Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

US Ponders: How Deep Is Economic Abyss?
AP ^ | 23 March 2008 | Rachel Beck and Erin Mcclam

Posted on 03/23/2008 7:09:53 PM PDT by oblomov

NEW YORK (AP) -- For months, Americans have been subjected to a sort of economic water torture -- a maddening drip of bad news about jobs, gas prices, sagging home values, creeping inflation, the slouching dollar and a stock market in bumpy descent.

Then came Bear Stearns. One of the five largest U.S. investment banks nearly collapsed in a single day before the government propped it up by backing emergency loans and a rival stepped in to buy it for a paltry $2 per share.

To the drumbeat of signs that seemed to foretell a traditional recession, this added a nightmarish specter -- an old-style run on the bank, customers clamoring to pull their cash, a stately Wall Street firm brought to its knees.

The combination has forced the economy to the forefront of the national conversation in a way it has not been since the go-go 1990s, and for entirely opposite reasons.

As economists and Wall Street types grope for historical perspective -- which is another way of saying a road map out of this mess -- Americans are nervously wondering about retirement savings, interest rates, jobs that had seemed safe.

They are surveying the economic landscape and asking: Just how bad is it?

They are peering over the edge and asking: How far down?

And the scariest part of all? No one can say for sure.

Even before the crippling of Bear Stearns, the U.S. economy was acting as a slowly tightening vise -- an interconnected web of factors combining to squeeze Americans from all sides.

Take Jaci Rae of Salinas, Calif. She runs a company, Luco Sport, that sells golf bags and accessories. The merchandise is made with foam, which is based on petroleum, so record oil prices have taken a heavy toll.

(Excerpt) Read more at biz.yahoo.com ...


TOPICS: Business/Economy; Front Page News; News/Current Events
KEYWORDS: creditcrisis; economy; garyk; recession
It's quite telling how the media portray this credit crisis as if it just emerged out of nowhere and caught everyone by surprise. And it's also interesting to observe the media move so quickly from asking "Are we in a recession?" to "How deep is the abyss?"
1 posted on 03/23/2008 7:09:55 PM PDT by oblomov
[ Post Reply | Private Reply | View Replies]

To: oblomov
Butbutbutbut the "stimulus" is going to fix this, right? Right? RIGHT?
2 posted on 03/23/2008 7:17:15 PM PDT by LiberConservative ("Stimulus" = $millions$ for China)
[ Post Reply | Private Reply | To 1 | View Replies]

To: oblomov

No one can say for sure. .

but if you vote Democrat in November, we can bring an end to all of your anxiety MSM


3 posted on 03/23/2008 7:21:22 PM PDT by lonestar67 (Its time to withdraw from the War on Bush-- your side is hopelessly lost in a quagmire.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: oblomov

It’s as deep as the oil is burried. Want someone to blame? Blame Congress. They stopped the Nuclear plants, they stopped the drilling, they stopped the refineries. Then they all got in bed with the oil princes in the Gulf and sold the Americans down the river for $100 dollars a barrel when it costs .50 cents a barrel to bring it up.


4 posted on 03/23/2008 7:23:41 PM PDT by Dogbert41
[ Post Reply | Private Reply | To 1 | View Replies]

To: ex-Texan; TigerLikesRooster; jas3; CodeToad; AndyJackson; ovrtaxt; nicmarlo; dennisw; Pelham; ...
"There is absolutely no truth to the rumors of liquidity problems that circulated today in the market. Bear Stearns' balance sheet, liquidity and capital remain strong."~~Alan Schwartz, Bear Stearns CEO, March 10, 2008
5 posted on 03/23/2008 7:29:40 PM PDT by Travis McGee (---www.EnemiesForeignAndDomestic.com---)
[ Post Reply | Private Reply | To 1 | View Replies]

To: lonestar67

“How deep is the abyss?”

Until a Democrat is elected, only Democrats paying non-producer’s bills with someone else’s money will do.


6 posted on 03/23/2008 7:30:03 PM PDT by Son House (Democrat High Tax Rates Suppress Opportunity and Jobs..)
[ Post Reply | Private Reply | To 3 | View Replies]

To: oblomov

Gary Kaltbaum http://www.garyk.com/

Links to his latest commentary here:
http://www.tradingmarkets.com/.site/stocks/commentary/gkitermi/-75870.cfm

Major League Rotation By Gary Kaltbaum
TradingMarkets.com
March 20, 2008 10:00 AM ET

There is a very good chance the last of the bull market sectors have now entered their own private bear market... at least for the near term. These are the sectors I have been writing about as holding up during the carnage. This includes GOLD/SILVER, OIL, COMMODITIES, FERTILIZERS and AGRICULTURE. They have been the only game in town thus a lot of late money and a lot of momentum money flooded in. That cuts both ways as momentum is twice as quick to get out... thus the recent yonking. I do believe there is a longer term bull market in the COMMODITIES but there was no way they could keep the rate of ascent they have been experiencing.

