10/9/08 - FSME Denninger Special Report - IT'S HERE!

reply to post by grimreaper797


I'd say that the Federal Government essentially nationalizing the Banking industry by "investing" in private institutions pretty much qualifies as Economic Armageddon for a once Capitalistic, now-semi Fascist, nation.

reply to post by Sky watcher


Nice try, but you are the one that needs to go out and live in the real world. Your personal life circumstances does not reflect the economic status of the entire country.

In fact, I own a business and know several business owners. The majority are doing great - there are one or two who come to mind like you, who are blaming all their woes on the "economy." Your fellow business owners appreciate it, because while your busy blaming everything on the economy we're making a profit. Perhaps if you had a better business model you could get credit? I'm having no trouble getting credit nor is anyone else I know with a sound business strategy. But no..its the economy's fault!

Stocks go up and down like this in cycles. Last time it happened in 1987 (although it also happened in 2002-2003 with the same results), and the same dire "OH MY GOD WERE ALL DOOMED" alarmists went out and try to scare everyone.

The economy is in a downturn, its not the end of the world. Its happened before, it will happen again. The alarmists will lose a lot - no doubt - but they always do. Your media and government thanks you for fear mongering

[edit on 10-10-2008 by LowLevelMason]

reply to post by LowLevelMason


Yes but 4th quater will definately not be up. We haven't seen the effects of this crisis yet in our economy. We will in the 4th and possibly even the 1st quater of 09. That is not to say that this isn't a time to invest, merely that its not a time to expect earnings in the 4th quater to be up, especially for consumer companies.

Banking is more likely to start see earning numbers up in the 4th and 1st quaters. I think JPM will have good 4th quater numbers, as well as BAC. I think that TGT(target) may be a solid LONG term investment, but I would hold off to buy them till they feel the effects of the current credit crisis. I say that because I don't think they have hit their low and you could still get a better bargin price later on.

All in all, I don't buy all the doom and gloom, but just the same, it is certainly possible, and IMO, probable, that it will get worse before it gets better. The economy hasn't had time to feel the effects of the credit crisis, and IMO, that is a good thing for people who pulled out of the market, and are waiting for the right time to jump back in.

I think we will bottom out at 7500, maybe even as low as 7300. At that point, we will see a balance off, then we will start to recover mid 2009 into 2010. The coming months will be the BEST time to invest in some of these stocks.

But yeah, I think you are wrong about the whole recession bit. I think we will see a mild, and maybe even a nasty recession, depending on how long this credit crisis lasts. The longer it lasts, the more lasting effects it will have on the end of 2008, 2009, and possibly even 2010 if we continue to have this credit crunch till the end of 2008.

reply to post by themamayada


Well for a massive effort to get that letter out they are failing miserably in my opinion because search as I might I cannot find this "report".

Would someone please provide a link. Thanks.

edit: ah think I found it here




[edit on 10-10-2008 by 2 cents]

reply to post by Jim Scott


The problem is NOT credit, it is abuse or credit/lack of control to giving credit out. Credit, when used correctly, is the BEST tool of the market. It lets the economy boom in a way that simply isn't possible without credit. The problem is when credit gets too lax for too long and we get fooled by an articifial boom leading to false perceptions on how the economy is actually functioning.

This market was down to 8000, and I think it will get down to 7500. Is that an accurate projection of the economy and the GDP? No. BUT, and this is a big but, was the 14,000+ an accurate projection of our economy or GDP? Definately not. We were dead set for a correction, and an abuse of credit is a key reason to that.

In short, credit is a powerful tool, and we need to learn how to wield it properly before we make another huge mistake and nearly crash our economy. Don't play with fire, in essense.

edit: spelling error

[edit on 10-10-2008 by grimreaper797]

reply to post by grimreaper797


I think its a bit premature to begin forecasting 4th quarter GDP. In any case it could go down - no way to tell at this point - but its certainly not going to go down 28% as we saw during the great depression. Also, much of the 4th quarter is fueled by consumer sentiment. Keep in mind that every single year the MSM forecasts that "holiday sales forecast down...says experts..." because its part of the MSM narrative. Then, surprisingly, when it goes up its "holiday sales surge, unexpectedly." Given the media war path to turn this into the next depression, I have little doubt they will spend lots of time telling us how Christmas is ruined and thus the 4th quarter GDP smashed.

