jdl51

ECRI: Economy Falling at Fastest Pace in 60 Years

Unemployment is just beginning to accelerate with thousands of new layoffs being announced daily. If any of the big three go under, or if all of them do, there will be unemployment in this country the likes of which we haven't seen in 70 years. With the housing market already under severe stress, foreclosures would increase even more than their already high levels. A few months ago the rest of the world was doing relatively well and could be expected to soften the blow by importing more of our industrial goods, but now one by one the European countries are falling into recession and China and Russia are slowing dramatically. Our ability to spend our way out of this mess is further hindered by the massive debt accumulations of the past eight years and especially of the past few months. The world's ability to absorb all this debt is questionable without significantly higher interest rates. All in all not a very good scenario for our new administration to find themselves in. In my opinion it will take years to work our way out of this mess IF everything goes right. Longer if it doesn't.

The Downfall of Keynesian Economics and the U.S. (Part 1 of 3)

I'm guessing that you're a republican and are trying to cover up the fact that instead of Keynesian economics, it's Freidmanian economics that has caused the current downturn. $7 trillion deficits for the past eight years is not Keynesian, nor is deregulation or non regulation of the financial industry Keynesian. These are all tenents of the Milton Friedman school of economics. The banking industry falsely and intentionally labeled their derivatives credit default swaps to avoid regulation and did not value them on their books properly, if at all. The current administration, a proponent of Milton Friedman style economics, did not attempt to correct the situation and when the housing market started depreciating it took the banks and their "financial weapons of mass destruction" with them. If basic Keynesian economics were being practiced since 2000, we would have had budget surpluses instead of massive tax cut induced deficits. It's a basic rule of Keynes that during good times we have surpluses and in bad times we spend those surpluses and go into deficit. With Friedman/Reaganomics we just get massive deficits year over year and let our children, grandchildren and great grandchildren pay the bill. Non regulation/huge deficits/tax cuts in good times, and now government ownership of the banking/auto/credit card industry are nowhere close to being Keynesian and I have to seriously doubt you've ever been to an economics class if you say that they are. Sounds like you're just another republican who can't take responsibility for the destruction of our economy that the policies of the past eight years have brought us.

The Case for Derivatives

What seems to have happened in the CDS markets is that they were deliberately structured to avoid regulation. They made investment banks tons of money when the underlying securities behaved themselves but increased risk exponentially when they didn't. From what I understand, they are like insurance policies, yet anyone can participate in them. So if I have a life insurance policy on my wife, and my whole neighborhood does too, then when she dies the whole neighborhood has to get paid off. And to top it all off, this huge liability was not on the books of the issuers which would have prevented them from exposing themselves in the first place. This is what happens when you have deregulators in charge. They looked the other way when all this was going on and now the chickens have come home to roost.

Fannie and Freddie Did Not Cause This Crisis

"THESE AGENCIES SOUGHT SUBPRIME AND ALT-A PAPER in order to expand low income and minority home ownership at the request of the Democrat controlled oversight committees in Congress."
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The democrats didn't gain control of any committees until February of 2007. The republicans were in charge of those committees and not only didn't oversee anything, were actively encouraging banks and lenders to step up their activities. Bush repeatedly stopped efforts by various state governments to rein in predatory lending practices. Minority loans are but a small percentage of troubled mortgages in this market. Here in S. Florida there are thousands of multi million dollar beach front/ocean view properties that are in default that had nothing to do with Fannie or Freddie. You have to remember that Fannie had mortgage limits that have only recently been raised. You could not get an FHA mortgage over, I believe, 300,000 until recently and a large percentage of defaults are over this amount. This blame Fannie by the repubs is trying to draw attention away from their lack of oversight and incompetence and which also has a not so subtle racial element to it although most FHA mortgages are to white folks.

Common Sense: My Solution to the Mortgage Crisis

From what I've been hearing, the real problem is the credit default swap market. There's trillions bet on these mortgages and they want to be paid off. The repubs keep talking about Fannie Mae to score points with their base yet it's the bankers who should shoulder most of the blame here because of their insane lending practices. We'll be lucky to survive this mess without a financial meltdown that could strangle the U.S. economy, if not the world's.

Gold Bull Sees Huge Run for Gold

Thanks, GWB and all his supporters for destroying the U.S. economy.

The Next Bubble

"Will agriculture stocks like Potash (POT) or Agrium (AGU) ever regain their bubble inflated highs?"

