Comments on: Look out below...!

Look out below...!

Asparagirl — Tue, 22 Jan 2008 00:18:35 -0800

While the US equities markets were closed on Monday for Martin Luther King Day, stock markets around the world took a nosedive, losing billions in equity; the markets in Australia, South Korea, Japan, China, Indonesia, Hong Kong, Germany, France, the UK, and more countries have dropped at least 5% each (Canada only fell 4.75%), even though most of those markets had already been seriously down for several days prior. India has been hit particularly hard, at one point down a whopping 11%, tripping their markets' automatic "circuit breakers" for a mandatory time-out period, before scraping back up to close at 8% down. US futures markets are currently predicting a 650+ point drop just at the open Tuesday morning, before even a single trade goes through. In a bit of serendipitous timing (for us, not for him), one poor young daytrader started posting unedited videos of his daily trading activities on YouTube several weeks ago, which meant that his Sunday night breakdown and Monday night quarterbacking (both videos NSFW for language) are both online for the world to see. (He was long the futures market without stops and lost about $40k out of his $55k account.) I suspect similar sentiments to the ones he expressed in his Sunday night video are going to be echoing throughout many offices on Wall Street this week...

By: Sticherbeast

Sticherbeast — Tue, 22 Jan 2008 00:30:33 -0800

lol

By: "Tex" Connor and the Wily Roundup Boys

"Tex" Connor and the Wily Roundup Boys — Tue, 22 Jan 2008 00:34:22 -0800

Damn it. I'm going to get laid off.

By: Blazecock Pileon

Blazecock Pileon — Tue, 22 Jan 2008 00:34:56 -0800

Never mind Wall Street traders. They'll just park three cars in their garage instead of four, etc. The real losers are working class folks who scrimp and save against inflation, who have their retirement funds leak 10% in a few days. It's amazing that neocons rail against FDR and his New Deal policies, all while setting up the social, political and economic conditions for a new FDR, who will to have to do similar clean-up work over the next ten years.

By: Asparagirl

Asparagirl — Tue, 22 Jan 2008 00:35:23 -0800

Oh, and did I mention that the S&P Futures market just went on lockdown a few minutes ago? Barring a miracle -- or a big and stupid "Hail Mary play" rate cut by the Fed before the market opens -- we are about to witness the biggest stock market crash in the United States since 1987.

By: Mutant

Mutant — Tue, 22 Jan 2008 00:38:39 -0800

Yah, its gonna be fun. I write commentary for our group at the bank, and in a piece distributed yesterday I put a lot of blame for recent nervousness squarely on FASB 157; now that everyone's being forced to mark stuff (that's pronounced "Level 3 assets") to market instead of to model, well, things are worth less what everyone all thought they were. And sometimes a lot less.

By: xil

xil — Tue, 22 Jan 2008 00:40:22 -0800

(The DJIA was actually a net positive in the whole year of 1987, though. But this is different! Panic! Sell! Sell!)

By: vacapinta

vacapinta — Tue, 22 Jan 2008 00:42:48 -0800

...we are about to witness the biggest stock market crash in the United States since 1987. And panic-mongering will help...how, exactly?

By: Asparagirl

Asparagirl — Tue, 22 Jan 2008 00:45:14 -0800

Dude, don't shoot the messenger.

By: Sticherbeast

Sticherbeast — Tue, 22 Jan 2008 00:47:49 -0800

This is awful, but this is also an honest question I'm pitching here: if you have the ability to ride out this recession for a little bit, are things going to be OK? I have this delirious hope that this will be a nasty speed bump on the road to prosperity, and that the pain of a temporary recession will help voters pick a wiser President this coming election.

By: Blazecock Pileon

Blazecock Pileon — Tue, 22 Jan 2008 00:51:31 -0800

his Sunday night breakdown and Monday night quarterbacking (both videos NSFW for language) are both online for the world to see That fellow looks and acts like he's one step away from a Gamblers Anonymous meeting. This week: A guide to the global economy!

By: Mutant

Mutant — Tue, 22 Jan 2008 00:51:35 -0800

On the other hand, if things markedly change for the better there is some truth to the Plunge Protection Team conspiracy theories. I think the "Working Group on Financial Markets" is purely an American phenomenon, as evidenced by yesterdays carnage. "The real losers are working class folks who scrimp and save against inflation, who have their retirement funds leak 10% in a few days." Its only a loss if realised. Someone who is a few days away from retirement should not be in the markets, or have a relatively small amount of their net worth in the markets.

By: vacapinta

vacapinta — Tue, 22 Jan 2008 00:53:00 -0800

The real losers are working class folks who scrimp and save against inflation, who have their retirement funds leak 10% in a few days. If this is a needed correction, folks with retirement funds and a longer view should be fine. After all, 1987-88 was a good time to get into the market. The losers are the daytraders and real estate speculators - the people looking for a quick buck.

By: blacklite

blacklite — Tue, 22 Jan 2008 00:58:08 -0800

He was long the futures market without stops and lost about $40k out of his $55k account. lol! IN THIS MARKET? (Sorry, I had to.) This is fun times, for those of us not in the USA. I don't know what the fuck is going to happen, but I am putting on a hard hat.

By: seanyboy

seanyboy — Tue, 22 Jan 2008 00:59:39 -0800

The biggest impact this will have short term is it'll force people to pick presidential candidates with experience. I'm betting Obama is crying very softly right now.

By: maryh

maryh — Tue, 22 Jan 2008 01:02:13 -0800

Looks like I picked the wrong week to stop smokin'.

By: Dreamghost

Dreamghost — Tue, 22 Jan 2008 01:03:11 -0800

I thought the market closes automatically once it loses 500 points in one day?

By: elpapacito

elpapacito — Tue, 22 Jan 2008 01:04:09 -0800

vacapinta writes "folks with retirement funds and a longer view should be fine." Uhm not necessarily...it could be that they don't suffer from today too much, that much is true (depending on the contract really)....some will have to hope that in the next sampling period of the index that is connected to their return the market will have recovered . People whose returns are calculated on the final value of the stock better hope it will have recovered. Question is how much time till the market recovers to pre-hit day, the longer it takes the worse. Day traders with expiring futures are either shivering or popping champagne.

By: stavrosthewonderchicken

stavrosthewonderchicken — Tue, 22 Jan 2008 01:04:22 -0800

This is awful, but this is also an honest question I'm pitching here: if you have the ability to ride out this recession for a little bit, are things going to be OK? Based on what I've been reading for the past few years since I started paying attention to this, I agree with the comments of Malor and others in past threads on this topic, that the answer to this is: probably no, not really, depending on what you mean by 'OK' and what you mean by 'a little bit'. The serial bubble-blowing of the Greenspan era, in deliberate attempts to stave off the inevitable, has not made the inevitable any less so, and made the scale of the collapse ahead more devastating. Things are badly broken, and it's going to take a good few years to sort it out. The stock market dive (which is not over, I don't think, by any means) is just the hacking wet cough; in other words, a symptom of more serious problems, of which the recently-discovered-by-the-media subprime shitstorm is only one. Real estate, residential and commercial, has a long way to go down yet, and housing slumps take a long time before they bottom. Word from all quarters (but word that I've yet to read anywhere in the Regular Old Media) is that bankers are crapping their pants all over the planet. Data point from Mish Shedlock:

Goldman estimates $200 billion in bank writeoffs are coming. We are well on the way. $200 billion in capital losses will impair $2 trillion in future lending because of fractional reserve lending. This is forward looking. Furthermore, I expect $200 billion is extremely conservative. I look for $500 billion minimum. $1 trillion, affecting $10 trillion in future lending would not be surprising if there is a cascade of derivative defaults.

Hold on to your asses, it's going to be a wild ride. I'm planning to hunker down for at least a couple of years; I reckon it won't be until around 2010 at the soonest that the background radiation will have dissipated enough to leave the Wonderchicken Fiscal Bunker. In terms of politics, any politician elected from now through the next couple of years is going to be facing extremely negative approval ratings for a good while, because there's going to be bugger-all any of them will be actually be able to do.

