1) That was not a crash. It was cleaning the idiots out of the market; said idiots those who paid 300xE for junk companies. 2) They're closing. Open your eyes. Food pantries across the nation are out of food because of increased demand. Tent cities are popping up. Suicide is way up from people loosing everything. Never heard of an apple cart. 3) Detroit is still an incorporated American city? Wonder how long that will last! 4) I agree there is more wealth then in the 1930's or 1970's. More wealth means the welathier have a greater chance to survive. But to the naive uneducated consumer who read an advertisement for a $250k mortgage with 0 down and $400/ month, he will never have credit again. Those are the "main street" people we're talking about - working class people victim to Wall Street - not Rodeo Drive where the poodle gets one less manicure per year. 5) Most = >50%. I think we all agree MOST people are chugging along paying $4 for a gallon of gas under the Bush Empire. Just hope MOST people don't want to buy a new house - because credit is a thing of the past. 6) I'm not calling you stupid. I just think you're a diehard republican defending your party and also a person who is unaware of what is really going on in the lives of working class Americans - our neighbors, families, fellow countrymen, all because of the Republican greed, deregulation and Wall Street greed. I nailed that reversal last Thursday and rode it Friday too. Sounds like you did a similar trade. Seems we paid $T's for a 1.5 day rally. Equitable? I don't think so. A year ago I was shorting everything. All my friends & family were calling me chicken little while they were still long in the markets. They were asking if I had become a "converted bear" and asked when I would be going long again. I said when we cut 50% off the snp and they laughed and said it could never happen. Now most of them are done and I'm doing better then ever. Is this how I prefer to make money? Absolutely not. I would much rather make half as much while my fellow countrymen are fully employed, able to send their kids to college, and having plenty in their pension accounts. But we have what we are dealt by those whom we elect and by those whom influence those whom we elect. Our choices are to live with it or leave. And I have considered leaving. It's disgraceful what condition this country is in relative to what Bush inhereted.
Bollocks - someone who made lots of money deserves a bonus. An employee's pay should not be determined by the stupidity of other people.
To answer you Cesko and the post above yours: The banking system is in trouble. Big time. HOWEVER and this is my central point: the carnage will hurt the wealthy more than the masses. How can Pabst say that? We all know about the ever widening gap between rich and poor, CEO vs worker, actor vs. makeup artist, athlete vs. peanut vendor ect. The trend trade has been to short the hourly wage worker and go long corporate managers. Well like ALL trends this trend is having a quick hard reversal. A year ago Jill the school teacher was worth 1% of Jerry the banker. Today she's worth 5% of him. In fact Jill is getting a raise. Her new contract has a CPI inflater. Jerry is out on the street. Jill's rent might have been raised on her cute studio apartment but Jerry's million dollar home is down 1/3rd. This will be one of those silk-stocking breaks like in the early part of the last century. Everyone will feel the pinch via higher commodity prices and certainly low wage folks will suffer too but the REAL PAIN will be inflicted on the "fat cats." Does anyone in their right mind think CEO compensation in 2009 will resemble the pay of 2007? Nope. But Cesko to give you a miniature look at the dichotomy check out IBM's share price. It still parties like 1999 while the banks think it's 1929. Two worlds that don't have to collide...
Bear in mind that stocks lost more in inflation-adjusted terms during the 1970s than during the 1930s. And in the 1970s, you couldn't hide in bonds - they got slaughtered too.
Exactly. I'm not saying the 70's were a panacea by a long shot. Brutal times. But this is-or once was-a site of traders and examining likely market scenarios is where we should be looking. I just don't see enough non asset deflation present to have a 30's type outcome.
Agree about the severity of the decline. The Nikkei dropped 40K to 10K (75%). I don't see that level of drop. But 50% is definitely possible (14K to 7-8K, DJIA). RE values in Japan were protected by 0% rates, endless bailouts and nationalizations to keep underwater financials from fire-selling their toxic assets. The whole thing was propped for over a decade. Which, IMO, is exactly where we're headed. The Treasury Nationalizing those losses is a new twist. If it works out, the liquidity trap should ease and inflation should jump as the FED monetizes the bulk of those losses (or interest payments to foreigners who purchase that offsetting debt)... The cost for Japan was a prolonged recession followed by nearly a decade of shitty/no growth as all that equity was either withheld by lenders to recapitalize (liquidity trap) or locked in underwater institutions that shouldn't have been around in the first place. We've both talked about the nature of capital mobility and how market wealth is not destroyed, but merely transferred. Well, for every Merrill Lynch and Nippon Bank that got propped, there were savvy investors on the short side who could have made killings on the inevitable demise of those garbage companies. We know how that story ends. That Smart Money is reinvested and recapitalizes the up and commers who do it smarter, faster and safer. Thats growth, right there. When Trillions in Capital get locked in shitty Companies that should be bankrupt, thats Trillions in Non-Inflationary Capital thats withheld from reinvestment in viable growth industries that bouys the entire economy for another round of advancement. Allocation from the inferior to the superior. When the Government steps in and essentially freezes masses of capital through props and nationalizations, that capital is immobilized from being lent to more productive ventures by the Smart Money (ie Shorts). Hence, growth stalls. Even with all their Intervention, the Nikkei wasn't saved. For every 401K Noodle Maestro and Hello Kitty Lunch-ables Guru, Mom and Pop got slaughtered. Only the Big Boys got saved. It'll be the same this time. Wallstreet just needs to put a marketable face on their bailout. OURS!! lol. Oh boy.
They ban short selling on 800+ stocks and the markets still fall, I think the financials though would have been down greatly today if it were not for the ban on those stocks. I cant wait till they lift the ban on October 2nd, tired of these rule and regulations they have to place on the market in order to prop it up. If it werent for all the injections, rate cuts and bailouts the markets would be 25-40% lower.
This is the most fake crises in the history of America. CDS poses a problem? Fine ban CDS contracts - make all the players fully hedge their exposure and then make those contracts unenforceable. Banks selling assets at fire sale prices is a problem? Fine just get rid of mark to market accounting so the banks can hold these assets till maturity and lose a lot less than dumping them by hitting the bid in the most illiquid market.
That would be fine. That's where the markets should be. And, IMHO, if the Joe public suffers for it, then tough shit. Because Joe public put Bush and his appointees back in the White House 4 years ago. Instead we now have a socialist government-managed market, managed by the baffoons who got us into this mess in the first place. Pandorra's box has been opened. There is no stopping now. This is making Nixon's wage and price controls look like child's play.