(This chart is from The non-recession continues)
Where in the world would you rather look for a job or start a business?
We have seen this movie before. 1992 was the most recent version.
Remember 1992? Remember the horrible US economy and how everythin…

The credit problems are a part but the FED has stated they will not let big bans and brokers fail. The latest downturn is due to oil mostly. The credit and housing is just pile on time for the shorts in the market.

Free advice if you haven’t sold yet use this weeks/next weeks short covering rally to sell whatever you have in the market ahnd sit on the sidelines until we know what oil is going to do, what the banks are going to do and if the dems run the table come NOv

while I would agree the uncertainity of a BHO president and a dem controlled congress is causing some to toss in their stocks during this downturn. The charts of the dow and sp500 show that the markets toped out of its lastest rally on 5/19/08. this was an important day because that was when oil took off and smashed records. since then the market has been trading with oil.

the major thing now is oil. sure the credit troubles and the banks are playing a role and making the sell off worse. and BHO rise in the polls are making people who normally would stick it out decide it might be a good time to sell. But it is oil

Harry Reid says oil and coal makes us sick. I wonder if he has any idea of the inventions that oil and coal has enabled in the last 100 years. From air travel to plactics to the microchip without oil and coal none of the modern marvels that save lives on a daily basis would be possible. we would not have the life expectantcy we have if not for oil.

Oil is a gift from above and as long as it is used in correctly saves lifes and cures people.

The dems must be beaten this election or we will know what misery is.

But to suggest that Obama is responsible for the stock market diving is nonsense.

Business investment is freezing up because credit is freezing up. No one trusts the banks, and no one wants to invest until they can see how bad the crash is going to be.

You wanna know why speculators are in oil? Because buying a security from an investment bank is every bit as safe as playing 3-card Monty with a street vendor in Manhattan.

The seeds/weeds of this crash were planted years ago. The failure to enforce the rules that might have prevented these problems magnified the crisis.

We learned nothing from Enron, but the banks copied Enron’s techniques and have now built an even bigger house of cards that is now about to collapse.

It’s all predicated on deception – the banks have no incentive to come clean with their losses now, and the agencies that could/should have compelled disclosure months or years ago are conniving in the deception to “prevent a panic.” They are blaming speculators.

Too late for that. The house of cards is about to fall, and the banks are desperate for a bailout – whether by propping up bubble prices for houses or by getting taxpayers to buy bogus securities that are carried on banks’ books at at 10 or 20 times their actual value.

Because there was no enforcement, the banks gave into the temptation of greed and deceived their investors and their customers in pursuit of ever bigger bonuses.

There are times and places where you need gov’t, and policing the market is a necessity. Markets have to be honest, and they don’t do that by themselves.

I believe in free markets, and I do believe that regulation should be minimized. But you still have to have some regulation, and those regulations HAVE to be enforced.

The SEC should be hiring right now – there are going to be plenty of good resumes to choose from.

Actually, now that I think about it, Obama winning the election would be the best thing possible for the GOP. The next 4 years are going to be awful no matter who is in charge, and Obama will be sworn in just in time for GWB to hand him a huge bag of crap that will bust open and ruin his presidency.

Inquiring minds would dare to know!

From EM over at HA:

“Remember this when politicians and the media talk about “the worst economy since the Great Depression”….

I would say one of the major reasons the stock market is tanking is the Obama campaign. First he is promising to increase the capital gains tax so people with significant stock market profits are going to cash those in this year so they can have the current tax rate on those gains.

Secondly, Obama is promising a boatload of “change”. If you want to freeze business investment, expansion, and hiring in its tracks, all you have to do is promise “change”. Until business gets some idea of what the new rules are going to be, they aren’t likely to make a lot of new investment.

Obama’s own promises are clobbering the economy.

A little math could help you avoid utter nonsense.

thuja on June 27, 2008 at 10:02 AM”

Are you sure…home prices have about doubled and car prices are up in the high double digits. Gas is uo almost 100% and home heating fuel is way up. What cost $80 a week at the grocery store in 2000is now $140 or so.