By: stavrosthewonderchicken

stavrosthewonderchicken — Tue, 22 Jan 2008 01:07:59 -0800

Barring a miracle -- or a big and stupid "Hail Mary play" rate cut by the Fed before the market opens -- we are about to witness the biggest stock market crash in the United States since 1987. I've been saying to people for a year or so that it'll be the biggest since 1929 when it comes, mostly to watch their expressions. I'm starting to actually think it's not entirely out of the realm of possibility, though.

By: FidelDonson

FidelDonson — Tue, 22 Jan 2008 01:08:12 -0800

You have to take into account that this is also a reaction to the huge growth that the markets have gone through in the latest years. Indian stocks for example have gained 50% over the last year.

By: Blazecock Pileon

Blazecock Pileon — Tue, 22 Jan 2008 01:09:32 -0800

If this is a needed correction, folks with retirement funds and a longer view should be fine If we're headed for the kind of crash and protracted recovery that the press is readying the masses for, a longer view may not matter. When retirement funds pay out revenues from a smaller base, there is subsequently much less from which to make money and pay it out. Add rising inflation where a dollar is worth even less — for retirees, lost value is lost faster, if not permanently. That's if you were fortunate enough to save. On the flip side, the inevitable bail-out of Wall Street will be paid for by government-signed IOUs from taxpayers, and not big business or its day traders. It seems pretty obvious the long-term losers will be working and middle-classes, regardless of whether the well-to-do have to switch from Cristal to Veuve in the short-term.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 01:13:36 -0800

DOOOOOOOOOM! On a serious note, can someone explain why the failure of ambac and MBIA (bond insurers) seems to have predicated this? Those 2 failures seem to be a huge fucking deal and I can't figure out why..

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 01:15:39 -0800

Also, doesn't trading halt at 10%? So we've technically limited the total drop that a market can undergo in a single day. Psychological, but a limitation nonetheless. Given heavy trading, what's the most it can drop in a single day? Figure 50% trading time (so 4 stops in a day 4 hours trading) Or is that not how it works?

By: stavrosthewonderchicken

stavrosthewonderchicken — Tue, 22 Jan 2008 01:17:17 -0800

Sorry, I messed up that link. Here.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 01:19:20 -0800

Also, aren't we all supposed to get checks for 800 dollars?

By: Slithy_Tove

Slithy_Tove — Tue, 22 Jan 2008 01:23:10 -0800

"When blood runs in the streets, buy common stocks." Some days, Mr. Market is ebullient. The sun is bright, the sky is blue, PE ratios of 100+ are just ducky, Flying Car Industries is launching its first product Real Soon Now, and the Dow is going to the moon. He tells you that it's okay to buy from him at ridiculous prices, because you can buy high, but sell HIGHER! Some days, Mr. Market is depressed. President Bush is poisoning our precious bodily fluids, oil is going to $1000 a barrel, a dollar is going to be worth €0.01, and we'll all be eating bark and dirt and living in caves in short order. Bear funds buy private jets and name them 'Bear Air', and Barrons is full of advertisements to 'Invest like a Scottish Widow'. We've been here before. The market will go down. The market will go up. I've posted this link before: in the long run, you can't beat stocks. And: diversify, because if you think you can predict which market segment is going to do best over the next few years [pdf], you're better than I am. This, too, will pass.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 01:25:47 -0800

I'm more cynical than you Slithy. I think this is a fundamental failure in regulation. Stocks are a good bet, but someone needs to keep an eye on these fuckos. If you let them do whatever the fuck they want, we get into this mess. A clusterfuck of biblical proportions. It's not good business, it's just corruption and lies that finally came tumbling down. When international markets are bitching about lack of oversight on the us financials, something's gotta change. We'll see what happens though.

By: stavrosthewonderchicken

stavrosthewonderchicken — Tue, 22 Jan 2008 01:26:38 -0800

This, too, will pass. Eventually, yes. But some messes do take longer to clean up than others.

By: elpapacito

elpapacito — Tue, 22 Jan 2008 01:31:34 -0800

Slithy_Tove writes "in the long run, you can't beat stocks."

The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. John Maynard Keynes, A Tract on Monetary Reform (1923) Ch. 3 English economist (1883 - 1946)

By: Xoc

Xoc — Tue, 22 Jan 2008 01:42:30 -0800

Can someone explain to me how these loans are causing massive losses? Presumably sub-prime mortgages are still secured by the real estate that was purchased. That means that the banks are winding up with a lot of real estate in their portfolios that they need to resell. But between down payments and mortgage insurance, the banks shouldn't be taking massive hits from these, unless the bottom has really dropped out of the real estate market.

By: panamax

panamax — Tue, 22 Jan 2008 01:43:10 -0800

can someone explain why the failure of ambac and MBIA (bond insurers) seems to have predicated this Quite simply, bond issuers like eg. the State of California would pay an insurance premium to eg. MBIA to "borrow" their AAA rating for our arguably non-AAA issues (California has an A+ rating now, which is close to slipping out of "investment grade"). If this "wrapping" [don't know the technical term] is lost, many holders of these bonds like pension funds will be required to liquidate these bonds due to the the codicils [again, don't know the technical term]of their investment requirements. In short, people were buying billions of A+ (if that) offerings thinking they were AAA given the insurance, but if the end-of-the-line insurerer turns out to be "Madame Merriweather's Mud Hut in Malaysia"[1] then the entire financial system will have one big JENGA! moment and it's Chernobyl time. oh, Asparagirl, great framing of the fpp. I had created the exact same content twice (the day trader guy is so representative) but I like how you broke everything down better.

By: vacapinta

vacapinta — Tue, 22 Jan 2008 01:43:51 -0800

The stock market regained all of its value just 18 months after the crash of 1987. Thats not too long-term, I'd say. I think data is better than a quote from Keynes: 1. Since 1870, stocks have had positive returns in more than 90% of 123 rolling five-year periods. 2. The after-inflation annual returns from stocks were at least 2.8% in 90% of 10-year periods, and at least 5.3% in 90% of 20-year stretches. 3. Over 20-year periods back to 1802, stocks have never generated less than 1.0% annual returns above inflation, and stocks have never failed to beat inflation over any period of 17 years or longer. 4. Over five-year periods back to 1802, stocks outperformed bonds and T-bills more than 70% of the time; over 10 years, more than 82% of the time; over 20 years, more than 94% of the time, and over 30 years, 99.4% of the time (and 100% of the time since 1870). Given the widespread fear that we are currently at or near a market peak, Siegel provides one more important piece of data: Had one been unfortunate enough to invest $1,000 in stocks just before the six worst market crashes this century, one's long-term returns would still have prevailed strongly over bonds and T-bills Source.

By: pharm

pharm — Tue, 22 Jan 2008 01:45:25 -0800

Lord_Pall: Oh that bit's easy: No doubt you're well aware of the massive fall in the value of bonds backed by mortgages sold in the US over the last six months? Many of those bonds were only AAA rated because the issuing bank had bought insurance from one of the so-called 'monolines' which would pay out in the event of default of the underlying mortgages. In effect, these bonds got to 'inherit' the rating of the insurer. This was a great deal for the banks, because it meant that they could sell the bonds to all sorts of institutions which are only allowed to hold AAA rated investments. However, if the credit rating of the insurer is cut, then that cut immediately effects every single bond which bought insurance from them. All of a sudden all those institutions which thought they were holding AAA rated paper find themselves holding junk. They're not allowed to be holding junk, so barring legislative action, they're going to have to sell the bonds on the open market, probably for much less than their original value -- remember that the underlying bonds without the insurance would not have been AAA rated even under the rating agencies old, now known to be wildly over-optimistic, rating methodology: They're probably close to worthless now. That's the optimistic outcome: If the bond insurers actually go bankrupt, then all that's left is the value of the underlying bonds. You can expect massive holes to show up in your local municipal funds, pension funds, etc etc. Local taxes will have to rise to make up the difference. I'd also expect a rash of lawsuits against the banks which sold these bonds: if successful, then the municipal funds would recover some money at the expense of the banks who are already desperately short of capital. The USA is almost certainly already in recession. This would make the recession much worse & this is why the downgrade is such a big deal for the markets, not just because it locks in losses now that will directly affect consumers, but because it suggests that things could easily get much worse.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 01:54:20 -0800

So it sounds like people got dicked. Was there a lack of oversight on the bond insurers?

