Market crash: are we there yet ?

[sailaway21]

Originally Posted by Sailormann

Not familiar with the Dodd and Frank, but FWIW the international consensus is that your mortgage vendors committed outright fraud at the behest of the Wall street mandarins. The world is waiting with bated breath for some very heavy and far-reaching legal actions to commence. Failure to do this will do more to devalue the US dollar than any other single factor.

You might want to acquaint yourself with Senator Dodd and Congressman Frank. They were the impetus behind the loosening of standards at Freddie and Fanny. And while we're not sure that outright fraud occurred at very many mortgage companies, at the behest of anybody associated with Wall Street, we are sure that outright fraud occurred at Freddie and Fanny to the benefit of top management there. The aforementioned congressmen were instrumental in getting those two institutions to take on bank loans well beneath their normal standards. One of the first signs of trouble was when they had to cook their books so as to receive bonuses for top management. The Inspector General, I believe, found their accounting to be rather imaginative and the books got corrected. The bonuses were not returned even though the new accounting showed they were unearned.

The government went after Franklin Raines, the CEO of Fannie Mae, and his accomplices. While it is estimated that Raines himself received some $90 millions in ill-gotten gains, he and his accomplices settled for mere pennies on the dollar. You can read about it here, in brief. Franklin Raines - Wikipedia, the free encyclopedia

Franklin Raines was president Clinton's Director of OMB. He has served as an adviser to the President-elect Barack Obama on matters financial. the depth of that service is a matter of some debate.

[wind_magic]

Originally Posted by Sailormann

There are indeed some excellent long-term holds available. Be careful though - there are some things that are going to blow up over the next few months, particularly politically sensitive equities.

I'd be real careful here.

What we are seeing are some real nice PRICES, which isn't the same thing as real nice VALUES. Even if you try to use a real value measure such as P/E, dividends, etc, you are still up against one basic fact - you are counting on earnings staying the same or improving. Dividends are great until they get cut, which they are sure to do if stock prices trend down, because why would a company continue to pay a high dividend to shareholders when it can't leverage the stock's price for it's own financing ? P/E ratio's too are great until either prices go up, which is the way P/E's got so high ... or earnings go DOWN, something as yet unexperienced by shareholders in recent memory, but again sure to happen if the economy tanks. Investors have become accustomed to talking about the "P" part of "P/E", but now they're going to learn all about the "E" part.

That said, there are some nice values out there, but you still have to dig around looking for them. I wouldn't look to any blue chips for value.

[TropicCat]

This post is specifically for Chuckles. After months of telling me how 'wrong' I am about this subject, we have this news item today.

Panel says US has been in recession since Dec. '07

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 28 mins ago

WASHINGTON – The U.S. economy has been in a recession since December 2007, the National Bureau of Economic Research said Monday.
The NBER — a private, nonprofit research organization — said its group of academic economists who determine business cycles met and decided that the U.S. recession began last December.

The White House commented on the news that a second downturn has officially begun on President George W. Bush's watch without ever actually using the word "recession," a term the president and his aides have repeatedly avoided. Instead, spokesman Tony Fratto remarked upon the fact that NBER "determines the start and end dates of business cycles."

_____________________________

the rest of the article is here:

Panel says US has been in recession since Dec. '07 - Yahoo! News

The article speaks for itself. Now Chuckles can argue with the people responsible for calling recessions, NBER. That they can argue reality just goes to show folks just how out of touch republicans are with the rest of the country. We knew there was a recession, they had to wait for the 'call'. Well, here it is.

As for Xort. You sir, are wrong. Search for my posts in the last two months and there are in fact enough predictions to keep you happy. Incidently, my batting average just went up another notch or two.

Oh wait... is this is crowing?...

[TropicCat]

Originally Posted by chris_gee

My my don't the boys come out to play.
"ricky
you still haven't given us your prediction of how far the new great depression will go.
you like to post your 'sky is falling' stuff but have already proved that you do not believe your own postings. you were totally wrong with your 15% correction prediction. .

Yep, I blew that completely and if you bothered to check, I posted the reason why I missed it.

Originally Posted by chris_gee

so man up and tell us what will really happen going forward. stop talking out of both sides of your mouth. 80% decline? 90% decline? total worldwide collapse? china taking over the USA? total annihilation from nuclear war started by Iran? the end of civilization? or have we seen the worst?"..

