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Markets Tumble: Recession Ahead?

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posted on Jun, 8 2006 @ 12:59 PM
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Despite the copious coverage of the death of Abu Musab al-Zarqawi and the subseqent drop in oil prices, American Markets are taking a beating today. Overall, fears of rising interest rates is threatening economic stability worldwide.
 



money.cnn.com
The Dow Jones industrials came close to losing its gains for the entire year Thursday as stocks sank amid worries about rising interest rates and a decline in stock markets around the world.

"What the market is focusing on today is what it has focused on the last several weeks: interest rates and whether the Fed will cause a recession or pull off a soft landing," said Alfred Goldman, chief market strategist at A.G. Edwards.

Worries about how much further the Federal Reserve and other central banks around the world will have to raise rates to fight inflation have fueled a drop in stock markets around the world in recent weeks. The fear is that if rates go too high, that could choke off growth, or even lead to recession.


Please visit the link provided for the complete story.


The conspiracist in me wonders about the timing of the Zarqawi death announcement in the face of what appear to be massive global economic difficulties. Campaigning for the 2006 US congressional elections is due to begin and the GOP which has previously touted economic strength and intestinal fortitude in the face of terror has a lot to gain by strategic terror-related information releases which eclipse economic difficulties.

Additionally, it seems that many are quite concerned with the uncertainty surrounding Fed Chairman Ben Bernake's recent appointment. It would not be politically positive for it to come out that another Bush nominee was the wrong person for the job.

Finally, one must wonder whether the Fed's recent decision to cease publication of the M3 money aggregate is affecting global economics. Fundamentally, the US is now able to print unlimited cash without facing up to the inflation which would result from such an M3 dilution. Perhaps Greenspan was wise to these shenanigans and decided that in the face of such blatant market manipulation he could not effectively manage the new pseudo-economy with the same alacrity with which he managed the Fed for so many years.

Related News Links:
www.federalreserve.gov
www.safehaven.com




posted on Jun, 8 2006 @ 01:58 PM
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I don't see how the United States can avoid recession at this point. Too many things have been allowed to go wrong, and not enough has been done to reign in the kind of government spending that will only contribute to the problem in the future.

Although it has not yet been acknowledged, I speculate that that the Fed continued tinkering with the prime lending rate has already forced housing market to stall by the end of this fiscal year. This will be disappointing, and painful, since the housing rally has been responsible for so many good economic numbers.

Look for credit card rates to spike as consumer spending falls off. The rising price of everyting will be blamed on higher fuel costs, which won't help. The nuts and bolts of this recession will be psychological. The current economy managers will have pushed a majority of consumers in to a bad mood.

Future historians will call this the recession that didn't have to happen. They'll cite a long list of factors that simply angered or frustrated enough consumers in to staying home and sitting on their money. In purely political terms, this will be "unfortunate" for the Republicans. The Democrat administration that takes over after George W. won't have to work that hard to restore the public's confidence in the economy.



posted on Jun, 8 2006 @ 02:15 PM
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Talk about rational expectations. The Fed doesn't need to change the interest rates just the fear that they might has taken care of it. I think we are closer to stagflation than a recession. Stalled economy (due to Fed?) and inflation cost of oil and all related products. All they need to do now is increase the money supply and watch the whole house of cards come down.



posted on Jun, 8 2006 @ 02:22 PM
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Ever think that the market might just be correcting itself? If you are worried, just shift your investments to commodities or the bond market. I can remember the first time the Dow topped 1000, 5000 and 10,000. Even in the bleak days of 1987 the market still bounced back. I think that this is just a result of the instant communications that we have today. Twenty years ago news of an incident somewhere in the world took time to reach us and then it took time to make a change in your investments, so as a result people tended to be patient. Today I can change my portfolio 20 times between breakfast and lunch. To me this makes things more volitile.



posted on Jun, 8 2006 @ 02:30 PM
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Originally posted by polanksi
Talk about rational expectations. The Fed doesn't need to change the interest rates just the fear that they might has taken care of it. I think we are closer to stagflation than a recession. Stalled economy (due to Fed?) and inflation cost of oil and all related products. All they need to do now is increase the money supply and watch the whole house of cards come down.