By: tkchrist

tkchrist — Tue, 22 Jan 2008 01:56:45 -0800

This, too, will pass. Not for a while it won't. I'm thinking four or five years minimum. Many US mefite's will be laid off in the coming months. So while it "passes" people are going to be facing seriously down graded lifestyles. If not worse. I have been harping about this for five years. Much of what people could have done (shifting to Euro based money markets, etc) is too late too do. Most of you will have 201k's on Thursday not 401k's. There is not much you can do but wait it out. I suppose you can do the usual. Stop buying shit you don't absolutely need. Pay off your credit cards and debt. Cancel your cable TV. Implement personal austerity. But honestly it's too late for riding out this downturn without sacrifice if you haven't been saving for the last year or two.

By: panamax

panamax — Tue, 22 Jan 2008 01:57:55 -0800

Can someone explain to me how these loans are causing massive losses? First, subprime is a SMALL part of the problem. This chart shows the true scope of the reset and recast waves coming toward us. Presumably sub-prime mortgages are still secured by the real estate that was purchased. Purchased at prices unsupportable by area incomes thanks to these suicide loan products and damn little borrower vetting! That means that the banks are winding up with a lot of real estate in their portfolios that they need to resell. Yup, and the more they need to resell, the lower the prices go, and the more current home-owners are put underwater. Wonderful feedback loop. But between down payments and mortgage insurance Down payments? LOL. The central feature of the 2003-2006 sub-prime & Alt-A boom was no down payments required! Plus PMI coverage is limited. unless the bottom has really dropped out of the real estate market For about a year now the bottom has been dropping out the *lending market*. No free-money Crazy-Eddie lending, no able buyers taking out suicide loans, no sales at these inflated & unsupportable pricepoints (in the bubble areas of CA, OR, NV, MT, UT, CO, FL, VA, NY, MA et al).

By: panamax

panamax — Tue, 22 Jan 2008 02:03:05 -0800

just 18 months after the crash of 1987 This is different. This "correction" is a retracement of the fake economy scam that has been running since at least 2003. All the corporate profits that powered the forward P/Es that propelled the market are tainted by the UNSUSTAINABLE BORROWING -- FOUR TRILLION by consumers via the household mortgage vector, TWO TRILLION by the Congress via deficit spending FY01-now). Music's stopped now. Time to grab a chair, if you can.

By: panamax

panamax — Tue, 22 Jan 2008 02:04:50 -0800

Implement personal austerity I cancelled my $5/mo subscription to Bob Brinker's radio show! It was fun while the market was zooming, but he's so . . . shrill when the bears come out and play . . .

By: Phanx

Phanx — Tue, 22 Jan 2008 02:04:51 -0800

This too, will pass. Sure - in the long run we're all dead anyway - but somehow that reflection fails to be comforting.

By: Slithy_Tove

Slithy_Tove — Tue, 22 Jan 2008 02:13:47 -0800

some messes do take longer to clean up than others. Stav, I've seen a sextupling of the price of oil in the mid-1970s, double-digit inflation and unemployment in the late 1970s, the savings and loan crisis in the mid-1980s, the abuse of options and 'portfolio insurance' in the late 1980s that caused the '87 crashette, the currency collapses in Asia in the late 1990s, and the dot.com/telecom bubble and burst in 2000-2003. All were nerve-wracking. I heard loud predictions of doom every time. Nonetheless, the US survived all of them, and so did the rest of the world. The Dow is 20 times higher than it was at the bottom of the 1970s slump. The latest turmoil seems no different than the many, many periods of turmoil that have gone before. The long run is a misleading guide to current affairs. In the long run we are all dead. elpapacito, Keynes was an enthusiastic speculator, although not a terribly successful one; wealthy friends had to bail him out of bad German mark positions at least once. One would expect this kind of sentiment out of someone with a speculator's outlook. This statement demonstrates the 'fallacy of the excluded middle'. You *can* have an investment horizon somewhere between 'short term', and 'after we are dead'. I'd rather throw in my lot with Benjamin Graham and Warren Buffet, who have better records of investing success, and who definitely believe in the long term.

By: Skeptic

Skeptic — Tue, 22 Jan 2008 02:14:15 -0800

Friday, 18 January 2008: President Bush announces a packet of economic measures. Monday, 21 January 2008: Worldwide markets stampede in a mass panic. He may only have one year left, but do not underestimate his power to mess things up in the meantime...

By: elpapacito

elpapacito — Tue, 22 Jan 2008 02:17:06 -0800

vacapinta writes "I think data is better than a quote from Keynes" By analogy, even Argentina's economy is in recovery now, but that doesn't make it less miserable for these who were hit hard. Plus numbers don't adequately represent economic reality, as panamax underlined very good P/E may look fantastic, but they may as well misrepresent economy.

By: pharm

pharm — Tue, 22 Jan 2008 02:23:41 -0800

Lord_Pall: Was there a lack of oversight on the bond insurers? The bond insurers were insuring bonds worth trillions of dollars with a capital base of a few billion dollars. They could cope with the random walk of finance that would lead to the occasional bond default, but in the event of a downturn in the economy that lead to widespread default, they will go bankrupt very quickly. In effect, buyers of these bonds were making a levereged bet on the future of the US economy: small returns if it kept on growing, total loss if it had a downturn. Many years of consistent profits blinds people to the existence of the low-probability large loss that lurks in the dark waiting to jump out and eat all their capital. "Picking up nickels in front of a steamroller" is how Warren Buffet described a different market IIRC. The mortgage-backed bond steamroller has just caught up with the markets!

By: hoverboards don't work on water

hoverboards don't work on water — Tue, 22 Jan 2008 02:23:54 -0800

Stop buying shit you don't absolutely need. Pay off your credit cards and debt. Cancel your cable TV. Implement personal austerity. That's good advice recession or not.

By: Asparagirl

Asparagirl — Tue, 22 Jan 2008 02:25:02 -0800

To be fair, Skeptic, the straw that broke the camel's back was Fitch's downgrading of Ambac (a bond-insurer) this past Friday afternoon -- worse, it was done in that little window of time before the equities markets closed but after the bond markets closed. That made almost everything Ambac has touched retroactively turn to shit. That's a lot of CDO's...and a lot of cities, towns, and public works projects in the US are suddenly going to find themselves unable to raise money going forward.

By: panamax

panamax — Tue, 22 Jan 2008 02:29:32 -0800

The Dow is 20 times higher than it was at the bottom of the 1970s slump 0) The Dow is 10x higher now 2) The Dow components get swapped out when they fail. 3) In 1975 what cost a quarter costs a dollar now. The latest turmoil seems no different than the many, many periods of turmoil that have gone before. This turmoil is a symptom. The US consumer was tapped out 25 years ago. The Reagan defense boom of the mid-80s led to recession that the PC productivity boom of the 90s -- and dramatically falling energy prices thanks to the North Sea and other non-OPEC fields coming on line -- powered us out until the housing boom of 2003-2006 propelled us to where we are now. And where are we now compared to 25 years ago? The divide between rich and not-rich is much wider, 3/4 of this country hasn't bothered to finish college, the manufacturing we didn't NAFTA we shipped to China, Peak Oil is on us like a cheap suit, the Greenspan FICA overtaxation scheme is beginning its planned descent into net deficit, Medicare is primed to blow up in the next decade, we've just blown a trillion or so on a war in the mideast without end, home equity %s are at their lowest rates ever recorded -- quickly falling toward sub-50% -- while consumer household debt is at an all-time high. That's the color of the sky in my world. It's a bit different from the background of this page.

By: bystander

bystander — Tue, 22 Jan 2008 03:02:21 -0800

I'm hoping Malor chips in, his predictions are looking closer to emerging reality. panamax highlights the confluence of the end of cheap oil, which I have been looking at and asking why isn't this pushing a recession (till now). The US real estate market is hurting, and the UK will hurt too. Now is really the time to make sure you have a couple of months of expenses money saved rather than buying that big shiny plasma or new SUV. Its not likely the end of the economic world, but if you are on the receiving end of a pink slip in a few months it might feel like it.

