Financial topics

[Joe the miner]

Does it serve any value to determine who caused this mess? I contend that it is not a who but a what that caused this mess. The what is greed; and since nobody knows how to eliminate greed (but most will pay the price), history will continue to repeat itself. At this point all we can do is to minimize the impacts/suffering that our families will have to endure. Unfortunately, people seem to be willing to give up their freedom to minimize suffering which will usher in our first tyranical government. Lock 'n load!

[calioasis]

Re: Joe the Miner

I would have to agree and I think that it is the main theory. It is unavoidable. Wise and smart people can try to prevent it, but they can't overcome human nature. We just have to hope that we are blessed with good leaders that can make the best of it and rebuild.

[isaac]

Re: Joe the Miner

We just have to hope that we are blessed with good leaders

We aren't!

Isaac

[herman19745]

Isn't it amazing how fast the rest of the world blew a fuse? If they hadn't been using imported dollars to issue their own currencies off of, the US wouldn't have been sapped so dry of jobs. We rebuilt all you starving SOB's and never got a dime out of any of you. We should have let the Nazis eat all of you. The Japanese mentioned having the US borrow in yen. Japan would collapse before the sun came up because there is nothing there to support sovereign credit. I am not much of a consumer, but many Americans hocked their houses to buy crap so you Europeans and Chinese could have a job. What the hell do you think China has been doing? You think those people that work for 2 cents an hour are saving all that money? No, they aren't. Instead, the Chinese government confiscates all the dollars and issues yuan against them. So indirectly the dollar debt is the circulating medium on China, so they never really have to spend dollars and the people are deprived of their international buying power. Ditto all the rest of the world. Russia supposedly had X trillion dollars 6 months ago. Now they teeter on collapse? What they really had was foreign reserves so they could have a money supply and now have a money supply and no play money. I would challenge you to go to the Federal Reserve data and show me who has all these dollars they have printed?

There seems to be some confusion to who got looted. When they started Bretton Woods, the US had the entire world productive capacity. We were sold out by a group of international bankers, first charged with rebuilding our former enemies then with floating their money. I believe the US would change shoes with anyone in the world if they wanted to baton of being the reserve money of the world. They don't because this American credit has brought the only prosperity there could be to the world and who wants their lives looted away by their bankers?

May I remind you that Americans invented the concept of outsourcing, and that the US in rapid pace outscourced first their industry to China and other Asian countries and after they outsourced their service jobs to India. US Car's are crap and nobody wants them anymore (thats why Toyota is a big success in US).
Everybody in the US was living on credit, and the bubble bursts and the whole world get sucked in a big blackhole. Thanks to the number one export product of corporate america : credit derivatives

[freddyv]

I'm not going to get
much sleep tonight.

John

John,

You really need to find a better frame of mind. I know things are bad, but your a smart guy and your as ready for it as anyone. As important as seeing the problem coming is finding a way to live and be happy even when things are not as we wish they were. The good old days are no doubt behind us, but peace of mind and happiness are choices every human has a right to make.

I'll sleep fine tonight. I sleep fine everynight.

Isaac

I agree. Life goes on and each of us has a lot to say about the quality of that life.

I too find myself getting a bit anxious about this whole mess as I have a house and a business and both have some debt attached to them. Keeping myself informed means I am making a substantial amount of money off this panic but it also means I know what's going on more than most, and that's just plain depressing at times.

Having a plan of action seems to be the key rather than to just sit and watch history unfold. I have a truck and camper and being a single man who loves to travel and be free I remind myself how I wouldn't at all mind living out of that camper as I have in the past. I also have a business with debt but I have made sure I am in a position to do what needs to be done to keep it profitable, including dealing honestly with employees about the decisions I will make so they can be prepared if layoffs come.

People survived the Great Depression and judging from the current economy compared to the economy in 1930 we may be much better off, even as the economy unwinds. Believing that the worst will happen seems unwise to me while preparing for it is wise and will put me in a better position no matter what happens over the next few years.

Meanwhile, each and every day, I try to remnd myself of what a gift life is and how the best things in life cannot be taken away by an economic meltdown.