We have the Federal government spending $56,000 a citizen to keep AIG, Citibank, Wamu, Wachovia, JP Morgan..and on and on... in business. With no end in site for continued bailouts. I've already posted what this means.

Originally Posted by chris_gee

I no more expect Rick to be a reliable forecaster of the future than any of his rather antagonistic opponents. Indeed when the market can swing 5% in a day prophets tend to look more like speculators.?"..

I predict markets as a sideshow to the main event. I'm not a market prophet and you won't find any post of mine saying anything different. My concern has always been about avoiding wha's going to happen anyway. America's health and economy.

As for my predictions over all. I'm probably batting over 900.

I'll take that any day. However, we seem to have a new game in this thread. Proving me wrong. Well, it's a game I love to play and considering the track record of those criticizing me, I'm looking forward to it.

[xort]

more sidestepping

[wind_magic]

Originally Posted by tdw

Well I for one am cheering you on......

Well, $au hit my stop again! This is the third time I've tried to go long the $au and got stopped out. Win some, lose some, the important thing is to know when you're losing and get out.

Brave Sir Robin ran away.
Bravely ran away, away!
When danger reared its ugly head,
He bravely turned his tail and fled.
Yes, brave Sir Robin turned about
And gallantly he chickened out.
Bravely taking to his feet
He beat a very brave retreat,
Bravest of the brave, Sir Robin!

[Cruisingdad]

A short link to read, but I will summarize:

http://finance.yahoo.com/banking-bud...-Can-Banks-Go?

Since many households use credit cards to manage monthly cash flow for necessities like groceries and gas, "pulling credit at a time when job losses are increasing by over 50% year-on-year in most key states is a dangerous and unprecedented combination," Whitney wrote in a research note.

That is a VERY dangerous combination. It is a vicious cycle. If you just lost your job (or not, even) and you are struggling to make ends meet, and they just cut your credit, you may not be able to buy groceries or necessities with credit. As such, you will not be able to wait out the storm (for Obama to save us or anyone else). That means you will not pay your credit cards (first and foremost), your car, and your house and will take your cash for groceries and gas and immediate needs. That is what you will HAVE to have. That also means that you will not be buying other items that keep the economy moving forward. Now you will be raking in late payments on everything. When your bills come in that next month, you will again have to choose what you are going to pay - which will be even less than before. Where you could not hardly make it before, you will really not be making it now. Vicious cycle.

Now the credit card companies are taking massive losses and writedowns on thier cards. This causes even more loss of investor confidence. They lose more in capital AND in the market (shares). For example, just a week ago Citibank was on the brink of collapse. SO they will pull back more to conserve cash. More people will not make their payments. It is a vicious cycle until it spreads into cars and house payments. It will also spread into consumer goods, which will cause more job losses, which will cause more credit cuts, which will cause more layoffs, etc.

I think we are entering a very scary period and a very fragile period. Or, am I only over analyzing and over reacting? As I have said before, a depression seems very possible and likely.


On another note...

Do you think economist (the really well known ones) are not talking about the real likelihood of a depression because of their reputation? I bet you that if they say there is going to be a depression and there is not one, they will look like the village idiots. However, they can always say there is only a small chance of one (even if they know better... which is what they are saying right now) and when or if it is almost on us, start changing their tunes about how things have deteriorated even more than originally thought. I bet you that is exactly what they are doing - not saying how bad it is and how likely a depression is so that they can save face should it not happen. Thoughts?

- CD

[sailingdog]

No, I think you've nailed it pretty well CD... A lot of this has been brought on the banks by themselves. How many credit card offers do you get in the mail...and how low did they set the bar for credit card applications.

[chris_gee]

The quotes attributed to me above seem to miss the point that they are in fact quotations of another.

[sailaway21]

CD,
I'm trying to figure which of you is more kooky, you or Whitney. "Manage cash flow" is one thing, depending on a credit card for essentials like food is, well, nuts in the best of times. Waiting for help to come, you're buying food on your credit card? Yeah, right! If you're buying food on your credit card because you have to it's likely that help will never come in anywhere near the time. And it's even more likely that, if your bailout plan for economic troubles was your credit card, you're already in trouble with it over that La-z-Boy recliner at Rentway you couldn't live without.