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Jan 22, 2008, 15:01 GMT
Fed slashes US rates in emergency action
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Older Talkback
SP4 - watch out for those chickens returning to roost
Chicken Little: The sky is falling!
Whats the big hurry?
Election day?
Is that who they are doing it for?
Nah, this is the only way that they can bail out the banks without a huge infusion of cash, which would be hard to hide. The next step will be some kind of moratorium on foreclosures in the US, plus a few tax gimmicks and some walking around money for Bubba Jones and his old lady.
Who will pay for it? American citizens, the Chinese and OPEC. How? Through inflation. What will China and OPEC do? They might well switch over to the Euro and dump dollars. That will not help them or us or the Europeans.
The lid has been torn off of Hell, folks. Get ready.
I'll buy some of that, but face it, stocks are not going to go up indefinitely, and neither is land. Since when is a recession some kind of emergency?
We've had seven spectacular years of growth, and a forecst of a recession by the liberal press EVERY year. Even a broken watch is right twice a day.
It has been rumored that Judah Ben-Hur, Ambassador to The American Republic will be the Presidential candidate for America in 2012. Their Party Platform will be published soon, with a website soley for that purpose. Another example of American History being made by someone aganist all odds...
Since when is a recession some kind of emergency?
Since October 29, 1929 seems a good starting point !
RE:'I'll buy some of that, but face it, stocks are not going to go up indefinitely, and neither is land.'
And you can't borrow money forever!
RE:'Since when is a recession some kind of emergency?'
When you are out of job and can't pay your bills because you didn't save any money.
RE:'We've had seven spectacular years of growth, and a forecst of a recession by the liberal press EVERY year. Even a broken watch is right twice a day.'
This is the real McCoy, SP4, not a hopeful mirage that only the newspukes can see. We HAVE had some really good times. Did Americans save enough money to be called real savings? NO! Rich folks collect interest. Poor folks pay it. The banks like poor folks because they pay interest. The politicians like having everyone ninety days from bankruptcy for a reason. That condition makes it easier for them to control you. Think about it.
RE: Chicken Little: The sky is falling! Whats the big hurry? Election day? Is that who they are doing it for?
===========
I can see this is someone without the least education in economics; and possibly paid to carry Bush's baggage - since no one could be this outright dumb and feed himself successfully.
This is a very serious moment, as the Fed waited far too long to act. The Fed was going to wait for the next regular meeting, and dummy-in-chief was going to wait for the State of the Union.
Foreign markets saw this as an absence of understanding of the situation, and a failure to understand how a global economy operates. The reaction was a selloff across foreign markets Monday, and despite the Fed's 3/4 point cut, further selloffs in overseas markets today.
This is a crisis of confidence. No one believes that Bush can do anything useful at this late date. $150 billion or so will be about half of what would be needed to make an impact, and that impact would be three months out past passage of legislation. Bush has already removed the disconnect to continuation of the existing tax cuts, and this jerk NEVER yields; so it's a perceived problem even in the never-never land of the West Wing.
The Fed will have to cut rates more, and everyone knows it. The DOW gapped down sharply this morning, recovered, and is again falling; because the fundamentals continue to get worse, like SP4's native intellect.
The discussion has moved from 'recession' to 'bear market', since there's now a complete lack of confidence in the paper that banks and other institutions hold, and banks do not even lend to each other. The Northern Rock deal in Britain is a saver for them, but the problems are far from over, with many foreclosures due for 2008, and buying power sapped by lower home values and upcoming mortgage rate increases.
SP4, just shut up. You're tolerable as the daily jackass in normal times, but now you're just a leaky faucet - drip, drip, drip.
This is a media overreaction, but it indicates how seriously the financial community sees the problem, and for Bush it's another photo-op in which to accomplish zilch. While there are those blindly loyal to Bush in the U.S., he has no reputation left at all overseas, and those markets feel the lack of U.S. leadership; as well as the overhang of more potential Mideast problems and the relationship to energy prices. After the Monday drop, normally there'd be some recovery the next day overseas, but it's not taking hold.
www.forbes.com/markets/2008/01/22/asia-stock-update-markets-equity-cx_v k_0122markets05.html
The shadow of a bear market loomed large Tuesday as stocks in Europe and Asia failed to halt the equity sell-off, with major indices down again following Monday's worldwide slide.