By: flabdablet

flabdablet — Tue, 22 Jan 2008 03:03:32 -0800

Maybe we should all pop down to our local bank and ask to see all our money.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 03:19:43 -0800

So the FTSE just rebounded from a 5% drop on the rumours of an emergency rate cut, apparently in addition to a cut at the end of the month. Are rate cuts an actual solution?

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 03:22:18 -0800

If I work in a safe government job, and my money's in real estate, not the stock market, is this something I should personally care about?

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 03:23:03 -0800

(i mean, apart from the real estate value rising as the stock market falls)

By: ClanvidHorse

ClanvidHorse — Tue, 22 Jan 2008 03:37:25 -0800

This is fun times, for those of us not in the USA. I don't know what the fuck is going to happen, but I am putting on a hard hat. That's just bullshit, blacklite. As far as we can tell, every other Western economy is in nose-deep in shit at the moment. From your profile you are in Canada and it is unlikely that if the U.S. plunges deep into recession that Canada will coast along regardless. Is Canada not the most dependent upon the US for trade of any country in the world? The U.S may be the start of it all, but it will fundamentally impact on most people's lives wherever you are in the world. This may not be as transparent as a day trader losing their betting chips but you can bet that almost everyone of us will feel the pain.

By: bystander

bystander — Tue, 22 Jan 2008 03:38:11 -0800

Ubu, in Australia in the 30's safe government jobs had work rationing (turn up and only get paid for 2 days a week, for example, in the railways) and bank withdrawals were restricted to give everyone a fair go. Hopefully, of course, this is a 1987 style blip, but having a couple of months cash on hand would be cheap insurance against such a catastrophe. And I wouldn't count on house prices rising with stocks falling. That only happens when there is more money coming into the system, like when the dot-com stuff left all that superannuation coming in with no place to go. If all the stock investors end up down 20% and business profits fall as well then the price of real estate is likely to stagnate or drop too.

By: wobh

wobh — Tue, 22 Jan 2008 03:43:18 -0800

"Let me ask you, are you at all concerned about an uprising?"

By: pharm

pharm — Tue, 22 Jan 2008 03:44:39 -0800

Commercial real estate funds in the UK have dropped precipitously, and the spread-betting markets are predicting sizable falls in the rest of the UK property market UbuRoivas. Real estate will not be immune to any downturn: it's not a counter-cyclical investment.

By: pharm

pharm — Tue, 22 Jan 2008 03:48:09 -0800

Addendum: I see you're in Sydney. I believe that .au has been living the high life off the commodoties boom for the last few years. Recessions == big drops in demand for commodoties. Don't expect the Australian economy to be immune. (Even Gold is dropping at the moment, which shows how much it's been bid up by speculative forces in the market.)

By: ClanvidHorse

ClanvidHorse — Tue, 22 Jan 2008 03:49:48 -0800

If I work in a safe government job, and my money's in real estate, not the stock market, is this something I should personally care about? Yes. Less revenues to the treasury from lower corporate taxes and income taxes lead to a reduced pot for spending on government services. Even if your job is safe, the chances are that you will have reduced support around you and increased budgetary pressures and tougher decision making. That is just taking it at it's most simplistic level. There are a million and one other events and small changes that will cascade from this. While it may not affect your ability to put bread on the table, the repurcussions of these stock market fears and the almost inevitable global slowdown will affect your life in many ways. Also, it is not the case that as stocks fall property will inevitably rise, there are many other factors to consider.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 03:51:36 -0800

bystander: what rational person doesn't have at least a couple of months' cash up their sleeve? and to clarify, i'm not talking about real estate as some kind of short-term managed fund that might at times be more or less profitable than stocks, but about the longer-term security of my own house, in terms of riding this out. if the value stagnates or drops a while, that's no skin off my nose, as long as i can meet the mortgage payments. the way things are, i should be able to do that even if unemployed, just by renting out one of the two bedrooms currently lying idle, so i think i'll call a big "meh" on this, coz finding tenants in this part of town is like bazookaing fish in a bucket. so, unless interest rates skyrocket, it's still feeling pretty cozy here.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 03:57:17 -0800

anyway, as tibetan wisdom has it, if you can do something about a problem, you don't need to worry about it. if you can't do anything about it, what good is achieved by worrying? it'll be interesting to see if any kind of global economic repositioning takes place as a result of this, by which i mean "will china continue to rise & rise?". i'm guessing that india's fucked, because it's still a total basket case, infrastructure-wise, and has really only been riding a bit of a wave of growth thanks to the outsourcing of call centres & IT work, which you'd think would be pretty vulnerable to a recession. about time i shut up now, and listened in to people who actually know or care about economics.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 03:59:23 -0800

Less revenues to the treasury from lower corporate taxes and income taxes lead to a reduced pot for spending on government services. We actually make a profit for the government, so we're a different kettle of fish, but yeh, less consumer spending & we could well feel the pinch.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 04:02:09 -0800

(heh - time to get my Mad Max dune buggy out of storage, and go raiding for petrol. where the hell *did* i put that feral studded leather outfit, though?)

By: SteveInMaine

SteveInMaine — Tue, 22 Jan 2008 04:09:02 -0800

Maybe we should all pop down to our local bank and ask to see all our money. Ah, you see, that attitude's part of the problem. It happened in the UK not too long ago, and it seems it's not over yet. The one thing I keep in mind is that there is no reason when it comes to the markets. It's all driven by emotions, and that's why I generally stay away. The smart money's in oatmeal, or might as well be. What will help you weather through any downturn is a belief in the Bohemian payment plan: All the money down and no payments.

By: bystander

bystander — Tue, 22 Jan 2008 04:13:33 -0800

Hi Ubu. Agreed a government job and house with a reasonable mortgage are good places to be. Agreed some cash squirreled away is sensible. I guess it depends on whether this is a 'sky is falling' problem or a 'I took a bath but am OK' kind of problem. Like you I'm counting on some job and the economy still existing, but there are folk, more than usual I suspect, saying this could be a bad one. If you were really paranoid, buy gold, pay off your debt and stockpile ammo (good advice for an Argentinian style collapse). More likely for us here is some belt tightening, less plasma or SUVs and stories in the paper about high flyers hitting hard times. In the US, the risks and rewards are always more extreme, and I would be more concerned. And a comment on the commodities boom, yes it has fueled spending and some overall modest tax cuts (a sandwich and a milkshake was the example) but if it finished the country would still be fine. Much more concerning would be a global recession for our services businesses, which would likely come at the same time.

By: matteo

matteo — Tue, 22 Jan 2008 04:15:28 -0800

what's good for Halliburton is good for America

By: AppleSeed

AppleSeed — Tue, 22 Jan 2008 04:15:54 -0800

Mash the reset button, pronto. Out with Bush, out with the housing Ponzi scheme, out with fossil fuels, out with flabby bodies and flabby minds, out with me-ism, out with hyper-concentration of wealth while basics of health, education, environment, infrastructure and a living wage are ignored. It's the end of the world as we know it, and I feel fine. In with the opposites of all of the above, natch.

By: tommyD

tommyD — Tue, 22 Jan 2008 04:22:22 -0800

Don't understand all this financial talk. I've always been ignorant about such things. But in my little town, there are many manufactured housing plants. While the local real estate market (so far) has been stable, this is not so in neighboring regions, where the modulars we build are sold. And in my little town, lots of NASCAR dads have hung up their nail guns and are tuning into the afternoon soaps. They aren't worried about their investments either. They are worried about groceries.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 04:25:13 -0800

bystander: i can buy some extra ammo with the profit i've made from my currency trading! i have $US300 left over from my recent holiday, and the aussie dollar's just fallen 2c against the greenback! ooooh...should i hold out for further falls? i wonder what the futures market says about three crisp, clean bills? less plasma & SUVs? meh, adbusters fan here. big believer in not buying things i don't need & cannot afford, and not taking out personal debt (other than a mortgage, which is kinda unavoidable).