Many stocks are on sale right now, many who buy the MSM will be too scared to buy them. Thats OK, because as we have seen today there ARE lots of buyers in this market just looking to snap up the panic sell pricing.

The thing that saddens me is that because the average small-time investor is buying the media fear mongering, they have SOLD LOW and will end up BUYING HIGH. The people who benefit from this are hedge funds, who are BUYING LOW and will sell it back to the same small time investors at a much higher value. Ultimately, the parties that benefit from the MSM fear mongering and everyone panicking and acting hysteriacal are hedge funds and institutional investors. You'd think most people would see this and not fall victim to the game, but they are en masse.

We're not even in a recession yet and I can't forecast one. Those who forecast such things have predicted a mild to moderate recession, lasting (last time I looked) 6 months - year, which is pretty normal. Seems about right to me. But no one is talking about a recession, everyone has assumed the next great depression has arrived!

[edit on 10-10-2008 by LowLevelMason]

Well I thought this was going to be a report. I'm not that impressed. I thought there was going to be an earth shattering revelation, but its nothing more than we already know.

reply to post by grimreaper797


Grimreaper,

Thanks for your reply.

You know, I had a big smile on my face whilst reading your post ... why? because it was one of the best posts I have read in a while on ATS. Straight and to the point.

However, I was also wondering why could you not have posted that the first time rather than taking a shot at the FSME? Sorry for citing you as a ''cheap shot'' for the video used, but I kind of felt protective for Relentless (although she can handle herself, that I am sure).

As I said, I felt that she could have stepped back a little, although I also feel that you could have posted that the first time and sparked a debate on that.

Kuddos for your post. We are all in this together whether we like it or not, and I do believe that the markets will get worse before they will get better. Today may be known as black Friday and we were here to debate it.

Breifne

reply to post by LowLevelMason


Im in retail, a big one, I won't say which, for obvious reasons, but if our company is any indication, the 4th quater will be negative. Hiring new employees has been frozen till further notice. Ive never seen that happen in this company before. Many companies right now, include the one I am in, should be purchasing ALOT of product to sell for the season. We aren't, mainly because we can't.

Trust me when I say, we have not felt the full effects of this credit crisis yet. The projection for the 4th quater IS definately negative. Consumerism this holiday season will be negative. It is true that the media likes to talk about how "this year holiday season will be slow" etc. etc., but this time, the conditions agree with that assessment.

I can't give any numbers out or anything, just that projections have changed GREATLY as a result of the credit crunch that is STILL going on. The sooner it is resolved, the less damage it will have on the fiscal year of 2009. Trust me when I say, the damage to the 4th quater of 2008 season is pretty much already done. The lack of credit right now has already smashed expectations and stock purchasing for many companies for the holiday season.

If the credit crisis is resolved within the next week to 4-6 weeks, we can expect the first quater to be the start of a slow balance/pull up from the bottom. By the second and third quater we should see slow gains, and by the 4th quater if all is going well, we should see decent times ahead from there, especially in comparison to this 4th quater.

If the credit crisis continues for more than 6 weeks, into the end of the 4th quater, we probably won't start to see a real pull back from the major losses you will see in the 4th and into the first quater until the 3rd or even 4th quater.

The length of this credit crisis will determine how long this recession will last. It could be a short but major bump in the road, it could be a large jolting bump in the road, or worst case scenario, it could turn into a brick wall in the road if the credit crisis does not get resolved (though that is seriously unlikely.)

IMO, We will start to recover between 2-3rd quater of 2009, and the 4th quater will be our bump up that we will need. Worst case scenario in my mind is that the credit crisis lasts unnecessarily long and ends up bringing the first half of 2009 fiscal year negative, and we don't start to see gains until the 3rd or even (pretty ugly scenario) 4th quater.

The very unlikely, but slightly possible chance that it doesn't get resolved (the bailout fails, G7 fails to act, etc. etc. aka alot of negative news one after another) then 2009 and right into 2010 would be a very bad year.

I can say these prediction because I work in a consumer oriented company and have a good pulse on the conditions that result from such a situation as the one we face.

If I am wrong, I am wrong. But I am almost 100% sure that there is NO way the 4th quater will experience growth. From what I have seen, first hand, its not possible.

reply to post by grimreaper797


I hope you are right.

But the economy is based on confidence.

