Market crash: are we there yet ?

[wind_magic]

Originally Posted by chucklesR

Here's some positive news.
I'm just fine. Not one of my friends or acquaintances is considering a foreclosure and I have lots of friends and acquaintances in my community.
In fact, I don't know anyone who has been laid off or is suffering in any way shape or form from this 1930's type depression. Even my real estate agent friend is busier than ever selling houses.
Every time I get a negative link on this thread I simply go to google and do a five minute search and sha-zam the other side of the story pops up, with the vast majority of the objectively reported and researched links being positive.

Numbers can be twisted, real life if more objective.

Even if this is/were a 1930's style depression, it's totally normal to feel it isn't that bad in the beginning, and to only see the full magnitude at the end. That is what defines a bottom. In 1929 when the market took it's first initial dramatic hit most people actually bought the dip thinking that it was a good opportunity, that prices would come back, and they did for a time. The market went into the 1930's in a series of moves down, recoveries, and further moves down, until it finally hit bottom in the Great Depression. It wasn't until then, at the bottom, that everyone was in agreement that it could never turn around, that prices would do nothing but fall, that everyone was losing their jobs, businesses were closing, people were being foreclosed on, etc. In the early states of the Great Depression there was little effect on the average American, it was mostly just a credit crunch and a loss of price in the stock market. Like today the bank runs were slight at first, it wasn't until later that people really started running on the banks in greater numbers, and it wasn't until much later that the full effects of the Depression really hit home for most people. In 1929 the unemployment rate was only 3.2%, but by 1931 the unemployment rate had risen to 15.9% and peaked out around 24.9% in 1933. If it's a recession, or worse, most people won't think so until the very end of it, that's what marks a bottom and a turn-around, just like the top is marked by extreme enthusiasm and a belief that prices won't ever go down, that a "new era" where the old rules no longer apply has begun.

Below is a basic timeline for the 1930's depression, you don't see bank holidays until 1933 to stop bank runs, four years after the stock market started to tank and the first banks began to fail. Here is the 1929 entry on this link, any of this sound familiar ?

* Herbert Hoover becomes President. Hoover is a staunch individualist but not as committed to laissez-faire ideology as Coolidge.
* More than half of all Americans are living below a minimum subsistence level.
* Annual per-capita income is $750; for farm people, it is only $273.
* Backlog of business inventories grows three times larger than the year before. Public consumption markedly down.
* Freight carloads and manufacturing fall.
* Automobile sales decline by a third in the nine months before the crash.
* Construction down $2 billion since 1926.
* Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.
* Stock market crash begins October 24. Investors call October 29 "Black Tuesday." Losses for the month will total $16 billion, an astronomical sum in those days.
* Congress passes Agricultural Marketing Act to support farmers until they can get back on their feet.

Here is the link to a timeline.

I'm not saying this is a 1930's style depression, I'm just saying you can't know it's not simply because things "aren't that bad". They can continue to get bad. How everyone feels right now is how they feel right now, it may be objective, but it isn't very predictive. The only predictive value it has to a trader is actually counter-intuitive ... if people aren't that frightened, then you know it hasn't gotten as bad as it's going to get, because people by definition have to be frightened to put a bottom in and start a meaningful recovery.

[Rickm505]

Originally Posted by sailaway21

Recession, what recession?
Jerry Bowyer on 3.3 Percent Second-Quarter GDP Growth on NRO Financial on NRO Financial

I spend two days helping to refloat my buddy's 1/2 sunk Gemini (how does chuckles keep his dagger board trunks clear?) and pop on to this thread only to find that Sailaway is posting without reading again. Post 1295 in this thread covers the lack of inflation coverage in Q2 numbers. And... the revision of that dubious 3.3%.

You are behind the curve my friend.

[sailaway21]

Windy,
Actually, none of it sounds familiar-sorry!

GDP grew at 3.3% in the second quarter, that's a long way from a contraction or recession. In fact, that's solid growth>

[wind_magic]

Originally Posted by sailaway21

Windy,
Actually, none of it sounds familiar-sorry!

GDP grew at 3.3% in the second quarter, that's a long way from a contraction or recession. In fact, that's solid growth>

I agree, it is encouraging.

Certainly some of the above looks very familiar, we've had 10 banks fail this year, one was the 2nd or 3rd largest in this country, IndyMac. Certainly there has been a very serious credit crunch over the past year, in fact we haven't seen credit so hard to get since the Depression. And auto sales are down, as is consumer spending. Hopefully that'll be the worst of it, but it's hard to know. The parallel really ends with the bank failures, 10 is a lot of banks, but that's NOTHING compared to how many banks failed in the 1930's.

