News What is wrong with the US economy? Part 2

[nuby]

How long till grocery prices come down? Is it really a crisis when the value of the dollar increases?

 

[Astronuc]

How long till grocery prices come down? Is it really a crisis when the value of the dollar increases?

Well, grocery prices should be coming down with the drop in oil/fuel prices, but at the same there's an upward pressue due to the cost of commercial paper. An increase in the value of the dollar is good for bringing down oil prices, but it's not good for exports. However, even with the dollar down, US exports have not surged and the trade imbalance is still strongly negative, i.e. the US continues to import far more than it exports.

 

[Astronuc]

Downward pressure on stock markets. Asian/Pacific Markets got hammered again.

At about 0600 EDT (US)

European Stock Indexes

DJ Euro STOXX50  2,714.17    -165.28  -5.74%  
FTSE Eurotop     2,053.12    -112.62  -5.20%  
FTSE-100         4,418.28    -186.94  -4.06% down as much as 8% 
FTSE-Techmark    1,247.78     -48.19  -3.72%  
FTSE-All Shares  2,244.52     -88.76  -3.80%  
 
DAX              5,006.45    -320.18  -6.01% down as much as 11%
MDAX             5,705.76    -284.87  -4.76%  
CAC40            3,543.08    -189.14  -5.07% down as much as 10%
SBF 80           3,774.54    -185.69  -4.69%  
 
Asia Pacific Stock Indexes

NIKKEI 225       9,203.32    -952.58  -9.38%   
NIKKEI 300         184.59     -16.20  -8.07%   
NIKKEI OTC       1,127.83     -51.77  -4.39%  
               
HANG SENG       15,431.73  -1,372.03  -8.17% 

ASX ALL Ordin    4,369.80    -228.10  -4.96%  
ASX MIDCAP 50    4,176.70    -237.80  -5.39%  
ASX 100          3,594.10    -188.40  -4.98%

U.S. stock futures point to more losses Wednesday as the march lower in worldwide stock markets looks set to continue.

European shares slump as global recession fears continue to rock markets. British banks mixed after a 50 billion pound government plan is announced.
• London tumbles to near 5-year low
• Darling unveils 50 bln U.K. bank plan

Costco sees 7% profit rise
The largest U.S. warehouse club operator sees a fourth-quarter profit rise as it aims to lure shoppers stung by the downturn.

 

[Astronuc]

Top News from Forbes/AP
Fed Orders Emergency Rate Cut To 1.5% (AP)

http://www.forbes.com/topstories/feeds/ap/2008/10/08/ap5523508.html

A commentator mentioned last night that if Bernanke was planning to reduce the Fed interest rate, then he out to do it 'now' and not wait for the upcoming Fed meeting. Looks like Bernanke did that just that.

The European stock indexes rally on the Fed action and coordinated action among central banks. I wonder if Benanke and Paulson slept last night.

At about 0800 EDT (US).

London     4,642.39   37.17 
Paris      3,723.41   -8.81 
Frankfurt  5,275.06  -51.57 
DJ Stoxx     238.98   -1.74

 

[mgb_phys]

This has me slightly confused, you have a problem caused by too many cheap mortgages and easy credit, savers are nervous about keeping their money in banks.
So the solution is to lower interest rates!
Is the idea that everybody will now take out loans to buy SUVs and spend the country out of a recession?

 

[OmCheeto]

This has me slightly confused, you have a problem caused by too many cheap mortgages and easy credit, savers are nervous about keeping their money in banks.
So the solution is to lower interest rates!
Is the idea that everybody will now take out loans to buy SUVs and spend the country out of a recession?

Could be. Perhaps this thread should be merged with the "Ask a stupid question" thread, based on the fact that the solutions to the problem so far are only eliciting sarcastic rhetorical questions:

WAMU is still sending me "pre-approved" credit applications. "0% fixed APR on Purchases until April 1, 2010. When I Transfer a Balance NOW!". And a choice of 6 card designs. Wooo!