By: jeffburdges

jeffburdges — Tue, 22 Jan 2008 04:38:06 -0800

I imagine we're basically seeing the fall out from the fed bailing out the mortgage companies. Too many bad bailouts will kill the economy.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 04:42:03 -0800

Anecdotally, I'd peg food inflation in the 20-40% range. Not just price increases, but the stealth 20% size reduction with the price remaining the same. Doom and gloom links - Bank of America earnings down 95% I think BOA is a bunch of fuckos who bought Countrywide for some other fucked up sleazy plan. And it would've worked except for you pesk kids! Actually, I don't know if BOA is hurting because of the CFC purchase, but I still think they're up to no good.

By: bystander

bystander — Tue, 22 Jan 2008 04:45:17 -0800

Bah. Ubu is already with the program. While I have no ammo I may hitch a ride in the mad max mobile if it comes to that. You cousins in the US watch out, I think there are plenty more of you that missed the sarcasm and do expect to have to shoot their way out. I can't see crime rates staying low if there are a lot of lay offs. But I hope they do. I was kinda surprised after Katrina about all the retractions in the newspaper regarding early stories about violence. A lot of my friends saw it as the final evidence US society had fallen apart, but I suspect in the wash up (no pun) it probably showed there was still a lot of community spirit.

By: UbuRoivas

UbuRoivas — Tue, 22 Jan 2008 04:51:29 -0800

bystander: find me the location of the original Interceptor, and you'll be allowed to ride shotgun even without ammo. however, your outfit will need to be tattered leather (it works best in the desert heat) and when we need to refuel, it'll be bare-knuckle fighting for you. these are my conditions.

By: orthogonality

orthogonality — Tue, 22 Jan 2008 04:51:30 -0800

Ok, bottom-line it for me. How bad is it? No hiring for six months? For a year? Bread-lines? Okie migrations? Or is it time for me to learn the Chinese for "Hey mister, wanna meet my sister?"

By: loquacious

loquacious — Tue, 22 Jan 2008 05:04:27 -0800

I don't know much about any of this fancy finance stuff, but way down here at the scummy bottom of the capitalist feeding chain things are already plenty tight this year. Basic food and survival costs feel like they've doubled and tripled in about 12 months.

By: poppo

poppo — Tue, 22 Jan 2008 05:06:01 -0800

I need my $5 back

By: Thorzdad

Thorzdad — Tue, 22 Jan 2008 05:19:22 -0800

...folks with retirement funds and a longer view should be fine. Except most retirement funds are locked-up until one reaches 65 or so. If you need to break-into your retirement funds ahead of retirement in order to keep the heat on, for instance, you lose a huge chunk of those funds right off the top in penalties and taxes.

By: mothershock

mothershock — Tue, 22 Jan 2008 05:22:35 -0800

When you say "squirrel away a few months of cash," do you mean under the mattress? Or in a bank? Is it safe to keep large sums of money in the bank (as opposed to investing it)?

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 05:27:04 -0800

.75 cut in fed rate.

By: ColdChef

ColdChef — Tue, 22 Jan 2008 05:29:55 -0800

I'm glad I put all my money into sidewalk repair and bloody, gooey clean-up futures.

By: orthogonality

orthogonality — Tue, 22 Jan 2008 05:31:51 -0800

First inra-meeting rate cut since immediately after 9/11. They're frightened of major dislocations. Bad sign.

By: ClanvidHorse

ClanvidHorse — Tue, 22 Jan 2008 05:33:31 -0800

Interest rates cut to 3.5% in the US. A massive cut. It will be interesting to watch the markets over the next few hours. A rally or panic?

By: smackfu

smackfu — Tue, 22 Jan 2008 05:33:56 -0800

Yeah, everyone should sell their stock immediately. That'll help.

By: Skorgu

Skorgu — Tue, 22 Jan 2008 05:34:11 -0800

I'll be damned if I can find the link, but I've read that adding it all up the subprime fiasco is about the size of the S&L crisis. Of course adding it all up is the bone of contention, but at least the sizes of the core problem seem to be somewhat similar. Food prices are scary though. Guess my Supcom rig will have to wait.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 05:34:17 -0800

Largest cut since 1984 I think.

By: eriko

eriko — Tue, 22 Jan 2008 05:34:46 -0800

That explains the sudden spike to 12000 on the DJIA futures -- which pulled right back. Bad day to be in USD, though. At 0734CST, one dollar buys you 1.455EUR, 1.957GBP, and it's 106.5 Yen and 1.029 CDN to the dollar. I suspect those numbers will change -- that .75 cut is a panic cut saying we'll do anything to save the markets, including inflate the dollar.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 05:39:09 -0800

If the rate cut doesn't help the market, does the government just start writing checks so companies look like they're making money?

By: Civil_Disobedient

Civil_Disobedient — Tue, 22 Jan 2008 05:40:00 -0800

Maybe we should all pop down to our local bank and ask to see all our money. Didn't you ever see Mary Poppins?

By: Civil_Disobedient

Civil_Disobedient — Tue, 22 Jan 2008 05:42:29 -0800

Also, if anyone needs a reality check, the BoA news is the most "hooooley fuuuuck" copy I've read all day. "Fourth-quarter net income fell to $268 million, or 5 cents a share, from $5.26 billion, or $1.16, a year earlier" Fuuuuuuuck. 95% loss. Yeah, we're all gonna feel that.

By: Civil_Disobedient

Civil_Disobedient — Tue, 22 Jan 2008 05:43:54 -0800

Also, also... "Citigroup Inc., the nation's largest bank by assets, posted a fourth-quarter loss of $9.8 billion, the biggest in its 196- year history" Fuuuuuck.

By: smackfu

smackfu — Tue, 22 Jan 2008 05:46:27 -0800

Yes, the banks got hit hardest by the whole mortgage-backed security thing. All those headlines from a couple of months ago are showing up in these earning statements. I don't think anyone is really surprised by that.

By: Burger-Eating Invasion Monkey

Burger-Eating Invasion Monkey — Tue, 22 Jan 2008 05:46:55 -0800

95% loss. Yeah, we're all gonna feel that. A 95% reduction in profit (which is what actually happened), is entirely different from a 95% loss.

By: Horken Bazooka

Horken Bazooka — Tue, 22 Jan 2008 05:47:45 -0800

Fuck. There goes the $200 in my 401k.

By: Dizzy

Dizzy — Tue, 22 Jan 2008 05:53:42 -0800

Can someone explain to me WHY our leaders (Rep AND Dem) are going to push "tax cuts" as a solution or hedge against the looming recession/financial "event"? Used to be that "tax cuts" were a uniquely Republican solution to most everything, but now the lefties too want us to take our extra cash (in the form of a give-back at tax-time or something similar) and use it to "spend our way out of trouble"... Am I nuts in thinking this is a major policy shift for Dems? Am I nuts in thinking this is nuts? Has this been done before? (W tossed me a check for $500 back in '02, if memory serves...)

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 05:54:27 -0800

I thought they were bribery checks, not tax cuts.

By: fourcheesemac

fourcheesemac — Tue, 22 Jan 2008 06:01:54 -0800

Maybe we should all pop down to our local bank and ask to see all our money. Didn't you ever see Mary Poppins? Fuck that, didn't you see The Wire this week?

By: Fuzzy Monster

Fuzzy Monster — Tue, 22 Jan 2008 06:03:49 -0800

The banks are going to get hit again when credit cards blow up. Already credit card defaults are on the rise. If consumer portfolios continue to weaken, certainly credit cards will be the next shoe to drop,'' William Fitzpatrick, who helps manage $1.8 billion at Optique Capital Management, said in a Bloomberg TV interview on Jan. 17. Fear is driving everything down world wide. Some traders and hege funds must be making billions of dollars selling stocks short. In a downturn, everything goes down, but quality companies will go down less and recover faster. Identifying those quality companies is what investing is all about. Right now I'm stockpiling cash (U.S. and Canadian) in money market funds. I've got a watchlist of stocks I'm looking to buy, which includes some U.S. financials. Every day more stocks go on sale.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 06:05:02 -0800

I'm collecting juiceboxes and instant noodles.