Benchmark indices across Europe failed to cross over into positive territory during afternoon trading on Tuesday, despite an attempt at bargain-hunting in the beleaguered financial sector.
The traditional definition of a bear market is a drop of 20%, from a previous high, in the space of one year.
The global sell-off came on the back of prolonged fears of a recession in the United States, which the U.S. Federal Reserve tried to calm on Tuesday by cutting the federal funds rate to 3.5% from 4.25%.
The U.S. cannot cut rates while everyone else remains as-is. Interest rates are what attract investment, and other countries in the Euro area would have an advantage in attracting investors. In addition, banks are not freely lending, and rate cuts could help. A stronger Euro and weaker dollar impairs Euro and German exports further, and slows the global economy. Stagflation becomes a threat, eventually, with needed rate cuts potentially permitting inflation to rise.
'European inflation at a six-year high of 3.1 percent, breaching the ECB target of just below 2 percent, is limiting policy makers' room for maneuver. President Jean-Claude Trichet said Jan. 10 that the bank is ready to act ``preemptively'' to raise rates to contain consumer prices.'
If the ECB and Britain are forced to act earlier than their regularly scheduled session, it signals a real problem.
www.bloomberg.com/apps/news?pid=20601087&sid=aT6mSXgLBTT8&refer=home
Jan. 22 (Bloomberg) -- The European Central Bank and the Bank of England may have to follow the Federal Reserve and cut interest rates as the risk of a U.S. recession threatens to drag down a global expansion, economists said.
``From a European and a U.K. perspective, the Fed cut adds to the risk of more and quicker rate cuts,'' said Amit Kara, an economist at UBS AG in London. Kara, a former economist at the U.K. central bank, predicts four cuts from the Bank of England this year and two by the ECB.
The Fed today lowered its benchmark rate in an emergency move for the first time since 2001 after global stock markets tumbled amid signs the world's largest economy is sliding into recession. The move spurred a rally in European stocks, though failed to stem a decline in U.S. indexes.
The widening interest-rate gap between the U.S. and Europe may spur gains in the euro, worsening the outlook for an economy already showing signs of a slowdown by hobbling exports. German investor confidence dropped to the lowest since 1992 in January and European manufacturing growth slowed in December.
G.W Bush its down to you, The WORST President in US history.
(While the primaries and economic news hog the headlines, the violence continues in Iraq in the northern regions, and the Shia have been battling their own fanatics in the south. Suddenly, al Sadr is the guy to work with in Iraq, instead of al Maliki. In an appearance on NVC News, General Petraeus refuses to see the light at the end of the tunnel, since it might be an oncoming train)
www.fednews.com/transcript.htm?id=20080122t3019
NBC 'TODAY' INTERVIEW WITH GENERAL DAVID PETRAEUS, COMMANDING GENERAL, MULTINATIONAL FORCE-IRAQ INTERVIEWER: RICHARD ENGEL
7:18 A.M. EST, TUESDAY, JANUARY 22, 2008
MR. ENGEL: The security situation here has certainly improved, but Commanding General David Petraeus told NBC News the gains are not yet self-sustaining and could be reversed.
www.bostonnow.com/blogs/fija/2008/01/21/gen-petraeus-too-generous
'There was a report on the NBC Monday night news showing Gen. David Petraeus handing out military medals and negotiating cash gifts to tribal war lords in Iraq who have stopped attacking the US military. Experts credit the giving of financial support to Sunni militants with the recent decrease in attacks on American forces.'
===========================
news.monstersandcritics.com/middleeast/news/article_1387962.php/School_ attacked_teachers_abducted_in_northern_Iraq__Roundup_
Baghdad - A suicide bomber attacked a school in the Iraqi city of Baquba on Tuesday, killing a guard and injuring 20 students and teachers while a policeman was killed and two teachers were kidnapped in two separate incidents in Tikrit, according to witnesses and security sources.
news.monstersandcritics.com/middleeast/news/article_1387662.php
Baghdad - At least 22 people were killed in acts of violence in Iraq, including gunmen from the al-Qaeda terrorist network, while at least 90 terrorist suspects were rounded up in raids by US and Iraqi forces across the country, Iraqi and US officials said Sunday.
This kind of piecemeal approach will take time to have an effect, which we cannot afford, and particularly borrowers cannot afford. Possibly the ECB and Bank of England are reluctant to see us act quicker, because they would have to move as well, and are not in the habit of being forced to act ahead of schedule.
