The Great Recession - post mortem

[Tekneek]

Originally Posted by Gary Gorski

Let's be fair here - Obama and his cronies have their hands in this whole mess as well. Seems there's been a mention or two of him and Freddie/Fannie in the same sentence not to mention that he's a Senator - why wasn't he storming through Congress a year ago to get them to do something. Democrat, Republican...Bush, the House, Senate, Treasury...this is on all of them.

Don't assume I am all about Obama being great either...

[Tekneek]

By the way, from what I am reading, it seems there is a fear that many CEOs will refuse to participate because they don't like the restrictions on golden parachutes and such. Rather amazing...they are trying to play chicken with the government in order to still get their big pay day. Take that money and split it amongst the other employees that will lose their jobs when these greedy SOBs blow up Wall Street.

[Bigsmooth]

”I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” Thomas Jefferson President of the United States


"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, President of the United States


"It is well the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford


"All the perplexities, confusion and distress in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation." This is because nearly every part of our lives revolves around money in some way. If we clear up the money problem, all sorts of seemingly unrelated problems will simply vanish!” John Adams President of the United States


"The youth who can solve the money question will do more for the world than all the professional soldiers of history.” Henry Ford


"Whoever controls the volume of money in any country is absolute master of all industry and commerce.” James A. Garfield President of the United States


"Banking was conceived in iniquity and born in sin.....Bankers own the Earth. Take it away from them but leave them the power to create money, and, with the flick of a pen, they will create enough money to buy it back again.....Take this great power away from them and all great fortunes like mine will disappear (he was said to be the second richest man in Britain) and they ought to disappear, for then this would be a better and happier world to live in.....But, if you want to continue to be the slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit. - Sir Josiah Stamp, President of the Bank of England


"I had never thought the Federal Reserve Bank System would prove such a failure. The country is in a state of irretrievable bankruptcy.” Senator Carter Glass


"The Federal Reserve are one of the most corrupt institutions the world has ever seen. - Senator Louis T. McFadden (for 22 years Chairman of the U.S. Banking and currency Commission)

[SportsDino]

Well it seems the Dow always has a reason to fall, gotta love short term speculation. Cleaning up my puts since I never believed a rally would occur on my targets and I'll soon own more of certain favorite companies than I deserve to, yay me, boo world!

I'm disappointed that already we are playing the shifting blame game in regards to Congress/president/etc... and how we already are making excuses for the bailout. Lets be honest here, the actors here are Big Finance, they have various parts of our government by the balls and are soaking us dry while continuing the old games.

Quit listening to the latest hype on CNBC and use common sense for a bit. It is going to get rockier!

[SportsDino]

And does it really surprise that CEOs are saying no to bailouts because it affects their golden parachutes? These are spoiled trust fund babies who have been given everything they want from the government in corporate welfare and bailouts, and what not... why would they suddenly expect they would have to give up ground.

The whole banking industry needs to be put in its place.

[Mizzou B-ball fan]

Originally Posted by SportsDino

And does it really surprise that CEOs are saying no to bailouts because it affects their golden parachutes? These are spoiled trust fund babies who have been given everything they want from the government in corporate welfare and bailouts, and what not... why would they suddenly expect they would have to give up ground.

The whole banking industry needs to be put in its place.

Agreed. It would appear that those of us who emphasized that a lot of money would be wasted on this bill may end up getting the result they wanted. The big players are balking at the stipulations, so the money will likely stay in government accounts, though we gave away billions of dollars in earmarks in the process of not doing much of anything.

[Mizzou B-ball fan]

Oil now dropping below the $90 threshold. Down to just below $89 at this point, down over $5 on the day.

[Flasch186]

We may be too late to stop this thing and I fear for the next 6 months - 1 year.

If we go into a deflationary spiral and then a depression the pain will be widespread and bloody. In the short term people will love deflation but as the companies margins get squeezed they'll lay off people left and right and cut corners on quality and safety. R&D becomes nonexistent and people will begin to hold off on spending in the hopes that the price of item X will get cheaper in a few months thus leading to more of the problem.

[MikeVic]

This really sucks.

[Buccaneer]

How come the teaman hasn't got the Chicken Little title yet?

[Mac Howard]

Originally Posted by Mizzou B-ball fan

Oil now dropping below the $90 threshold. Down to just below $89 at this point, down over $5 on the day.