By: gen

gen — Tue, 22 Jan 2008 06:06:39 -0800

Fed funds rate has just been cut .75% in between meetings. Unprecedented.

By: gen

gen — Tue, 22 Jan 2008 06:11:32 -0800

FRB: Press Release--FOMC statement--January 22, 2008

By: Justinian

Justinian — Tue, 22 Jan 2008 06:13:23 -0800

Anyone want to give me a job? I work hard and I don't eat much. Hah hah. but seriously, anyone?

By: ZenMasterThis

ZenMasterThis — Tue, 22 Jan 2008 06:14:37 -0800

American stocks are NOT overvalued. (pdf; S&P 500 P/E in blue on bottom chart) If the US market tanks today, consider it a BUY opportunity. If it doesn't, it's STILL a buy opportunity.

By: aramaic

aramaic — Tue, 22 Jan 2008 06:19:25 -0800

There ought to be a law (Godwin MkII) stating that nobody can express stock opinions without also publishing their personal portfolio allocation in full. ...that way you can see why they have their opinions. Makes things a lot clearer, on those few occasions when it happens.

By: milarepa

milarepa — Tue, 22 Jan 2008 06:27:08 -0800

I would totally be worried about this if I was now, ever been, or ever expected to be, anything but poor.

By: briank

briank — Tue, 22 Jan 2008 06:30:00 -0800

Luckily, I have traded in all my dollars for bright shiny Ameros

By: Flunkie

Flunkie — Tue, 22 Jan 2008 06:30:56 -0800

Can someone explain to me WHY our leaders (Rep AND Dem) are going to push "tax cuts" as a solution or hedge against the looming recession/financial "event"?

Yes, but the answer is different for the two of them. Democrats: Because voters like hearing "tax cut", and because the Democrats think that cutting the taxes of people with moderate or little wealth will stimulate the economy by prompting more spending. Republicans: Because voters like hearing "tax cut", and because the Republicans think that cutting the taxes of people with great wealth will make those people wealthier.

By: Fuzzy Monster

Fuzzy Monster — Tue, 22 Jan 2008 06:32:57 -0800

Interesting article from almost two years ago: The US - a finance-based economy on crack

By: localhuman

localhuman — Tue, 22 Jan 2008 06:33:20 -0800

*Tune* I can't wait to get my recession Check, my recession Check, my recession Check! *Tune*

By: The Card Cheat

The Card Cheat — Tue, 22 Jan 2008 06:34:16 -0800

I would totally be worried about this if I was now, ever been, or ever expected to be, anything but poor. The prospect of having to tighten my belt, which is fairly tight to begin with, doesn't worry me at all. But quite a few interested observers are predicting that many of us in the middle won't even have belts once the dust settles, which does.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 06:34:28 -0800

Down 500 points already. Insane. Curbs go in at 10%, so 500 more to go.

By: smackfu

smackfu — Tue, 22 Jan 2008 06:37:44 -0800

You seem to be enjoying this a little too much.

By: Asparagirl

Asparagirl — Tue, 22 Jan 2008 06:44:20 -0800

The only number going up because of that "Hail Mary" rate cut is Jim Cramer's blood pressure.

By: milarepa

milarepa — Tue, 22 Jan 2008 06:44:33 -0800

The prospect of having to tighten my belt, which is fairly tight to begin with, doesn't worry me at all. But quite a few interested observers are predicting that many of us in the middle won't even have belts once the dust settles, which does. I've always felt little more than an afternoon away from fighting for a potato in the street. Sure, having to actually do so will be a shock and a new experience. But, less so for me than people who thought they could just run out the clock watching reruns of "Perfect Strangers."

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 06:44:56 -0800

It's fascinating. I'm also profoundly angry at these fucknogs who have utterly destroyed any semblance of financial transparency or legitimate business models. Maybe I'm old fashioned, but I like businesses that make things. They make things, sell things to other people and other businesses who then make more things. These things can be used to produce even more things, which can in turn be used to provides goods and services to both the consumer and other companies. I like the idea of banks that make loans based off of your ability to repay. The idea of evaluating someone's financial position using research and understanding to decide whether they can handle the responsibility. I like the idea of buying something with cash. Not gold, Not jewels, not checks, CASH. I also like debit cards (chip and pin ones) It infuriates me that all these sacks of shit made all this money doing utterly bugfuck crazy things with money. And they're going to get off scott free. It's a cliche thing to say, but those cocksuckers from citibank aren't going to lose their house. It's the normal folk who had 401k's, or held municipal bonds or had any iota or semblance of faith that SOMEONE, somewhere was keeping an eye on these utterly putrescent cocksuckers. But no. We went with the gordon gecko approach of fuck you, fuck your neighbor, make synergy, sell lies, repackage lies, cut up lies, and you end up moving to fucking bora-bora scott free, leaving all of those broke and destitute motherfuckers to work at wal-mart for the rest of their goddamned lives. It's like watching a really uncharismatic, unfunny and horrible version of Lawrence Garfield from Other Peoples Money. So yeah, I'm having a bit of ScahedenFraude watching their shit fall apart around them.

By: Justinian

Justinian — Tue, 22 Jan 2008 06:45:55 -0800

What the hell is cutting interest rates to the bone going to do at this point except add inflation on top of financial chaos due to the mortgage bubble? I am in cash except for my IRA... adding the $5000 for 2008 last wednesday doesn't seem like such a good idea now... but if inflation and a furthering weakening dollar eat up cash what the heck am I supposed to do? I think I'm going on a bender today. Sadly, I'm not actually kidding.

By: lazaruslong

lazaruslong — Tue, 22 Jan 2008 06:46:06 -0800

Whenever the market tanks and folks freak out about how long it's going to take to clean up, I get this overwhelming sense of apathy. All the theorycrafting, the data analysis, just seems so pointless. The industrial age is going to end in the next 15 years as the age of cheap reliable oil comes to a close, and all of this will burn in the resulting fire. Percentages in a portfolio are not going to feed you when that happens. I suggest learning to grow some tasty produce in the garden instead. /DOOOOOOOOOOM Seriously though, all the manufacturing, transportation, hell even communication infrastructure in the world is predicated upon an abundance of cheap oil which will be Gone. Forever. Soon.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 06:46:10 -0800

Oh yeah, for perspective, I'm in the UK paid in pounds at the moment. Moving to Finland in a few weeks to get paid in Euros. Essentially, I'm somewhat out of the line of fire so it's easy to be a distant observer.

By: lazaruslong

lazaruslong — Tue, 22 Jan 2008 06:48:17 -0800

And please don't take my previous comment as a dismall of the current conversation in any way, and I don't intend to derail the intelligent commentary in progress. Just sayin', you know?

By: lazaruslong

lazaruslong — Tue, 22 Jan 2008 06:49:05 -0800

*dismissal, natch. Although somehow still appropo.

By: Justinian

Justinian — Tue, 22 Jan 2008 06:51:03 -0800

Wow, I'm looking at some financial pain but even I realize that "the industrial age is going to end in the next 15 years" is out there.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 06:52:32 -0800

NYSE invokes Rule 48. I have no idea what this actually means, but I suspect it'll be used to rip someone else off.

By: ourobouros

ourobouros — Tue, 22 Jan 2008 06:53:54 -0800

The market did take a nasty drop but it appears to be climbing a bit, not just spiralling ever downwards into the end of the industrial age. Google Finance ticker.

By: localhuman

localhuman — Tue, 22 Jan 2008 06:55:41 -0800

Today, New York Stock Exchange has invoked Rule 48, which provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could cause floor-wide delays in opening of securities on the exchange.

By: drstein

drstein — Tue, 22 Jan 2008 06:55:42 -0800

"If you were really paranoid, buy gold, pay off your debt and stockpile ammo (good advice for an Argentinian style collapse)." Good thing I now live somewhere that I can actually do that legally. *watches his employee stock plan shares decline in value*

By: The Card Cheat

The Card Cheat — Tue, 22 Jan 2008 06:56:23 -0800

I don't know if "the industrial age is going to end in the next 15 years" or not. But if you read this article and replace the words "fuel" and "calories" with...pretty much anything at all, you'll find plenty to worry about.