It looks as though the usual INACTION by the White House and the Fed have allowed this to fester to the point that people don't believe that it can be resolved without pain. Bush was LATE on Katrina, LATE with the Iraq surge, LATE getting serious about Palestine, and LATE in placing Petraeus with a working strategy in Iraq. Now, he's LATE on the economy. If ignorance is bliss, the White House must be ecstatic.
The Democratic candidates should be feasting on this incompetence by the GOP, and the GOP's higher spending 2001-2006, and the runup in the National Debt, which ALSO makes other countries nervous about our long-term financial situation, particularly the oil producers whose oil is priced in dollars.
We are dependent on about $2 billion in funds EVERY DAY coming from China and other nations, and also sovereign funds investing in U.S. corporations. A weaker dollar does not attract investment, but it CAN attract bargain-hunters looking for cheap U.S. stocks and the chance to take an ownership position in U.S. corporations.
www.marketwatch.com/news/story/fed-isnt-finished-rate-cuts/story.aspx?g uid=%7BFE058836-414C-4CC9-8F04-866CF0AB29DE%7D
'Don't take today's move ... to mean that the FOMC is through,' said Richard Moody, chief economist at Austin-based Mission Residential, in a note to clients. 'We expect another funds rate cut at the scheduled January 29-30 meeting, with possibly more to come in the spring.'
Nigel Gault, chief U.S. economist at Global Insight, believes the central bank will eventually get rates as low as 2.5% before the current easing cycle draws to a close. The Fed's likely to cut rates again by another quarter of a percentage point at their formal meeting next week, he said in a telephone interview. Scott Anderson, senior economist at Wells Fargo Economics, said the Fed 'will cut another 75 basis points by the end of April, bring the fed funds target rate to 2.75%.' He said the Fed won't be keen to move below that level in order to keep some ammunition in reserve 'for a rainy day.'
(B of A is a particularly well-run bank, but writedowns are unavoidable at this point. The problem extends beyond subprime mortages, as all housing prices are impacted. Mort Zuckerman might well have been conservative.)
www.mclaughlin.com/library/transcript.asp?id=623
'MR. ZUCKERMAN: No, I think there is reason for some optimism. But I have to tell you, I think we're facing the worst financial crisis in the last 40 or 50 years, maybe since the Great Depression. You have a situation where we have two and a half trillion dollars of paper, of which the estimate is that 25 percent of it is going to be wiped out in value. That's $600 billion. And that's just the estimates today. Those estimates get worse and worse as this paper gets to be worth less and less. And nobody knows what the consequences of that is. We've never been in that kind of situation.
Amongst other things, nobody knows who owns the paper. I mean, nobody -- Merrill Lynch announced that they were losing roughly $5 billion. It then went to $8 billion within a matter of three weeks, which they are the biggest seller of this kind of paper. They're off by 60 percent. I mean, if they're off by 60 percent, who knows what the real value is?'
--------
www.bloomberg.com/apps/news?pid=20601087&sid=a7GHIS5K.A9M&refer=home
Jan. 22 (Bloomberg) -- Bank of America Corp. and Wachovia Corp., the second- and fourth-largest U.S. banks, said earnings plummeted after more than $6 billion of combined mortgage- related writedowns. Bank of America's fourth-quarter profit dropped 95 percent to $268 million, while net income at Wachovia was almost wiped out, plunging 98 percent to $51 million.
``The revaluation of assets that initially looked like a very exclusive subprime problem is emerging to be something much more,'' Kevin Fitzsimmons, a New York-based analyst at Sandler O'Neill & Partners, said today in an interview. Kenneth Lewis, Bank of America's chief executive officer, said market conditions are the ``most stressful'' since 2001 and forced the Charlotte, North Carolina-based company to double reserves for potential loan losses to $3.3 billion in the fourth quarter. The bank said earnings will improve this year. Lewis and Wachovia CEO Kennedy Thompson said they don't expect to cut their dividends.
``The Fed can alleviate the amount of losses they take and make a recession shorter-lived, but the problem with Fed cuts is that it takes three to four quarters for it to pass through to the real economy,'' said James Ellman, who oversees $200 million at Seacliff Capital in San Francisco.
