there in 1992, I saw some of those guys. My reaction when I looked at them was that they had nothing to live for. We were really lucky our soldiers didn't have to go up against them. Alcohol is a big part of their culture for sure. It is in many parts of Europe.
As for the US, some places will be hit harder than others. It's possible the areas that didn't have as much of a boom will have less of a bust. Alaska is the Saudi Arabia of the US in terms of oil, so perhaps they will be fine. New York has been doing well from tourism, with people from Europe coming there to shop. With the global credit squeeze, it remains to be seen. I'm hoping the experience brings us closer together. Something good could come out of it.
A commune for Clarkies? A Walden Pond for Clarkies? I'm in. You guys can take care of me.
Stan Davis
Lakewood, CO
"We're no better than our own sense of humility."
the life expectancy for a Russian man is now down to 59 years, according to a biology text book that is only a few years old. Appalling.
Proud to be an American.
More thoughtful comments than I've often seen there at the Guardian site in such a short period. Here's part of one of the last comments (before they were closed) by a former banker:
Hello everyone, I am a former banker in America's 6th largest bank. I now own my own business and I would like to give everyone my prospective. What has happen in the US is a series of bad decissions from our government on all levels. It starts with our education system and goes all the way to the white house, there is a definitive shift in power when one loses focus on the most important assets a country has. Its people. America forgot who she was and will pay the price. No one can say how far this will go but one thing I agree with, the balance of power has shifted. At the bank I would see every day how people who could not afford a mid sized vehicle would want a loan for "the new HUMMER" as if that was the symbol of American pride. Many years ago the pride was the woman making bullets at the local factory for our military fighting a justified war. Today we want the newest ipod. Even people that are not from the US will come here to live like we do, as if that were "the right way to live".
We as Americans because of our greed have brought this on our selves, there is no one to blame. These are the results of living outside of our means not expecting to PAY FOR IT. I would see at my office the rich getting richer. While the poor saw a new tv commercial and would come to the bank and withdraw more and more money every day to buy what they saw on tv. It was three years ago that I began seeing hundreds of our wealthiest clients come to the bank and diversify their portfolios, sell dollars, buy euros and gold. They began selling off their mutual funds and stocks and wire them to Rome, Madrid, Shanghai, Mexico City and even Brazil. The reality was that they got rich, very rich, so the divide between rich and poor became even bigger. These clients took their money and ran just like anyone would do in a Las Vegas casino.
I will predict that in the future the US will be as similar as our neighbors south of the border. With a small middle class, a large lower class and a moderate upper class. This "new" upper class will rival the worlds wealthiest people. Our country will not explode like everyone predicts but one thing is certain things will be different.
Nick Kelly
Wes Clark could still secure America as a national security candidate.
I think my son was 10 years old when he told a friend who wanted to buy something he didn't need this: "You are just a victim of advertising".
Too many "victims of advertising" .
Hopefully, he can see through all of the political advertising as well.
Nick Kelly
Wes Clark could still secure America as a national security candidate.
US debt clock runs out of digits
A picture of the debt clock taken in October by Mervyn Kaye
Until last month, the clock had enough digits to measure US debt levels
The US government's debts have ballooned so badly the National Debt Clock in New York has run out of digits to record the spiralling figure.
The digital counter marks the national debt level, but when that passed the $10 trillion point last month, the sign could not display the full amount.
The board was erected to highlight the $2.7 trillion level of debt in 1989.
The clock's owners say two more zeros will be added, allowing the clock to record a quadrillion dollars of debt.
Douglas Durst, son of the late Seymour Durst - the clock's inventor - hopes to replace the Manhattan clock with its lengthier replacement early next year.
For the time being, the Times Square counter's electronic dollar sign has been replaced with the extra digit required.
For its part, the digital dollar symbol has been supplanted by a cheaper version - perhaps a sign of the times for the American economy.
Some economists believe the $700bn bail-out plan for ailing US financial institutions could send the national debt level to $11 trillion.
Milton Friedman's great misfortune is that his policies have been tried. -Naomi Klein, quoting John Kenneth Galbraith
....