By: Mutant

Mutant — Tue, 22 Jan 2008 06:56:48 -0800

Down 500 points already. Insane. You hit the nail on the head; it's emotionally driven selling, not representative of fair value at all.

By: poppo

poppo — Tue, 22 Jan 2008 06:59:11 -0800

NYSE invokes Rule 48. I invoke Rule 8, and challenge for leadership of the clan

By: b1tr0t

b1tr0t — Tue, 22 Jan 2008 06:59:28 -0800

we are about to witness the biggest stock market crash in the United States since 1987 Fortunately, stock markets only crash when you least expect it.

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 07:03:00 -0800

Mutant - given how much shit these guys have off-the-book, how can you say that? Nobody is clean about their actual exposure to fucked loans, and all of their bastardized offspring. Because of that, you don't know who's a legit, profitable company, and who's just selling you a sack full of exploding lepers.

By: Fuzzy Monster

Fuzzy Monster — Tue, 22 Jan 2008 07:04:04 -0800

Some perspective: As of 9:51 A.M. The Dow is down 2.01%. On Black Monday (Oct. 19, 1987), The Dow dropped 22.6%. It was the largest one-day percentage drop since 1914. Two days later, The Dow had the largest one-day percentage gain since the 1930s. The Dow went up 10.15%, bringing the Dow back above 2,000 and in line for a yearly gain.

By: ClanvidHorse

ClanvidHorse — Tue, 22 Jan 2008 07:04:15 -0800

So yeah, I'm having a bit of ScahedenFraude watching their shit fall apart around them. I don't understand your attitude. It seems very confused to me. If the market goes tits up, those people that you purport to care about are precisely the ones to lose everything. So, for everyone's sake, it is to be hoped that things pick up. Traders will be out buying Gucci cufflinks soon enough whatever happens.

By: XMLicious

XMLicious — Tue, 22 Jan 2008 07:04:22 -0800

Lord_Pall : I like the idea of buying something with cash. Not gold, Not jewels, not checks, CASH. Fiat currency, you mean? Be careful, Ron Paul will spank you. You can't hide from him in Finland.

By: Turtles all the way down

Turtles all the way down — Tue, 22 Jan 2008 07:04:26 -0800

Metafilter: I'm having a bit of ScahedenFraude (Sorry, Lord_Pall, I couldn't resist ;-P )

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 07:05:37 -0800

Wow, I really spelled the shit out of that.

By: Slithy_Tove

Slithy_Tove — Tue, 22 Jan 2008 07:07:07 -0800

I invoke Rule 34. Maria Bartiromo and Jesse Livermore.

By: sfts2

sfts2 — Tue, 22 Jan 2008 07:07:39 -0800

This is all so much bullshit. Many institutions need to liquidate portions to raise capital all at the same time- panicky individuals dumps stocks into the correction, fueling despair, supply demand, the economy hasn't changed that much in the last month. Fuzzy Monster is quite correct. Savvy investors buy/hold. Trust me, I'm getting hammered but wrong time to shit pants.

By: effwerd

effwerd — Tue, 22 Jan 2008 07:09:35 -0800

I just hope this doesn't affect the Super Bowl cuz I got the last twenty dollars in my savings account riding on the Giants.

By: Dr-Baa

Dr-Baa — Tue, 22 Jan 2008 07:09:59 -0800

嘿先生，想要满足我的姐姐？

By: Lord_Pall

Lord_Pall — Tue, 22 Jan 2008 07:14:02 -0800

Fiat currency, you mean? Be careful, Ron Paul will spank you. You can't hide from him in Finland. I didn't say I was a financologist... Just old fashioned. Besides, Isn't Ron Paul crazy? //Ducks//

By: Phire

Phire — Tue, 22 Jan 2008 07:17:07 -0800

Heh, we've been watching the global markets plummet all of yesterday, and the Canadian Government just announced a 25 point cut in our rate, too, with further cuts to come.

By: Pastabagel

Pastabagel — Tue, 22 Jan 2008 07:18:40 -0800

I love how everyone is saying it's 1990 or 1987 or 2000. The only thing that's up on my screen is Union Pacific (UNP). It's 1896, baby! Choo choo!

By: Pastabagel

Pastabagel — Tue, 22 Jan 2008 07:25:43 -0800

Let's just turn this thread into a Yahoo! Finance message board. OMG MKT COMMING BACK BERNANKE RALLY LOOK OUT SHORTS BETTER COVER!!!!!!11oneune

By: Abiezer

Abiezer — Tue, 22 Jan 2008 07:25:57 -0800

the Chinese for "Hey mister, wanna meet my sister?" You ask, we provide: "喂，先生；想认识认识我的妹妹吗？" Bonus phrase: "得了，我承认。有中国特色的社会主义确实有优越性."

By: unixrat

unixrat — Tue, 22 Jan 2008 07:27:58 -0800

bystander: what rational person doesn't have at least a couple of months' cash up their sleeve? Did you see the pants-shitting going on in the Dreamhost thread over a temporary two-day $200 unexpected charge? I made some comment about people running their lives pretty close to $0 and fucking cortex tried to put me on some sort of bourgeois stake for saying that's a bad thing. Also: personal post 1001.

By: the cydonian

the cydonian — Tue, 22 Jan 2008 07:28:13 -0800

So a quick headsup, everyone: how are the markets looking now? I'm presuming it's well into trading time in the Wall Street now.

By: smackfu

smackfu — Tue, 22 Jan 2008 07:33:02 -0800

Opened low and have been climbing back up.

By: twsf

twsf — Tue, 22 Jan 2008 07:33:31 -0800

Dow down 152. Heaven forfend! Maybe the Fed did something right today. Who was it -- Andrew Carnegie? JP Morgan? -- who is reputed to have said simply, "Markets fluctuate, sir"?

By: mr_crash_davis

mr_crash_davis — Tue, 22 Jan 2008 07:34:43 -0800

Still looks a bit unsettled.

By: ROU_Xenophobe

ROU_Xenophobe — Tue, 22 Jan 2008 07:35:43 -0800

I invoke Rule 34. Maria Bartiromo and Jesse Livermore. Curse you. I was going to invoke Rule 34 for Ron Paul / Worf hentai.

By: drezdn

drezdn — Tue, 22 Jan 2008 07:39:31 -0800

I really think the shadow inflation is a completely overlooked problem. Cheaper items have been getting smaller and smaller, while raising their prices slightly, masking real rises in the cost of goods.

By: arcticwoman

arcticwoman — Tue, 22 Jan 2008 07:40:58 -0800

Ok, I don't really understand, but I'm getting a little worried. I, like most of the world, don't have a couple of months cash squirreled away. Frankly, it is pretty bourgeois to assume that every rational person does. Rationality has nothing to do with it, being poor does. How is this going to effect poor people? People with no retirement, students, renters, people with car loans and credit cards, single parents? In layman's terms, what exactly does any of this mean?

By: The Card Cheat

The Card Cheat — Tue, 22 Jan 2008 07:44:03 -0800

My favourite thing about any bad day at the stock market is all the photos of stressed-out stockbrokers accompanying the articles...they're typically photographed with head in hands, rubbing their eyes wearily, slumped over their desks, etc. Do they get new shots each crash, or are they just stock photos? And how do we know they're not just tired? I don't trust the media.

By: Alvy Ampersand

Alvy Ampersand — Tue, 22 Jan 2008 07:46:13 -0800

Prediction: Everything will be fine.

By: Fuzzy Monster

Fuzzy Monster — Tue, 22 Jan 2008 07:49:23 -0800

Dow down 152. That's less than 2%. Much, much better than the 22.6% drop on Black Monday. Maybe the Fed did something right today. As always, time will tell. Asparagirl, you called this rate cut a "big and stupid 'Hail Mary' play." I'm curious to know why you think this rate cut is a bad idea. What does everyone else think? Personally, I'm thinking this rate cut is good for the U.S. markets in the short term but might be bad for consumers (lower U.S. dollar, higher inflation (as drezdn mentioned) in the long term.

