What is wrong with the US economy? Part 2

[Astronuc]

Dow 30 was down by 732.28 at one point (which just eclipsed the previous record low of 721 first day open after 9/11/2001), and flirted with a new 52-week low. It has recovered somewhat - climbing about 160 points.

 

[Art]

A number of european countries and US states have been caught adding antifreeze to wine, so you can't trust expensive products either!

It all adds up to a confirmation of the need for regulation and oversight. All of these diverse problems from the financial markets to food quality are a consequence of a lack of these in pursuit of free market economics.

 

[Astronuc]

Just before close:
Dow30: At 4:14PM ET: 10,365.45 -777.68 (-6.98%) I'm wondering if this is the close.
Nasdaq: 1,983.73 -199.61 -9.14%

Ouch that hurts someone!

I wonder how badly the Asian and European will do in the morning? Will they or the US market recover tomorrow?

 

[LowlyPion]

Just before close:
Dow -689.59 -6.02%
Nasdaq -199.61 -9.14%

Ouch that hurts someone!

I wonder how badly the Asian and European will do in the morning? Will they or the US market recover tomorrow?

Dow now showing -777.68 after the close.

 

[Astronuc]

I wonder if that's after hours - or it was delayed?

 

[LowlyPion]

I wonder if that's after hours - or it was delayed?

Probably delayed as it is technically after the close that it changed to that, but is no longer moving.

 

[turbo]

The markets will rebound. After a drop like this, there are bargains, and they will be traded heavily enough to offset some of today's losses. Realists in the market know that the bailout proposal was a potential windfall for the well-connected, and now that it is dead, they will stop factoring it into their buy-sell evaluations and buy into the bargains.

 

[Astronuc]

Marketwatch reported - Dow tumbled 777.60 points, or 7%, to end at 10,365 points, its biggest ever point loss.

If Congress doesn't come up with a bill, I don't see much of a recovery, if any. Look at the overseas markets and futures in the morning.


So much for strong fundamentals.

 

[LowlyPion]

Marketwatch reported - Dow tumbled 777.60 points, or 7%, to end at 10,365 points, its biggest ever point loss.

If Congress doesn't come up with a bill, I don't see much of a recovery, if any. Look at the overseas markets and futures in the morning.


So much for strong fundamentals.

You will be able to look this evening when the Asian Markets start - 9:00 PM Eastern.

 

[Topher925]

So exactly how screwed are we?

http://biz.yahoo.com/ap/080929/wall_street.html

The majority of my investments are in the stock market. I was really counting on that money to help me get through my PhD. But now I have lost about 40% (as of today) of it due to my bad decision making. Does anyone think the market will rebound within a couple years?

 

[LowlyPion]

Rosh Hashanah starts at sunset.

No Congressional action apparently until Wednesday

 

[Astronuc]

So exactly how screwed are we?

http://biz.yahoo.com/ap/080929/wall_street.html

The majority of my investments are in the stock market. I was really counting on that money to help me get through my PhD. But now I have lost about 40% (as of today) of it due to my bad decision making. Does anyone think the market will rebound within a couple years?

That's hard to say at the moment because it depends on what happens the next few days, and with the foreign markets, and ultimately with the stabilization bill that Congress is considering.

It also ultimately depends on how much bad debt there is in relation to the income. The US government is looking at a $400 billion deficit this FY and a similar one next year. How much of the economy strongly dependent on that is hard to say.

The housing problem is supposed to continue through the next quarter and maybe into next year. Also watch the unemployment trends the next 3-6 months.

If the sovereign funds pull their capital out of the US market - watch out.

Also - those derivatives and unknown financial instruments are unkown.

Now the equity markets have recovered after a fall like this, but that was before the current financial crisis when there was not so much uncertainty and the economy was not so over-leveraged. Keep in mind that the market stabilized all morning after it fell in the opening minutes.

 

[Art]

The only thing supporting the markets at this time is investors still believe a deal will be struck. If it becomes apparent none will be I would expect the indexes to drop like a rock spurred on by more bank collapses.

 

[LowlyPion]

The only thing supporting the markets at this time is investors still believe a deal will be struck. If it becomes apparent none will be I would expect the indexes to drop like a rock spurred on by more bank collapses.

I think that's already happened.

Tomorrow nothing will get done.
Wednesday either.

Thursday things will be going swell again.

 

[nuby]

Oil down a lot today.. and the dollar up. What are the chances we're headed for a "Great Deflation" .. If no bailout happens will the value of goods/services drop, and increase the value of currency worldwide?

 

[CaptainQuasar]

I wish I was a leprechaun.

I wish I was a leprechaun. That's what I was thinking last St. Patty's day, that I ought to get into the leprechaunin' business. If only I'd listened to myself.

 

[Astronuc]

Oil down a lot today.. and the dollar up. What are the chances we're headed for a "Great Deflation" .. If no bailout happens will the value of goods/services drop, and increase the value of currency worldwide?

Lower energy prices would cushion the downturn in the US economy - for consumers and energy users. For energy developers, e.g. oil and gas producers, it's not so good.

 

[LowlyPion]

Tokyo Stock Exchange

http://www.tse.or.jp/english/

currently off 4%-5%.

That might suggest another 400 500 points tomorrow on the Dow.

But Bush will speak in the morning at 7:45 AM.

That's got to make the sphincter tighten if he's going to talk before the markets open.

 

[Astronuc]

Bush gave a pep talk this morning before the markets opened.

Ummmm - it didn't help.

 

[Astronuc]

According to MarketWatch - S&P 500 futures rose 31.9 points to 1,150.70 and Nasdaq 100 futures added 34.25 points to 1,546.25. Dow industrial futures added 211 points.