Back to Klein. Recently, on Amy Goodman's Democracy Now, Klein notes that Obama seems to offer an alternative to Friedmanism. His followers genuinely believe that Obama will institute "trickle up" economic remedies. If so, then why Goolsbee? Why Liebman? Why Furman?
We need better ideas responding to what a Barack Obama presidency would absolutely face. As soon as he comes to office, “Yes, you can” turns into “No, you can’t; we’re broke.” No green jobs, no alternative energy, no healthcare for everyone. You know, his plan for—to give healthcare to every child in America costs $80 billion. Bailing out AIG cost $85 billion. They’re spending that money. They’re spending those promises. So, the people who are going to say, “No, you can’t,” who are going to use this crisis to shut down hope, to shut down possibility, are ready.
In other words: It may well be that those who wish to shock us into a Friedmanite "paradise" -- no unions, no Medicare, privatized Social Security, privatized schools -- understand that the Big Zap will work best if it hits while a Democrat sits in the oval office.
Once in a while you get shown the light, In the strangest of places if you look at it right.
Or TRUST...
Dow Down 678.91 (7.33%)
iiits not working. Or maybe it is. Depends on whether you subscribe to Friedmanism.
Wall Street crashes – again!
By Richard Lander | 21:28:20 | 09 October 2008
The medicine ain’t working, yet.
Despite concerted efforts from central banks and governments around the world, investor confidence remains shattered by fears of a deep recession – the result being that shares once again slumped on Wall Street on Thursday.
Having only gone below 10,000 on Monday, the Dow Jones Industrial Average went below 9,000 just three days lower, ending around 668 points, or 7.2%, down at 8,589.
One factor scaring investors was the downgrading of General Motors which has been placed on CreditWatch Negative at Standard & Poor's.
‘WTF just happened?’ wrote Wall Street money manager Barry Ritholtz on his Big Picture blog.
Even Ritholtz, a confirmed bear throughout the credit crisis, had thought we were near the bottom. ‘Okay, our Dow 10,000, 9,500 and now our Dow 9,000 targets have been hit.,’ he wrote before the close.
‘This cascading waterfall selloff is ugly. Next key level of support is 8,750, where we would again be buyers of the market.
If that does not hold, then we are looking at no support until the 2002 levels -- about 7250....
http://www.citywire.co.uk/Adviser/-/news/other/content.aspx?ID=317149
Nick Kelly
Wes Clark could still secure America as a national security candidate.
Nelsons and myself have been predicting target of DOW 8,000 or so.
Here's my reasoning:
The post 9/11 disruption low on the Dow was hit around July 1, 2002 at about 7600. The broader average of the SP500 hit about 816 at that time.
The Dow and SP500 are currently at 8,579 and 902, respectively; therefore, we have another 10-12% downside to go before those lows are hit.
Of course, most other people who are technical-analysis savvy are aware of those targets and you would normally expect some major buying coming in before those targets are hit; however, we've got a lot of momemtum to the downside and so I'm thinking those prior lows will be reached.
This would also represent nearly a 50% drop ni the overall market.
For my part, I've been about 95% out of stocks since June (with a net gain of 15% this year) and intend to move at least 35% of my 401K portfolio back in if those targets are hit (which could possibly be tomorrow), with some more left in reserve if we go lower.
in the next 5 years (according to Cramer) or the next 10 years (according to Orman) you shouldn't be in the market. You might as well go to Vegas with the money to gamble and at least have fun doing it.
I've always stayed away from Atlantic City and the stock market. I'm about half way between the two and the only difference I've found is that AC has more colored lights.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
Las Vegas = -2% per bet returns (best odds at Blackjack or Craps) UNLESS you're playing poker which can be highly profitable
Stock market strongly in one's favor assuming a discplined (data-driven) approach
And if you followed Suzie Orman's advice in the 1930s, you would have missed a potential 400-500% return on your money. Anyways, Suzie's wealth is based on books/advice and going against the herd is probably not all that profitable for that line of work.