Why is a failed bank trying to take on more debt? Is the collapsing banking industry just a scheme to eliminate all of the banks except for one? Such that they don't have to spend $3 billion a year on postage trying to get us to switch lenders?

$0.25 presort standard postal rate(estimated)
3 credit card junk mail per week(based on me)
52 weeks/yr
80,000,000 households
$3,120,000,000 cost for a year of credit card junk mailings

 

[mgb_phys]

It wasn't (that) sarcastic.
Traditionally you cut interest rates to allow companies to borrow money to invest and expand. At the moment you can't borrow money anywhere for anything.
The downside of low interest rates is inflation since lower mortgage payments and cheap credit allows people to buy more stuff.

It also weakens you currency, although not presumably if everybody does it at once.

 

[Astronuc]

$0.25 presort standard postal rate(estimated)
3 credit card junk mail per week(based on me)
52 weeks/yr
80,000,000 households
$3,120,000,000 cost for a year of credit card junk mailings

That's about right. I get solicitations for home equity loans, credit cards, investment accounts, insurance - and that's 2-3/day - blecchhhhh!

I junk mail, and those stupid phone calls - even though we're on a do not call list.

 

[Astronuc]

This has me slightly confused, you have a problem caused by too many cheap mortgages and easy credit, savers are nervous about keeping their money in banks.
So the solution is to lower interest rates!
Is the idea that everybody will now take out loans to buy SUVs and spend the country out of a recession?

The banks borrow at 1.5-2% and loan out 6-14%, so it's the spread on what they borrow and what they loan that counts, and that doesn't include points (fees) up front.

 

[mgb_phys]

The banks borrow at 1.5-2% and loan out 6-14%,

But the problem for the banks at the moment is that they can't borrow anythign at all - that's the liquidity crisis. The only people they can borrow from is savers, and savers who are already nervous about having their money in banks aren't going to be rushing to put it back if interest rates are cut.

 

[Art]

The banks borrow at 1.5-2% and loan out 6-14%, so it's the spread on what they borrow and what they loan that counts, and that doesn't include points (fees) up front.

That's the crux of the problem. Very few banks will lend any money to other banks and the little that is lent is at an historically high interbank rate of >6%. It is hard to see how a drop in the Fed rate will translate into cheaper loans for existing customers much less new ones.

 

[Count Iblis]

Yesterday it was announced that the FED will give loans to companies themselves.

Also, if you nationalize the banks, the government can set the interest rate themselves.

 

[Astronuc]

Yesterday it was announced that the FED will give loans to companies themselves.

Also, if you nationalize the banks, the government can set the interest rate themselves.

The Fed is looking at buying commercial paper, which are effectively direct loans to businesses. The entity, Office of Financial Stability, established by the Treasury/Fed will buy some bad debt (including mortgages).

http://www.federalreserve.gov/newsevents/press/monetary/20081007c.htm

October 7, 2008, 9:00 a.m. EDT

The Federal Reserve Board on Tuesday announced the creation of the Commercial Paper Funding Facility (CPFF), a facility that will complement the Federal Reserve's existing credit facilities to help provide liquidity to term funding markets. The CPFF will provide a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV) that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. The Federal Reserve will provide financing to the SPV under the CPFF and will be secured by all of the assets of the SPV and, in the case of commercial paper that is not asset-backed commercial paper, by the retention of up-front fees paid by the issuers or by other forms of security acceptable to the Federal Reserve in consultation with market participants. The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility.

This is 'shock economics'.

See - http://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 - the details are still evolving.

http://en.wikipedia.org/wiki/Troubled_Assets_Relief_Program
http://en.wikipedia.org/wiki/Office_of_Financial_Stability

In the Wikipedia article - Investor Jim Rogers called the plan "astonishing, devastating, and very harmful for America". Anyone who knows Rogers, knows he's a contrarian.


