What's to be said. We are in it...deeply! Comments welcome on when the trend line will turn from Bear to Bull.Thanks to a friend for posting this where I could find it. Here's the link so you can view the chart full screen.
Whatever the Fed, Obama and the financial gurus are trying to do isn't working. The Dow was down another 250 points today! There is no confidence in the markets for the multi-billion dollar band-aids that are talked about, even if they are being applied.
Here's just one small tidbit of the depth of the problem today:
"Shares ofGeneral Electric Co. (GE) fell to their lowest level in 14 years Monday as investors were spooked by reports highlighting the potential for greater losses in its financial unit. GE shares fell 6% to
$8.82 Monday morning, following a price target cut by a Deutsche Bank analyst who said there's a growing risk that GE will have to cut its dividend to support its GE Capital financial unit.The rapid buildup of unrealized losses in GE Capital's balance sheet may endanger GE Capital's profitability and its ability to pay its debt holders, Deutsche Bank analyst
Investors continued to show a strong level of fear over GE Capital's ability to meet its debt obligations Monday morningNigel Coe said in a research note Monday.
We are coming to understand what the term "full faith and credit of the United States Government" really means. Not much, when it comes to investor confidence and the ability to change the direction of the economy.
I think it's down further from here. Nothing the Feds are doing is working. Who will be the first to call this a Depression and what will be their criteria? We are on a Depression trend line. Now for the real news: the U.S. is on a downward spiral absent recession and there is no politician willing to admit it, let alone do anything about it. It's called 'entitlements.'
I even despise the name and always have because as humans we have no 'entitlements', certainly none that can be forever guaranteed by government! The Kingdom of Heaven is our only entitlement and that only by faith.
9 comments:
Using the stock market declines as a measure of recession vs. depression, if the market doesn't fall much from here, were in recession range - compared to the last two crashes. So, we're at a decisive market support area this very week!
But look at the massive recovery after the second month in 1929, but this "dead cat bounce" lasted only about six months.
Nouriel Roubini said recently that he expects the broad market to fall another 20% before it's over, putting us mid-way between recession and depression.
I'm guessing there will be a 10-20% recovery into May '09 going forward.
It would be interesting to see some related data on how long it took the market each time to return to pre-decline levels.
20% more could happen in a matter of days. The lower the market, the easier 20% is to achieve. I'm in a glum mood today!
Paul Volker
Crisis may be worse than Depression (Reuters)
George Soros
Sees no bottom for world financial "collapse" (Reuters)
Warren Buffett
not as bad at World War II or the Great Depression, but it's still pretty severe (Economic Times)
So, they're somewhat mixed. (You can't trust Soro's anyway, as he's always angling.) But add Roubini's call of 20% down from here, and it looks to be MID-WAY, the worst type of recession, practically a depression, but not as bad as 1929.
The basic question is this: Where is the bottom and how will we know when we've reached it? The gurus have no more clue that we do, methinks.
This is a scary moment!
I'll try to post any daily statements from leaders on this topic:
Ben Bernanke
The official FOMC forecast calls for healthy growth next year and robust growth in 2011, but the chairman of the Federal Reserve has his doubts that a depression can be averted. (MarketWatch, today)
(I'm sticking with Roubini's call: Down 20% from current levels. But maybe not until after a big rally. Will hold here IMO. In the end, it will be a major recession... Hey, what really defines a depression anyway?)
A depression is when everyone is depressed over the economy. A recession is when your neighbor who lost his job is depressed over the economy.
Personally, I don't think the slide stops until the banks market values are reset to true value. And we won't know that until the toxic assets are cleaned out and the mystery is removed. For some it is probably negative value, which means we either let them go bankrupt (stockholders beware) or save them for social stability (taxpayers beware).
Well said, Lander. I agree with you. Wake me when it's over and the DJIA is back over 12,000
In a brief segment on TV last night, Ben Bernanke said he does not think we'll have a depression. Checking the news quickly this morning, ... oh, it was 60 Mintues last night. Anyway. He seems upbeat: "Ben Bernanke sees recovery ahead."
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