That's another indication that the global economy, not just the US', is slowing down. Oil use, and thus oil price, is a direct measure of commercial activity.

[Buccaneer]

Originally Posted by Mac Howard

That's another indication that the global economy, not just the US', is slowing down. Oil use, and thus oil price, is a direct measure of commercial activity.

Or that perhaps rampant speculation has ceased? Oil analysts have been saying $80-90 should have been the normalized price all along.

[Flasch186]

Originally Posted by Buccaneer

How come the teaman hasn't got the Chicken Little title yet?

cuz far be it from you to admit it Ive actually been right a bunch. Which sucks cuz I'd rather have been wrong this year up until now on some of the things I ended up being right on and wouldve rather have been right on some of the things I was wrong on. I'll take any title you want as long as you get the crotchety old man title

As for your post above about oil, one exacerbates the other (amongst many other things) which causes massive problems including the deflation ive mentioned that you seem so willing to have added to the pressure the entire country is under.

[QuikSand]

Originally Posted by Mac Howard

That's another indication that the global economy, not just the US', is slowing down. Oil use, and thus oil price, is a direct measure of commercial activity.

And I presume you were saying the corollary back when oil prices were exploding several months ago? That oil skyrocketing from 80 to 100 to 120 to 140 must have meant that the world economy was going gangbusters, and that this was really a good sign?

(Just kidding, I happen to agree with you in general, it just seems like a strange time to try to make much sense of oil prices)

[Flasch186]

Originally Posted by QuikSand

And I presume you were saying the corollary back when oil prices were exploding several months ago? That oil skyrocketing from 80 to 100 to 120 to 140 must have meant that the world economy was going gangbusters, and that this was really a good sign?

(Just kidding, I happen to agree with you in general, it just seems like a strange time to try to make much sense of oil prices)

nope, I said it was a bubble....along with the commodities trade.

I was right about the dollar strengthening however it wasnt for the reason(s) I anticipated so...

and I continue to Bucc's chagrin to hope and pray that I am chicken little and everything will be fine.

[Mac Howard]

Originally Posted by QuikSand

And I presume you were saying the corollary back when oil prices were exploding several months ago? That oil skyrocketing from 80 to 100 to 120 to 140 must have meant that the world economy was going gangbusters, and that this was really a good sign?

(Just kidding, I happen to agree with you in general, it just seems like a strange time to try to make much sense of oil prices)

I was almost convinced that every cloud really did have a silver lining but the gas is now cheaper but we had to sell the car to pay the mortgage

[BishopMVP]

Originally Posted by Mac Howard

But when banks are involved it's a different matter. The last time banks went belly up was 1929. The reaction then was precisely what you are asking for - punish those who brought it about. The perpetrators were certainly punished but so was everyone else. Unfortunately this brought about the greatest crash in modern economic societies outside of the two world wars. There was absolute misery for all for 4 years. Unbelievable misery! And in the end it was government spending - Roosevelt's New Deal - that brought America and the rest of the world out of the economic dark ages and back to growth.

Sorry for piling on two pages late, but no, the New Deal did the opposite. FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate / UCLA Newsroom The unemployment rates were still 19%/17%/15% in 1938-1940. And if the NRA had been allowed to stand, I shudder to think of the effects. (Hint: why did the Soviet economic system collapse - because one person can't price 200+ commodities.)

And while I don't have anything in front of me, a huge factor, if not the largest, in the global depression was excessive government regulation in the form of tariffs and barriers to trade that shut down the global market - later Bretton Woods was passed to hopefully eliminate this in the future.

[SportsDino]

There are issues with the New Deal, but to say without it there would have been a great recovery... well that is just using stat-magic with a narrow focus. It was a worldwide depression, and in the absence of government controls we might have seen widespread damage to the real economy. To use steel as an example, if the steel industry was crushed by foreign steel dumping we would not have had the same industry to profit off the war industry in world war II.

[SportsDino]

Oil speculation has been big, although I agree that 80-90 is its probable range. I've made money in both directions on the oil speculation, again, another reason to make your own estimation of an asset's worth and separate hype from news. Oil/gold is part of my inflation hedge... and I know deflation is spiking in references in the news, but again it seems like the latest play on the public's panic.