The guy to watch now is Neel Kashkari - besides Paulson and Bernanke.
http://en.wikipedia.org/wiki/Neel_Kashkari


BTW - Remain Calm. Don't Panic. The economy may be on its knees, but it and we are not down and out.

Keep a towel nearby.

 

[mgb_phys]

The Fed is looking at buying commercial paper, which are effectively direct loans to businesses

But presumably only big businesses issue them so it's just a bailout of GM, GE and the usual suspects - it does nothing for a small business that has had it's overdraft called in or can't get a loan to fund expansion.

 

[Astronuc]

But presumably only big businesses issue them so it's just a bailout of GM, GE and the usual suspects - it does nothing for a small business that has had it's overdraft called in or can't get a loan to fund expansion.

GE has done a lot on its own to bolster its capital. Warren Buffett has taken a $5 billion position in GE and GE is issue stock. GM is another story - they are getting a lot of help - but I believe so is Ford and Crysler. I'm not sure about the others in the auto industry.

Meanwhile -

NEW YORK -- The number of Americans joining the unemployment line has risen to levels we haven't seen since the last time the U.S. was in a recession, in 2001. And with the landscape of the Wall Street banking system rapidly shifting under the weight of the subprime mortgage crisis and resulting credit crunch, it's no surprise many Americans are concerned about job stability.

They should be. Employers announced plans to cut 95,094 jobs last month and that doesn't include many that are expected to shake out from all the consolidation happening among major financial institutions.

And about another $1 trillion evaporated from retirement accounts for a total of nearly $3 trillion lost in the past two weeks. In theory, it could return if and when stocks recover.

I think the unemployment numbers need scrutiny, because I believe they are under-reported in order to keep the number artifically low. This is one the many problems with respect to gauging the health of the economy that I've seen over the last 20+ years.

 

[Astronuc]

What is wrong with the US economy?

Congress?

Pelosi says $150B economic stimulus plan needed
http://news.yahoo.com/s/ap/20081008/ap_on_go_co/meltdown_pelosi

DENVER - House Speaker Nancy Pelosi said Wednesday that a $150 billion economic stimulus plan is needed now because of the faltering economy and she may call the House into session after the election to pass it.

Pelosi told reporters that the stock market meltdown, which has caused an estimated $2 trillion loss from pension funds, was a factor in her recommendation for a second stimulus bill. The first relief plan sent out $600-$1,200 tax rebate checks to most individuals and couples this year.

The House did pass a $61 billion economic aid proposal last month before lawmakers left Capitol Hill ahead of the Nov. 4 election. But a similar plan failed to pass the Senate. President Bush had promised a veto anyway.

 

[Astronuc]

U.S. May Take Ownership Stake in Banks!
http://www.nytimes.com/2008/10/09/business/economy/09econ.html

WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

The Treasury plan was still preliminary and it was unclear how the process would work, but it appeared that it would be voluntary for banks.

The proposal resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.

The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.

. . . .

Hmmmm. Is socialism creeping into the American capital markets? I have to wonder then about limits on executive and managment compensation.

http://dealbook.blogs.nytimes.com/2008/10/09/us-may-take-ownership-stake-in-banks/

 

[mgb_phys]

Hmmmm. Is socialism creeping into the American capital markets?

No the government is using debt to buy-up companies at rock bottom prices when they are forced to sell - it's pure 80s corporate raider. Gordon Gecko for president?

 

[Astronuc]

No the government is using debt to buy-up companies at rock bottom prices when they are forced to sell - it's pure 80s corporate raider. Gordon Gecko for president?

Speaking of corporate raiders - where are they? I don't hear much about Carl Icahn, Kohlberg-Kravis-Roberts, or any of the raiding parties in all this mess. Why are they out there rescuing/raiding banks and other financial institutions.

Interestingly Warren Buffett (one of America's most successful investors) is advising Obama - not John McCain.