--Fred

[freddyv]

Updated Earnings for the S&P 500 from CNBC's page at:
http://www.cnbc.com/id/15839135

"As of Friday, November 21st:The remaining 5% of companies in the S&P 500 that have not reported earnings for third-quarter will do so in the next four weeks. Next week 6 S&P 500 companies and one Dow component are expected to report.
The blended earnings growth rate for the S&P 500 for Q3 2008, combining actual numbers for companies that have reported, and estimates for companies yet to report, stands at -18.5%.
On April 1st, the estimated growth rate for Q3 was 17.3%, and by July 1st, the estimated growth rate had fallen to 12.6%. (Data provided by Thomson Reuters)"


Amazingly we are still hearing predictions of earnings growth going forward. Analysts are not only inflating future earnings as has worked in the past but they don't seem to understand that PE ratios will probably bottom out around 5 or 6 as (a few years from now) earnings stabalize and investor confidence has fallen to extremely low levels. That's the time to switch to a long position, IMO.

--Fred Voetsch

[John]

From a web site reader:

> I enjoy reading your web logs and totally agree with the
> financial crisis we are going to have. Technically the market
> looks like it is about to break key support and the meltdown could
> start this week.

> Do you think it could start that soon?

> I am going to put on short positions on any rally.

> Do you think the Government has any more tricks?

A generational panic and crash could occur next week, next month or
next year.

Could it happen the same week as Thanksgiving? Could it happen in
the weeks before Christmas? Could it happen in the weeks before
President Obama is to take office, walk on water, and save the world?

It makes sense that there are many hedge fund managers and investors
who might otherwise be selling off right now, but who are hanging on
by their fingernails in the hope that Obama will keep his promise and
change the world from the moment he takes office.

That's one side of it.

The refutation to that theory is that the market has already fallen
17% since the November 4 election.

Furthermore, other indicators are very worrisome: Volatility is
through the roof, and the credit markets are still almost as frozen
as ever.

So I return to the view that the meltdown could happen on any day,
and could be triggered by anything - a word, an action, an event
that's totally unpredictable.

Sincerely,

John

[John]

The following question from a web site reader refers to my DJIA
historical page.

** Great Depression and Dow Jones Industrial Average
** http://www.generationaldynamics.com/cgi ... 010.i.djia

> Quite an interesting market these days! (I'm still bearish, FYI.)

> I'm a bit curious how you arrive at the TREND VALUE (approximate
> book value). I notice that this number goes up EVERY DAY. Is it
> possible for it to go down?

The trend value is a best-fit exponential growth curve for the DJIA
since around 1900. The formula is given by:


Trend value = 38.46486589 * e ^(0.0457096666 * (year - 1900))

> I had a suggestion for you concerning dates on your chart.

> Thu 2008-11-20 7552.29( -5.56%) (135% of 5580.8) ( 53% of
> 07-10-09)

> My suggestion is to make the right column like the left column.
> Specifically, in the example above, consider changing to
> 2007-10-09 rather than 07-10-09. It would be a lot easier to
> understand quicker - - at least for me!!

Good idea - I've made the change.

Sincerely,

John

[John]

From a web site reader:

> Is it possible that a generational crash of the stock market has
> taken place over several months instead of one or two days because
> of actions by the Working Group on Financial Markets, aka 'plunge
> protection team'? There was no plunge protection team back in
> 1929.

There is indeed a "Plunge Protection Team," and it has two members:
Henry Paulson and Ben Bernanke. They've been throwing hundreds of
billions of dollars at banks, hoping to beat the deflationary spiral,
which is impossible.

Actually, that's a joke. I've answered this question before.

The Plunge Protection Team is the whimsical name used in a 1997
Washington Post story.
http://www.washingtonpost.com/wp-srv/bu ... plunge.htm

The real name of the group is the "Working Group on Financial
Markets," and it's in the Treasury Dept. The working group
languished for several years, but was reactivated late in 2006 by
Treasury Secretary Hank Paulson.
http://www.telegraph.co.uk/money/main.j ... view30.xml

Sincerely,

John

[malleni]

That is - the NEWS!!!

http://www.bloomberg.com/apps/news?pid= ... EE1iClqDrk

"...Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year..."

$7.76 trillion!

Really "negligible detail"!

A simple question for all forum members: "where is all this money coming from?"