Recession Fears Blanket Wall Street; Dow Plunges 300 Points

I am sorry that some people are upset that there are people who don't buy into the doom and gloom and recognize cyclical cycles when most investors sell based on emotion rather than any financial reasoning. I understand it may be hard to conceive of how anyone could not buy into the mass media mentality and *gasp* make money off the markets by trading smartly.

You let me know when I start boasting though - you see, that would involve me proclaiming I made some X amount of money or shorted X stock. But I guess to the doomsday prophets, anyone who points out that this is a excellent time to buy stocks that are on sale must be boasting. Time to get informed folks.

But its OK. I understand it is much easier to think the government somehow is directing the economy and its much easier to blame people based on political ideology. It is much, much harder to accept that the economy goes up and down in cycles - and as much as you want to blame the opposing political ideology for it (or everyones favorite, that big ambiguous "Corporate Greed") - your just wrong.

It'll be interesting to see who gets the credit when it goes back up. Usually people will give the credit to whoever is of their own political ideology.

[edit on 18-1-2008 by LightinDarkness]

I heard Cramer say tonight on mad money that there is a looming bank insurers crises and that if the government doesn't act quick to buy(?) these defunct insurers out we could have an Armageddon banking crises in weeks (or even days). He mentioned that the stock market could drop 2000 points rather quick and that we would go back into the dark ages (1800s he said) if the government doesn't take certain action SOON! I couldn't believe that I was hearing someone in mainstream media admitting these things.

reply to post by whatsup


Why would you be surprised to see this reported? The main stream media LOVES doom and gloom. They'll be predicting armageddon and the end of the world every chance they get. I would be surprised if they WERENT predicting doom and gloom, as they have been since about August. Need lots of armageddon type stuff to fill up the 24 hour live news cycle nowadays.

reply to post by whatsup


Yes I read an article on this before, provided by a member, I believe that after the initial market housing crash, the credit followed, auto sales, retailers and so on and on.

We have so many houses going for foreclosure that the housing insurance business is going to come down also.

If people default on mortgage payments that means that they have not money to pay for anything else attach to their mortgages.



[edit on 18-1-2008 by marg6043]

if it gets as bad as some are predicting, you'll know about it when the people start rioting and burning the banks and government buildings down. '


What else have they to loose once they've lost it all?

No house, no job, no cash or any line of credit available.....what would you do?

Originally posted by JacKatMtn

Recession Fears Blanket Wall Street; Dow Plunges 300 Points

www.foxbusiness.com

The Dow lost another 300 points and the S&P fell 2.9% to its lowest level since October 2006 on a series of major news and economic reports that all raise serious questions about the direction of the economy.

The industrial average has now fallen more than 1,000 points 2008.

(visit the link for the full news article)


Related News Links:
www.thest reet.com

This is only the beginning. Please dock my user account for a short answer. -----------PC

Originally posted by infinite
It's getting much worse

Bond insurers spark new credit-crisis fears

Shares in Ambac Financial and MBIA, the world’s biggest bond insurers, fell 65 per cent and 40 per cent, respectively, after Moody’s Investors’ Service raised the possibility that Ambac might lose the triple-A credit rating on which the insurers depend.

Credit crunch enters new phase

Those companies won't be the only thing that will lose triple-A credit rating.
Try this gigantic company.

Moody’s says spending threatens US rating

The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said on Thursday.

The warning over the future of the triple-A rating – granted to US government debt since it was first assessed in 1917 – reflects growing concerns over the country’s ability to retain its financial and economic supremacy.

Since 1917? That can't be good. I know Moody's is not to be trusted, but still.

Originally posted by infinite
Take a look how bad it is in the UK

Investors bale out of Britain

The pound has plunged and stocks are officially in a bear market, but there are still ways to profit

The FTSE 250 index of medium-sized firms – a better indicator for the state of the British economy than the main FTSE 100 index because it contains more domestic businesses – has now dropped 20% since its peak in early June. The Footsie is down 6% since then and 4% since the start of the year.

He said: “Last month saw close to the biggest single monthly drop of the pound since the exit from the exchange rate mechanism at the start of the 1990s, and suggests that the world is developing a different view of the UK. This seems justified as there are lots of reasons to be bearish on the pound.”