Also, tell Warren Buffet that the best place to be is in Las Vegas.
"The big problem with Suze Orman is that she appears to be a below-average financial planner," says Bob Veres, a leading commentator on the financial-planning world and author of the new novel "Song of the Universe," in which the protagonist is a financial adviser.
"She scores very high on the personality index, but very low on the knowledge and understanding of the complex issues that face a lot of her audience. She's giving generic, simple solutions to people's most difficult problems, and judging from her portfolio, she's taking them on a path she really hasn't traveled herself."
"And if you followed Suzie Orman's advice in the 1930s, you would have missed a potential 400-500% return on your money." Hmm, what kind of investments were available in the 1930's and 1940's? Oh yeah... the precursors to Helliburton.
Proud to be an American.
...is listening to that meat-grinder of a voice. Nothing will get me to change the channel faster than seeing her on TV.
Stan Davis
Lakewood, CO
"We're no better than our own sense of humility."
Its early in Asia but its "crisis time" in the words of the BBC. The Tokyo market is down by 11% (its only 10 AM n Tokyo). Also a large real estate investment company has gone bust in Japan.
Barry
Our departure point is the present, our goal is the future... it is for us to determine.
Ironically, my company chose this time period to switch our 401(k) provider (we'll only pay a 1% service fee now, rather than the 2.5% that the previous provider charged), so we haven't been able to get to our money for the past week while all of the accounting takes place. We received the required 30-day notice of change last month, but I wonder if anyone else expected to see this situation.
Proud to be an American.
Wonder if some lawyers can look at that situation and see if the employees have a legal case for not being able to have access to the accounts during this period (probably not)
I've split some of my self-directed IRA money (rolled over from prior 401K) into multiple accounts due to the possibility of a brokerage house failure for that very reason - the potential of not being able to access funds for a month or two when wanting to do something.
Another big 401K chunk is with my current employer and I can't really protect against that possibility there...but it appears to be with a highly stable/conservative management company, so I'm not overly concerned about that.
we received great advice from the professional investment counselors. Whether individuals chose to follow the advice was up to them.
Proud to be an American.
...the ability to access the account to make a trade in what I'm wondering about as a company responsibility
determinded by law. It gave people a chance to move, withdraw, or borrow the funds in their accounts prior to the blackout.
Proud to be an American.
Wednesday, October 08, 2008
A futile bailout as darkness falls on America
By Paul Craig Roberts
America has become a pretty discouraging place. Americans, for the most part, will never know what happened to them, because they no longer have a free and responsible press.
The 20th century proves that the market is likely to know better than a central planning bureau. It was Soviet Communism that collapsed, not American capitalism. However, the market has to be protected from greed. It was greed, not the market that was unleashed by deregulation during the Clinton and George W Bush regimes.
The Paulson bailout saves his firm, Goldman Sachs. The Paulson bailout transfers the troubled financial instruments that the financial sector created from the books of the financial sector to the books of the taxpayers at the US Treasury.
This is all the bailout does. It rescues the guilty.
The Paulson bailout does not address the problem, which is the defaulting home mortgages.
The defaults will continue, because the economy is sinking into recession. Homeowners are losing their jobs, and homeowners are being hit with rising mortgage payments resulting from adjustable rate mortgages and escalator interest rate clauses in their mortgages that make homeowners unable to service their debt.
Shifting the troubled assets from the financial sectors' books to the taxpayers' books absolves the people who caused the problem from responsibility. As the economy declines and mortgage default rates rise, the US Treasury and the American taxpayers could end up with a $700 billion loss.
Since Paulson's bailout of his firm and his financial friends does nothing to lessen the default rate on mortgages, how will the bailout play out?
If the $700 billion bailout is based on an estimate of the current amount of bad mortgages, as the recession deepens and Americans lose their jobs, the default rate will rise. The $700 billion might not suffice. The Treasury will have to go hat in hand to its foreign creditors for more loans.