That leads me to the potential good side of the equation. I am a big believer in inter-market work. That simply means if OIL goes down, what benefits? If COMMODITIES drop, what benefits? I believe there is a good chance that we are going to see rotation into areas that have been dead in the water... how about RETAIL, RESTAURANTS, TRAVEL , TRANSPORTS and the like.

You get where I am going with this. If we do not get rotation into these areas... look out as the market will break. If we do get rotation, I expect the market to hold.

[snip]


7 posted on 03/23/2008 7:32:17 PM PDT by Matchett-PI ("Hillary is what the Clintons look like with their pants up." ~ Mark Steyn 2/23/08)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Son House
How deep is the abyss?”

BIS (Bank of International Settlements) reports about $600 TRILLION of notional obligations which could come due at any given moment. Apparently BS was going under because of this (14 trillion) which was beginning to unwind. Given to Morgan-Chase (who had about 70 trillion). Notional value becomes actual value upon demand performance by the purchacer of the derivitive. If performance is impossible, then those in line become victims. This is very dangerous gambling. Totally irresponsible.

8 posted on 03/23/2008 7:35:07 PM PDT by Texas Songwriter
[ Post Reply | Private Reply | To 6 | View Replies]

To: Travis McGee

The Abyss is large because the debt was sold, the collateral is overseas in their banks.


9 posted on 03/23/2008 7:36:27 PM PDT by eyedigress
[ Post Reply | Private Reply | To 5 | View Replies]

To: oblomov

The out of control gov’t spending has nothing to do eith it, right? Throw the bums out!


10 posted on 03/23/2008 7:38:18 PM PDT by VRWC For Truth (No mas Juan "Traitor Rat" McAmnesty)
[ Post Reply | Private Reply | To 1 | View Replies]

To: VRWC For Truth
Hold on for the ride, we sold our debt.

One

11 posted on 03/23/2008 7:42:23 PM PDT by eyedigress
[ Post Reply | Private Reply | To 10 | View Replies]

To: oblomov

A woman I work with mentioned a “recession coming up” a few months back. I asked her if she was doing worse economically, or anything of the sort and she said “no”. I then asked her what she was personally concerned about, and she couldn’t give me an answer, she just gave me an add look, as if I was crazy for asking such a question. I think with most people, the media ‘announces’ there is a recession, and the sheeple just fall in line and behave like there is one.


12 posted on 03/23/2008 7:50:43 PM PDT by KoRn (CTHULHU '08 - I won't settle for a lesser evil any longer!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: oblomov
Since last year, people have been talking about a economic slow down in 2008. The fear-mongering only makes it appear worse.
13 posted on 03/23/2008 7:59:04 PM PDT by Fishing-guy
[ Post Reply | Private Reply | To 1 | View Replies]

To: oblomov

It’s a “media created crisis”.


14 posted on 03/23/2008 7:59:57 PM PDT by gunservative
[ Post Reply | Private Reply | To 1 | View Replies]

To: Matchett-PI

I agree with Kaltbaum. I think we will see a big pullback in commodities here. Commodities have been a leveraged trade for a lot of hedge funds, and now the financial system is being de-leveraged.


15 posted on 03/23/2008 8:02:19 PM PDT by oblomov
[ Post Reply | Private Reply | To 7 | View Replies]

To: oblomov
"economic water torture"

a result no doubt of economic global warming.

16 posted on 03/23/2008 8:16:40 PM PDT by DannyTN
[ Post Reply | Private Reply | To 1 | View Replies]

To: gunservative
It’s a “media created crisis”.

Bear-Stearns at $2 a share us not media created. A quick series of interest rate cuts is not media created. A foolish stimulus package hastily assembled is not media created. $111 dollar a barrel oil is not media created. We are in for a serious ride. And it was mostly caused by our policies in the domestic production of energy. Our environmental, tax, and social regulations have produced the business environment we now endure. It is not looking good. No matter how you try to explain away the enormous increase in the expense of oil, that increase will have an effect. It is happening now.

17 posted on 03/23/2008 8:20:21 PM PDT by AndrewC
[ Post Reply | Private Reply | To 14 | View Replies]

To: Dogbert41
"Blame Congress. They stopped the Nuclear plants, they stopped the drilling, they stopped the refineries. "

Exactly.

Each of them should that voted for such must be hanged ,drawn and quartered. Then buried in unmarked graves in Mexico.

