Dow Crash Coming To Your 401K (2007 to 2022)

[loco]

Public losses for private gain: The effective nationalisation of huge sectors of the economy means US taxpayers are picking up the tab for failing banks.


Nouriel Roubini
guardian.co.uk
Thursday, September 18, 2008

With the nationalisation of Fannie and Freddie, comrades Bush, Paulson and Bernanke started transforming the US into the USSRA (United Socialist State Republic of America).

This transformation of the US into a country where there is socialism for the rich, the well-connected and Wall Street (ie, where profits are privatised and losses are socialised) continues today with the nationalisation of AIG.

This latest action on AIG follows a variety of many other policy actions that imply a massive – and often flawed – government intervention in the financial markets and the economy: the bail-out of the Bear Stearns creditors; the bail-out of Fannie and Freddie; the use of the Fed balance sheet (hundreds of billions of safe US Treasuries swapped for junk, toxic, illiquid private securities); the use of the other GSEs (the Federal Home Loan Bank system) to provide hundreds of billions of dollars of "liquidity" to distressed, illiquid and insolvent mortgage lenders; the use of the SEC to manipulate the stock market (through restrictions on short sales).

Then there's the use of the US Treasury to manipulate the mortgage market, the creation of a whole host of new bail-out facilities to prop and rescue banks and, for the first time since the Great Depression, to bail out non-bank financial institutions.

This is the biggest and most socialist government intervention in economic affairs since the formation of the Soviet Union and Communist China. So foreign investors are now welcome to the USSRA (the United Socialist State Republic of America) where they can earn fat spreads relative to Treasuries on agency debt and never face any credit risks (not even the subordinated debt-holders who made a fortune yesterday as those claims were also made whole).

Like scores of evangelists and hypocrites and moralists who spew and praise family values and pretend to be holier than thou and are then regularly caught cheating or found to be perverts, these Bush hypocrites who spewed for years the glory of unfettered Wild West laissez-faire jungle capitalism allowed the biggest debt bubble ever to fester without any control, and have caused the biggest financial crisis since the Great Depression.

They are are now forced to perform the biggest government intervention and nationalisations in the recent history of humanity, all for the benefit of the rich and the well connected. So Comrades Bush and Paulson and Bernanke will rightly pass to the history books as a troika of Bolsheviks who turned the USA into the USSRA.

Zealots of any religion are always pests that cause havoc with their inflexible fanaticism – but they usually don't run the biggest economy in the world. These laissez faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.

This article first appeared on Nouriel Roubini's blog and is edited and cross-posted here with the permission of the author. Nicknamed "Dr Doom", Professor Roubini is now widely acknowledged as having accurately predicted the present crises in financial markets......along with Neurotoxin of GetBig.Com   




NT

Good for you!  Didn't Ron Paul predict the present crises too, like five years ago?

[Neurotoxin]

Good for you!  Didn't Ron Paul predict the present crises too, like five years ago?

the last sentence in red was simply a joke. 

i have personally NOT followed Ron Paul the last 5 years. i usually watch the economic numbers myself. this way i'm completely objective in my analysis.

listening to others clouds MY judgement.


NT

[Neurotoxin]

GBers, remember that we are nearing bonus season on WS. with that in mind, if the Dow can hold the recent low of 10,460 over the coming days/weeks, expect the usual holiday/bonus season rally to occur.......regardless of underlying economic fundamentals.



NT

[Neurotoxin]

Short-sale ban list expanded to include GE, GM and American Express.

Pushing on to shore up the markets, the list of banned short-sale stocks has been expanded to include the likes of General Electric Co., General Motors Corp. and American Express Co.
The three companies' shares are all part of the 30-stock Dow Jones Industrial Average.



NT

[Neurotoxin]

GBers, every tool is being utilized by the Fed. to prop the market and spark a rally.


NT

[Mark Kerr]

How bad do you think this financial crisis will get?

Oil just shot up $20.00 a barrel this afternoon.

They are predicting oil prices could get as high as $300.00 per barrel.

[Neurotoxin]

tracking the market on a daily basis can help the average investor get a feel for sediment and tone of the market. anyone who has consistently followed me over the last year knows what i'm referring to. overall market tone plays a significant psychological role in whether institutions are more likely to be buying or selling.


so, with that in mind here's today's fishwrap:


 
Sept. 22  U.S. stocks dropped, led by banks, retailers and technology companies, on speculation the Treasury's plan to buy toxic assets from financial firms will fail to prevent a recession and as a $15-a-barrel jump in oil threatened to damp consumer spending.

The S&P 500 retreated 48 points, or 3.8 percent, to 1,207.08 at 3:49 p.m. in New York. The Dow Jones Industrial Average slid 378.24, or 3.3 percent, to 11,010.2. The Nasdaq Composite Index decreased 89.74, or 4 percent, to 2,184.16. Seven stocks retreated for each that rose on the New York Stock Exchange.