[BishopMVP]

Originally Posted by SportsDino

There are issues with the New Deal, but to say without it there would have been a great recovery... well that is just using stat-magic with a narrow focus. It was a worldwide depression, and in the absence of government controls we might have seen widespread damage to the real economy.

There was 15-25% unemployment for 10 years. That qualifies as widespread damage to the real economy to me. (There was also a famine - exacerbated by the New Deal/Agricultural Adjustment Act destroying massive amounts of food and farm products to, um, help end a famine?) The combination of high minimum wages and increased threat of strikes from unions kept the unemployment rate high until WWII rolled around, where suddenly unions couldn't threaten to strike without being thrown in jail, and strict wage controls were implemented (of course, that ended up screwing us long-term because businesses started offering benefits like health-care to compete against other businesses, but that's a different example of government intervention having disastrous unforeseen consequences).

To use steel as an example, if the steel industry was crushed by foreign steel dumping we would not have had the same industry to profit off the war industry in world war II.

The steel industry that Roosevelt accused of a criminal conspiracy to cause economic ruin and ordered the FBI to look into, then had the Justice Department go after for antitrust reasons? No, our steel industry would have quickly recovered even if it suffered a temporary downturn as long as FDR didn't succeed in completely packing the Supreme Court. After all, its huge competitive advantage over European competitors was that it wasn't in the middle of a war zone, and that wasn't going to be any different. At the same time, a "dumping" of cheap steel onto the US market would have resulted in cheaper building materials, a construction boom, and a corresponding increase in jobs.

[Warhammer]

Guys, the Great Depression truly didn't end until WWII. The probable solution was obscene amounts of government deficit spending that makes today's budget squabbles look silly.

http://www.marktaw.com/culture_and_m...ionalDebt.html

Yeah, look at the left of the graph, our deficit for one year alone, exceeded all government receipts.

[Fighter of Foo]

Originally Posted by Warhammer

Guys, the Great Depression truly didn't end until WWII. The probable solution was obscene amounts of government deficit spending that makes today's budget squabbles look silly.

http://www.marktaw.com/culture_and_m...ionalDebt.html

Yeah, look at the left of the graph, our deficit for one year alone, exceeded all government receipts.

What are you talking about? That deficit WAS WWII because there was no one to buy anything. Also it clearly shows that years 2004-today are projected. It's highly probable the numbers are worse than the projections given what we know from this thread alone.

Our current "squabble" has us under an enormous amount of debt that we're just now feeling the effects of, and to make things worse we're heading INTO an economic retraction not coming OUT of one, making this situation even worse.

What's sad/depressing is that had we not set $3 trillion+ on fire in Iraq and the rest of the world (the right of the graph) we'd be in a much better position to deal with all of this.

[BishopMVP]

Originally Posted by Fighter of Foo

Our current "squabble" has us under an enormous amount of debt that we're just now feeling the effects of, and to make things worse we're heading INTO an economic retraction not coming OUT of one, making this situation even worse.

Well, if you're going to talk about the problems caused by being under huge amounts of debt, deficit spending and current account deficits, it is worth pointing out where, historically, these all began - the New Deal, with WWII and the rebuilding of Europe accelerating the debt supercycle.

Or we could try to spend $1 trillion, increase government regulation and control of the economy and assume it will fix the problems created by exactly those kinds of solutions. Spurred on by a belief amongst a number of people that the New Deal was responsible for the recovery.

Unadulterated Keynesian economics are a joke that leave countries worse-off long-term.

[Daimyo]

Originally Posted by BishopMVP

Well, if you're going to talk about the problems caused by being under huge amounts of debt, deficit spending and current account deficits, it is worth pointing out where, historically, these all began - the New Deal, with WWII and the rebuilding of Europe accelerating the debt supercycle.

Warhammer's link above doesn't really support this. Yes, debt was added by the New Deal programs and war reconstruction, but it was quickly under control and remained so for over 30 years. Debt didn't really start accumulating again until 1976, but was then back on a downward trend by 1980. That's when debt seemed to really get out of control as it exploded in the years between 1980 and 1992 and then again, even moreso, after 2000.





Warhammer's link where these images, along with some commentary, can be found: http://www.marktaw.com/culture_and_m...ionalDebt.html

[Kodos]

Kinda funny how you always hear how terrible Democrats are with money, but the Clinton years were the only ones where the graph goes down. Obviously, lots of other stuff affects what happens with the deficit, but we always hear about those darned BIG GOVERNMENT TAX AND SPEND LIBERALS.