By: Pastabagel

Pastabagel — Tue, 22 Jan 2008 07:49:51 -0800

So a quick headsup, everyone: how are the markets looking now? I'm presuming it's well into trading time in the Wall Street now. posted by the cydonian at 10:28 AM on January 22 Now? It's 10:32 ET, and the markets suck. Nasdaq only down 2.31%, s&p500 down 1.76%. Down is down 1.52%. What the hell is that? It's fucking weak, is what it is. I was promised Armageddon. I want brokers falling out of windows. I was there in 87 and I was hoping for more 3 hour delayed tape and sinister computer program trades ruining everyone's life. But nowadays we have our fancy JAva relatime screens and our fancy Warren Buffets buying up the Reading and Short Line Railroads. And do you know why he wants to do that? Because he wants to own all four, that's why. Screw the Marvin Gardens and the Pennsylvania Avenues. This motherfucker wants to charge $200. Even Best Buy is up 1.4%. Who the hell shops at Best Buy? Assholes, that's who. You know who you are. Why yes, helpful sales person, I would like a $95 power cord with my shitty 1080i tv. Even stupid John Deere with its stupid green combine harvesters is up over 2%. People love corn, we get it. Nasdaq down 2.31% at 10:30. Pfft. I was there for the S&L crisis and for LTCM. I was there for the Asia meltdown, and for the Argentina meltdown, and for the Russian Meltdown. I was even there for the Pets.com meltdown, and let me tell you, that shit was epic. It turned out that no one wanted pet toys at a P/E of 974. What a surprise. So this is nothing. Seriously, what's the problem now? Something about Jim Cramer going on vacation or something and his mortgage payment got lost in the mail, and he got all upset. Big whoop. Wake me when the market, you know, opens.

By: greytape

greytape — Tue, 22 Jan 2008 07:49:55 -0800

I feel really sorry for all my friends who left uni last year and went to work in the city, they're so getting laid off. They'll be Bernards and Giles weeping bitter tears on the streets of London tonight.

By: malocchio

malocchio — Tue, 22 Jan 2008 07:52:54 -0800

This is not the market crash you were looking for.

By: Alvy Ampersand

Alvy Ampersand — Tue, 22 Jan 2008 08:00:45 -0800

Damn, I'm good.

By: dios

dios — Tue, 22 Jan 2008 08:02:38 -0800

lol at the people who were wrong and seemingly excited about a crash. Sucks to be you.

By: Stynxno

Stynxno — Tue, 22 Jan 2008 08:02:47 -0800

/me invests into his IRA. You're all idiots if you get out of the market now. It is time to buy, not to sell.

By: The Bellman

The Bellman — Tue, 22 Jan 2008 08:02:54 -0800

Your favorite financial Armageddon apparently sucks.

By: Eideteker

Eideteker — Tue, 22 Jan 2008 08:04:27 -0800

Will the cure be worse than the disease? - The Fed needs to let a recession happen. To Some, the Widening Crisis Seems Driven by Fear, Not Facts - "What makes this correction more dangerous, they say, is that the selling is not being driven by panicky retail investors, as it was in the collapse of the technology bubble, but by hedge funds and investment banks that find themselves saddled with illiquid securities backed by an array of valueless assets. 'What you see is not a panic of the public. This is a panic of the sophisticated,' said James Sinclair..." — that is to say, it's the hedge fund managers (those who survived and hung on to their jobs) who are panicking in order to stay employed. This drives down values for the rest of us. I wouldn't panic yet. Even those nearing retirement need to look to the future. Just because you're retired doesn't mean you're dead. If you're retiring at 65 now, you should realistically plan so that you can live comfortably to 90. People are living longer these days. So for the elderly investor to panic and withdraw entirely from the market now is the worst course of action. 90 - 65 = 25 years. Unless the economy collapses entirely, it's unthinkable (and mathematically impossible, I think) for the market to not recoup its losses over 25 years. If that happens, your money won't be worth the paper its printed on so it won't matter where it's allocated. So, of course, if you're not yet at retirement age, you would be extra-stupid to panic. You have 25+ years to regain your losses. In 1987, it took 18 months. In 1929, it took a decade. That is less than 25 years, for those bad at math. Some tips:

Don't panic.

Do not keep money you may need in the short term (12-18 months) in the market. You should have 3-6 months salary saved in cash. If you are buying a house in the next 6 months, look at 6 month CDs, but generally speaking, leave your liquid money liquid.

You can take money from your IRA/retirement accounts penalty-free for certain things, like a first-time home purchase, edudation, or some medical expenses.

Do your research. Every bank these days has an investment advisor. They vary in quality from horrible to excellent. But when your teller suggests you go sit with him as you're cashing your paycheck on Saturday, consider making some time for it. Drop into a few banks where you don't have accounts and express an interest in meeting with their investment advisor. If you get a survey of information rather than relying on one particular source, you will be better equipped to read the news media between the lines, where it counts.

Diversify. Don't look for the next Google. Slow and steady. The stock market averages 12% growth over the past 30 years. Allocate some money for an index fund, but don't be totally risk-averse. A competent broker will explain diversification to you and do a risk profile. Just because he advocates a more risky position than you may be comfortable with doesn't mean he's a shyster trying to sell you the moon. Invest in a pyramid: a large base of slow growth, then some money in medium-risk, then a bit in high-risk high-yield. Review these allocations as you age and at every major milestone (change of jobs/promotion, birth of a child, purchasing a house, death of a parent, etc.).

Leave things be. They want you to believe doom and gloom and micromanage your funds because it generates churn and creates fee income for them on trades. Remember who is sponsoring the financial news you're reading. Look at the ads on cnnmoney and nytimes/business. Stock trading companies. You panic, they cash in.

Use the rule of 72 to gauge your return over time. If you go into CDs with your money at 4%, it will take you 72 / your rate (4%, in this case) or 18 years to double your money. That index fund at 12% will double your money in six years. It may be down at any given point in time as a function of the rolling 12 month average value, but barring a total collapse, it will rebound before you're dead of natural causes. And the difference between doubling 18 years vs. 6 years means that if you plan to retire in 30 years, say (assuming the average mefite is younger than 35), the index fund would have doubled five times while the CD would not have doubled even twice. That does not mean you would have five times or even ten times your principal in the index fund. You would have 2⁵ or thirty-two times your initial principal. The CD leaves you with roughly 4 times what you started with. One of the biggest heartbreaks I saw during my time in finance was people who learned their finance the hard way in the depression putting all their money in CDs the day they turned 55. Meanwhile, I saw the customers on the far side of retirement (again, those who lived to 90) surviving on a dime because the day they retired they stopped earning money*. It doesn't have to be that way.

Yes you can save 3-6 months salary, faster than you think. What are you buying that you don't need? Can you make due with one extravagance a month, say cable internet or cable TV? Cut costs now, while you're young, because compound interest means that a penny saved now is a dollar when you retire. Better to cut costs now while you have income than be forced to do so when you are retired.

Breathe easy, work hard at your job, develop a craft/hobby on the weekend if only to assure yourself that you know enough carpentry/weaving/car mechanics to get a job if things get really rough. I don't think they will, and I'm pretty doom and gloom wrt to Peak Oil, but the main thing is that you feel confident in yourself and your ability to make stuff. Just keep saving. We're in for a bumpy ride, so you need to sit tight and NOT flail around. You could fall out of the boat or capsize us, bub.

Don't panic. * A CD at 4%, taxable at a 25% tax bracket yields roughly 3% after taxes; barely keeping pace with inflation now, and certainly NOT if inflation goes up due to Fed rate cuts and increasing oil prices. Those who are treading water with CDs now will start to drown.

By: pineapple

pineapple — Tue, 22 Jan 2008 08:05:39 -0800

where the hell *did* i put that feral studded leather outfit, though? Damn, sorry, I borrowed it. And the cleaners said they can't get out the smell of apocalyptic desperation, k sry thx. :( I would just like to say that while I understand that MeFi = Not My Financial Advisor, and Your Agenda May Vary and all that... I'm still buoyed by this thread; I'd rather listen to real people (ones I know to be smart, mostly) talk about this stuff than all those ratings-hungry Chicken Littles on the cable news channels.