I think it depends who you talk to. Many of the small business owners I frequent complain about lack of customers, older folks I talk to in the grocery stores think we are headed for a depression, others are complaining about having a $500 monthly or more energy bill--it’s all about perception. But, if many are living so tightly that they can’t afford rising living costs, that tells me there is more trouble on the horizon.
Let’s see....Bank of America is buying Merrill-Lynch, Lehman is declaring bankruptcy, the Feds are bailing out Fannie, Freddie, and Bear Sterns among others, the Big 3 automakers are requesting around a cool $50 Billion in low-interest loans....throw in foreclosures, massive credit card debt, commercial real estate hitting the skids, high gas price (yeah, I know...gas it back down to around $3.60--Big Whoop!), high food prices, high energy costs, stagnating salaries, pension plans in trouble, massive lay-offs, and the biggie national debt of $9.5 TRILLION and climbing. The Fed is now backing away from anymore bail-outs. GOOD! It had to happen that those who made poor investments pay the piper; we can’t afford more debt piled onto more debt. Poor decisions at the Fed level were made by ignoring the signs and not realizing all this so-called “exurberance” was nothing more than an extremely unsteady house of cards. Foreclosures were the starter’s gun in the race to the bottom!
I’m a firm believer that we do need a shake-out with no artificial props. It only prolongs the inevitable, and, hopefully, someone, somewhere has learned something from all this and tighter oversight and regulations are put back into place (I have to think had these 2 needed items not been gutted, what happened might’ve anyway but not on such a grand scale). So, yeah, more than ever....it’s about the economy!
I was just going to hit this site with 16 minute old AP news and QUack beat me to it! AMazing.:
16 minutes ago
NEW YORK - In a stunning reshaping of America’s financial landscape, two venerable Wall Street firms fell from the shock waves of a credit crisis that has plunged the financial system into turmoil, as stocks tumbled across the globe Monday.
Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filed for Chapter 11 protection in the biggest bankruptcy filing ever and said it was trying to sell off key business units.
Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in a $50 billion all-stock transaction.......
The demise of the independent Wall Street institutions comes six months after the collapse of Bear Stearns and 14 months after the beginning of the credit crisis, sparked by bad mortgage finance and real estate investments.
Ominously, American International Group Inc., the world’s largest insurance company, was asking the Federal Reserve for emergency funding and planned to announce a major restructuring Monday.
Sixth-largest point drop ever comes amid Wall Street upheaval
[...]
According to preliminary calculations, the Dow fell 504.48, or 4.42 percent, to 10,917.51, moving below the 11,000 mark for the first time since mid-July. It was the worst point drop for the Dow since it lost 684.81 on Sept. 17, 2001, the first day of trading after the terror attacks. It was also the sixth-largest point drop in the Dow, just behind the 508.00 it suffered in the October 1987 crash.
Seahorse, you are right it is all about perception...even the posts below yours show how perception and reality differ. For instance:
1. Where is gas $5 a gallon locally? The highest I saw between here and Baltimore on Saturday was $3.94 at the Glasva Citgo and he is 22 cents higher than the next highest I have seen. Most today are still below $3.70. The price of oil dropped below $95 a barrel today...I think it closed around $93-94. The high was $147 in July.
2. Comparing point drops is silly. 508 today was 4.4%. 600 in 1987 was 23%. Naturally the politicos on tv are going to make today out as the worst day ever. Hardly. A simplistic example but...If you had $100 in the Dow this morning you have $95.6 left. If you had $100 in the Dow in 1987 you had $78 left at day’s end. Anyone with all their money in Lehman, like many of the employees...is (well was) nuts.
I am happy to see that the Federal Government found its “manhood” and stopped bailing out these companies. Lehman failed. Good, they should have...they took too much risk...addionally the WSJ is reporting tonight that the new regulator overseeing Fannie and Freddie is refusing to pay the severance packages of the CEOs of the two companies. Good those guys shouldn’t get a reward for what they did.
Don’t get me wrong..today sucked...but it certainly could have been much much worse. We are all paying for the stupity of a lot of people who should have known better than to take soooo much risk and get sooo heavily leveraged.
shadow diver- this is the frst sane news I have heard lately- I was so pessimsitic because of the golden parachutes these CDEO’s were getting- if your company fails under your leadership- why would you just not be fired and walk away with nothing- not be rewarded with millions?