[BishopMVP]

Accelerating was the wrong word, but using annual change in debt is just as misleading. National debt never fell below ~2 trillion or 35% of GDP after WWII. http://upload.wikimedia.org/wikipedi.../3b/USDebt.png (I don't know how to resize that to make it fit better.)

And, yes, Kodos, Reagan and the Bush's haven't exactly been fiscal conservatives. But fwiw, the deficit didn't go down, merely the rate of increase was slowed, which sadly does count as a victory.

[Mac Howard]

Originally Posted by BishopMVP

Well, if you're going to talk about the problems caused by being under huge amounts of debt, deficit spending and current account deficits, it is worth pointing out where, historically, these all began - the New Deal, with WWII and the rebuilding of Europe accelerating the debt supercycle.

Or we could try to spend $1 trillion, increase government regulation and control of the economy and assume it will fix the problems created by exactly those kinds of solutions. Spurred on by a belief amongst a number of people that the New Deal was responsible for the recovery.

Unadulterated Keynesian economics are a joke that leave countries worse-off long-term.

As I said - ideologues are always the last to recognise the flaws in their ideology. The self-deluding rationalisations never cease to be astonishing

Keynesian economics stopped with Reagan and the current crisis is a direct result of the dismantling of the regulatory systems that has occurred since.

The problem is always excess. By the 1970s excessive Keynesian economics had certainly brought the world economy to a condition where it was unable to handle economic impacts such as the oil shock in 1973/4. The response was to veer massively to the right - to return to the free market economics of the pre-1933 world. But, again, excess took over and has brought about the present situation.

What is needed now is a balanced response once the economic situation is recovered - free markets but with restrictions on those who would abuse the markets and oversight with the power to punish that abuse. The oscillation from one extreme to the other, driven mainly by ideologues and self-interest, has to come to and end if we're to avoid seeing another century like the last.

Whether our political systems have the ability to carry this through remains to be seen. Economic philosophies have tended to converge recently - socialism has been put aside for the present and this crisis is about to do the same for unfettered markets - and there is hope that the adversarial approach of the past may be at an end. There is little to choose between Obama and McCain in their response to this crisis and we can only hope that their shared solution is the right one.

I say "hope" because we still exaggerate enormously our real understanding of economic systems and a little more humility is needed.

[Flasch186]

Japan just pumped 1.5 trillion Yen (~15 billion $) into short term money market funds and watching what was going on in the Eurozone today was scary. The euro is at a fork in the road now.

[BishopMVP]

Originally Posted by Mac Howard

The problem is always excess. By the 1970s excessive Keynesian economics had certainly brought the world economy to a condition where it was unable to handle economic impacts such as the oil shock in 1973/4. The response was to veer massively to the right - to return to the free market economics of the pre-1933 world. But, again, excess took over and has brought about the present situation.

If you think we've actually been running an ideological free-market system recently I'm not sure what to say.

[Mac Howard]

Originally Posted by BishopMVP

If you think we've actually been running an ideological free-market system recently I'm not sure what to say.

Bush is certainly not the "dryest" President you've ever had but the present financial crisis has come about because the financial community has behaved in a thoroughly irresponsible manner that the dismantling of the regulatory system has allowed. It is that "freedom" to act, free of regulation and oversight, that has created this crisis. If you don't see the present system as "free market" then I suspect I'd be horrified by one you do.

[Flasch186]

UPDATE

'Global' rate cut of a 1/2 a point. Doesnt seem like Im the only chicken little, eh Bucc? Perhaps youre wrong on this one....but I promise, I pray youre right.

[Butter]

Originally Posted by Daimyo

Why would you (not YOU, but this guy) make the scale of this graph in thousands of millions of dollars? Lop some of those zeroes off there and just make the scale billions.

[ISiddiqui]

British bailout:

Britain Announces Huge Bank Bailout - NYTimes.com

About $350B and $85B is to bailout 6 specific banks, which the government will own shares in now (of course that wasn't good for the stocks of those banks, but whatev).

[Mac Howard]

Originally Posted by ISiddiqui

British bailout:

Britain Announces Huge Bank Bailout - NYTimes.com

About $350B and $85B is to bailout 6 specific banks, which the government will own shares in now (of course that wasn't good for the stocks of those banks, but whatev).