In a dramatic reversal to last year, sterling dropped to $1.9575 last week, its lowest level since March. It has slid 8% in the past two months from $2.11, its highest since 1981. The fall against the euro has been equally dramatic: from 70p to 75p.

This might explain my own question. Why Brown so eager to sell to China.
Brown tells China: Invest in UK

reply to post by whatsup

I heard Cramer say tonight on mad money that there is a looming bank insurers crises and that if the government doesn't act quick to buy(?) these defunct insurers out we could have an Armageddon banking crises in weeks (or even days).

Thanks for posting the Cramer commentary whatsup...he's right this time. I don't follow him closely...only seem to catch his more outrageous moments...but it's good to see some form of public disclosure taking place. The scale, and lethal potential of credit default swaps isn't even a blip on MSM radar.

What we collectively call the Subprime Crisis, began with the unraveling of one tiny German bank (IKB) back in July...but it's only a part of the problem. World central banks know this, the US Fed knows this, Secretary Paulson knows this...and apparently Jim Cramer knows this. The real problem, and the hidden focus of failed emergency measures since August, is the potential unwinding of Kajillions in unregulated, over-the-counter credit derivatives.

PIMCO's Bill Gross isn't known for frivolous rhetoric.

Garden variety recession? I don't think so

Edit: Props to cpdaman & a couple other posters for bringing this issue to light 6 months ago

[edit on 19-1-2008 by OBE1]

reply to post by whatsup


Cramer is right, sadly, the central banks have not taken the insurance companies into account.

He is right, we have days.

~ Educational Purposes Only ~

"The Kondratieff Wave - is an excellent way to get a good overall understanding....

...as well as getting a good picture of both the US and the global macro economic outlook. ..."
((snip from the page linked below))

www.fiendbear.com...

reply to post by St Udio


A very informative read

btw, I've find the video on CNBC about the insurance companies facing bust, which will collapse the financial system..

Cramer: "we have weeks, if not, days"

A question asked to Cramer..
Depression imminent?

[edit on 19-1-2008 by infinite]

More to read about the annalist are saying about our economy.

America: Losing Our Status as an Economic Super Power

American today is going deeper and deeper into debt. At the same time, jobs in fields like manufacturing and IT are being outsourced to low-wage countries overseas at an alarming rate; this current course will devastate our economy and result in our fall from grace as the world’s economic superpower.

www.managementtoday.co.uk...

Scramble for cash

Devastated by tightening credit markets and the mortgage mess, Wall Street firms have sent out an S.O.S.

Their cries have been answered in large part by overseas investors, which have agreed to inject billions of dollars into America's biggest banks

money.cnn.com...

US economy has lost momentum; recession fears persist: Somber Fed

WASHINGTON: Retailers, home builders and many manufacturers should brace for even more rough times ahead, a somber Federal Reserve suggests amid growing fears that the US might be sliding into recession.

www.dailytimes.com.pk...

Our economy is a house of card and is starting to crumb from the top to the bottom rather than from the bottom to the top.

We regular Americans are at the bottom of the house of cards. When the federal reserve ask the Government intervention is because this whole mess is about to hit he American citizens right on the head and the repercussions of this is something that can manifest in many ways.

Can somebody see riots already starting? Or our government has taken all the step necessary to subdue the population because it knew what it was coming a long time ago.

In a bid to save the world's largest economy from recession, U.S. President George W. Bush and central bank chief Ben Bernanke yesterday endorsed a $100-billion stimulus package as the spreading housing mess continued to hammer banks, consumers and investors.

www.theglobeandmail.com...

Yeah, I was watching the weekly recap on CNBC last night, and the analysts all agreed that Tuesday, Monday being MLK Day here in the states, could be explosive due to the expiration of built in market protection in options. The options expired yesterday.

reply to post by marg6043


marge6043, what was that thread your dear old friend infinite made about China..

2008: The year of a new superpower

We are learning something in early January and that China is becoming very powerful in her economy. Our Prime Minister has basically gone to the Chinese with cap-in-hand to beg for them to invest in the UK economy.