The difference with POT, MOS, etc. is that fertilizer prices are still rising as we speak, unlike the grains, oil and precious metals. So with the underlying commodity price still rising and the value of the stock down 30% or more, I would suspect you haven't seen the end of the AG "bubble" as far as the fertilizer companies are concerned.

Why Commodities May Be Nearing a Turning Point

Population will go up another 500,000,000 in the next seven years. I think I can safely say food production will be hard pressed to keep up and that's not even taking into account regional droughts, rains, etc. So from a long term perspective the ags look like the place to be. We are one crop report away from a run up, frost, flood. Everything is now lumped together with oil and the dollar. If they decouple from the two because of demand increases, look out.

So Why Does It Feel Like a Recession?

With the way the Bush administration tried to manipulate economic statistics to try and show the 2001 recession started on Clinton's watch, I would view these numbers with a great deal of skepticism. From what was it, flat 4th quarter last year, .5% in the 1st quarter to 3.3 in the 2nd? Something smells fishy especially with a lot of our trading partners also slowing down. Wouldn't put it past them.

Shifting Emphasis from Inflation to Growth

My supposedly fiscally responsible die-hard republican cousin told me that our trillions of republican debt are no problem. We'll just default on it and stick the Chinese, Russians and Japanese with a bunch of worthless paper. Apparently there's no need to worry about the consequences.

King Dollar Roars Back

With 10 trillion in debt and rising at the rate of $700 billion a year (don't forget those little off budget items, like Iraq) the world will be awash in U.S. debt for the foreseeable future. I expect interest rates to rise to entice the world to swallow this tsunami of debt which will force our floundering economy to grind to a halt. Then we'll see how the dollar does. Might happen even sooner if any of our friends decides to get out from under their treasury holdings, like China, Russia and Japan.

Careening Towards a Financial Crisis?

surgcare: From 1800 to 1980 the total federal deficit was around $1 trillion. Since Reagan, Bush I, Clinton, Bush II the deficit is now closing in on $10 trillion. Clinton was the only president to move the budget into surplus at that time mainly because of his 1993 tax increase which was criticized by republicans who said it would destroy the economy. The military was so decimated by the Clinton years that 10 months after he left office our military invaded Afghanistan and completely took over the country. Then a year and a half later, they invaded Iraq and overran that country in 3 weeks. If you want to look at a state that is in terrible shape, look at Florida which is on the verge of collapse because of the policies of Jeb Bush and the republican state legislature. Like his older brother he was left with a budget surplus and squandered it all. People are leaving the state in droves. California has had republican governors for 21 of the past 25 years. The failed policies and the outright criminality of the Bush administration and his rubberstamp republican congress had damaged our economy, our credibility around the world, and has completely decimated our military. It will take years to fix the damage Bush and his supporters have done to our great country.

Careening Towards a Financial Crisis?

What I find interesting is when the republicans are in office it's both sides fault and when the democrats are in office it's the democrats fault. Just ask yourself this: If we weren't $10 trillion in debt and counting, would we be having this discussion. Since Reagan was in office the republicans have added $9 trillion to our national debt with their tax cut policies that were supposedly supposed to pay for themselves, remember? It was their trickle down, tax cuts reduce the deficit, deficits don't matter, borrow and spend, laffer curve, etc, etc, theories that have driven this country to the brink of financial disaster. It was all a big con scheme to destroy social security. The $185 billion a year SS surplus went to pay for their tax cuts for the wealthy taking the poor and middle class's SS surplus. Now there's nothing left and yet they still claim they're the party of fiscal responsibility.

Why I'm Still Out of Mastercard and Visa

I'm amazed at how many people think V and MA are susceptible to credit card debt. These companies are facilitators only. They make their money only from the transaction fees that they charge the banks who hold the credit card debt. They do not hold any debt and never will. With the steady increase of debit and credit card usage worldwide their revenues will only increase. They got hit last week because of a lawsuit against them by AMEX and Discover Financial. V has set aside funds for the settlement, but MA did not and that brought them both down. Expect both of these companies to be an excellent long term investment.

Buy Natural Gas - Cramer's Lightning Round (8/1/08

Let's see. He just called the market bottom the other day so it should be nowhere but up from here. Also the financials, according to him, are at their bottom. That's a lot of money for people to lose if they follow his advice. Mark the date.