Chances are high that there is a chain reaction occurring right now in the markets and the economy as a whole. There likelihood of more bad news and more resulting market panic is high.

The likelihood of good news that will promote recovery is slim. In fact the good news has to be as dramatic as the bad news.

Right now, much of the asset values in the economy are based on credit. An example of this is the home prices. High home prices were totally based on easy credit and the subsequent collapse is based on the lack of that credit. How much of the rest of the economy is subject to the same deflation? If large scale deflation does occur, how will society adjust?

How will the economy adjust when people have to pay in cash instead of the buy now pay later mentality? How will business adjust if they have to buy goods based on available cash? How will manufactures adjust when they have to lower prices on goods sold? How will farmers adjust if they have to sell crops at lower prices? How will oil producers adjust if oil prices drop down to $15-$20 a barrel? How will all the wage earners adjust when their pay decreases and job losses occur due to above circumstances?

Worst of all, what will happen if the government mistakenly and horribly tries to keep one part of the economy inflated as the rest deflates?

Economic collapse and social unrest is a real possibility. The government is heavily involved in the economy, they better be 100% right about what they are gonna do when (not if) and how they will intervene because the slightest mistake on their part will be the end of it all.

reply to post by grimreaper797


Buy the way I am in commercial real estate appraisal.

So far, businesses are getting credit but I think that is because of the economic environment of Southern California. But the drop off is definitely noticeable.

Right now I am keeping an eye on the lending activity. If it suddenly disappears, I'll be heading for the hills.

reply to post by Breifne


I was annoyed because aside from the speculation, which would be nasty, there was nothing to support the market fundamentally collapsing under itself. Yes, there are a great deal of bad assets on banks books. Yes, the bailout hasn't taken effect and the credit crisis is starting to take physical form for everyone. But that doesn't mean the market is going to experience an instant collapse.

The reason the banks are hoarding is so that if some of these bad assets come to roost, they would have the capital to cover the calling in of that bad debt. Thats why they aren't lending. It would be a huge hit, but they wouldn't go under. There is nothing to indicate a huge collapse, though you could say that speculation will further drive stocks down.

BUT, the idea that nobody will buy, is just ridiculous. The idea that the stock market will get to 5000 or 6000 is foolish. It simply won't get that low. Stocks value won't get that low.

There are intelligent buyers out there. Companies like JPM, TGT, and BAC, they have the numbers to support buying way before the market ever gets that undervalued and oversold. Speculation may drive the stocks down to undervalued levels (7300-7500) but the buyers will come back to buy them.

Thats what happens with speculation. There were like 1400 companies that hit 52 week lows. That is COMPLETELY ridiculous. This is a HUGE opportunity for buyers. IMO, the buyers know that the market will still come down some so they are waiting for suckers to sell. That is what they are, suckers.

People selling right now are grade A fools. In poker, we call these people donkies. They literally THROW their money away, and the sharks love them. They want them as happy, or afraid, as possible. Warren Buffet knows this. He is a shark. He went from a millionaire to a trillionaire in 1987 because he was a shark. He knew that fundamentals weren't being followed, fear was. People GAVE their money away to people like him.

If I were investing, I would be waiting on stocks like TGT, only because I know they are going to drop from now. Why buy now and get a moderate deal, when I know more suckers will sell and give me an even better deal down the road?

That is how I see it. My cheapshot was just annoyance that some one as high as FSME was calling for a collapse, when nothing of the sorts is going to happen.

reply to post by wutone


An overvalued market is based on confidence. A fundamental market is based on fundamentals. Right now we are seeing confidence disappear, and as a result, the overvalued market is falling apart. At some point (imo 7300-7500) we will see the fundamental market come back into play. The overvalued stocks will now be at value or even, in many cases, undervalued. The fundamental market players will then start buying.

Warren Buffet made his fortune off this sudden switch from overvalued stock market to fundamental stock market in 1987 and the time after. This is the time for the Warren Buffets of the market to make their fortune. Having good knowledge of when the stock have become undervalued is going to be a huge benefit for people investing.

A sad fact of this market is that most in it are always a step behind. They are going to be a step behind while this market goes from overvalued to fundamentals. They will be selling because they are playing the confidence market.

A good quote I just heard not too long ago was this. "Many people, regardless of the fundamental changes that go on, are scared and want out. I say let them out." Why? Because they are the suckers who didn't realize that the market is making a transition back to fundamentals from a confidence based market.