As the US Treasury has not got $7, much less $700 billion, it must borrow the bailout money from foreign creditors, already overloaded with US paper. At what point do America's foreign bankers decide that the additions to US debt exceed what can be repaid?
This question was ignored by the bailout. There were no hearings. No one consulted China, America's principal banker, or the Japanese, or the OPEC sovereign wealth funds, or Europe.
Does the world have a blank check for America's mistakes?
This is the same world that is faced with American demands that countries support with money and lives America's quest for world hegemony. Europeans are dying in Afghanistan for American hegemony. Do Europeans want their banks, which hold US dollars as their reserves, to fail so that Paulson can bail out his company and his friends?
The US dollar is the world's reserve currency. It comprises the reserves of foreign central banks. Bush's wars and economic policies are destroying the basis of the US dollar as reserve currency. The day the dollar loses its reserve currency role, the US government cannot pay its bills in its own currency. The result will be a dramatic reduction in US living standards.
Currently Treasuries are boosted by the habitual "flight to quality," but as Treasury debt deepens, will investors still see quality? At what point do America's foreign creditors cease to lend? That is the point at which American power ends. It might be close at hand.
The Paulson bailout is predicated on cleaning up financial institutions' balance sheets and restoring the flow of credit. The assumption is that once lending resumes, the economy will pick up.
This assumption is problematic. The expansion of consumer debt, which kept the economy going in the 21st century, has reached its limit. There are no more credit cards to max out, and no more home equity to refinance and spend. The Paulson bailout might restore trust among financial institutions and enable them to lend to one another, but it doesn't provide a jolt to consumer demand.
Moreover, there may be more shoes to drop. Credit card debt could be the next to threaten balance sheets of financial institutions. Apparently, credit card debt has been securitized and sold as well, and not all of the debt is good. In addition, the leasing programs of the car manufacturers have turned sour. As a result of high gasoline prices and absence of growth in take-home pay, the residual values of big trucks and SUVs are less than the leasing programs estimated them to be, thus creating more financial problems. Car manufacturers are canceling their leasing programs, and this will further cut into sales.
According to statistician John Williams, who measures inflation, unemployment, and GDP according to the methodology used prior to the Clinton regime's corruption of these measures, the US unemployment rate is currently at 14.7% and the inflation rate is 13.2 percent. Consequently, real US GDP growth in the 21st century has been negative.
This is not a picture of an economy that a bailout of financial institution balance sheets will revive. As the Paulson bailout does not address the mortgage problem per se, defaults and foreclosures are likely to rise, thus undermining the Treasury's estimate that 90 percent of the mortgages backing the troubled instruments are good.
Moreover, one consequence of the ongoing financial crisis is financial concentration. It is not inconceivable that the US will end up with four giant banks: J.P. Morgan Chase, Citicorp, Bank of America, and Wachovia Wells Fargo. If defaulting credit card debt then assaults these banks' balance sheets, who is there to take them over? Would the Treasury be able to borrow the money for another Paulson bailout?
An alternative to refinancing troubled mortgages would be to attempt to separate the bad mortgages from the good ones and revalue the mortgage-backed securities accordingly. If there are no further defaults, this approach would not require massive write-offs that threaten the solvency of financial institutions. However, if defaults continue, write-downs would be an ongoing enterprise.
Clearly, all Secretary Paulson thought about was getting troubled assets off the books of financial institutions.
The same reckless leadership that gave us expensive wars based on false premises has now concocted an expensive bailout that does not address the problem, which will fester and become worse.
Paul Craig Roberts is coauthor of The Tyranny of Good Intentions. He can be reached at:
...that successful capitalism depends on "controlled greed." The greed has been uncontrolled for far too long, and the greed blame rests both on the moguls and consumers.
Stan Davis
Lakewood, CO
"We're no better than our own sense of humility."
...the word Democrat....nor liberal......nor progressive.....nor the name of the Democrat whose economic coattails he is riding all the way to the WH.
Obama is simply an Obamacrat, and as such will do whatever is needed to ensure re-election............. and no more.
If you thought Bush's WH was politics over policy, you ain't seen nothing yet.