It's interesting that European media do refer to China as a superpower, not just economic, and the US does not. Our politician's use the term too. Even though the Chinese are still behind the US, they can still be seen as a superpower.

The Chinese sovereign fund is an example of their wealth and economic might.

sits an waits for ATS members to yet again deny Chinese economic superpower

reply to post by infinite


Yes my friend,

Remember when we talk here in ATS a while back how China will take over the US?

But people had the wrong Idea and thought that it was by war, China will surpass US and it will be with not weaponry of any kind.

China a comunist nation that stayed in isolation for so long now having the mighty US and devoloping countries begging for money.

I wonder what the patriots will think about this now.

China's reserves hit $1.53 trillion

Country's central bank says foreign exchange reserves added $461.9 billion last year. China's foreign exchange reserves hit $1.53 trillion at the end of 2007, up 43 percent from the end of the previous year, the central bank said Friday.

The bank said in a statement on its Web site that $461.9 billion was added to the country's foreign exchange reserves in 2007.

money.cnn.com...

This in comparizon to this . . .

U.S. Consumer Debt Rose $15.4 Billion in November

www.bloomberg.com...

China has a huge "red cheque book" that our economies are becoming very dependent on.

As I've always said on ATS, China does not need to beat US military just economically. Remember the Cold War? it was economies, that's how the West defeated the Soviets. Capitalism.

With all those US treasuries in her purse, China has the upper hand.

Like what Chinese said "Even a thousand miles long road, starts with a small single step"

The ONLY economy superpower People's Republic of China needs markets for it's industry, so they will bail USA for sure. But this bail out will cost the yankz arm and leg in long term.

Yankistan is populated by increasingly dumbed sex obssessed teens incapable of anything(thus losing their jobs ) , and indeed turns into idiocracy

AMBAC - MBIA - ACA

WSJ and FT on How Far Down is Down, Exactly? (Bond Insurer/Counterparty Risk Edition)

...At the center of these concerns is a vast, barely regulated market in which banks, hedge funds and others trade insurance against debt defaults....called credit-default swaps, in which one party, for a price, assumes the risk that a bond or loan will go bad....

"You are essentially counting on the reliability of strangers" to pay up on their contracts, notes Warren Buffett, the Omaha billionaire. In some cases, he says, market players can't determine whether their trading partners have the ability to pay in times of severe market stress. Full Text

That's because after being traded about and reshuffled on the OTC market...it's impossible to know who your trading partner is...and the derivative amount can end-up being multiples of the original face value of your bonds. Through rampant speculation, and investors seeking fail-safe returns on sketchy paper, the initial risk associated with below investment grade bonds originated in New Jersey for example...has literally been spread across the planet.

History might record a domino effect in the CDS market as the defining; "I'm coming to join you, Elizabeth!" moment for the entire US financial system, and beyond. Tenuous at best. Imagine one bounced check at some obscure Modesto credit union...bringing down the entire US banking system.


Posted today at StockHouse: Adrian Douglas.

reply to post by manson_322


Wow where do I start here but first off you underestimate the intelligence of our people remember isnt it our people who created this site? Are we not the ones who are talking about all of this and may I mention freely? I have my problems with my government but when you start dogging on the American people this is where I draw the line...Another thing is ..is there anything wrong with sex? Frankly I think we wouldnt have as many problems in the middle east if the arabs were having more sex. They kill themselves to meet virgins for gods sakes doesnt that tell you anything?

Now with that being said in regards to this post..you would think China has the upper hand by holding all of our debt but in reality they do not. Just like when you take a loan from the bank for a house and the house loses half of its value you can give the house back to the bank and they are left holding the bag. Kinda what is going on right now with this housing crisis...people are seeing their values plummet so what do they do they give it back to the bank. Hey why not? Now I think that we will be at war with China because just like what happened to the knights templar Ill give you a brief overview but the king of france owned them a ton of money so instead of paying them back he had them all killed...wiped out the debt completely...Im afraid to say this might end up happening to us. Now as far as the economy get ready for a bumpy ride because 2008 will be a crappy year.