Why the change? Credit. Credit is basically confidence in the form of money. Right now credit is basically gone, or very limited, so confidence is gone as well. When confidence disappears, all you have is fundamentals on how the company is doing.

Realizing that change has occured, and when, is the decider on whether you become a big time investor, or another sucker who sold at the wrong time.


The kind of bad news you are talking about is unlikely. Bad news right now will bring the market down, but not any lower than where its going to be headed anyway.

Like I said, we are headed for a recession, definately. How long the credit crunch lasts will determine how long the recession will last. They are directly connected to eachother. I think that the credit crisis will be solved in less than 6 weeks, 8 at the absolute most.

Because of that, I think the recession will last, at worst, most of the fiscal year of 2009. (the 4th quater of 08, IMO, is headed for negative growth regardless.) BUT, this recession is just a good time for those who are already out of the market, to find opportunity, and trust me, there will be PLEANTY of it. More than any of use can imagine.

Many companies, possibly close to all, will see their lows between these last couple weeks and the next half a year to year. That means they will be ridiculously undervalued, and thus, great deals.

You are taking a very unlikely approach, then building upon that, another unlikely event. You are saying that the sole lack of confidence will completely destroy the market. That isn't possible. Right now we have a credit/confidence crisis. This would have to last right into 2009, a good deal of it too, if the situation you are talking of were to unfold.

reply to post by LowLevelMason


BTW, this isn't me listening to the media when it comes to 4th quater downturn, this is a result of my first hand knowledge of multiple large national companies in the exchange. I work with one, a family member works with another, and a close friend works with another. I also have knowledge about another semi big company still on the exchange, as a result of being a former employee and keeping in touch.

This quater is, very likely, going to go negative. From what I have seen, numbers wise (information that doesn't get released to the general public.), I cannot see how another positive quater will result. Especially given the first hand contact with consumers at my work. We will not see the same kind of spending this year. Confidence is down, and sales will be too. That means product purchase from big companies will be as well.

reply to post by grimreaper797


But you are basing the assumption on free markets correcting itself.

The problem is that a free market correction hurts a segment of the population, especially those that made a lot of money during the credit bubble.

The government WILL intervene on behalf of the financial sector, which is not capitalism, because the government finds it necessary to prevent the banking sector from crashing. The problem is much of the financial sector is collapsing due to a their attempts to profit off a churned market as well as government pressure to lend to people who shouldn't get loans.

I don't think that the economy would collapse if it were allowed to correct itself and government intervention only included the enforcement of laws.

As of now, the government is propping up institutions that are failures by their own actions or existing government policy.

Many people at this moment are pissed and confused at the government's actions regarding the bailouts. There is a general feeling that Wall Street can't be trusted, that they screwed everyone, and the government is serving them and not their constituents. Investors did not invest into a neo-socialist economic structure, and many investors don't know if keeping money in a neo-socialist economic structure is safe or profitable. As it stands, a lot of shareholders lost out on AIG, Bear Stearns, Lehman, among others while the bond holders and CEO's basically walked free and clear.

If the government keeps intervening in such a way, it will reinforce the feelings of many people that the government is socializing the economy (at least socializing the losses). This is a huge loss of confidence.

Add the credit crunch into the equation. Banks are not just holding out on loans because they are scared, they are holding out because they CAN'T loan anything anyways. When people don't invest, the banks cannot sell of mortgages and are therefore limited by their deposits into how much they can lend out. This is why the Fed keeps throwing more and more money at the banks, so they have more cash on hand to lend out.

The future is a big unknown. Economic stability doesn't like unknowns.

GM may merge with Chrysler. Many "redundant jobs", possible pension loss. That would cause civil unrest.

Just shows you no company is untouchable (exept GSE's). As CNBC just said, we don't know what will happen next we have never seen the economy like we have had in the last few weeks.



Bad economy and lack of credit markets are to blame according to WSJ.com

[edit on 10-10-2008 by LookingAround]

reply to post by wutone


If there were no bailout, it would be MUCH more likely that we would be headed for a depression. If there were no bailout, there would be no end in sight for the credit crisis and I would not be touching anything in the market. I wouldn't buy a thing in the market for many months without a bailout package because I would need months to see what companies have been able to adjust to working on minimal or no credit avalibility.