I hope the outcry was so great- that they get nothing and these bailouts of institutions stop.
Why are the companies failing? Are they not paying attention to their auditors? Do they even have auditors to create the policies that often times “anal” but necessary to right the errors.
Are the CEO’s just surrounded by YES people?
What about the outsourcing of our workers?
Would bringing back those jobs create new taxes & wealth so we would have the economy comiing back?
SD, I haven’t heard of any $5 a gallon gas locally, but there were reports of stations running out of gas in some of the western areas of Maryland and $5 a gallon at some stations in North Carolina. From what I’ve read the pipelines that service the East Coast, Colonial and Plantation, are carry reduced capacity, and, as you know, it doesn’t take much to start a panic buy on gas. All anyone has to do is whisper $5 a gallon and gas lines will snake around the block.
BJG, Phil Gramm is probably kicking himself in the butt for his stupid “nation of whiners” remark. I’d rather be termed a “whiner” than a lemming! Better to complain and gripe than follow all the uninformed over the cliff!
BUT EVERYTHINGS GOOD!
Yeah, right! Reckon them’s who’re at fault figure if they keep sayin’ it over and over, it’ll come true!
yesterday after the economic news that was happening on Wall Street:
McCain:
The economy is fundamentally sound- (sounds like he is still listening to his financial guru- Phil Gramm, even though he is supposedly OUT)
Haven’t we heard that before.
On all the news rounds this morning he says we need to have regulations to keep this from happening agin- (again his pal Phill Gramm, dismantled these sytem regulations)
Yeah, right! Reckon them’s who’re at fault figure if they keep sayin’ it over and over, it’ll come true!
Seahorse, things may not be hunky-dory but, looking at this event from 30,000 feet instead of 100 feet, one can easily see that our market economy is cyclical. We know this happens every four years or so. Sometimes worse than others but bear markets like this present great opportunities for folks who don’t panic.
I just wish that when the “Chicken Little” press reported on the financial companies that have failed, they would also report on the financial companies that are sound and have been affected very little by the current crises.
BJ, I could be wrong but I believe you misquoted the Senator. I believe that the quote reads, “The fundamentals of our economy are sound.” Big difference. The latter being spot-on accurate. The prior being open to interpretation.
We know this happens every four years or so. Sometimes worse than others but bear markets like this present great opportunities for folks who don’t panic.
Birdman, as G Gordon says, we have to agree to disagree I don’t think what’s happening now has happened ever except maybe in the early ‘30s. The downfall of our largest financial houses is unreal. The amount of bogus junk they were holding is amazing. The Fannie and Freddie mess is nothing but pitiful in that quasi-government institutions were allowed to over-extend and then hide the poop due to lack of oversight. What really stinks is those in charge KNEW and did nothing about it. What did they think was going to happen? That Tinkerbell was going to sprinkle them with pixie dust and spirit them away to Neverland? What a bunch of sleazebags!
AIG is next; who’s after that? More banks?
Totally agree that there will be some great buying opportunities after the dust settles, but I surely wouldn’t put my money down right now. But, then again, I’m not a risk taker, either.
Seahorse, I will concede that many of your points are excellent! I guess I should have been more specific above. It happens every few years or so but it’s never exactly “the same.” This time, a “perfect storm”, if you will, hit hard. Our accounting principles have allowed some companies to over-exaggerate their earnings/holdings/worth to the point that, when the music stopped, they got caught. I would have hoped that this sort of thing would have been prevented after Enron and WorldCom but, history tends to repeat itself. At the same time, we had the deleveraging of the market and the housing/mortgage bust. We are in the midst of an economic war. The question is, will this re-establish a reasonable “floor” from which to begin anew or will this latest rash of victims (Lehman, Merrill, Fannie, Freddie, AIG[?]) have died in vein? Hopefully, we learn something from all this.
I don’t think what’s happening now has happened ever except maybe in the early ‘30s. The downfall of our largest financial houses is unreal. The amount of bogus junk they were holding is amazing. The Fannie and Freddie mess is nothing but pitiful in that quasi-government institutions were allowed to over-extend and then hide the poop due to lack of oversight. What really stinks is those in charge KNEW and did nothing about it. What did they think was going to happen? That Tinkerbell was going to sprinkle them with pixie dust and spirit them away to Neverland? What a bunch of sleazebags!
