Market crash: are we there yet ?

[TropicCat]

Originally Posted by therapy23

What is one to do when they say you can't own it anymore and want it back like they did once before?

Got a shovel?

[therapy23]

Originally Posted by TropicCat

Got a shovel?

Yea, but most own the "funds" and do not have the stuff to bury.

Then if you dig it up to use it who can you use it on? A huge black market with gold as the currency?

[Cruisingdad]

Originally Posted by therapy23

Yea, but most own the "funds" and do not have the stuff to bury.

Then if you dig it up to use it who can you use it on? A huge black market with gold as the currency?

I've been thinking that those great big Mercedes Hood Ornaments hanging from a gold chain around your neck should never have gone out of style...

- CD

[kootenay]

Originally Posted by TropicCat

One of the guys in our marina is an ex trucker. He says that an American trucker heading for Mexico had to drop his load at the border. A Mexican trucker then picked up the load and brought it into Mexico.

However, the real traffic came in the other direction where Mexican drivers simply crossed the border and were allowed to deliver loads to their destination.

American truckers were furious with this disparity and demanded change.

Thats weird we ship truckloads of cherries to Mexico every year using both US and Canadian trucks and nor problem they go right on through to their destination. Must be a licencing or insurance issue. US and Canadian Insurance isnt good in Mexico. All the guys we use also carry Mexican Insurance. the back haul is usually tomatoes or Yams.

[TropicCat]

The entire premise of both government and our central bank policies is that "credit is too tight" and the banks have to begin lending again to revitalize our economy. In a nutshell we are capitalists without access to capital.

However, when you look under the hood, so to speak, what we continue to see is proof... month after month that credit has been and still is too loose. How can this be? Didn't I just contradict myself in two sentences? Yep..but check out the following list which demonstrates that consumers are unable to pay back the money they've been lent. This is credit card monthly data on charge offs.

Discover Financial Services Reports Aug Master Trust; Net Charge offs 9.16% v 8.43% m/m

JPMorgan Chase and Co Reports Aug Master Trust; Net charge offs 10.07% v 7.92% m/m

Bank of America Corp Reports Aug Master Trust; Net Charge offs 14.54% v 13.82% m/m

Citigroup Inc Reports Aug Master Trust; Net Charge offs 12.1% v 10.03% m/m

Foreclosures continue to be at an all time high

I'm waitng for commercial data to round out this list, but it isn't going to be any better. I met with the largest commercial broker in central Florida last week and they are predicting total collapse from what activity they are seeing in their marketplace. Nationwide estimates this year say that 100,000 retail shops will close and available commercial inventory has risen sharply.

Lawrence Summers, one of Obama's advisers and a prominent economist is unsure why unemployment is rising so quickly. If a guy of his stature says he doesn't know, the underlying problem is a systemic change. Apparently he didn't get the memo that white collar jobs are disappearing overseas as capitalism is heading for lower labor costs and tossing the American economy under the bus in the process. In the meantime U6 is almost 16.8% unemployment and Shadowstats.com says even higher ... 21%.

Neither the Bush administration, nor this one seem to have any interest of addressing correction of systemic changes, so we have no jobs, consumers tapped out and unable to pay their bills, and no changes in policy in sight to correct any of it. The economy continues to spiral downward as 70% of our economic engine (the American consumer) have been hit so hard they can't get up.

So, unemployment, credit, commercial property, residential property, consumer spending. All key indicators say, no rebound, continued recession until someone finally calls this what it is. The 2nd Great Depression. And does something about it.

This is exactly what I predicted 2 years ago in this thread. Remember EVERYTHING can be made cheaper overseas.

[kootenay]

Letting the dollar fall would help with much of the competitiveness issues. I know how much it has hurt us up north here having a strong dollar vs the US dollar. It has led to alot less export business and what we do is at lower values. Our Banking system is strong thanks to good lending practices ( little or no Sub prime exposure other than Cdn banks with US subsidaries. Capital levels are mandated by Govt so they are in a much better position than their US counterparts. They are also National unlike US banks which tend to be local or regional at best. One thing that concerns me is that we havent heard much about new regulatory structures in the US to avoid the past problems. I read Bene's post above and really dont think that higher levels of capitalizeation are a bad thing. I know there will be a period of adaptation to a new capital structure but it wont hurt in the long term. Credit isnt tight up here if anything it really hasnt changed in the past year. Good companies hav no problem accessing credit. I know we have been in a period of expansion and using bank money to do it with not a hitch.

