World Markets Plunge - DJIA Futures Down Nearly 500 Points

Originally posted by cpdaman
Forgot to add this in last response;

there has been a tremendous amount of short-covering this morning after the fed rate cut's.....

Hee, hee, I was just about to post this very sentiment. But it's true - for the uninitiated, this has a tendency to drive prices up - you will have the really big players averaging out of short positions all day, probably spiking it up at the days end - only to start shorting again on Wednesday. So I expect Wednesday to be a down-day, the rate cut has already been announced, so will have little additional impact imo.

[edit on 22-1-2008 by omelette]

so with the fed and PPT facilitating a bounce this morning (helped by all the people who went short trying to cover their bets now) we are currently trading around 180 in the red.

Pimpco's bill gross (largest bond manager) says fed made good decison today but the panic is still out in the markets just subdued and that the MBIA and AMBAC potential defaults are driving it.

He says a fiscal stimulus of at least double or triple i.e 3 percent of GDP will be needed to lift the economy out of a recession (which is about 450 billion) which should go into the hands of low to middle income homes because they will spend it.

Then the white house comes out and says "bush is not against a bigger stimulus.

money.cnn.com...

stock manager interivewed said that investors have lost confidence in the consumer, the banks, and the bond monolines AMBAC and MBIA and that the economy needs to be jump started

Perhaps we could look forward to a 2500$ check soon

dp

[edit on 22-1-2008 by cpdaman]

Maybe we all should just do like the Feds do.
When we run out of money, just take our computers
and scan a twenty or a hundred and print some more

Then when we get caught, have the blistering defense:

"Hey!!! Our government does it. That makes it legal" LOL

just some interesting reads

CNN Blitz campaign to urge people not to sell out of the market

CNN America tightening her belt

they can try all they want to curb the recession. The FED cut was only
temporary and will do no good later this week when everything dives.
"It is the sound of inevitability !!!!" (quoted from Agent Smith, Matrix)

The current rate cut was just a ploy to keep the market from a
one-day crash. It buys a lil time, that's all. The problem is, we can't
get through this downtrend to make it back up again if the FEDS keeping
trying to prolong the recession. The event has to play out. And that is
what they are trying to prevent cuz Bush doesn't want it happening on
HIS watch.

just looked at the Dow

-8.79% and dropping

rate cut was too little too late,
better hold on to your underwear .... LOL

Originally posted by cpdaman
Perhaps we could look forward to a 2500$ check soon

LOL, I seriously doubt that

all I'd do with that money is pay off bills that got me behind,
not spend it on retail. But I seriously doubt that much (per payment)
will ever see the light of day.

Originally posted by SimonSays
they can try all they want to curb the recession.

As they should...
You people are making it sound like it's a bad thing.

Newsflash: There is no easy way out.
So any attempts to slow a receission or jump start the economy is certainly not a bad thing. What is a bad thing is doing nothing and allowing the economy to tank. That would be devestating worldwide. And reading a lot of the posts in this thread it seems that's what most of you all want.

just looked at the Dow

-8.79% and dropping

rate cut was too little too late,
better hold on to your underwear .... LOL

??
What are you looking at?
The Dow just 1% down. After the drop (which wasn't even 5%) and climb back up, it's been fairly stable all day around -1%.
And the cut certainly wasn't too little. I think that was the right amount. Half a point would have been good also.

reply to post by infinite

The only people screwed are those who did not prepare. Like the song says " A country boy can survive". The panic will come from the urban area, not the rural sector so much.
In the metro area's people are not used to fetching their own grub. Instead they prefer to have the lower sector of civilization serve them. I hope the economy does collapse. Then these rich elite white ASSHOLES Multi-National CORPORATIONS who actually run this country will be forced to deal with the middle and lower class citizens they have left by the wayside. It shouldn't comes as any surprise that this economic system is faltering. When you have a system that is based on IOU, your doomed from the get-go. But what better way to bring about a ONE WORLD GOVERNMENT then collapse the economic structure of the world. Well if you will excuse me I have to make plans for this June's Salmon run. It just might be what I'm living off of this next winter.