According to The Guardian (British left-wing newspaper) that's now risen to 500 billion POUNDS - ie nearly a trillion dollars. And that for a country with a population less than a quarter of the US.

Youse guys are wingin' over nuttin'

http://www.guardian.co.uk/business/2....creditcrunch1

• Up to £50bn of taxpayer money to buy preference shares - £25bn will be released initially with a further £25bn at a later date

• An extension of the Special Liquidity Scheme introduced after the collapse of Bear Stearns to allow £200bn of funds to be made available to banks

• A guarantee of the debt issued by banks of up to £250bn

[Flasch186]

Chicken little.

http://biz.yahoo.com/ap/081008/eu_iceland_meltdown.html

Iceland struggles, abandons fixed exchange rate
Wednesday October 8, 10:40 am ET
By Jane Wardell, AP Business Writer
Iceland sinks further into crisis, abandons bank nationalization, fixed exchange rate

REYKJAVIK, Iceland (AP) -- Iceland plunged further into financial crisis on Wednesday as it scrapped plans to nationalize a major bank, instead placing it into receivership, and abandoned attempts to put a floor under its falling currency by fixing the exchange rate.

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Adding to Iceland's woes, the British government said that it planned to sue over lost deposits held by tens of thousands of Britons with Icelandic bank accounts.

The global credit crisis has exacted a heavy toll on Iceland, where the banking sector dwarfs the rest of the economy thanks to a stock market boom in the mid-1990s.

Those heavily exposed banks are now putting the entire country at risk, with Prime Minister Geir H. Haarde warning of "national bankruptcy."

The struggle of the government to deal with its top-heavy banking system was highlighted by a decision to place Glitnir, the country's third-largest bank, into receivership under the Icelandic Supervisory Authority. The decision came less than two weeks after the government announced it was taking a 75 percent stake in the bank for 600 million euros ($820 million). Central bank governor David Oddsson told TV station RUV late Tuesday that the "difficulties of the bank were much greater" than previously estimated.

The move into receivership gives Glitnir temporary protection from its debt obligations.

A receivership committee appointed by the regulator has replaced Glitnir's board and immediately began restructuring the bank with announcements that it plans to sell its Finnish and Swedish businesses.

Meanwhile, the Icelandic central bank, Sedlabanki, said it was giving up attempts to peg its currency to stop the kronur free-falling.

The bank had temporarily fixed the exchange rate of the krona at a level equal to 131 krona against the euro -- on Tuesday morning.

Earlier Wednesday, it made a plea that "market makers in the interbank market support its attempts to strengthen the krona," which went unheeded.

"It is clear that there is insufficient support for this exchange rate; therefore, the Bank will not make any further such efforts for the time being," it said in a statement.

In Britain, Prime Minister Gordon Brown said that the government will take legal action to recover deposits belonging to 300,000 British account holders with the Icesave Internet bank after its parent, Landsbanki, was placed in receivership.

British savers have deposited millions of pounds in accounts through the collapsed Landsbanki's Internet operation, Icesave, which has suspended withdrawals.

British Treasury chief Alistair Darling said the British government would also guarantee all customer deposits at Icesave, even if they were above Britain's standard 50,000 pound ($88,000) protection plan because Iceland was refusing to meet its guarantees.

"The Icelandic government, believe it or not, have told me yesterday they have no intention of honoring their obligations here," Darling told the British Broadcasting Corp.

Darling added that savings bank ING Direct UK had agreed to buy more than 3 billion pounds ($5.3 billion) of deposits held by around 180,000 British savers with two other Icelandic-owned banks, Kaupthing Edge and Heritable Bank, which is owned by Landsbanki.

The speed of Iceland's downfall in the week since it announced it was nationalizing Glitnir bank caught many by surprise, despite warnings the country was the "canary in the coal mine" of the global credit squeeze.

Haarde, who has complained of a lack of support from other European nations, has sought a 4 billion-euro (5.47 billion) loan from Russia as the country scrambles to stop the collapse of its economy. It has also introduced emergency laws that give the government sweeping new powers to take over companies, limit the authority of boards, and call shareholder meetings.