FORTUNATELY, the government is bailing out the financial sector, so we can get a general idea of when this crisis will end, and how badly it may or may not be for the economy as a whole.

Make no mistake, government needed to intervene. If they didn't, it would have been an exact repeat of 1929, right down to the core of the problem.

You are assuming that without government intervention, the market would be able to come back out of the damage a suddenly creditless market would cause. First off, if we allowed the financial sector to crash, like you propose, all future projections for all businesses would no longer be applicable. That means complete uncertainty in every part of the market.

Next it would take many months to see what companies learned to function without credit. During that time, everything is being cut. Jobs, production, wages, etc. Companies may have MASSIVE restructuring, or just go under entirely. No company will be able to pick up the pieces either, because they would have to pay for everything entirely in cash. You would see massive amounts of businesses and savings simply disappear before your eyes.

To make this post a great deal shorter, letting the financial market completely meltdown, would be the end of the US economy as a whole. We would be put back into the dark ages, possibly literally. The depression might have been bad, but there is alot more riding on credit now than ever before.

General Motors held merger talks with Chrysler

General Motors Corp reportedly has held preliminary talks to acquire Chrysler LLC, against the backdrop of an increasingly bleak decline for the auto industry. Reports on Friday night by The Wall Street Journal and the New York Times both cited unnamed people familiar with discussions between the two U.S. automakers.

www.marketwatch.com...

Hmm. I can't make hide nor tail of that, but it seems big.

reply to post by grimreaper797


The bailout will cause a depression according to whom?

Maybe we should asked who was bailed out. It wasn't the companies that were bailed out themselves. The stockholders lost out huge.

The Fannie and Freddie bailouts are excellent examples of corruption and irresponsibility. We need to ask who the major bondholders were and why they held those bonds. The truth is foreigners held $1 trillion worth of Fannie and Freddie debt with China holding around $375 billion alone. The Chinese had a huge amount of money into backed mortgages in order to put downward pressure on their currency and therefore gain market advantages.

I don't mind as much as bailing out retirement savings and pensions, but bailing out people whose actions were meant for an economic advantage and at the same time helped churn up the housing market is enraging.

And China is only one part of the corrupt web that is the Fannie and Freddie bailouts.

We all know about the CEO's that walked away with millions even though some were cooking the books *cough Franklin Raines cough * but we don't know about all those politicians that defended that actions of Fannie and Freddie.

The bailouts do not point fingers nor do they set up an investigation into the collapse of Fannie and Freddie and the general collapse of the housing economy.

Basically the government threw money at the problem and the problem was only to happy too catch it.

What the bailouts will do is :

1. Reward executives for screwing around with their companies.

2. Encourage more risky actions. Remember no one ever discussed the cause of the problem and I have seen nothing that would change the environment that would prevent future like problems arising.

3. The bailouts empower politicians (many who supported Fannie and Freddie and were supported by Fannie and Freddie) who originally "encouraged" banks to lend to people who don't meet normal credit standards. Remember all those politicians a few years ago who bragged about how many Americans were buying homes?

4. The bailouts discourage economic readjustment. The economy should shed it's excesses an move to more stable and productive sectors.

5. The bailouts are just a $700 billion moral hazard.

And I can say more but I don't feel like typing my fingers off.

As far as a depression starting if the bailouts didn't happen, who is to say that a depression isn't already underway? Who is to say a depression won't happen to because of the heavy new tax burden's, the downgrading of the U.S. government's credit rating, or an overall default?

And who are the ones that called for the bailout? Aren't they the same people who were entrusted to watch over the economy? Now they want bailouts?? How come the people that led us to the abyss suddenly know how bring us back?

The big bailout won't prevent depression. The lack of a bailout wouldn't have caused on either.

But as the famous quote goes, the bailouts are just "privatizing profits and socializing loss." This new socialist system is almost feudal. Now that the bailouts were passed, the government is transforming itself into the strong arm of the elite. The entire economic shift to this new socialist structure is more likely to cause a more horrible depression than any depression caused by a rejection of the bailouts.

To me this is great stuff i want to see the world go to # it will allow man time to really reflect on its self.... i hope it happens soon though cause im unemployed cause of lay off and bills pileing up, and having trouble finding work but oh well i been stockpilein ammo and im getting an itchy trigger finger lol .... Destroy all... Strong will make a way