"There may be a recession in stock prices, but not anything in the nature of a crash"
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

The global economy, artificially boosted since the recession of 2008-2009 by massive monetary and fiscal stimulus and financial bailouts, is headed towards a sharp slowdown this year as the effect of these measures wanes. Worse yet, the fundamental excesses that fueled the crisis – too much debt and leverage in the private sector (households, banks and other financial institutions, and even much of the corporate sector) – have not been addressed.

Today's market is configured in a way that the only reliable way to make money is by increasing volume and trading on myriad venues. We're talking about gains of mere pennies per trade on zillions of trades. The problem is that--when there's a glitch in the system--the high frequency bullyboys head for the exits taking an ocean of liquidity with them. That leads to a "flash crash" like the one on May 6 when the markets tumbled nearly 1,000 points in a matter of minutes. And, there's nothing to prevent a similar cataclysm from taking place in the future, because nothing's changed. The SEC still has its head in the sand.

Image from: Gold-Eagle.com

Need to Read Financial Articles below

From 1982 to 2000, the U.S. stock market went on the longest bull run ever, as share prices rose to dizzying heights. In the late 1990s, a combination of factors, which included the Federal Reserve lowering interest rates, created a huge price bubble in Internet stocks. A speculative bubble occurs when price far outstrips the fundamental worth of the asset.

London-based GFC Economics is making a frightening prediction: By spring 2009, the United States could be facing more than 1 million layoffs every successive month.

The financial crisis that began 13 months ago has entered a new, far more serious phase

Lingering hopes that the damage could be contained to a handful of financial institutions that made bad bets on mortgages have evaporated. New fault lines are emerging beyond the original problem -- troubled subprime mortgages -- in areas like credit-default swaps, the credit insurance contracts sold by American International Group Inc. and others firms.

Small Banks' Reckoning Day Is Coming

Wall Street is bracing for regional and small banks to fess up to large losses from their mounting volume of soured construction loans made primarily to home builders.

According to the Federal Deposit Insurance Corp., $45.4 billion of the $631.8 billion in construction loans outstanding at the end of the first quarter were delinquent. When banks announce second-quarter results in coming weeks, they are expected to report sharp increases in loans that builders can't repay. Banks are also facing intensifying pressure from federal and state regulators to deal with the problem loans on their books.

Colliding Bubbles, US Unemployment, the Credit Crisis and Oil Price Surge

The reality is that we probably saw a decrease in jobs of at least 100,000. The market was upset with 40,000. What will it do when the monthly number prints 100,000 later this year? And it likely will. The Federal Reserve projects that unemployment will rise to 6%. That means there are a lot more jobs to be lost. And that is if unemployment stops at 6%, which would be a very mild recession indeed.

It's All Downhill From Here, Folks

FDIC Chairman Shiela Bair warned that “as of Sept. 30, there were 65 institutions with assets of $18.5 billion on its list of "problem" institutions;” although she wouldn't give names.

So, what does it all mean? It means there's going to be an unprecedented wave of bank closures in the US and that people who want to hold on to their life savings are going have to be extra vigilant as the situation continues to deteriorate. And it is deteriorating very quickly

US's triple-A credit rating 'under threat'

Last year, David Walker, comptroller general of the US, caused controversy when he compared America's current situation with the dying days of the Roman empire and warned the country was on "a burning platform" of unsustainable policies.

Medicare and Medicaid spending, which has risen sharply over the past few decades and now accounts for about 45 per cent of total federal spending, up from about 25 per cent in 1975, has long been a source of concern.

Last month, Peter Orszag, director of the Congressional Budget Office, which advises Congress on the federal budget, said the issue was "the central fiscal challenge" facing the US

Mortgage Meltdown

The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

Panic of 2008
Forecast: U.S. dollar could plunge 90 pct
A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."

Sub-prime black hole is getting scarier'

Blackstone's president warned that the sub-prime crisis on Wall Street was getting "deeper, darker and scarier" yesterday as the US private equity firm posted a loss for the third quarter, hit by a fall in real-estate revenues and charges related to its initial public offering.

Talk of Worst Recession Since the 1930s

Noting that consumption is already slowing, Mr. Melcher figures sharply rising unemployment is inevitable. Another of his worries is that central banks around the globe, America's included, are debasing their currencies, which is setting the stage for a new round of higher inflation. Our bear figures the next six to 12 months will be awful for investors as the market goes down "pretty substantially." His frightening outlook calls for an additional 20% to 30% decline from current levels. A drop of that magnitude would put the Dow down in a range of roughly 9,100 to 10,400.