They really haven't changed the economic fundamentals at all,'' said Jeffrey Coons, co-director of research at Manning & Napier Advisors Inc. in Fairport, New York, which manages $18 billion. ``We still have a debt-laden U.S. consumer facing falling employment. That's going to be overhanging our economy for some time.''



NT

[Neurotoxin]

Sept. 23  Treasury Secretary Henry Paulson's $700 billion proposal to stabilize the banking system may push the national debt to the highest level since 1954, threatening an erosion of foreign appetite for U.S. bonds.

The plan, which asks Congress for funds to buy devalued securities from financial institutions, would drive the debt above 70 percent of gross domestic product and the annual budget gap to an all-time high, possibly exceeding $1 trillion next year, economists estimated.

This is sobering, absolutely sobering, even to someone who doesn't drink  said Stan Collender, a former analyst for the House and Senate budget committees.



NT

[Neurotoxin]

Sept. 23  U.S. lawmakers may seek to include commodity speculation limits in legislation designed to rescue banks from bad mortgage investments after a squeeze in oil trading sent crude to a record gain.

Crude oil for October delivery yesterday climbed more than $25 a barrel in New York Mercantile Exchange trading, before settling 16 percent higher at $120.92 as the contract expired. The fluctuation, the biggest since Nymex crude trading started in 1983, prompted the Commodity Futures Trading Commission to say it was ``closely monitoring'' prices for manipulation.



NT

[Neurotoxin]

Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5 Billion   Barclays Bank, which is buying the business, confirmed last night.


bankruptcy with 2.5 Billion in bonus' ?


business as usual. 
 


NT

[Neurotoxin]

please read my earlier post below. it accurately describes how we got to this point.

NT

when it comes to finance and markets, i'm DEAD SERIOUS. although i prefer to remain completely anonymous with regards to my job, i will offer an unbiased assessment of where the economy and markets are ultimately headed. judge me only on information i can provide. i'm NOT interested in obtaining business, those days are long gone. i'm just trying to help the average guy who usually gets killed when markets crash. 



in the past 4 yrs the market has run-up very nicely. this move was based on the Fed lowering prime interest rates to historic lows in an attempt to stimulate the consumer and the economy. at the time it worked great by stimulating the housing market which increased production and consumer spending. (consumer spending is 70% of our nations GDP) as consumers home values rose, they began to borrow against their homes prompting a record number of home equity loans to be taken out which again increased consumer spending. (people were using their homes as ATM machines) secondly, a large percentage of mortgages were ARMS (adjustable rate mortgages) combined with no doc loans. (no documentation of income needed to obtain the loans)


as all this was happening, the Dow went higher and higher and everyone from mainstreet to Washington was happy. NO ONE was looking at the potential disaster the above scenario could later create. fast forward to 2006-2007.......all the cheap "no doc" ARM loans would start to reset HIGHER pushing an already borrowed/tapped out consumer to pay higher mortgage rates they cannot afford. additionally, as money is made cheap to obtain, it causes INFLATION and a WEAK dollar. (higher prices with less buying power) this is evidenced by soaring home prices, gas, food, etc. all of this has been compounded by the vast out of control war spending/borrowing.....further weakening the greenback. as the US currency weakens (currently at an all time low) nations want more money for their goods, pushing prices of all imports HIGHER. the only bright side to a weak dollar is increased exports, which DO NOT offset higher import prices.



so, how does all this relate to the coming market crash ? well, the market rose from 9,000 to 14,200 on all the economic stimulation provided by the short lived housing boom and the markets have yet to adjust to the housing bust, the credit crunch, record forclosures,high inflation, record gas and oil prices and a now weak consumer who can no longer borrow like a drunken sailor. in markets, there is a specific "lag time" which enables guys like me to GET OUT before the crash/reality hits. just like in 2000 (i was OUT of tech stocks in march........market crashed in april ) history tends to repeat it's self. again, it's not a matter of if........it's a matter of when.


 

the perfect storm is brewing........

 

[Neurotoxin]

GBers, as you know the Fed recently stopped shorts selling in 799 financial firms. yesterday, GM, GE and American Express was added to the anti-shorting list. in addition, the fed is now looking into "oil speculators," with the intent to drive oil prices lower.

all the above measures (combined with the 700 billion bailout) are a desperate attempt designed to rally the market higher.

as i've stated before, if we hold the Dow low of 10,470.00, i'd expect a nice short cover rally.



NT

   

[Neurotoxin]

Guys, the Feds biggest fear right now is PENSION FUNDS. if the markets continues to tank, the Feds afraid of having to bail them out also.

if that occurs, all hell will break loose. paulson and big ben are attempting to smooth out the market on capital hill today.