 

[Astronuc]

Speaking of executive compensation - If This (Financial Crisis/Bailout) Won’t Kill the Bonus, What Will?
http://dealbook.blogs.nytimes.com/2008/10/07/if-this-wont-kill-the-bonus-what-will/

By ANDREW ROSS SORKIN

RIGHT away, Henry A. Waxman lit into Richard S. Fuld Jr. on the one issue that most inspires a passionate debate: executive compensation.

Mr. Waxman, chairman of House Committee on Oversight and Government Reform, was running a hearing on Capitol Hill on Monday about the latest series of bank failures. He started his questioning of Mr. Fuld, Lehman Brothers’ chairman, not by asking about what led to the firm’s bankruptcy, but by pointing at a chart showing that Mr. Fuld had made some $480 million between 2000 and now.

“That’s difficult to comprehend for a lot of people,” said Mr. Waxman, a Democrat from California. “I have a very basic question, ‘Is this fair?’ ”
. . . .

Base salaries for senior managing directors are often no more than $200,000. The eye-popping money is supposed to come at year’s end, after the profits have been tallied.

At its peak, in 2006, Goldman Sachs gave away $16.5 billion in compensation, an average of $623,418 for each employee.

Of course, the opposite is also supposed to be true: when profits come down — or are nonexistent — bonuses are supposed to plunge, too. There has been an unusual understanding between investment banks and their shareholders that most firms will spend 40 to 50 percent of their revenues on compensation, perhaps the only industry in the word with such a high ratio.

With Wall Street in the doldrums, bonuses for 2008 could drop 50 percent from the previous year, rivaling the fall in 2003, Thomas P. DiNapoli, the New York State comptroller, predicted last week. He said he expected 40,000 employees on Wall Street to get pink slips. You can extrapolate those numbers across the nation’s finance industry and start to understand why the stock market keeps falling. (To make matters worse, for every person in finance who loses a job, Mr. DiNapoli said, three other people are laid off.)
. . . .

Take a look at what happened to banks in 2007: Citigroup, for example, reported a profit of $3.6 billion, down 83 percent from the previous year. Many other firms saw similar declines. Yet bonuses across Wall Street declined only 4.7 percent from the year before. The payout was $33.2 billion, according to Mr. DiNapoli.
. . . .

And these guys now need help?

Bonfire of the Vanities Redux

 

[Jimmy Snyder]

No the government is using debt to buy-up companies at rock bottom prices when they are forced to sell - it's pure 80s corporate raider. Gordon Gecko for president?

When Gordon Geckos (that is real ones, not fictional ones) raid, that's capitalism. When the gov't does it, it's socialism.

 

[Astronuc]

When Gordon Geckos (that is real ones, not fictional ones) raid, that's capitalism. When the gov't does it, it's socialism.

What's the diff? They both use other peoples' money.

Anyway - more signs of how wonderful the economy is doing:

Thirty-one states are experiencing a dive in revenue and may be asking for help.

http://finance.yahoo.com/loans/article/105909/States-That-Can%27t-Pay-for-Themselves

The ten most distressed states. Budget gaps given in % of total budget.
California
Budget gap: 22%
Gap: $22.2 billion

New York
Budget gap: 9.8%
Gap: $5.5 billion

Florida
Budget gap: 19.9%
Gap: $5.1 billion

New Jersey
Budget gap (as a % of the total budget): 7.7%
Gap: $2.5 billion

Arizona (Hey, Johnny!)
Budget gap: 19.9%
Gap: $2 billion

Georgia
Budget gap (as a % of the total budget): 8.7%
Gap: $1.8 billion

Nevada (so the gambling doesn't help)
Budget gap: 16%
Gap: $1.2 billion

Maryland
Budget gap (as a % of the total budget): 7.2%
Gap: $1.1 billion

Alabama
Budget gap (as a % of the total budget):
9.5%
Gap: $784 million

Rhode Island
Budget gap: 13.1%
Gap: $430 million

And towns and school districts are having problems too!