Some support came from Sweden, where the central bank said Wednesday it would grant liquidity assistance to the Swedish arm of Icelandic bank Kaupthing with a loan of up to 5 billion crowns ($702 million) "to safeguard financial stability in Sweden and ensure the smooth functioning of the financial markets."

The intervention of the British and Swedish authorities underscores the effect that a full-blown collapse of Iceland's financial system would have on the rest of Europe, given the heavy investment by Icelandic banks and companies across the continent.

One of Iceland's biggest companies, retailing investment group Baugur, owns or has stakes in dozens of major European retailers -- including enough to make it the largest private company in Britain, where it owns a handful of stores such as the famous toy store Hamley's.

Kaupthing has also invested in European retail groups, and racked up debts of more than $5.25 billion in five years to help fund British deals. The Icelandic government on Tuesday extended its own $680 million loan to Kaupthing to tide it over.

Against this tumultuous backdrop, Haarde vowed Tuesday that ordinary Icelanders would not pay the price for this spending spree and that his country will not default on its debt.

"Iceland has never defaulted on sovereign debt and won't," he said.

[Fidatelo]

I keep waiting for the shoe to drop on Canada. So far our banks seem to be ok, but of course they will keep telling us they are fine until the day they go under. I know we have more regulations than the US, but this thing is seemingly bringing down banks in every country in the western hemisphere, and I don't see how we can be that immune.

[molson]

Originally Posted by Mac Howard

Youse guys are wingin' over nuttin'

Do you believe there's a point where it's too much and the money just becomes fake and worthless?

What if in six months we need 5 trillion to keep things running smoothly? What if in a year it's 100 trillion?

Or is just "hey, it's the government, they can take on debt"?

[Flasch186]

http://biz.yahoo.com/ap/081008/eu_russia_markets.html

Trading on both Russian stock markets halted
Wednesday October 8, 10:37 am ET
By Catrina Stewart, Associated Press Writer
Russia's MICEX shuts until Friday after steep opening losses, RTS until further notice

MOSCOW (AP) -- Trading on both Russian stock markets was halted on Wednesday after shares plunged within an hour of opening on fears the credit crisis will take a heavy toll on growth.

MICEX, where most trading takes place, was shut until Friday after it dropped more than 14 percent to 637.9 points in the first half-hour of trading. The RTS index -- which has lost more than 69 percent since its May peak -- has been shut down until further notice. It fell 11.3 percent in the first half-hour, dropping to 761.6 points.

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Both exchanges have suspended trading on several occasions in recent weeks in a bid to stem steep slides in share prices.

Investors have withdrawn billions of dollars from Russia's oil-fueled economy since its war with Georgia in August. Sliding oil prices and concerns about the depth of the financial and economic woes in Europe and the U.S. have sent shares into freefall in recent weeks, contributing to the Russian markets' worst-ever day of trading on Monday.

"It looks like the crash in the West is happening this week," said Eric Kraus, an adviser to Otkrytiye brokerage. "Until that is behind us, we cannot expect any degree of rationality in the Russian financial markets."

The government is now battling with its most serious financial test since the 1998 collapse, and has announced a series of measures to pump liquidity into the stricken banking system and restore confidence in the markets. It has announced more than $200 billion in loans and relief since the crisis escalated in September.

Policy makers have sought to get liquidity moving through the banking system via state-backed lenders amid signs that many businesses are unable to access funding, either because it is unavailable to them or interest rates are too high. Many businesses have pared back investment plans, laid staff off and cut production.

"The credit-sensitive sectors are grinding to a halt, and that process is now spreading," said David Aserkoff, strategist at Renaissance Capital. He said it was possible Russia could face recession if the situation continues.

"How do you go from 8 percent to zero percent? Throw in falling oil production too. It's difficult, but it's not impossible, to imagine that Russia could fall into a recession at some point in the next nine months," Aserkoff said.

As policy makers in Europe and the U.S. scrambled to coordinate interest rate policy to shore up confidence, President Dmitry Medvedev called for a stronger role for financial regulators, auditors and ratings agencies to combat the global financial crisis.

"Any crisis is a natural way of resolving contradictions. And it must be used to 'clean up' and to extend and maximize the period of growth for our economies," said Medvedev, who was speaking at an international conference in Evian, France.