The big interest cut was just to stop the big impact that is now affecting emerging developing countries, the tech stocks have a down today and we know that they are link to developing countries.

Also the rate cuts will be affecting the dollar against other foreign currencies, that means that what it seems to help one side it will end hurting us eventually.

The big waiting is to see if this will hold long enough for the global markets to fix itself of if more bad news will just give another plunge.

Sad but is very true when it comes to how volatile the markets are today.

In my personal opinion the hidden lies and hidden numbers are the ones that will be the ones dictating what will happen in coming days as the truth is been exposed.

Then we most question of how low can interest go before killing our currency for ever.



[edit on 22-1-2008 by marg6043]

One more thing we most see how bad things will be shaping up when the reports about unemployment comes out in the next quarter for the month of January.

That will be a good indication of the recession in the workings.

Originally posted by RogerT
I expect a fall to 10,000 over the next few months, but I'll be really surprised if the bankers and govs don't step in and at least pretend to take the edge of in the next few days.

It will be interesting what reaction the market will have to a half point rate cut by the fed on the 31st

Well they surprised me with the speed and amount of the rate cut - I thought they'd let another day of carnage pass first

.75 now and calls for more aon the 31st. If they don't the market will tank for sure, and if they do, the dollar is dead.

I'm calling this a dead cat bounce and going short again. Next stop 10,000.

Kicking myself big time for not loading up on euros and gold at the european open - Nice 40 dollar move from gold.

Well the Dow almost made it back to level 12071 high on my screen, but fell away in the last 20 mins to close around 130 down with futures continuing to sell after market close. No doubt the PPT will put in a little boost overnight, but that doesn't seem to be making much difference lately. The masses want out of stocks it seems. Buckle your seat belts Dorothy ...

Originally posted by RogerT
Well the Dow almost made it back to level 12071 high on my screen, but fell away in the last 20 mins to close around 130 down with futures continuing to sell after market close. No doubt the PPT will put in a little boost overnight, but that doesn't seem to be making much difference lately. The masses want out of stocks it seems. Buckle your seat belts Dorothy ...

Most people know that you can not control stocks or the price of stock, that coupled with a very shaky financial system, over extended credit, lower wages, and not as many jobs, people want something to hang on to.

I think that we will see this correction take us down to the 9000's, then things will stagnate for about 5 years, until people and banks get out of debt.

This is just my humble opinion.

I just checked and the DOW was at a minus 128. Ok so the Band aid the Government slapped on helped today but it will be falling off in a day or two .

The more the feds cut the rates the higher inflation goes and the US Dollar becomes toilet paper or fire starter for the wood stove or fireplace.

the new bands for 2008 folks " Band aid Bush/ Fu$k US Feds" the most unpopular around.

So,the Gobal depression has begun,watch as the several markets fall and the corprate blood suckers ask to be bailed out..

Originally posted by ThatsJustWeird

What is a bad thing is doing nothing and allowing the economy to tank. That would be devestating worldwide. And reading a lot of the posts in this thread it seems that's what most of you all want.

I don't think people WANT a recession, but a recession seems to be unavoidable. Recessions can be cleansing for a market. And our market is unhealthy. If we had regular corrections instead of overevaluation of the stock market (such as when the DJ hit over 14,000) while most people are in debt including banks, then we wouldn't be in such a "pickle".

I say, instead of staving off a recession...let it just happen. It has happened countless times before. Staving off recessions through cutting interest rates will prolong the inevitable in the US and inflate the USD creating problems for the world economy.

Originally posted by mike dangerously
So,the Gobal depression has begun,watch as the several markets fall and the corprate blood suckers ask to be bailed out..

This is the biggest concern I have. If you or I dig ourselves into debt, who digs us out? But these large corporations look to the government who gets the money from us.

I don't think that many large corporations will be bailed out, but mostly sucked up by more solvent corporations.