Stop wanking! It’s un-American and discredits our ancestors who worked so hard to make the most of this free country which was once seen as a gift from God…

Nozzle on June 28, 2008 at 9:04 PM

We have squandered our inheritance on cheap credit and an entitlement economy. The bill collector is at our door and he is the very people we have helped in the past but we should expect no mercy. No whining, just the truth. The US of A is the world’s biggest debtor nation.

It is the speculators that are the carney in the coal mine and they are warning us of potential massive harm coming. Yet the dems want to kill the carney so they can aviod the facts of what is coming.

unseen on June 28, 2008 at 3:55 PM

Ithink you meant canary but the image of a carney in the coal mine is pretty funny.

exports are working also due to the weak dollar. however if the USa slows down I think the rest of the world will too. cracks are starting to so in the EU and china.

Nozzle on June 28, 2008 at 9:04 PM

in 1929 the economy was doing great also. It does not take much to push an economy into a recession or a depression. $4.00/gal gas is a very big deal. Unemployment while low is increasing and can increase drasticlly, quickly.
there are very ligitimate concerns out there. Failure to address those concerns can and will lead to very bad places. If nothing else failure of the Repubs to understand the problems with the economy will lead to a dem takeover of government which IMO will push us right over the edge.
This discussion that the rebups want to make that it isn’t a recession while technically right misses the point by a country mile. Things are very bad out in the heartland. A large part of the population is holding on by their fingernails. Already this is seen by the subprime mess, the defaults on credit cards, defaults on auto loans and the increase in credit card balances. These are all INDICATORS or WARNINGS that things are not good out there.

Pretending erverything is all right or comparing America to 3rd world nations and saying compared to them we are fine misses the point.

IMO we are standing on the cliff in the market, in the economy, and in our leadership of the world. Many enemies are arrayed against us. this include some of the opec countries, Russia, China, the terrorists, some of the liberal commies in the democratic party. There is an active economic war going on.

Everytime oil drops our enemies like Libya or Iran get up and talk the oil back up. Until are gov understand this is an economic war and does something to counterattack these dictators (like saying we will drill, release SPR oil etc, telling the commies environmental wackos to sit down and shut up ) they will continue to win the war.

news on MSNBC. I enjoy picking up the not-so-subtle editorializing the anchor conveys. Today they said the stock market plunge was the worst since THE GREAT DEPRESSION!

Sorry to bust your little ‘liberal media is after us’ bubble, but that story was originally broken by Bloomberg and is completely accurate.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aT.gUZndgG7k&refer=home

The Fed bailed out Bear Stearns, but it can’t bail out Citigroup or CountryWide or Bank of America or WaMU

It can and will bail out all the above if necessary. The economic dislocation and high cost of FICA guarantees makes it more expensive to let a bank fail than ti find additional capital. The government has a few friends in Dubai and Saudi Arabia who might be called to help with another bailout. Or Warren Buffet is always game to invest in a traditional bank as long as the price is right and the subprime and derivatives exposure can be accurately priced.

Although I agree that the stock market appears to be pricing banks like WaMu for bankruptcy at 4.50 a share. It’s really unbelievable.

When credit is hard to get, the economy slows. No credit for TVs at Best Buy, No operational loans for hospitals or school districts. Car loans and home loans become tough even for folks with good credit.

Fedex says shipments are down. JD Powers is predicting a horrible car market, Florida and California are planning on laying off thousands of teachers.

Just what part of the economy is expanding, hmm?

Look at the stock market- it tells you that energy and raw materials companies are on fire. That’s the only reason the economy is showing any growth. Just about everyone else is hurting.

The Fed bailed out Bear Stearns, but it can’t bail out Citigroup or CountryWide or Bank of America or WaMU – all of which are on the precipice of insolvency.

When credit is hard to get, the economy slows. No credit for TVs at Best Buy, No operational loans for hospitals or school districts. Car loans and home loans become tough even for folks with good credit.

Fedex says shipments are down. JD Powers is predicting a horrible car market, Florida and California are planning on laying off thousands of teachers.

Just what part of the economy is expanding, hmm?

Wal-Mart – the store of choice when your wallet is a little light.