He also proposed a new global financial architecture, arguing that bullwarks of the old financial order -- the International Monetary Fund and the World Trade Organization -- had been discredited in the 1990s. He said new financial centers and strong regional currencies could provide stability and prevent a repeat of the global financial crisis. Medvedev has previously touted Moscow's ambitions to become a financial center and make the ruble a reserve currency.

Meanwhile, Russia's Parliament followed some European countries' example to vote overwhelmingly to raise the amount covered by deposit insurance from 100,000 rubles (about $4,000) to 200,000 rubles. A further 90 percent of deposits are covered up to 400,000 rubles. This will now be raised to 700,000 rubles.

[Mizzou B-ball fan]

Originally Posted by Flasch186

http://biz.yahoo.com/ap/081008/eu_russia_markets.html

Honestly, Russia's economy is far less able to handle these problems than the U.S. or Europe. It's very fragile. Toss in the oil price drop, and they've lost their only lifeline to sanity.

[Flasch186]

we're very interconnected in the world so these ripples elsewhere are significant of what is happening elsewhere....to say 'chicken little' is just ridiculous IMO.

[Mizzou B-ball fan]

Originally Posted by Flasch186

we're very interconnected in the world so these ripples elsewhere are significant of what is happening elsewhere....to say 'chicken little' is just ridiculous IMO.

You're right. If you believe that the relative stability of a Russian economy and the U.S. economy are even close to comparable, we have little to discuss.

[Flasch186]

are you kidding? Are you taking me literally pointing out one economy vs. ours when I point out interconnectedness as being 'it'? FWIW if you havnt seen the reciprocated effects of what were doing throughout the world than your head is buried so deep you may never admit to it.

I posted an article about Iceland just a little before!! Stop with the nonsense MBBF and start debating positions that have actually been said. You always do this and sometimes I wonder if you deny reading things or ignore posts so you can just keep standing in your corner which is done in many of the threads your the main antagonist in.

Ive simmered down....please tell me the tipping point of how many things need to come from how many countries to prove youre wrong in the above debate and Ill be sure to aim for that threshold otherwise it is pointless and you'll never, everrrrrrrrrrrrrrrr, come around to the stances that those on my side are espousing.

[sterlingice]

At some point, do we just decide on ditching stocks altogether? I don't mean tomorrow, but in 100 or 500 years, is it going to be one of those things people look back at and laugh or at least view as quaint like people using leeches and earth-centric solar system models.

Basically, financial people have suckered regular people into playing this baseball card trading game with paper that has no value. I guess, in a strange sense, money is paper that has no value but it is given intrinsic value by an entire country. However, basically, you have a bunch of people who have no idea (401K investors) being directed by novice traders (large firm people in charge of 401Ks) who just get suckered in by advanced traders.

In the end, isn't your return on investment in a stock basically StockPriceSell - StockPriceBuy + DividendOverEntirePeriod?

SI

[Flasch186]

the stock market is just a small window into what is going on.

[Mizzou B-ball fan]

Originally Posted by Flasch186

are you kidding? Are you taking me literally pointing out one economy vs. ours when I point out interconnectedness as being 'it'? FWIW if you havnt seen the reciprocated effects of what were doing throughout the world than your head is buried so deep you may never admit to it.

I posted an article about Iceland just a little before!! Stop with the nonsense MBBF and start debating positions that have actually been said. You always do this and sometimes I wonder if you deny reading things or ignore posts so you can just keep standing in your corner which is done in many of the threads your the main antagonist in.

Ive simmered down....please tell me the tipping point of how many things need to come from how many countries to prove youre wrong in the above debate and Ill be sure to aim for that threshold otherwise it is pointless and you'll never, everrrrrrrrrrrrrrrr, come around to the stances that those on my side are espousing.

Once again, you totally miss the point.

1. The Russian economy is fragile and has far more volitility than U.S. or European markets. They are a disaster in the making. Sure, there's a global economy, but the Russian economy could easily collapse without similar effects being seen in other countries.

2. The Iceland situation is much more relevant to the U.S. than Russia.

3. "those on my side". There's no sides here. Relax. I'm not sure where you got the idea that I don't think there's a problem here, but feel free to continue on if it makes you feel better.

[Flasch186]

i miss the point LOL

could very well be true that im more worked up than you or others as it is my nature.

[Fidatelo]

Originally Posted by sterlingice

At some point, do we just decide on ditching stocks altogether? I don't mean tomorrow, but in 100 or 500 years, is it going to be one of those things people look back at and laugh or at least view as quaint like people using leeches and earth-centric solar system models.