18 posted on 03/23/2008 9:00:33 PM PDT by NoLibZone (Duncan Hunter- The very Govts unwilling to support us in the WOT got the Fuel Tanker Deal)
[ Post Reply | Private Reply | To 4 | View Replies]

To: KoRn

“I asked her if she was doing worse economically, or anything of the sort and she said “no”.”

Maybe she doesn’t buy gas and grows her own food.


19 posted on 03/23/2008 9:14:55 PM PDT by Pelham (Press 1 for English)
[ Post Reply | Private Reply | To 12 | View Replies]

To: Texas Songwriter

Last figures I saw for JP Morgan was a $97.3 trillion exposure to derivatives.


20 posted on 03/23/2008 9:19:18 PM PDT by Content Provider
[ Post Reply | Private Reply | To 8 | View Replies]

To: oblomov

“How Deep Is Economic Abyss?”

We could find out by electing Her Thighness. Wall Street will plummet.


21 posted on 03/23/2008 9:21:31 PM PDT by Rembrandt (We would have won Viet Nam w/o Dim interference.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Matchett-PI
I believe there is a good chance that we are going to see rotation into areas that have been dead in the water... how about RETAIL, RESTAURANTS, TRAVEL , TRANSPORTS and the like.

You get where I am going with this. If we do not get rotation into these areas... look out as the market will break. If we do get rotation, I expect the market to hold. Sounds about right...

22 posted on 03/23/2008 9:27:04 PM PDT by GOPJ (Remember your ABC's -- Anybody But Clinton.)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Pelham
"Maybe she doesn’t buy gas and grows her own food."

Not true. I'm no different. These economic times have had a minor effect on me personally. If nothing else, my family is probably better off than we have ever been. Sure fuel costs are higher, and groceries are a bit more expensive, but I have yet to NOT drive somewhere I was planning on driving because of gasoline prices being higher, and we are continuing to purchase groceries as we aways have.

23 posted on 03/23/2008 9:33:56 PM PDT by KoRn (CTHULHU '08 - I won't settle for a lesser evil any longer!)
[ Post Reply | Private Reply | To 19 | View Replies]

To: Dogbert41

That about sums it all up. Add Congress to getting involved in market manipulation of housing as well.


24 posted on 03/23/2008 9:36:06 PM PDT by iThinkBig
[ Post Reply | Private Reply | To 4 | View Replies]

To: KoRn

I am happy for you and not bitter your doing well. If your wealth was honestly earned and you wish to keep it, you had better get active with knowing all the facts and get ready to get involved in responsible politics, investing in American energy independence or both. Because at the end of the day, you will also feel the pain if you don’t, you and your family will just feel it 3-4 years from now.


25 posted on 03/23/2008 9:40:51 PM PDT by iThinkBig
[ Post Reply | Private Reply | To 23 | View Replies]

To: oblomov
The combination has forced the economy to the forefront of the national conversation in a way it has not been since the go-go 1990s, and for entirely opposite reasons.

This author seems to have forgotten the year 2001.

26 posted on 03/23/2008 9:45:25 PM PDT by AZLiberty (Wipe the national hard drive and reinstall the Constitution.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: GOPJ

I agree. And I get the impression that Gary is looking for that rotation to happen. He was one of the first “bears” in the room and was almost alone in there.

He has always said that when the room finally gets crowded wall to wall when everyone is talking about fearing another “Great Depression”, he knows that it’s almost time for him to get out of that room as the market has just about bottomed by then.

I think that if he gets that rotation he’s looking for, he’ll start buying while the others are still holding hands in the bear room. :)


27 posted on 03/23/2008 9:46:58 PM PDT by Matchett-PI (I want to see Jindal or Romney as McCain's VP running mate!)
[ Post Reply | Private Reply | To 22 | View Replies]

To: KoRn

Many of my coworkers drive more than 30 miles to get to work, not untypical in southern California. Gasoline costs are killing their budgets. It’s not journalistic hype out here.


28 posted on 03/23/2008 10:00:50 PM PDT by Pelham (Press 1 for English)
[ Post Reply | Private Reply | To 23 | View Replies]

To: KoRn

My grandfather...who lived to be a hundred...commented once on the early 1930s, Alabama and the depression. As he said...it came and went...and no one locally noticed much of anything. Those in rural America and on farms...just kept growing and selling. They all found jobs to bring in money and no one starved to death. The few who did leave the area...all went to California...and three decades later...they were all enormously rich.

I suspect that we all have some magic feeling over the word “depression” and think of it as the pit. The only ones who truly suffered out of this period...were wealthy millionaires who gambled big and lost big.