[SailorMitch]

Originally Posted by chucklesR

Here's some positive news.
I'm just fine. Not one of my friends or acquaintances is considering a foreclosure and I have lots of friends and acquaintances in my community.
In fact, I don't know anyone who has been laid off or is suffering in any way shape or form from this 1930's type depression. Even my real estate agent friend is busier than ever selling houses.
Every time I get a negative link on this thread I simply go to google and do a five minute search and sha-zam the other side of the story pops up, with the vast majority of the objectively reported and researched links being positive.

Numbers can be twisted, real life if more objective.

Chuck, ummm, you're experiencing your "real life" through the rose colored glasses of being a Beltway Bandit in the protected environs of the Baltimore/Washington area. Remember, not everyone in the country can crow about the ability to charge their time on Sailnet to a gubmint contract the way you have. When i worked for the government I suspended an employee like you and was set to fire him, but he retired first.

Just in the Post today, nationwide business insolvencies are up 44 percent over last year and expected to go higher this year. in pg county just to the west of you, 10,000 eviction notices are filed each month. A friend from high school is in the real estate business in Richmond-- she is barely hanging on. Also in Richmond, both my neice and nephew lost their jobs in the last year, and my neice subsequently lost her house. My wife's cousin in Texas lost his accounting job with Union Carbide and feels lucky to have gotten a job with the county down there at about 1/4 of what he once earned. but at least his family will have health insurance.

That is the real life you and all your many friends and acquaintants have been blessed to miss. HEll, even mcCain says we are worse off now than we were 4 years ago. Perhaps we have avoided the classic definition of a recession, but that doesn't mean everyone is hunky dory does it??

[Rickm505]

So you're saying that Chuckles is just as aware of the real economy as McCain?

I would agree with that. The people who are better off today are those with offices on K street. That would certainly explain Chuckles point of view.

[wind_magic]

Originally Posted by wind_magic

On the $us, I think that rally might be a little overdone for the short term, possibly putting in a short term top late last week. Risky trade though.

$us trading 0.8716 vs. the $aud

Eeeey .. risky is right, I was wrong about this one.

I knew they wanted to buy $us, but I thought they were going to take a breather. They didn't.

[sailaway21]

Things just got decidedly worse for the taxpayer with the government taking over Freddie and Fannie.
U.S. Seizes Mortgage Giants - WSJ.com

[Rickm505]

Originally Posted by sailaway21

Things just got decidedly worse for the taxpayer with the government taking over Freddie and Fannie.

How would you know? You're still posting that the economy is growing!

Come on folks...the alternative is unthinkable. With no one operating secondary, the entire real estate structure of the economy collapses instantly.

Sailway21 still doesn't have a clue how the secondary mortgage market operates or why Paulson made his move. Go back and read my posts when I predicted this.

Stockholders just got creamed, but they had two months warning this was going to happen, so who's fault is that? It's about 100 times cheaper to bail these GSE's out than to let them fail.

There are no savings accounts to lend out. What little there was has already been lent. Americans have a less than zero savings ratio. There are no more checking accounts to borrow against, I explained this 5 months ago. The middle class is disappearing and no longer backs mortgages. Secondary marketing does...ie...bonds. The Private market died August 2007, the GSE's are it. They die, so does real estate. Paulson had no choice and Sailaway should read up a bit before posting nonsense.

[Stillraining]

Im really an ignorant Man...and I humbly admit to it..

I have worked hard all my life struggling to over come my mistakes and downfalls financially.

Several years ago I got in trouble with debt load of my business and was forced to sell my origional and completely paid for home we used as rental property.

It was a small starter home of 820 square feet but in a very quaint and quiet neighborhood in a small rural town. I gave first offer of sale to the renters whom had been faithful and dependable for 4 years at a fair below market value price. I later found out that by finagling the couple were able to get a government sponsored loan ( Freddy Mac ) for 3%.

Now Here is the rub for me..and I apologize if I seem petty or self centered..But here I am being forced to liquidate a tangible asset to satisfy a loan debt at 12 % mind you and now I am also helping bail out borrowers that benefited purchase of government backed loans on my required liquidation.

Im sorry but Next time I have business cash flow and payment problumes I guess all of you are going to bail me out too?