The time has come to pay the piper and all the BS'ers that have cooked the books are about to get their hats handed to them.

Originally posted by RetinoidReceptor

I say, instead of staving off a recession...let it just happen. It has happened countless times before. Staving off recessions through cutting interest rates will prolong the inevitable in the US and inflate the USD creating problems for the world economy.

The Government wants people to believe they actually create something, but they create nothing.

The US Government produces nothing, it worlds largest paper shuffling organization that gives the illusion it creates jobs, stability, economic growth, but what it really does is consume, consume and more consume.

What business anywhere else in the world can just keep raising prices whenever they need more money or print dollars, or raise taxes, levy new ones? Not any business I have come across, with the exception of governments.

All these government pension plans, health care plans are going to have to be cut down to nothing. Why? you can't squeeze blood out of a stone. The middle class is dwindling and that is what paid for the majority of government plans for it's workers.

The only reason anyone in the government gets paid is because of tax payers hard earned money.

On my chart the dow price revisited 11600 after hours. now back over 11900, but that's looking pretty bearish to me (cfd price - which I guess reflects futures)

First i'm sorry for the long post, if anyone doesn't want to read my analysis of the future in the economy just skip this post

I think that the ability to just allow a recession and have the peace of mind things will work out is a luxury that is no longer available

The reason for this is the absolute Dominance that the Financial Sector of the economy yields on all other aspects.

Almost all the growth in the united states in the last few years was due to extending debt further, that includes more and more mortgages written and higher and higher insurance (house, medical, auto..you name it )revenues generated. Alot of the financial world took advantage of the deregulation in markets that allowed investors to wield very high levels of leverage which translated into high rewards but also risk. The early years of this game saw very low defaults and thus risk, because house values kept rising and more buyers were willing to jump in at what they saw was a great investment and low rates made lending very easy *(but low rates get too much blame) it was the greed combined with desperation that will result when a flawed economic structure has to rely's on constantly growing debt that is a structural problem* These low default rates led to "wall street greed and math geeks" developing complex strucuted investment vehicles i.e CDO's SIV's MBS, ABS and the like which they though lowered risk but only because that was based on the 3 year period where defaults were historicaly low.

Now in leveraged markets risk is greater and combined with structured finance vehicles with false formula's (due to inaccurate default imputs) we are witnessing a massive unwind of credit because normal market falls (although this housing unwind and credit unwind is relatively large) are greatly MAGNIFIED due to the LEVERAGE of the debt that was engineered.
Again this leverage was necessary to provide the growth that a economy largely dependent on debt needs) so the 2 big reason for a bigger FALL is the fact that Finance dominates the economy much more than in the past, and that normal financial gyrations are magnified in a highly leveraged enviornment and this becomes a very high risk when models are developed based on false assumptions of deault risks.

the fall in house values translate into defaults and foreclosures combined with the fact that rating's for certain bonds are not matching the quality with which they are labeled. As these tremendous differences in the value of their worth become apparent people are stuck holding the bag because the genius of these investment allowed the risk to be spread out everywhere. Nobody wants to have to sell these products because they know (like bear stearns found out they will barely get 25 cents on the dollar) . taking a 75 percent loss on investmets is very destructive for any business. now couple that with the biggest bond insurer's MBIA and AMBAC going under and what you have is tons of uncertainty and fear that bonds could become worthless and counterparty's will default in payments and no insurance will be there to cover losses. Until the gov't steps in and bail's out these monoline's the uncertainty and market fallout will continue.
Also the economy is so dependent on consumer spending that the falling home values are hurting people's spending psychology and ability's. Also cost of living prices are increasing many times faster than any wage increases which is stretching the consumer's out at the same time a small perecentage of these consumers also get to see their house payment's double (or reset) and this leads to missed payments and foreclosure. The big secrect is that this problem has spread well beyond subprime mortgages, many folks with prime mortgages are in trouble.