And of course farmers are getting the best prices ever, except those whose crops flooded. Yet along with high prices for crops are high costs for diesel, which definitely is stealing icing off the cake for them.

But hey, I’m lucky – I’m in one of those rare markets where my house value is holding steady, and our investments are only down between 5 and 12 percent since last year. Gee, if I had listened to Cramer last fall and bought financial stocks, I’d be down 50-70 percent, and waiting for the next round of capital raising to further dilute my investment.

Yep. Things are going great and all Congressmen are pure of heart, especially those friends of Angelo Mozillo.

Not.

Yes it is gas. I become a permi-bear on this economy when oil went to $125.00. The ecomony can not withstand $4.00gal/gas and $5.00/gal/desiesl

I was worried about a market crash before the bear streans bailout. Because of that bailout the FED safed the market and the economy. However with gas at $4.00/gal our “leaders” still do not seem to see the problem. there is no crisis team working on it, no quick drilling bills being voted on, no release of oil from the SPR, No nothing. Until our leaders see the problem it will just get worse. the rise in oil is signalling to anybody that doesn’t have their head up their a** that serious problems are coming down the pike.

The dems want to blame the speculators. It is the speculators that are the carney in the coal mine and they are warning us of potential massive harm coming. Yet the dems want to kill the carney so they can aviod the facts of what is coming.

If that bubble bursts and gas can get down to a reasonable $3 or so a gallon, we should be able to weather things. But the psychological impact of high gas prices squelches the animal spirits and slows the economy.

Remember the question: What do economists wish to economize?

Answer: Love.

After all, self-interest rightly understood is the basis for our economy.

Yes, this is stream-of-conscience posting on my part.

I don’t know anyone who dosent have a job. The economy is just fine, and has been for years.

tx2654 on June 28, 2008 at 1:46 PM

Ok, Pauline Kael.

The gov’t should farm out its statistics gathering. Underestimating inflation is in their interest, see COLAs.

Now that inflation is running up you should expect to see interest rates rise which will be the horrible for housing. We are in recession but it will be apparent to everyone by the end of the year.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 3.6 percent in the first quarter, 0.1 percentage point more than the preliminary estimate; this
index increased 3.7 percent in the fourth quarter. Excluding food and energy prices, the price index for
gross domestic purchases increased 2.3 percent in the first quarter, the same as in the fourth. About 0.3
percentage point of the first-quarter increase in the index was accounted for by the pay raise for federal
civilian and military personnel, which is treated as an increase in the prices of employee services
purchased by the federal government.

These are all annualized numbers.

Do you believe that inflation is increasing at 3.6%? This is important because Nominal GDP – GDP deflator = Real GDP. The fudge factor is the GDP deflator and I think that inflation has been much higher than 3.6%, north of 5%. If that is right then we have been in recession for the past two quarters which would officially make this into a according to Hoyle NBER recession.

Remember this when politicians and the media talk about “the worst economy since the Great Depression”. When the real numbers come out, no one bothers to report them. The hyperbole serves them better than the truth.

Come on Ed, are all the economists and analysts on Wall Street trying to manipulate public opinion as well?

People on Wall Street will tell you this is the most severe crisis that’s occurred in their lifetimes. The entire banking system is under nearly unprecedented duress and the nation might be standing at the precipice of runaway inflation. From a structural standpoint, things are far, far worse than after 9-11. The slowdown following 9-11 resulted from a decline in business activity, not a liquidity crisis. WaMu and other major banking stocks down 90% over the past year doesn’t signal a minor slowdown in the works.

As for 1% economic growth, many experts believe that the booming energy and materials sectors accounts for more than 1% of economic expansion. (Energy production and service companies, along with commodity producers, are doing extremely well.) Meaning that without high energy and raw materials prices, this economy would be witnessing negative growth. So that 1% number is probably an allusion. On Main St., you’re going to be hard pressed to find businesses that are witnessing anything but a slowdown. And guess what- the big tax rebate stimulus is going to run out of steam soon.

Believe me, these events are causing me as much economic pain as most everyone else. But let’s not pretend everything is ok.

Can’t disagree with anything you’ve said. I don’t like living this close to the cliff edge.