Wachovia and Bank of America reported the lowest quarterly profits in at least six years during the country's worst housing slump in more than two decades. The world's biggest banks and brokerages have disclosed more than $120 billion of writedowns and credit losses since June, mostly caused by the collapse of the subprime mortgage market.
Lewis, 60, and Thompson, 57, said today that the companies were battered by the fixed-income markets. Lewis said he expects economic growth to ``be anemic at best in the first half.''
RE:'Lewis, 60, and Thompson, 57, said today that the companies were battered by the fixed-income markets. Lewis said he expects economic growth to ``be anemic at best in the first half.'
No big surprise here. Inflation, a universal sneak-attack-tax, has been ongoing for years now. The people it hurts the worst are those living on fixed incomes. Who might that be?
Well, there are a lot of elderly stuck in this particularly nasty bit of aspic, but there is also the working class, whose wages have not only failed to rise, but have actually declined in real terms. Why the decline? This unceasing tide of illegal immigrants from south of the Rio Bravo.
Now we have a recession. Which corporations get hurt first and worst by a recession? Small to mid-sized companies. Who employs the majority of working class Americans and illegal aliens? Uh-huh, that's right. Small to mid-size corporations. Guess who they are going to lay off first? Oh, come on! You can figure it out. That's right! The illegal aliens! Most of them cannot file for unemployment benefits so the small to mid-size firms don't take such a horrible hit on their unemployment insurance.
What are the aliens going to do? Go home? Maybe a tiny few, but most of them won't because there is nothing in their native countries for them to return to. If the US economy is sour, you can just imagine how bad it is in say, Guatemala or San Salvador. Why go home? It would be long, dangerous expensive trip at the end of which you wuld go hungry.
No, most of them will stay here and they will do whatever they must to survive until the economy rebounds.
Desperate people take desperate measures, George.
...I may be the dumbest bastard on this planet, but I've been investing for over 30 years, and....this is the hard part so pay attention....markets, and economies are cyclical. Presidents and politicians have been blaming each other for the economy since there has been one.
This president is a free trade, free market guy and he's no going to change in the next 30 days, so pucker up. It worked on his watch, with record employment, low inflation, record tax receipts and record household wealth, but it's not going to go on forever.
There is no way, in the face of lower profits and higher taxation looming from a dem president, that Wall St., or any other street, is going to pay more for stocks. That being the case, they will got to a level where people will pay for them. This is a good thing, not bad.
Add to that a Mortgage mess, lower consumer spending and you have all the makings for a real slowdown. These were bad loans by unscrupuolus investors and folks who lied on their applications, so boo hoo.
There is no way real estate is going to sell for more when the buyers are dumping as fast as they can to get out. I thought everyone knew this.
So go home, pour a drink, sit on your ass and realize that a curve is not a curve unless it has a downside.
What did you think, this economic juggernaut was going to go on forever???????
RE:'Add to that a Mortgage mess, lower consumer spending and you have all the makings for a real slowdown. These were bad loans by unscrupuolus investors and folks who lied on their applications, so boo hoo.'
The banks and realtors have had people out searching for people to apply for these mortgages. Those people were on commission so they have been more than willing to help people fill out their mortgage applications.
Now the chickens have come home to roost. It made the mortgage lenders sick and, as is usually the case, the disease has spread to other lenders. The problem is grievously worsened by a government that has done nothing to encourage American citizens to save any money beyond pouring everything they acquire into real estate. The tax system does not leave many of them enough money to feed a savings account. The few who have managed to save a little will now have to tap their savings to service their debt--often that is debt incurred to pay for a gorramned house that is declining in value. We seem to have forgotten that houses are actually a consumer good.
You are dismissing this one too lightly, SP4. The problem lies with the fundamentals of our economy and our stupid, incomprehensible, unfair and counterproductive tax code. It hasn't helped any that our immigration policy has depressed wages while our economic policies have allowed inflation to continue while encouraging people to run up a forty-foot float of debts.
This is supposed to be a country of economic opportunity, but between the Dems and the Goopers there hasn't been much.
you're the dumbest bastard on this planet.
bush is not a free trade president. bush is the chief 'outsource jobs' president.
OF COURSE the long term action is cyclical - but now we're seeing greater rises and greater drops in a short period of time, and that makes investors nervous.
The fundamentals absolutely SUCK right across the board. The banks have no idea of the value of what they hold, and are reluctant to lend. That's one reason for the Fed action; a 3/4 point cut, with more to follow.
