Market crash: are we there yet ?

[Rockter]

Whatever be the landing, whenever it happens, tell me, when is any of this National Debt going to be paid back?
Every day that goes by, it worsens.
Both parties do it, endlessly, but neither seems to pay any of it back.
When are they going to?
In a year's time, if I looked at the debt figure it would still be rising. Now that can only lead to insolvency eventually, or a living standard so depressed by debt repayments, that the people will lose incentive to better themselves. Whatever be the political party, they are just going to smile their way through it, and the debt will rise, and rise, and feeding off it, with be some latter day Lehnam Brothers, working some other scheme, while singing the priases of the "free market". Free for them, but not so free for the US taxpayer.... no, they have the IRS to keep them in line.

I smiled ruefully the other day. In the London Telegraph there was a 1/4 page cartoon of a bust of Karl Marx, smilling.
The caption "tee hee hee", told all.

[chris_gee]

Interesting that there are always the same few who attack the messenger.
I doubt anyone imagines that housing alone was responsible for this mess but it is both a symptom and precipitant.

"What is currently going on is a restructuring of the market to restore confidence in the market. The actual economy is not the issue and is largely solid. Months ago I pointed out the woes of the auto industry as being a much more serious problem with longer lasting consequences."
Finance is a large chunk of the economy 20%? , housing x%, and the consumer 70%. If the consumers' income has been constrained in real terms for 20 years (discounting the effects of the top few %) while their expenses rise they are not going to keep the ship floating. While exports kept GDP up perhaps last qtr if you believe any government stats, this seems to have been largely in food commodities not manufacturing reflecting the effects of weather and corn/energy susbsidies etc. Cue someone to bleat but we have not met the criteria for a recession yet.
If you have a financial crisis it effects main street because they can't get finance ( despite the almost a trillion put in emergency funding so far to aid liquidity).
The DJIA graph over 5 years? Yes it is higher try taking inflation off.
The article Sailaway cites is very much the perennial bleat that taxes should be reduced.
My recollection is that total debt is now over 300% of GDP.
There is a shortfall in funding for pension funds and social security and probably medical care let alone wars and bailing out bankers.
Yet we still get the tired old the economy is fine, and hackneyed party political prejudices.
What is the saying? Roast the pigs and fleece the sheep?

[PBzeer]

Debt is 37.9% of GDP by estimate for 2008, was 36.8% for 2007.

[Rickm505]

Originally Posted by sailaway21

Just to note a few of Rick's more blatant errors.

You are nothing short of amazing. My errors? Gimme a break. You have been sitting in this thread espousing garbage for a year. First, there is no problem, next there is no crisis, then how wonderful Bush is, and of course there's no recession based on bogus reporting... At the same time the financial world is crashing at our feet.

Your Boys' legacy is increasing our country's National debt by 6 trillion dollars. First explain that??

Next please tell this forum how we are going to pay it back when their idea of a budget is a trillion dollar deficit.

Your Boys legacy is invading countries for oil. Explain that??

Your boys' legacy is letting the man who killed 3000 Americans stay free for 8 damn years. Explain that????

Republicans love to change the subject when caught like a deer in headlights. Forget Rick this, and forget Rick that and start explaining how to deal with reality as you will stay pinned in those headlights until this is resolved.

America is in trouble. Your boys caused it. Quit being a Bush apologist and start explaining solutions that don't nail Social Security and Medicare. And don't insult us by mentioning tax cuts....

Simply amazing...

[Rickm505]

Originally Posted by PBzeer

As I browse an increasing number of outlooks about the bailout, from cost, oversight, and political posturing, I'm beginning to wonder if what emerges this week will be far different than what has been proposed. I'm beginning to get the sense that we are at a "Fram Moment". We can take a hit now, or a bigger one later. Because what I'm reading indicates that whatever happens will be a political, not an economic, solution. And that is not good news..

John, answer this question. How does the financial health of this Nation survive without banks writing mortgages?

That's the one and only problem at the root of all these bailouts. I've explained how the system works. The system is now broken. Let the GSE's fail and that's the end of it... Fini... Nada.

The rest of your post is moot.

