Posted on 11/26/2007 1:16:47 PM PST by Moonman62
Stocks Sell Off As Concerns About Credit, Banking Outweigh Better-Than-Expected Retail Reports
NEW YORK (AP) -- Wall Street sold off sharply Monday as concerns about a weakening credit market wiped out investors' enthusiasm about strong retails sales over the holiday weekend. The Dow Jones industrial average fell nearly 240 points.
Investors were unnerved by another series of announcements that pointed to continuing problems in the credit markets that stem from home loan debt going bad under the weight of a faltering housing market.
Two banks had bad news: Citigroup Inc. warned it is looking to cut costs -- raising the possibility of further job cuts -- and HSBC Holdings PLC said it plans to bail out two funds it manages. To do so, Europe's largest bank plans to move about $45 billion of the fund's assets onto its balance sheet.
Meanwhile, The New York Federal Reserve, acknowledging "heightened pressures" in money markets that are expected to last through the rest of the year, said it plans to conduct a series of repurchase agreements aimed at boosting liquidity in the credit markets. The announcement from the New York Fed, which carries out monetary policy set by the U.S. Federal Reserve, essentially puts in writing many of the steps the Fed often takes at this time of year.
The Fed said it would inject $8 billion into the banking system on Wednesday. The amount of money is somewhat larger than in past years at this time.
According to preliminary calculations, the Dow fell 237.44, or 1.83 percent, to 12,743.44, closing near the lows of the session.
Broader stock indicators also gave up ground. The Standard & Poor's 500 index declined 33.49, or 2.32 percent, to 1,407.21, and the Nasdaq composite index fell 55.61, or 2.14 percent, to 2,540.99.
The DJIA was 12,000 when Pelosi took over. Still above that at this time.
The dollar is going to drop regardless of whether the Fed cuts rates. That’s a given just now, and there’s now way around it, sadly. It is too late in the game for the dollar to be turned around by standing fast on the Funds rate.
The dollar has dropped so far, so fast, that as far as the Euro goes, the Europeans will have to bring down the Euro if they want something done. There’s no way we can bring the dollar back up fast enough to solve that situation.
We are at a five year up trendline. I see the market going thru it. We have a good economy, let the market work out it’s subprime excesses.
bump
Yep!
They ain’t making any more land. Real estate is the best investment you can make. You’ll build equity in the home as the price continues to go up and you’ll be able to refi to a better rate...
(Is this the right thread for these maxims?)
Well, to be frank, I am not sure what government intervention can do at this point. We are where we are because gross excesses and out-of-control credit creation were allowed to persist. Intervention has allowed these excesses to morph into a worldwide cancer.
As to how bad economic news is being talked about on a supposedly conservative site....not being a born conservative, but a latter-day convert, I think conservatives value truth over spin no matter whose ox is being gored. It may be true that the unemployment rate is at historic lows, but the folks being foreclosed on can’t live in nor eat those stats. I think that when major, primary, money-center “banks” (meaning “credit sources”) such as Fannie, Freddie, Citi, and CFC are provably insolvent.....a concept which is practically unthinkable...and it’s not just one of them, you have to start thinking about the whole credit system, not just one rogue trader. If you think that way, then it’s pretty clear that the problems in the banking sector seem to stem from the idea that banks, who know only too well what crap they themselves are holding, are collectively unwilling to trust other banks enough to buy any new crap. So this market is freezing up. And it’s not smart, IMO, to pretend that everything is sweetness and light with this sector, because a great deal of what has gone on, is going on, and will henceforth go on is the very definition of a “con”fidence game. As such, there is lots of info that has not come out yet on the quality of what these banks hold. Fannie debt is going for 70 cents on the dollar. That’s unheard of. In case it’s not clear, I consider the present situation of world markets to be very, very serious. Very.
Today was a very damaging for the stock market bull case. Mondays are NOT suppposed to be like this, and clearly, NOBODY believed Friday’s uber ramp.
~~Ludwig von Mises
"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."
---Harvard Economic Society, October 19, 1929
“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”
~~Only Yesterday: An Informal History of the 1920’s by Fredrick Lewis Allen
We’re not “excited” Peter. We’re scared poopless and I don’t even own stocks, bonds, or any investments save land. For some of us that are Savers, we’re wondering just how low the dollar will go. How high the inflation will go, and if, again, gold will be confiscated, and all our saving have to be exchanged for something as ridiculous as an Amero.
Mentioning a hurricane warning to sitcom-watching neighbors does not make one "pro hurricane."
Conversely, ignoring hurricane warnings while watching sitcoms doesn't provide any real protection.
The ironic thing is that after the hurricane hits, the sitcom-watching oblivious neighbor will probably blame the one who tried to warn him. He will say that talking about the coming hurricane actually caused it.
It was ever thus. But we'll keep trying, in good faith, to warn our oblivious neighbors.
That'll make it harder to attract the money needed to finance the deficit. Most of that comes from overseas.
“Is this the right thread for these maxims?”
Sounds good to me Dura. I’ve never believed in investing in anything save land. We may have to bury the tax man, though—or maybe even dig him up.
I’m reminded of a story from Granville Co. NC just before the Revolution. The tax man for Lord Granville was such an overzellous stinker demanding such onnerous tax rates that someone finally had enough of him and offed him. At length, some of the citizenry including some of my ancestors, dug him up just to reassure themselves that he was truly dead. This is a story that should be required reading for all politicians.
“...handwriting on the wall in big orange, day glow letters...”
If it weren’t so sad, Dave,I’d say that was the funniest line I’ve heard all day...LOL Someone once said if we don’t start laughing about all this, we’ll surely cry.
You will be flush with Ameros, dont worry!
From where? What an idiotic analogy!
Yeah, like having an entire wheelbarrow of them just to buy a loaf of bread.
And what are you saving? What ARE you saving?
You could put the rate at 0% and it wouldn't make any difference. Lowering interest rates won't help the economy as much as producing more of what we are importing. If the people had the 'good paying jobs' promised by 'free trade', they would have enough to pay for their homes.
tortillas
Yep and my guess is we’ll see a close below 10,000 on the Dow in ‘08.
Honestly I don’t know why this is any surprise; I’ve been out since mid-summer. These economic trends run in cycles and the “free” money cycle had to come to an end with a bang.
The real question is.........how long before the Fed is forced to seal the Dow drop with an interest rate hike to salvage what’s left of the Dollar? The Europeans will force that in my opinion.
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