NT

[Rimbaud]

Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5 Billion   Barclays Bank, which is buying the business, confirmed last night.


bankruptcy with 2.5 Billion in bonus' ?


business as usual. 
 


NT

I know, it pisses me off to no end when I see a CEO who destroys a company & then gets millions. Shit give me a chance to do that. I'll take down any company within a year's time & I'll do it for $500,000.

[Neurotoxin]

U.S. Stocks Fall in Market's Worst Two-Day Drop Since 2002


Sept. 23  U.S. stocks fell in the market's worst two-day slump in six years on concern Congress will hold up a $700 billion bank bailout that Federal Reserve Chairman Ben S. Bernanke said is critical to preventing a recession.

The Standard & Poor's 500 Index slid 18.87 points, or 1.6 percent, to 1,188.22, capping a two-day decline of 5.3 percent. The Dow Jones Industrial Average lost 161.52, or 1.5 percent, to 10,854.17, erasing a 128-point rally. The Nasdaq Composite Index declined 25.64, or 1.2 percent, to 2,153.34. Almost three stocks fell for each that gained on the New York Stock Exchange.
``The credit crunch is going to become far more severe than anybody thought two weeks ago,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.7 billion. ``In my opinion this is not understood by the politicians in Washington.''




NT

[Bindare_Dundat]

``In my opinion this is not understood by the politicians in Washington.''




NT

Except Ron Paul! 

[Bindare_Dundat]

 

[Neurotoxin]

GBers, as you know the Fed recently stopped shorts selling in 799 financial firms. yesterday, GM, GE and American Express was added to the anti-shorting list. in addition, the fed is now looking into "oil speculators," with the intent to drive oil prices lower.

all the above measures (combined with the 700 billion bailout) are a desperate attempt designed to rally the market higher.

as i've stated before, if we hold the Dow low of 10,470.00, i'd expect a nice short cover rally.


   

opinion unchanged.


NT

[Neurotoxin]

Sept. 24  Federal Reserve Chairman Ben S. Bernanke said the U.S. is facing ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending.

``Economic activity appears to have decelerated broadly,'' Bernanke said today to a congressional Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''




GBers, if Bernanke had just read "The Dow Thread," he would've known about this crisis almost a year ago.  



NT

[Bindare_Dundat]

Paulsonus Treasurasaurus

Benus Fiatus Fedasaurus

Barnus Advisor-ass-asaurus

[Neurotoxin]

GBers, right now the market is being held up by the financial's/banks (no short selling allowed) until bush's 700 BILLION bailout pushes through.

if we hold the low of 10,470.00 and a bailout plan is reached, expect a BIG short cover rally.

everyone's just waiting to pull the trigger.   


all opinion, no advice.



NT

[Neurotoxin]

GBers, below are the latest pathetic economic numbers released today. IMO, they'll have ZERO effect on market direction.

the market is focused on ONE item. bush's bailout......period.

no WS trader will short this market before the announcement.

all opinion, no advice.


NT


WASHINGTON 9/25 Orders for U.S.-made durable goods sank in August, falling 4.5% on weaker demand for a broad range of goods, the Commerce Department reported Thursday. Excluding the 8.9% decrease in transportation goods, orders fell 3.0%, the sharpest drop in nineteen months. The decrease exceeded the expected 2.0% fall forecast by economists. It was the largest drop in total orders since January. The report was weak across the board. Shipments fell 3.5% in August, the largest decline since April 2001. Inventories rose 0.7%

Also:

WASHINGTON 9/25  U.S. weekly jobless claims shot to their highest level in seven years, the Labor Department said Thursday, as people in the hurricane-hit states of Louisiana and Texas filed for benefits. First-time claims for unemployment benefits jumped by 32,000, to 493,000 for the week ending Sept. 20. The four-week average of claims also jumped, by 16,000, to 462,500, the highest since November 2001. Continuing claims were at 3.54 million for the week ending Sept. 13, a five-year high.

[Neurotoxin]

GBers, right now the market is being held up by the financial's/banks (no short selling allowed) until bush's 700 BILLION bailout pushes through.

if we hold the low of 10,470.00 and a bailout plan is reached, expect a BIG short cover rally.

everyone's just waiting to pull the trigger.   

U.S. stocks soar on hopes for bailout for banks


NEW YORK  U.S. stocks sailed higher Thursday afternoon after lawmakers announced basic agreement on a rescue package for the embattled financial sector, helping overtake grim economic data, including a slump in new-home sales. After climbing 300 points, the Dow Jones Industrial Average up 196.00 points to close at 11,022.06 +1.82%
 


NT

[Bindare_Dundat]

Could be a very rough Friday.

[Neurotoxin]

i'm completely shocked !     


NT

JPMorgan Buys WaMu Deposits as Regulators Seize Failed Thrift


Sept. 26  JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.