Basically, financial people have suckered regular people into playing this baseball card trading game with paper that has no value. I guess, in a strange sense, money is paper that has no value but it is given intrinsic value by an entire country. However, basically, you have a bunch of people who have no idea (401K investors) being directed by novice traders (large firm people in charge of 401Ks) who just get suckered in by advanced traders.

In the end, isn't your return on investment in a stock basically StockPriceSell - StockPriceBuy + DividendOverEntirePeriod?

SI

This is my fear. Investment 'professionals' will always try to push charts and historical data on you as reasons why you should invest in the market, but more and more it's feeling like a ponzi scheme. Sure all those baby boomers made crap loads of money over the last 100 years, but in any pyramid scheme everyone makes money except for the guys on the bottom rung when the thing collapses. I honestly am beginning to worry that the entire financial model of our society may collapse during our lifetime, and that myself or my children will be the ones left holding the worthless bags of play money that kept our parents living in McMansions and driving Hummers to work.

[Antmeister]

Originally Posted by Fidatelo

This is my fear. Investment 'professionals' will always try to push charts and historical data on you as reasons why you should invest in the market, but more and more it's feeling like a ponzi scheme. Sure all those baby boomers made crap loads of money over the last 100 years, but in any pyramid scheme everyone makes money except for the guys on the bottom rung when the thing collapses. I honestly am beginning to worry that the entire financial model of our society may collapse during our lifetime, and that myself or my children will be the ones left holding the worthless bags of play money that kept our parents living in McMansions and driving Hummers to work.

If you were an writer for a newspaper editorial, I would read your weekly column religiously simply because of how I enjoyed reading this. Sure it sounds depressing as hell and an opinion, but it's good, entertaining writing.

[sterlingice]

Originally Posted by Fidatelo

This is my fear. Investment 'professionals' will always try to push charts and historical data on you as reasons why you should invest in the market, but more and more it's feeling like a ponzi scheme. Sure all those baby boomers made crap loads of money over the last 100 years, but in any pyramid scheme everyone makes money except for the guys on the bottom rung when the thing collapses. I honestly am beginning to worry that the entire financial model of our society may collapse during our lifetime, and that myself or my children will be the ones left holding the worthless bags of play money that kept our parents living in McMansions and driving Hummers to work.

It makes me want to just go and put all of my money in safe, but non-growing bonds, in that you get back slightly more than inflation and that's it. Then again, those are still only backed by the government.

That said, going back to before. One can draw a parallel between stocks and money saying "they're just worthless pieces of paper representing a commodity". However, there was a need for money when it came about- you needed something, anything to be a standard for currency so you didn't have people trading 3 goats for 2 sheep and then turning around and trading 2 sheep for a mule and then the mule for 5 sets of clothes. Instead, you could just trade in your 3 goats for cash and then for clothes.

This, on the other hand, is starting to feel like social security, only it's run by crooked money grubbers

SI

[Edward64]

IMF predicting US deep recession next year.

Forecasters see U.S. leading global downturn - World business - MSNBC.com

The IMF now projects that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing to 3.9 percent this year. It is forecast to weaken even more — to just 3 percent — next year, marking the worst showing since 2002. In the past, the IMF has called global growth of 3 percent or less the equivalent to a global recession.
:
In the United States, the economy, which grew by 2 percent last year, is projected to slow to 1.6 percent this year. Growth would screech to a virtual halt in 2009, barely budging at just 0.1 percent.
:
Looking at other countries, Germany's growth will slow to 1.8 percent this year, down from 2.5 percent last year. France's growth will weaken to just 0.8 percent, compared with 2.2 percent in 2007. Britain's economy will see growth taper to 1 percent, down from 3 percent last year. Canada's growth will tail off to 0.7 percent this year, from 2.7 percent last year.
:
In Japan, growth will cool to just 0.7 percent, from 2.1 percent last year.

Global powerhouses China and India will see growth clock in this year at a robust 9.7 percent and 7.9 percent, respectively. Even if those projections prove correct, they would still mark downgrades from their blistering performances last year. Russia's economy should grow by a brisk 7 percent this year, down from 8.1 percent last year.

Here's to China and India (especially China) to keep going. If China goes downhill severely, it may be a double US-China blow.