A list of problems ... from the Mideast security linked to their importance as oil producers; to the ongoing failures in Iraq requiring a large long-term financial commitment by the U.S.; to Bush's bellicosity towards Iran which was NEVER this kind of problem with a strong Iraq next door; to the fanatics in Pakistan gaining influence, and the same in Afghanistan; to the needs of China for commodities (which is one reason commodity prices have not dropped even more, and the price of gold is nearing $900 as a reaction to the mess).
There's zero good news, and a host of serious problems. If you're alive in 50 years, this will level out on a historical basis; but RIGHT NOW we are facing significant problems in an election year, and that causes Presidents to act precipitously, if not outright stupidly. The White House is ALREADY suggesting an increased rebate. They should freeze foreclosures for 90 days, and do what they can for the banking system - bad earnings are on the way, and more reluctance to lend to businesses.
Eventually the Fed will have to react to inflation, which is being gunned by oil prices and linked speculation, as well as China and India buying up raw materials, which was NEVER a competitive problem in the past.
Looking to the past's 'average' market performance as a guide to the next year is absolutely infantile. It's complacency that's the enemy, whether it's the economically uninformed prattling away in a public forum, or the President whose ass that poster's head inhabits who does not comprehend economics, and refuses to listen to those who do; and who is incapable of dealing with crises in a timely manner, as I noted earlier. If you weren't such an ass-kisser, you might be listened to more seriously.
(Does this sound like a PLAN???)
ap.google.com/article/ALeqM5h19_YeGzwzlmJhx42iIA7nJF0_UAD8UB09F00
'Discussing the White House's options, press secretary Dana Perino told reporters: 'I'm not going to close the door, but I'm not suggesting that anyone believes it has to be bigger' than the $150 billion figure already bandied about.'
voanews.com/english/2008-01-22-voa9.cfm
Islamic militants attacked and killed five Pakistani soldiers in the country's tribal mountainous region near the border with Afghanistan as analysts say the al-Qaida-linked fighters appear to be gaining more control of the region. VOA's Nancy-Amelia Collins in Islamabad reports.
Violence has increased in the past week between Pakistani security forces and militants. The latest attack, before dawn Tuesday, left five Pakistani soldiers dead.
Last week, the al-Qaida-linked militants attacked and briefly captured a military fort in South Waziristan. Two days later the military claimed up to 90 militants were killed in two separate clashes in the same area, but a spokesman for the militants denied the heavy loss of life.
======================
(Municipal bonds may suffer a ratings hit, forcing them to pay higher interest rates, impacting state budgets. Note that Spitzer is proposing tax HIKES in New York, and New Jersey is selling off infrastructure)
www.bloomberg.com/apps/news?pid=20601109&sid=a30y_cTn2Mz4&refer=news
The crisis has been brewing for about six years, ever since the insurers discovered collateralized debt obligations. These securities, part of an area known as structured finance, were created by Wall Street by repackaging assets such as mortgage bonds and buyout loans into new obligations for sale to institutional investors.
Attracted by top ratings from Standard & Poor's, Moody's Investors Service and Fitch and by lucrative premiums, the insurers agreed to pay CDO holders -- many of them banks that created the securities -- in the event of a default. Insurers backed $127 billion of CDOs that relied at least partly on repayments on subprime home loans, according to a Dec. 19 report by S&P, the No. 1 credit rating company.
``It looked so profitable and so easy that they let the portfolio shift too far toward structured finance,'' says Robert Fuller, who runs Capital Markets Management LLC, a Hopewell, New Jersey-based firm that advises municipalities and nonprofits. ``It morphed into this monster that is devouring them.''
(Commodity prices are falling in fear of a worldwide slowdown; but China will use the opportunity to stock up)
www.reuters.com/article/weekAheadWallStreet/idUSN2124763620080121
NEW YORK, Jan 21 (Reuters) -This week could mark the end of the bull market for Wall Street, with U.S. stocks likely to join a global equity market plunge triggered by fears of a U.S. recession. Investors said last week a $150 billion White House rescue plan was too little too late, as more and more data signaled the U.S. economy was headed for recession.
If U.S. stocks open at the levels futures were indicating, it would push major indexes dangerously close to bear market territory -- or a 20 percent drop from their peak in October. That would mark the death of the bull market that was born in early October 2002.
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