 

[Jimmy Snyder]

What's the diff? They both use other peoples' money.

Look to the Soviet Union for the diff. People take care of the the things they own.

 

[turbo]

And towns and school districts are having problems too!

That's a problem that is falling on home-owners here. As prices of basics rise, jobs disappear, and wages fall (in real dollars), defaults on property taxes increase. In Maine, property taxes pay for the school districts (about 50% of all property taxes), municipal government services, and the town's portion of the cost of county government, including the sheriff's department and jail.

As property tax defaults increase, town revenues decrease, and the towns' tax rates have to be increased to keep up. Our tax bill this year took a substantial jump. Last winter was particularly brutal, and many towns had exhausted their road-maintenance budgets (salt, sand, overtime for plow-truck drivers and equipment operators) before winter was half-way through. As a result, many small towns are in trouble. Unlike the federal government, towns are not allowed to run deficits, so shortfalls = reduced services. Apart from a gravel road that was badly washed out in the spring and had to be rebuilt, there has been no improvement to our town's infrastructure this year, and precious little maintenance. Some day this will come back to bite us.

 

[mgb_phys]

The crisis is starting to have a real noticeable effect http://news.bbc.co.uk/2/hi/business/7660409.stm

 

[jal]

Thirty-one states are experiencing a dive in revenue and may be asking for help.

They are all bigger than Iceland.
Did those state overspend as much as Iceland?

 

[OmCheeto]

Anyway - more signs of how wonderful the economy is doing:

Thirty-one states are experiencing a dive in revenue and may be asking for help.

Oh and look at this, next month we get to vote on whether or not to bankrupt our state:

http://www.oregonlive.com/politics/oregonian/index.ssf?/base/news/1219200915204700.xml&coll=7"
A November ballot measure that would remove the $5,600 limit on federal income taxes that can be deducted on Oregon tax returns would cost the state budget $1.1 billion to $2.4 billion every two years, according to new estimates.

And who does it benefit? Rich People! (defined as people making more money than me.)
Looks like intrastate pork barrel to me.

No on 59!

------------------------------------
this has been an unpaid advertisement by the OmCheeto for president committee.
i aproved this message.

 

[Jimmy Snyder]

Here's the real skinny from the People's Democratic Republic of Northern South Jersey. My neighbors on both sides are moving out.

On one side is a successful lawyer. His wife is a horse riding enthusiast and they bought a house with facilities for keeping and riding horses. He has been trying to sell his house for about 6 months now. His asking price is way above the market so I guess he can afford to wait it out. He told me that he would sell it cheaper, but his wife won't have it. No panic here.

On the other side is a contractor. He does odd-job type house repair in the neighborhood. When he bought the house it was not exactly a fixer upper, but because of his skills, he treated it like one, fixing it up to be worth more than he paid for it. However, business has been too slow and he is going to foreclosure because he can't make the payments. It's a sad story. It is the only hard case I know of in a neighborhood of 100 or so homes. We live in the nicer part of town and I don't know what the figures are for the rest of the town.

My neighbor across the street was also a contractor and a successful one, but he retired years ago. He is putting a lot of money into his house just now, replacing windows, redoing the exterior and putting on a new roof. He is doing some of the work himself, but he is not in the best of health. I think some of the people helping him are former employees of his contracting business. Anyway, this upgrade offsets the loss a little bit.

That's it. The neighborhood is stable otherwise.

 

[Astronuc]

The crisis is starting to have a real noticeable effect http://news.bbc.co.uk/2/hi/business/7660409.stm

They just need to start denominating in 1000's or kilo-dollars. So then the debt would be reduced to less the $k 10 billion (kilo-dollars) instead of $ 10 trillion. See - it's real simple to manage the debt.

 

[mgb_phys]

They are all bigger than Iceland.
Did those state overspend as much as Iceland?

Worse, they did overspend!
Iceland didn't really overspend, it's just that a lot of global banks have offices in Iceland - it's a bit like deciding the Wall St bailout should be entirely paid for by Manhattan tax payers.

 

[Astronuc]

http://news.yahoo.com/nphotos/Zero-Dollar-Bill/ss/events/bs/100808zerodollargilb

Always look on the bright side of life - Monty Python, The Life of Brian

 

[Astronuc]

GM shares fall to lowest level since 1950
http://biz.yahoo.com/rb/081009/business_us_gm_shares.html
Thursday October 9, 11:53 am ET

DETROIT (Reuters) - General Motors Corp (NYSE:GM - News) shares fell as much as 21.6 percent to their lowest level since 1950 on Thursday amid financial market turmoil and the car maker's report of European sales declines through the first nine months of 2008.
. . . .
GM, whose shares fell as low as $5.42 on the New York Stock Exchange, blamed the credit crisis and inflation for hurting consumer confidence in Europe, where its sales have declined 1.9 percent in 2008 through September.

GM, the largest U.S.-based automaker, posted a $15.5 billion net loss in the second quarter and announced plans in July to cut costs by about $10 billion. The company has been restructuring in North America to meet increasing demand for more fuel-efficient vehicles.

An investment banker who declined to be identified attributed the share decline to elimination of short-selling restrictions on the shares that had put the equity value out of balance with bond and credit-default swaps values.
. . .
Ford shares fell 20 cents, or 7.5 percent, to $2.46 on Thursday. Ford stock had reached its lowest level in a quarter century on Wednesday, falling as low as $2.10.

The bailout bill has $25 billion in tax credits for the automakers, but if they are losing money, it's not clear to me how tax credits can help.

A local analyst is predicting a deeper, more severe depression than the Great Depression of hte 1930's, and he also predicts the breakup of the United States. His argument is that the US is too big to be managed by a central government. He plans on doing a presentation to the Vermont Secessionist movement soon.

IMO - those prediction are not necessarily going to happen, but the could if enough people chose to let that happen.

 

[jal]

As a side line ... problems with the compensation structures
comment/question.

Is there any law that prevents taking a commission? (Golden parrachutes)
Is there any law that would be broken by going to a spa? (Incentive programs)
What laws did the financial "big wigs" break? (huum They probably had an input into the making of those laws)
How can you send someone to jail or punish them for not breaking the law?
-----
As far as I know ... it isn't a crime to skim, (take a percentage on a transaction), and then to assume that the value of the item, (in transaction), has a greater value, after the transaction.
-------

 

[mheslep]

As a side line ... problems with the compensation structures
comment/question.

Is there any law that prevents taking a commission? (Golden parrachutes)
Is there any law that would be broken by going to a spa? (Incentive programs)

That last demonstrates the fundamental problem with broad attempts to cap executive pay - they can simply take compensation as fringe benefits. Indeed, that mechanism is how we entered into the current US employer based health care system. IMO, executive pay has to be controlled by the shareholders who can look can take time to look at the books and executive total compensation. Government should be involved only to demand the facts are transparent as possible.

 

[mgb_phys]

A director has a legal duty to 'enhance shareholder value' - in theory anything they do must have the intention of raising shareholder value or they face criminal penalties.
Of course they could always argue that them being well manicured means they can do their job better, which is good for the shareholders!

This has been tested in court - if for instance a product recall would cost more than the compensation paid to the families of victims of a lethal product. Then the company has a legal duty NOT to order a recall, unless they can claim that bad publicity would harm future sales.
The view taken by the courts is that poor widows and orphans have invested in this company, and by not being merciless capitalists you are defrauding them.

 

[Art]

As a side line ... problems with the compensation structures
comment/question.

Is there any law that prevents taking a commission? (Golden parrachutes)
Is there any law that would be broken by going to a spa? (Incentive programs)
What laws did the financial "big wigs" break? (huum They probably had an input into the making of those laws)
How can you send someone to jail or punish them for not breaking the law?
-----
As far as I know ... it isn't a crime to skim, (take a percentage on a transaction), and then to assume that the value of the item, (in transaction), has a greater value, after the transaction.
-------

It is against the law to misrepresent your accounts through off balance sheet transactions to make it look as if you are making a ton of money to justify huge bonuses when in reality you are in deep trouble. Enron executives went to prison for this and I expect some high flying financiers will be going there too.

 

[Astronuc]

At 3:05PM ET: The Dow 30 Industrials are: 8,979.50 -278.60 (-3.01%)

GM down, also the oil stocks are down on falling oil prices.

 

[jal]

That last demonstrates the fundamental problem with broad attempts to cap executive pay

There is a fundamental problem that is greater than this.
NOW, The present system, ... The markets must have a "correction" every few years because of the "compensations" and "inflated assume" values.

Take the example of when you buy a new car ... the "correction" is immediate ... it is worth less than what you paid for it if you try to resell it immediately. You cannot "assume" that it is worth the same or more for five years, and then take the "correction" when you try to resell it.
Therefore, how do you remove the "need" to have market corrections (Adjust for the fees that have been taken by the middle men)?
The present "problem' is just a "correction" that been deferred for too long and is hitting harder than the previous corrections.
Without changing the compensation structures the "corrections" will keep happening.
--------

 

[Astronuc]

At 3:30PM ET - Dow 30 Industrials: 8,864.01 -394.09 (-4.26%)

Dow is taking huge swings by the minute. Another bad day.

Only 3 components IBM, Intel and McDonald's positive - and just barely.

 

[Greg Bernhardt]

DOW now down over 500

 

[Ivan Seeking]

This really is an economic Pearl Harbor! Buffet was right.

 

[Ivan Seeking]

The only prediction for a floor that I have heard was about 8200

 

[Astronuc]

DOW now down over 500

A really bad day!

At 3:46PM ET: 8,655.01 -603.09 (-6.51%)

The only prediction for a floor that I have heard was about 8200

So what constitutes a crash?

There seems to be little confidence in the stock markets right now.


Last Friday at about 1:10 pm the Dow as at 10773. And in less than 5 days it's fallen more than 2000 points.

 

[lisab]

Has anyone looked at their 401(k) yet? Yesterday a bunch of us at my work all worked up the guts and looked at the same time...

I'm down 30%, year to date, as of yesterday. Ouch. I still have a long way before I retire, but still...seriously...ouch.

 

[mgb_phys]

I'm down 30%, year to date, as of yesterday. Ouch. I still have a long way before I retire, but still...seriously...ouch.

Typically it takes less than 18months to recover after a 'crash' - and think of all the contributions you are buying this month at rock-bottom prices!

 

[Astronuc]

U.S. stock indexes slammed as GM, financials hit
Dow Jones Industrial Average off 5,000 points, or 37%, from year-ago peak

One year to the day after climbing to its peak of 14,164.53, the Dow Jones Industrial Average was down 397.76 points at 8,860.34, pushing the blue-chip index under the 9,000 level to under 9,000 for the first time since August 2003.

The Dow's late-afternoon level has it down more than 5,000 points, or 37%, from its year-ago high.

It's seems to be pulling a last minute rally.

 

[Borek]

-507 now.

 

[Astronuc]

Has anyone looked at their 401(k) yet? Yesterday a bunch of us at my work all worked up the guts and looked at the same time...

I'm down 30%, year to date, as of yesterday. Ouch. I still have a long way before I retire, but still...seriously...ouch.

Not yet. I have two - one is a guaranteed income fund. The other a mix. My colleague is down about 50%.

 

[Ivan Seeking]

In 1929, the Dow dropped about 43% in thirty days.

One year ago we were at about 14,000. We are now at about 8700 - down about 37% over the last year.

 

[lisab]

Typically it takes less than 18months to recover after a 'crash' - and think of all the contributions you are buying this month at rock-bottom prices!

Yep, I know. I'm still contributing the max amount...a bit nervously, though...