[wind_magic]

Originally Posted by Rockter

Whatever be the landing, whenever it happens, tell me, when is any of this National Debt going to be paid back?
Every day that goes by, it worsens.
Both parties do it, endlessly, but neither seems to pay any of it back.
When are they going to?
In a year's time, if I looked at the debt figure it would still be rising. Now that can only lead to insolvency eventually, or a living standard so depressed by debt repayments, that the people will lose incentive to better themselves.

It can't be paid back, it's beyond that now. They will have to debase the money supply, monetize the debt. The way this works is simple, the Fed prints money and buys U.S. treasuries, and then simply destroys the treasuries. They convert debt into currency, like magic.

They told you all about it, didn't you get the memo ?

Originally Posted by U.S. Treasury & FED

September 17, 2008
HP-1144

Treasury Announces Supplementary Financing Program

Washington- The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury’s current borrowing program, which will provide cash for use in the Federal Reserve initiatives.

Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.

HP-1144: Treasury Announces Supplementary Financing Program

[tdw]

You guys are twixt a rock and a hard place.

You really need to lower interest rates in an attempt to kick start the economy but if you do the USD is headed for the underworld and what assets are not know owned by foreigners soon will be and at bargain basement prices.

This worked for you last time cos Japan, who bought up what assets they could at the time, then promptly took a bath themselves and you were able to buy a lot of them back and quite cheaply at that.

Somehow I doubt the Chinese will be quite so helpful this time round.

Meanwhile the USD is in all probability going to slide big time anyway and there is bugger all you can do about that. The only upside of that scenario is an improvement in your ability to export which will help employment and partially address your absolutely woeful trade imbalance.

What's more you run the risk that the USD will cease to be the international currency of record. It's place may well be taken by the Euro.

Sure as hell we are living in those proverbial interesting times.

[Rickm505]

Originally Posted by tdw

You guys are twixt a rock and a hard place. .

You noticed? This is what happens when an incompetent administration is handed the keys to America. I wonder why no one is calling for their arrest and trial for treason. Could anyone have done more to try and destroy this country and what it stands for?

Originally Posted by tdw

You really need to lower interest rates in an attempt to kick start the economy but if you do the USD is headed for the underworld and what assets are not know owned by foreigners soon will be and at bargain basement prices. .

It's already too late. This series of bailouts has already cast the die.

Originally Posted by tdw

What's more you run the risk that the USD will cease to be the international currency of record. It's place may well be taken by the Euro..

And this is in fact the invisible elephant in the room. No one talks about it, but everyone knows it's there. If this occurs we will decline to a 2nd rate economic power. No 'expert' will refute this.

At this point in time, I'd love to hear suggestions on how to prevent this from happening.

[PBzeer]

Near as I can tell Rick, the main difference between you and me is that I know I don't know it all. But I'm guessing, just guessing mind you, that the banks will figure out a way to stay in business. And I'd make a further guess, they'll be closing mortgages today, tomorrow and the day after. However good or bad a solution they come up with in Washington. The only question at this point is whether they put a band-aid on, or suture the wound. I'm guessing it will be one huge band-aid, with lots of smaller ones to win votes in November.

[Rickm505]

Originally Posted by PBzeer

Near as I can tell Rick, the main difference between you and me is that I know I don't know it all.

Actually, you should stop there. I suggest you reread my secondary marketing post.

Originally Posted by PBzeer

But I'm guessing, just guessing mind you, that the banks will figure out a way to stay in business. And I'd make a further guess, they'll be closing mortgages today, tomorrow and the day after.

Patently wrong. You still can't grasp this. If these bailouts didn't happen the Great Depression would look like a walk in the park. I think you must be getting your info from right wing talk shows.... as no one in the financial industry disagrees with bailing out the GSE's. No one.

What you're suggesting is the same thing as saying that we can remove all the weapons in our Armed Forces and they will still be able to fight..and win. I give up ...

Originally Posted by PBzeer

However good or bad a solution they come up with in Washington. The only question at this point is whether they put a band-aid on, or suture the wound. I'm guessing it will be one huge band-aid, with lots of smaller ones to win votes in November.

Again... if this is a band aid, it's the largest one in the history of mankind. This "band aid" will devalue our currency and put all Americans deeper in debt. Then again, only a Bush apologists can sweep $10 Trillion under the rug and call it a band aid.

If it's that insignificant John, you write the check.