Overseas markets also were performing relatively well after Monday's bruising. The Nikkei 225 tumbled 4.1% in Tokyo, but the Hang Seng closed higher and the FTSE 100 edged up 0.3% in London.

Overnight and this morning (0600 US EDT) -

Royal Bank of Scotland shares drop 7.5%, Barclays down 4.3% after US Congress rejects economic intervention.

Tesco's revenue reported up 13%.

Hang Seng and Indian Sensex markets up.

German DAX 30 index down 1.3% at 5,730.00
French CAC 40 index down 2% at 3,874.80

Volvo to cut 1400 jobs in Sweden and Belgium

 

[nuby]

For energy developers, e.g. oil and gas producers, it's not so good.

and don't forget the government, and our military/energy investment in middle east.

I'm not surprised the people (and congress) are doing the opposite of what GW Bush asks/wishes. Is anyone? The biggest joke of his presidency would be if "no bailout" somehow turned out to be the best option.

 

[Astronuc]

A rally this morning.


Meanwhile - Gas(oline) shortage plagues the Southeast
http://news.yahoo.com/s/ap_travel/20080930/ap_tr_ge/travel_brief_gas_shortage

My brother was apparently having trouble finding gasoline the past few days.

ATLANTA - Motorists are rising before dawn so they can be at the filling station when the delivery truck arrives. Some are skipping work or telecommuting. Others are taking the extreme step — for Atlanta — of switching to public transportation.

Across a section of the South, a hurricane-induced gasoline shortage that was expected to last only a few days is dragging into its third week, and experts say it could persist into mid-October. The Atlanta area has been hit particularly hard, along with Nashville and western North Carolina.

Those lucky enough to find gas are paying more than drivers elsewhere around the country.

"I've used up gas just looking for gas," said Larry Jenkins, a construction worker who pulled his red pickup truck into a Citgo station in Charlotte, N.C., on Monday. The sign said $3.99 a gallon, but the pumps were closed. Many filling stations in the area have not had gas for days.
. . .
The shortage started with the one-two punch of Hurricanes Gustav and Ike, which shut down refineries along the Gulf Coast. Now, more than two weeks after Ike, many refineries are still making fuel at reduced levels.

While other parts of the country get gasoline from a variety of domestic and overseas sources, the Southeast relies heavily on two pipelines that carry fuel from the Gulf of Mexico. Because the gasoline moves at just 3 to 5 mph, it can take up to 10 days to reach Atlanta.

And companies don't want to store it because that would cost profits.

 

[phoenixy]

As of Monday, Sep 29, DOW and NASDAQ are both lower than when Bush took office 8 years ago. But let's ignore stocks for a moment and look at some other economic indicators.

Are You Better Off Now Than You Were Eight Years Ago?

http://www.cepr.net/index.php/publications/reports/2000-2008:-are-you-better-off/

 

[Astronuc]

Yesterday the Dow Wilshire 5000 stocks lost about $1.2 trillion of value, but hey it's only money and if one waits long enough, the value of equities may recover.

Meanwhile - if one had good inside information:

Google jumped 4.4% in early trading.

Sovereign Bankcorp - jumped 91%. (could have made some good buckage there!)

Huntsman and National City both increased 54%.

Genworth was up 28%

and JPM and Citgroup rallied more than 10%.

 

[Art]

Here's a video highlighting the differences between what McCain said before and what he said after his epiphany moment in relation to the economy and de-regulation.

 

[LowlyPion]

Oil. We'd better not be at war over this? Doh! Because we could drill, drill, drill in Alaska instead? DOH!

https://www.youtube.com/watch?v=gVDCXpSD6Fk

 

[LowlyPion]

Here's a video highlighting the differences between what McCain said before and what he said after his epiphany moment in relation to the economy and de-regulation.

Thanks for the link. Brave New is apparently an attack arm PAC supporting Obama. They recently did the one asking about his medical records and the progress of his skin cancer that he is withholding.

 

[mheslep]

...His real opinion is that the Republicans couldn't deliver the votes that they said they could and are now painting it as a partisan issue. True that.

Crap that.

 

[Astronuc]

Stock futures are down ahead of the Senate vote.

So the markets may drop, then they'll probably rally if the Senate passes the bill. But then there is the House vote on Th or Fri.

October will be volatile like Sept.


Interestingly, since the markets recovered so easily, that might suggest that the government shouldn't intervene - but that could cause further instability.

Also - the big question nobody wants to ask - by intervention, is the government simply postponing the inevitable. This however means poking through the myth that economy appears stronger than it is. It's a bit like knowing a hurricane is approaching, but not preparing for, and then suffering because of the lack of everyday routine support.

Perhaps the biggest concerns are the actual debt and the fact that the US energy supply is largely outside the US, which is not good for an energy intensive economy.

 

[turbo]

Congress is STILL looking at a bailout, and they are STILL shooting for $700 billion, even though nobody can say how that figure was arrived at. I'm getting sick of this. The longer Congress dithers around, the more paralyzed the market will be. If they flatly reject any bailout, the market will stabilize, investors will buy up perceived bargains, and life will go on. Right now we've got a market full of hogs waiting to see which trough the bailout is directed to, and any rapid infusion of cash is going to cause a lot of instability, and possibly make matters worse as investors drop investments that are poorly positioned to suck up bailout money.

http://news.yahoo.com/s/ap/20081001/ap_on_bi_ge/financial_meltdown;_ylt=AhR3DeZP.c46xoCInh5xXNas0NUE