29 posted on 03/23/2008 10:34:53 PM PDT by pepsionice
[ Post Reply | Private Reply | To 12 | View Replies]

To: NoLibZone; Dogbert41

You’re leaving out a large group who are equally responsible: the voters who keep putting these criminals back in office.


30 posted on 03/23/2008 10:40:41 PM PDT by Dahoser (America's great untapped alternative energy source: The Founding Fathers spinning in their graves.)
[ Post Reply | Private Reply | To 18 | View Replies]

To: KoRn

I agree with you. Things are going extremely well for me and my family. Furthermore, the company I work for supplies equipment to heavy industry and our business has never been better and that’s saying something for a +70 year old company.


31 posted on 03/23/2008 10:55:24 PM PDT by tatown (Better to Burn Up than Fade Away...)
[ Post Reply | Private Reply | To 23 | View Replies]

To: pepsionice
The only ones who truly suffered out of this period...were wealthy millionaires who gambled big and lost big.

I just can't let this nonsense go unchallenged.

The Great Depression caused enormous suffering throughout America.

Many people had no work and no money. That translated into no food. This was not just among the wealthy or in small pockets of the country. There were soup lines and many able-bodied men "rode the rails" looking for work somewhere.. anywhere.

My own grandmother in rural West Virginia would often see strangers show up offering to do any kind of chores for food because they were hungry.

Many farmers lost everything because they couldn't raise the money to continue paying even their small mortgages.

The Great Depression was a terrible time for millions of Americans.

My 81-year-old father-in-law said he remembers you could buy a bottle of soda pop for a nickel but NOBODY HAD A NICKEL.

America suffered more than 30% unemployment and the political upheaval was tremendous. The psychological devastation and feeling of despair and helplessness of that period affected everyone who experienced it for the rest of their lives.

We cannot face the truth about the future when denying the truth about the past.

Just because one Alabama farmer's recollection of the Great Depression was not painful does not mean the rest of the country did not suffer horribly.

32 posted on 03/24/2008 3:34:51 AM PDT by NoControllingLegalAuthority
[ Post Reply | Private Reply | To 29 | View Replies]

To: KoRn

Ah yes, “the look”; no doubt tacit recognition, if only briefly, that you haven’t been sufficiently worked over. I get that a lot. :)


33 posted on 03/24/2008 4:42:16 AM PDT by Freedom4US
[ Post Reply | Private Reply | To 12 | View Replies]

To: Pelham
Not only that the federal government is in debt to the tune of $9.5 trillion, the US consumer is tapped out with their credit cards, personal savings is at an all-time low, The US averages $400 billion in trade deficits per quarter, food is 3 times the cost it was 5 years ago (that's a 300% increase, fuel is twice as expensive as the price pre-Katrina, and now the central banks are wanting the taxpayer to pay for worthless paper as a large group of bankers and big-player investors sit laughing on top of hundreds of billions of scammed loot.

OK, so, just how are we to spend ourselves out of this mess with hyper-stagflation in place and gaining momentum? Just ask those in Kalifornika and the debt the state is running.....looks like all the college education in the world can't provide common sense, integrity and conservative fiscal policy.

34 posted on 03/24/2008 4:53:31 AM PDT by RSmithOpt (Liberalism: Highway to Hell)
[ Post Reply | Private Reply | To 28 | View Replies]

To: pepsionice
Those in rural America and on farms...just kept growing and selling

Maybe you better try telling that to them...
35 posted on 03/24/2008 7:01:49 AM PDT by Santa Fe_Conservative (The RINOs think that they have won but we shall see who has the last laugh in '08...)
[ Post Reply | Private Reply | To 29 | View Replies]

To: Santa Fe_Conservative
The difference between now and in the 1930s is that the commodities boom of the prior decade caused farmers to basically use all of their availible land to meet demand. This is NOT good for topsoil, hence the "dustbowl."

Haven't heard any reports of farmers not rotating their growing patterns/exhausting the topsoil. Yet.

36 posted on 03/24/2008 7:05:41 AM PDT by Clemenza (I Live in New Jersey for the Same Reason People Slow Down to Look at Car Crashes)
[ Post Reply | Private Reply | To 35 | View Replies]

To: RSmithOpt

“Just ask those in Kalifornika “

Mexifornia is the preferred term out here.


37 posted on 03/24/2008 8:57:10 PM PDT by Pelham (Press 1 for English)
[ Post Reply | Private Reply | To 34 | View Replies]

To: Pelham

My bad, sorry....libs and illegals... 3/4 of the problems with that state.


38 posted on 03/25/2008 5:25:30 AM PDT by RSmithOpt (Liberalism: Highway to Hell)
[ Post Reply | Private Reply | To 37 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson