We were at 9000 Dow not too long ago.... Now at around 7,200 today... When will the domino's stop falling?
Stocks Tanking Again - Market Down Many Days in a Row
While eyes have been locked on the steep descent of Citigroup and Bank of America, financial stocks are no longer the main culprits in pulling the stock market toward 11-year lows.
Instead, manufacturers and even makers of basic consumer goods are now the biggest drags, a shift that has some investors worried.
Although the current bear market began as a housing and banking crisis, the damage has spread.
A more diverse group is leading the declines today. A look at the Dow Jones Industrial Average this year shows declines in stocks like 3M and Procter & Gamble have had more of an impact than the drop in Citigroup or American Express.
"What started as a subprime mortgage crisis became a U.S. credit crisis, then a U.S. recession, and now we are in a full-fledged, globally synchronous recession of historic proportions," says Leo Grohowski, chief investment officer BNY Mellon Wealth Management in New York. "There are very few areas that have been insulated from the decline in earnings and in stock-price performance."
During the bear market's first 13 months, beginning in October 2007, financial companies led the declines in both the Dow Jones Industrial Average and the Standard & Poor's 500-stock index. Of the six largest contributors to the drop in the Dow, three were financial stocks, even though there were just five financials among the 30 Dow companies.
The three offenders were American International Group (since removed from the Dow), AmEx and Citigroup. The other three leading losers were two industrial companies, Boeing and Caterpillar, plus International Business Machines.
Normally, makers of consumer basics such as cleaning products and diapers are resistant to bear markets because their sales are relatively stable. This time, their shares are falling regardless. In many ways, this bear market is worse than the one led by technology stocks from 2000 through 2002, which itself was unusually severe.
The pervasiveness of the current bear market has analysts worried. During the 2000-2002 bear market, the undying willingness of American consumers to keep spending was one of the few bright spots, ultimately helping turn stocks around. This time, the U.S.'s financial troubles have engulfed consumers as well, and that bodes ill.
Monday, February 23, 2009
Friday, February 20, 2009
Article on "Is it Fair to Call This a Great Depression"?
Article on "Is it Fair to Call This a Great Depression"?
Sure - it isn't as bad as 1929 yet. But people weren't as well off in general then - even when times were good.
But relative to what people are "used to" -
the foreclosure crisis - the banking crisis - stock market declines -- more and more unemployed - I'd wager to say that this can be called a Great Depression - and if you don't think so yet -- you may change your mind this year.
By the way - this domain is for sale to the highest bidder - with a reserve price of $100,000 :-)
Sure - it isn't as bad as 1929 yet. But people weren't as well off in general then - even when times were good.
But relative to what people are "used to" -
the foreclosure crisis - the banking crisis - stock market declines -- more and more unemployed - I'd wager to say that this can be called a Great Depression - and if you don't think so yet -- you may change your mind this year.
By the way - this domain is for sale to the highest bidder - with a reserve price of $100,000 :-)
Tuesday, January 27, 2009
Iceland Collapse: Riots, Suicide, and Soup Kitchens in Churches
Last week - the worst riots in Iceland since it became a founding member of Nato in 1949.
Rocks were hurled at police and the Althing. Its windows were smashed and the building set alight. Over 130 protesters received treatment after police used tear gas to disperse the crowd.
On Friday morning, human rights
campaigner and protest organiser Hordur Torfason told a chilling anecdote to illustrate the desperation many Icelanders are feeling. He had received a phone call from a man who said that four generations of his family had lost everything. “He wanted me to help them build a gallows in front of the parliament building,” says Torfason. “I asked him if this was to have some symbolic significance. ‘No,’ came the answer. ‘A member of my family wants to hang himself in public.’”
“I said I would help them but not in this way,” says Torfason. “But he killed himself two days ago.”
Red Cross employees and volunteers are working overtime to prepare for depression and desperation.
The relief agency has expanded and is setting up support groups and activities for the unemployed.
“One of the effects of long-term unemployment is depression,” says the agency’s Thor Gislason.
More people are attending church, he says, not just for spiritual succour, but because food is sometimes provided for a nominal charge.
Soup kitchens, emblematic of Eastern bloc poverty, might be going too far. “We believe people will be too ashamed to stand in line publicly for food,” says Gislason, “so we will organise activities and volunteer work where food is involved instead.”
Fortunately, nobody is starving or freezing on the street. But Iceland is clearly on the brink of either a major change or some kind of collapse. Its situation should serve as a warning to other countries sunk by the financial crisis. No place is immune to this kind of upheaval.
Rocks were hurled at police and the Althing. Its windows were smashed and the building set alight. Over 130 protesters received treatment after police used tear gas to disperse the crowd.
On Friday morning, human rights
campaigner and protest organiser Hordur Torfason told a chilling anecdote to illustrate the desperation many Icelanders are feeling. He had received a phone call from a man who said that four generations of his family had lost everything. “He wanted me to help them build a gallows in front of the parliament building,” says Torfason. “I asked him if this was to have some symbolic significance. ‘No,’ came the answer. ‘A member of my family wants to hang himself in public.’”
“I said I would help them but not in this way,” says Torfason. “But he killed himself two days ago.”
Red Cross employees and volunteers are working overtime to prepare for depression and desperation.
The relief agency has expanded and is setting up support groups and activities for the unemployed.
“One of the effects of long-term unemployment is depression,” says the agency’s Thor Gislason.
More people are attending church, he says, not just for spiritual succour, but because food is sometimes provided for a nominal charge.
Soup kitchens, emblematic of Eastern bloc poverty, might be going too far. “We believe people will be too ashamed to stand in line publicly for food,” says Gislason, “so we will organise activities and volunteer work where food is involved instead.”
Fortunately, nobody is starving or freezing on the street. But Iceland is clearly on the brink of either a major change or some kind of collapse. Its situation should serve as a warning to other countries sunk by the financial crisis. No place is immune to this kind of upheaval.
Monday, January 26, 2009
Less boxed product is selling apparently...Stone Container, Chicago files Bankruptcy
Smurfit-Stone Container Corp., the largest producer of cardboard box materials in North America, said Monday that it has filed for Chapter 11 bankruptcy protection as it looks to restructure a heavy debt.
"The acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure."
"The acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure."
Iceland Government Officials Resign
Iceland's ruling coalition resigned Monday, three months after the collapse of the country's currency, stock market and several major banks, and following months of public protests, Kristjan Kristjansson, a spokesman for the prime minister told CNN.
Of course - since my last post - GMAC got bailed out & just other bad economic news. Lots of layoffs etc.
By the way - this http://www.2009greatdepression.com/ is for sale for not less than $50,000.
Things seem to be playing out quite nicely for a Great Depression in 2009 - as I predicted several years ago.
Of course - since my last post - GMAC got bailed out & just other bad economic news. Lots of layoffs etc.
By the way - this http://www.2009greatdepression.com/ is for sale for not less than $50,000.
Things seem to be playing out quite nicely for a Great Depression in 2009 - as I predicted several years ago.
Monday, December 29, 2008
Why are we concerned about saving GMAC?
Why are we concerned about saving GMAC? Is this car and home lender really "too big to let fail?" Regulators are considering whether to give taxpayer money to prop up GMAC.
GM owns 49% of GMAC. Privately held Cerberus Capital Management owns the rest. Cerberus also owns Chrysler. Maybe the car makers would be better off without the distraction of running banking operations.
The great fear is that loans to prospective car buyers would dry up without GMAC, and that would kill any hopes of a revival for the U.S. car industry.
Hogwash. There are many credit unions, small banks and large banks that would provide such loans. The U.S. government already provided hundreds of billions of dollars to lenders such as Citigroup and Bank of America for making loans.
GM owns 49% of GMAC. Privately held Cerberus Capital Management owns the rest. Cerberus also owns Chrysler. Maybe the car makers would be better off without the distraction of running banking operations.
The great fear is that loans to prospective car buyers would dry up without GMAC, and that would kill any hopes of a revival for the U.S. car industry.
Hogwash. There are many credit unions, small banks and large banks that would provide such loans. The U.S. government already provided hundreds of billions of dollars to lenders such as Citigroup and Bank of America for making loans.
Lehman Brothers Post Mortum
The WSJ this morning reported that Lehman Brothers Holdings Inc's emergency bankruptcy filing in Sept (after the U.S. government declined to bail it out)- wiped out as much as $75 billion of potential value for creditors.
A more planned and orderly filing would have allowed Lehman to sell some assets outside of bankruptcy court protection and would have given it time to unwind derivatives positions.
Lehman unsecured creditors have asserted they are owed $200 billion. How much of that is collected remains to be seen.
The Lehman meltdown touched of a stock market panic and credit crisis and was quickly followed by a government rescue of American International Group Inc, once the world's largest insurer - to the tune of $152 billion - 10X the bailout of the auto industry - with little to no oversight.
Reportedly - that bailout is benefiting European Banks.
A more planned and orderly filing would have allowed Lehman to sell some assets outside of bankruptcy court protection and would have given it time to unwind derivatives positions.
Lehman unsecured creditors have asserted they are owed $200 billion. How much of that is collected remains to be seen.
The Lehman meltdown touched of a stock market panic and credit crisis and was quickly followed by a government rescue of American International Group Inc, once the world's largest insurer - to the tune of $152 billion - 10X the bailout of the auto industry - with little to no oversight.
Reportedly - that bailout is benefiting European Banks.
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