So we have a 1-2 punch which leads to Banks being very UNWILLING to LEND! it doesn't matter if the Fed lower's fed funds rate to 1% ( a market that continues to fall should underline that). The reason this statement is true ultimately is the idea that what the heck would a bank borrow money at 3.5 percent for instead of 4.25 when they (the lender) question wether they will ever be paid back? why lend in this enviornment, guess what you won't.

The Federal Gov't needs to step in and Bailout or takeover and cover the policy's written by the mortgage insurance company's MBIA and AMBAC . This will provide some certainty to the investors that they will be reimburesed somewhat for losses.

Next House prices need to stabalize otherwise consumer's will not feel as wealth and will owe more than they own and not be able to continue the housing as atm charade. The only way to do this is to provide so much money to low and middle income families that not only do they spend most and save/pay off some but the total inflation which this handout generate's will raise the rate of inflaton and thus stop the nominal prices falls in housing (thru inflation of prices) *note their values won't stop falling) , just their house price's should (this is considered monetizing debt) this usually comes at the expense of devaluing the currency greatly , BUT as today showed The Global economy is spooked, and other country's may need to take similiar steps that the u.s have (such as the European Central bank cutting rates) as well as other foreign country's picking up some of the slack and buying up U.S debt to help support the dollar for their own stability (one of the perks of having the world reserve currency). I don't think the dollar can be allowed to collapse, yes it can slowly lose more value, but it will be orderly.

Also any handouts and stimulus (even if 2400$) or roughly 3 times bush's current plan, will be temporary and housing prices may stop falling (best case scenario) but costs of living will continue to increase so people will have trouble making payments because as housing falls and jobs are lost people will spend less and unemployment will rise. This IMO will need to be stemmed by creating More jobs in some way. The answer may be new mass employment. Where this employment will come from i don't know, Perhaps the military will grow tremendously as well as an increase in "green tech" and the sneaking feeling i have that more jobs and man power will be needed to create a changing landscape where alternative energy's are utilized much better. There is still a very legitimate chance unemployment could get way out of control.

Thus banks are unwillng to lend out money to consumers's who are more and more likely to default. Also these banks have lost their fair share of captial and are in need of Soveirgn Wealth Fund injections or really SWF taking a chunk of the ownership in exchange for Hoping to keep them afloat. Next commerical real estate lending has slowed dramatically. And this will have it's own consequences.

We have a number of reasons to fear the worst is ahead and that this will not be a normal recession either in duration or depth, and i strongly believe there is NO WAy around this turmoil leading us to adopt a lower standard of living for the long term. And this is with The gov't bailout's and intervention described above in the form of Job creation, taking over mortgage bond insurer's, stablizing home values though (moneterizaton of debt) w/ the help of foreing country's continuing to support the dollar to stave off a panic which a currency crisis would do, and likely a nice little check to consumers which will buy the economy some time to make the above changes, so that spending continues and unemployment doesn't get out of control.

lastly i would like to say that since i have been trying to grow my small business the ability to stay neutral with my beleifs and predictions of the future have been very tempted to be biased toward future growth (because i want to believe i will make more money and be safe!) and i think if i had the success before i had a neutral unbiased beleif toward the economy my predictions would be VERY compromised. Again i thnk this causes many people to label bad preditions as "doom and gloom" so they don't lose their peace of mind.


[edit on 22-1-2008 by cpdaman]

Reading some of the posts in this thread is comical. I can almost hear the audible groan that people didn't get the "economic armageddon" they had hoped and prayed for today. Sorry, doomsday prophets, your not going to get it any time soon - at least not from the US economy.

Whenever the stock market doesn't fall by some absurd amount everyone rushes to claim "ITS JUST TEMPORARY!" and "IT WON'T WORK" - yet when it goes down by a large amount, all of a sudden its "OMG OMG OMG ECONOMIC DOOM AND GLOOM DEPRESSION." I feel like some of the people in this thread are foaming at the mouth for a depression (by the way, anyone claiming this is a depression - you can't even begin to understand how wrong you are) and get very upset when it doesn't happen.

Its amazing how much people follow the mass media exactly like they want you to.