Some folks out there believe that the Fed's recent decision to stop reporting on the M3 statistic was designed to allow a massive money supply increase in a clandestine way to seemingly bolster the US economy without spurring inflation. Though such a scam seems, on the surface, like it would work, with global markets so tightly interconnected, it will not take long for folks to realize that there is a glut of greenbacks floating around the planet.

On the other hand, I have always wondered about the notion of global economic collapse. It would obviously be predicated on the fact that economies are not driven by actual good/services/labor, but by the perceptions associated with the capability of nations to provide those functions effectively. Economics have always bothered me that way. If on Monday everything is fine and on Tuesday global markets collapse what has really changed? Unless a comet hit the planet on Monday night and wiped out a large portion of the world's population and productive capacity, the only thing to have changed will be global perception. As a result, maybe we can forestall any such collapse, by clicking our collective red slippers and wishing we were back in Kansas.



posted on Jun, 8 2006 @ 03:13 PM
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In case anyone is keeping score, the Dow bounced back to only be down by about 30 points at 4:00 PM EST today. A fluctuation of a percent or two is to be considered normal through out the course of a day.



posted on Jun, 8 2006 @ 03:30 PM
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The Sky if Falling!
The Sky is Falling!



posted on Jun, 8 2006 @ 05:13 PM
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I'll stand by my remarks. Just watch your credit card interest rates and wait forthe stupidness to begin. This'll be a psychologically driven recession and it will not last for more than 2-3 years.



posted on Jun, 8 2006 @ 05:29 PM
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Funny that this has been predicted for quite some time, but as usual we have other present and more important things going around that our own economy.

The sign were there years ago, they has been there all alone but nobody cares.

Now is inminent and about to happen.

Well . . . we may survive or we may not . . . our fate is now mostly in the hands of foreign ivestors.

Even Greenspan was warning about the future to come.



posted on Jun, 8 2006 @ 06:40 PM
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Intellects like Mr. Greenspan have that gift to see decades ahead. All I know is what I suspect about the next two or three years. This recession is going to be more like a self-inflicted wound. Concerns over the war and the high price of gas have over-shadowed the Bush administration's very weak effort to hype the current good stae of the conomy. Add to this the fact tha the GOP is willing to plays resort to some dicy accounting to influence the perception of the economy, and you've got yourself a recipe for nothin' but trouble in a super-sized bucket.



posted on Jun, 8 2006 @ 06:52 PM
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They lie about everything! They just can't hide it anymore so they have to come out with it. It's going to get real bad! Good paying jobs have gone bye, bye. People can't afford homes so now the real estate market has gone to crap. Everyone's extra cash winds up in the gas tank, or paying intrest on a credit card. Thanks Ronny!



posted on Jun, 8 2006 @ 07:31 PM
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Originally posted by JIMC5499
Ever think that the market might just be correcting itself? If you are worried, just shift your investments to commodities or the bond market. I can remember the first time the Dow topped 1000, 5000 and 10,000. Even in the bleak days of 1987 the market still bounced back. I think that this is just a result of the instant communications that we have today. Twenty years ago news of an incident somewhere in the world took time to reach us and then it took time to make a change in your investments, so as a result people tended to be patient. Today I can change my portfolio 20 times between breakfast and lunch. To me this makes things more volitile.


in case you haven't noticed, the commodities seem to be falling rather nicely at the moment also...which doesn't seem to make too much sense to me, but...

well, for you guy's reading pleasure...

Housing market cooling
news.ft.com...

States selling off assets
www.usatoday.com...

Debt grows.
www.dallasnews.com...

and greenspan talks oil..
www.iht.com...

sorry, couldn't find the one I was reading earlier about congress being quite upset with the fed for causing their precious stocks to plummet...lol

but there's enough doom and gloom here I think without that one small little story.

I still think that for the past several decades there's been so much manipulation into our economy that there hasn't been a clear picture of just where we were standing....

I'm beginning to think that the manipulators have lost control....



posted on Jun, 8 2006 @ 07:43 PM
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