The us needs to accept that the consumer will not spend its way out of this mess. the probem is too much debt and stupid programs lik Cash for Clunkers are just dumb. Government should be encouraging saving, and reasonable levels of debt not encouraging taking on more debt.

[kootenay]

The three slide below are what worries me. Debt and gobs of it at every level. In 2007 US total debt equalled the entire world GDP. Note these tables dont take into account forward commitments such as Social Security which is totally unfunded and a future liability.

[kootenay]

Here is an article on the Canadian Banking system and its not bad with one exception. If you dont have 25% down on a mortgage you will be using the Canadian Mortgage and housing Corps to get a 5% mortgage and then generally only if you are a first time buyer. Of course you must qualify re income and provide copies of your income tax statements for the years prior for any mortgage.

Canadian bank system gets the balance right - The Irish Times - Fri, Jul 03, 2009

Why Canada has a stronger system

- IT HAS a more robust regulatory regime to supervise its banks.

- The banking regulator conducts regular forensic inspections of the banks and continuously demands information.

- Canadian banks have higher capital reserves and must have a minimum tier-one ratio of 7 per cent. Some 75 per cent of this must be held in ordinary shares or common equity.

- The banks are cautious lenders and Canadians are prudent borrowers.

- Customers are not allowed to take on mortgages of more than 80 per cent of a property’s value unless they buy mortgage default insurance from the government- owned Canada Mortgage and Housing Corporation (CMHC) or two state-sponsored private insurers. The minimum deposit is 5 per cent and maximum term is 35 years.

- An investor must seek government approval to acquire more than 10 per cent of a bank.

- Just 30 per cent of bank loans, all insured against default, are sold to investors in securitisation deals. This motivates the banks to ensure they hold high-quality loans.

- The five biggest banks control between 80 and 85 per cent of the domestic market.

- Canadian finance minister Jim Flaherty says bank mergers are “not a priority”. This has stopped any one bank becoming too large.

- The CMHC monitors housebuilding to ensure it does not rise significantly above 225,000 new units a year, suppressing price fluctuations.

- The biggest bank, Royal Bank of Canada, pays bonuses in its capital markets division based on pretax net income rather than revenue.

[wind_magic]

Welcome to the thread Kootenay, nice to have some Canadian perspective.

[Cruisingdad]

Lots and lots of intersting news today.

First, here are some great articles. I bet windy agrees with all of them, except the part (and get ready for this Windy) where he says we need FAIR trade, and like me and RIck have been saying, the Chinese are not holding up their end of the bargain (duh, what a surprise).

Go for Gold Inflation Is Here and Going to Get "Much Much Worse" Pento Says: Tech Ticker, Yahoo! Finance

Obama Playing with Fire U.S. Will Lose Trade War with China Pento Says: Tech Ticker, Yahoo! Finance

Next Leg Down Will Be "More Painful Than The Last" Pento Says: Tech Ticker, Yahoo! Finance

I agree with this guy almost 100% - especially that part about listening to Bernake. The guy missed the bus the whole last 2 years, yet people listent to him now when he says things are rosy?

On another front, and this goes into the box of, "Things That Make You Go Hmmm...."

SO the stock market is trading in the billions of shares and lots of people are buying into the dow??? Well, can someone please explain then (as I was saying yesterday) how it is that Career Builder found that 6 out of 10 Americans, if not unemployed, are living paycheck to paycheck and not saving anything? Read this:

Six-in-Ten Workers Live Paycheck to Paycheck, Reveals New CareerBuilder Survey - CareerBuilder

Of special note is how much higher these numbers are than from previous years and how many people are going into their 401ks just to make it. THis includes a large increase from those making 100k or more a year, so not just the typical middle and lower class.

I am telling you that we are not out of these woods yet. Not by a long shot. In fact, I would compare it we found a meadow in the middle of a forest. Everyone is dancing around thinking they found their way out. Instead, they are going to realize real quick that not only did they not find their way out, all the celebrating made them forget which way to even head to get out.

Watch those articles. This guy invests with common sense and looks at the long term. Let me know what you think.

So where is all this money coming from and all these buyers??

- CD