Posted on 11/21/2008 8:47:36 PM PST by TigerLikesRooster
Tired of The Crash?
The market and economy will not stop falling apart until:
Paulson is fired and his policies cease.
We have transparency in balance sheets - for every firm on the exchange. No exceptions. All Level 3 asset mark models and assets identified - period.
Bernanke withdraws all his alphabet soup programs or is removed from office and his successor does, and the "crowding out" in the credit markets ceases.
Its that simple, and all three must happen before we will see any sort of sustainable bottom put in.
This doesn't mean we can't have "rip your face off" rallies - we both can and will.
But the market and economy will not bottom until the three things above are done, and the only way that is going to happen is when you make it happen.
That's right. Your 401k is a 201k (and will soon be a 41k) because you (collectively) sat on your butts last October when I started running petitions and because we have managed to garner only 50-odd people at protests.
There should be hundreds of thousands.
There should be general strikes - people who simply refuse to go to work, en-masse, across the nation.
There should have not been one Congressman or woman who voted for the bailout returned to office.
Bottom line: You have and are consenting to this economic depression - and make no mistake, that is exactly what the credit markets are saying we are entering right now.
Remember that more than a year ago Subprime Mortgage Bonds forecast a total meltdown in that industry, and that nearly all of the companies in that space would go bankrupt. We were told that this sort of "Armageddon" scenario would not and could not occur, and that the credit market was playing "histrionics". A number of so-called "smart money" investors (Wilbur Ross anyone?) stepped in and bought these supposedly-undervalued instruments - and promptly got slaughtered when the actual performance was worse than the credit markets were forecasting.
The credit market was right and those who said it couldn't happen were wrong.
Now the credit market is saying that we are going to have more defaults than happened during The Great Depression. That is, it is forecasting a Greater Depression that worse than the 1930s. The TNX (10 year yield) is threatening to break three percent, down another 6% (!) this morning to 3.16%. The bottom going back as far as my charts extend is 3.07%. Almost there.
The 13 Week T-Bill (IRX) stands at 0.1%, which is for all intents and purposes zero. The Effective Fed Funds trading rate has been between 0.2 and 0.3% since the last putative rate cut to 1% - that is, effectively zero.
Corporate AAA commercial mortgage spreads are at extreme wides, standing at over 700 bips; added to reference this means that super senior AAA commercial mortgages now yield more than 10%. Given the level of credit enhancement in these deals this forecasts default rates of more than thirty percent in this space. Similar extreme spreads are found among both the "high grade" and "high yield" corporate bond markets.
The credit market is telling you that we are headed for an S&P 500 trading at three hundred and a DOW at under three thousand. That we are headed for unemployment north of 20% on the U6 (broad) measure, and GDP contraction of twenty percent cumulatively from top to bottom.
That's one person in five in the US without a job, deflation of 20% cumulatively or more in prices, over 2 million businesses going bankrupt in the next three years, and literal starvation and privation - all across America. No part of this nation will be spared.
The market callers are all saying all this is impossible.
Even though every thing the credit market has forecast thus far since this problem began has been not only proved correct but conservative; that is, if you bought believing that it would not be as bad as the credit market is forecasting, you have had your head handed to you.
So who are you going to listen to?
Ben Bernanke ("we won't have a recession") and Hank Paulson ("the economy is fundamentally strong"), along with all the market "callers" on CNBC, who have been wrong every single time for more than 18 months?
Or the credit market which has been right 100% of the time thus far since this crisis began?
Welcome to The Greater Depression, and make sure you remember that the blame for this event belongs to Congress, Henry Paulson, Ben Bernanke, and of course..... you, since you have failed to insist and force your government (and yes, its your government, just as its my government) to stop these clowns.
We will get out of this when - and only when - you stop believing that you can "have a pony", "a chicken in every pot", "economic stimulus", and "free credit for everyone."
Only when we the people (collectively) are either all bankrupted or we come to our senses and demand that the fraudsters be locked up and the bad debt purged by default will the system clear and both the economy and market find a sustainable bottom.
Those are the only two choices folks, and right now, you're choosing bankruptcy and Depression for all.
Ping!
yes.
Sounds to me like this Geithner dude is part of the bunch that Mr. Denninger wants canned.
If what Denninger says is true the new kings of America will be gubbermint workers. Federal workers will be emperors. Gubbermint workers will collect their pensions while others slave away to pay taxes
If we have a “greater depression”, America is finished.
During the 30’s, something like 80 percent of the people were rural. Now, the situation is almost the opposite.
City folk don’t grow beans.
This would be a nightmare scenario.
He's East Coast blueblood all the way
Wikipedia has an entry
He graduated high school from the International School in Thailand (WTF?)
http://en.wikipedia.org/wiki/Timothy_F._Geithner
He looks like an honest but incapable do gooder
Soon many wanna-be will find that they have better luck with plowing the field.
Can you help me with this, why did AIG Lehman Bros, Goldman Sachs FMae Fmac GM Ford Chrysler etc etc et al, all, all of a sudden develop into a crisis? I for one (and I appear to not be the exception to the rule) cannot comprehend (I can read it but that is about it) financials, was no one able to over the past 2 or 3 quarters not see these problems developing? One other question, just what did their respective Boards of Directors do during this same time frame?
Wrong, bankruptcy and Depression only for those that chose to live on credit!
get the depression going full steam, i’m ready to capitalize on the misery!!!!
I'm all for it, but it's not going to happen. We are headed for the Greater Depression.
Well, it was a nice country while it lasted.
Soon many wanna-be will find that they have better luck with plowing the field.
Actually many Americans are mentally suited for agricultural work and factory work and not much more
I would love to disperse our cities and send people back to hoeing cabbages, gathering eggs and shoveling manure
If a great depression sets in we should establish large rural communes where those who want to work can
Soviet style collectivism.
I can just imagine what would would happen if meth and other drugs infect such places
At least during the Great Depression there was very minimal drug use
And very little debt
I wonder if he’ll be making “business” trips to China, Dubai, and a few other non-debtor nations a month or two from now from now....
However, domino continued its fall, and by the first half of this year, it hit a major domino hub where chain reaction could spread much wider and faster. Domino spread beyond financial sector and move into real economy. Credit is being destroyed, banks stop lending.
All struggling business now starts to go under. Soon some healthy ones would be in danger.
You have to also consider that people in the know have tried ans are still trying to hide the true magnitude of the problem as long as possible, hoping to avert the one catastrophic crash, which can do great damage to their interest and the general economy, and secure some escape route for them, however unlikely it would be. For a long time, the market has not been transparent. It has gotten much worse in recent months. I am sure there are still so much going on behind the scene in strict secrecy.
as long as your next neighbor does not starts start to fall.
Since I grew up durring the last one and the lessons taught me by my parents and hearing the experiences of my GG Grandfather losing his bank in the 1880s depression, the First National Bank of Pomona, i’m more than ready to not only weather the depression but planing to prosper from it.
Very good take. Gerthier is an international type of guy. My bet he knows tons of high level financial people around the world
But Ben told us he could stop the recession with his magic money machine.
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