Living Paycheck to Paycheck Gets Harder

Across the nation, Americans are increasingly unable to stretch their dollars to the next payday as they juggle higher rent, food and energy bills. It's starting to affect middle-income working families as well as the poor, and has reached the point of affecting day-to-day calculations of merchants like Wal-Mart Stores Inc. (WMT) (WMT), 7-Eleven Inc. and Family Dollar Stores Inc. (FDO) (FDO)

Food pantries, which distribute foodstuffs to the needy, are reporting severe shortages and reduced government funding at the very time that they are seeing a surge of new people seeking their help.

While economists debate whether the country is headed for a recession, some say the financial stress is already the worst since the last downturn at the start of this decade

Weak dollar prompts record foreign buyouts of U.S. companies

We could be looking at the world's largest tag sale if we continue to see declines in the dollar," said Donald Klepper-Smith, chief economist at DataCore Partners

Learn from the fall of Rome, US warned

The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon, the country’s top government inspector has warned.

David Walker, comptroller general of the US, issued the unusually downbeat assessment of his country’s future in a report that lays out what he called “chilling long-term simulations”

Bankers Fear World Economic Meltdown

There has been a profound and fundamental change in the world economy over the past decade. The very triumph of financial liberalization and deregulation, one of the keystones of the “Washington consensus that the U.S. government, International Monetary Fund (IMF), and World Bank have persistently and successfully attempted over the past decades to implement, have also produced a deepening crisis that its advocates scarcely expected.

The global financial structure is today far less transparent than ever. There are many fewer reporting demands imposed on those who operate in it. Financial adventurers are constantly creating new “products” that defy both nation-states and international banks. The IMF’s managing director, Rodrigo de Rato, at the end of May 2006 deplored these new risks – risks that the weakness of the U.S. dollar and its mounting trade deficits have magnified greatly

Twilight of the Gods

"Much has been written about panics and mania…. But one thing is certain; that at particular times a great deal of stupid people have a great deal of stupid money. At intervals… the money of these people — the blind capital, as we call it, of the country — is particularly large and craving: it seeks for someone to devour it and there is a 'plethora'; it finds someone and there is a 'speculation'; it is devoured and there is a panic"
– Walter Bagehot, "Essay on Edward Gibbon"

Final Stop: Soup Kitchen U.S.A

The days of the dollar as the world’s “reserve currency” may be drawing to a close. In August, foreign central banks and governments dumped a whopping 3.8 per cent of their holdings of US debt. Rising unemployment and the ongoing housing slump have triggered fears of a recession sending wary foreign investors running for the exits. China, Japan and Taiwan have been leading the sell off which has caused the steepest decline since 1992.

To some extent, the losses have been concealed by the up-tick in Treasuries sales to US investors who’ve been fleeing the money markets in droves. Investors have been trying to avoid the fallout from money funds that have been contaminated by mortgage-backed assets. Naturally, they bought US government bonds which are considered a safe bet. But that doesn’t change the fact that the dollar’s foundation is steadily eroding and that foreign support for the dollar is vanishing. US bonds are no longer regarded as a “safe haven”. . . .

. . . The Bush Team was warned repeatedly---by the BIS, the World Bank, the IMF and the European Central Bank ECB---that their policies were “unsustainable” and would end in an economic meltdown. But they brushed aside the warnings with the same casual indifference as they did the critics of the war in Iraq

A debt culture gone awry

The U.S. economy, once the envy of the world, is now viewed across the globe with suspicion. America has become shackled by an immovable mountain of debt that endangers its prosperity and threatens to bring the rest of the world economy crashing down with it.

The ongoing sub-prime mortgage crisis, a result of irresponsible lending policies designed to generate commissions for unscrupulous brokers, presages far deep[ Home Page ] [ Gothic Angel Art ] [ Angel Fantasy Art ] [ Angel Art Guardian Angles.htm ] [ Guardian Angles ]er problems in a U.S. economy that is beginning to resemble a giant smoke-and-mirrors Ponzi scheme. And this has not been lost on the rest of the world

Are we headed for another Great Depression

In the case of empires, a way to gage solvency is, how big is their own reserves compared to the size of these same currency reserves held by potentially hostile rivals? In the case of the USA, we send dollars out as fast as we can print them

And if we think of these funds as boats, then China has Noah's Ark, Japan has an aircraft carrier, Europe has a holiday cruise liner, Russia has a very fancy yacht and the USA has a rowboat made out of an old bathtub. That is leaking.

China has $1.3 trillion in its reserves and is therefore, King of the Mountain. Japan has $900 billion and is no longer holding new currency so all the red ink in trade is no longer staying away, it is floating back home to here, as inflation. Europe has about $600 billion and Russia, $330 billion. The USA has only $66 billion and the numbers released today by the Federal Reserve shows that number is DROPPING. Yikes

The Credit Crisis Could Be Just Beginning

Massive levels of debt underlying the world economic system are about to unwind in a profound and persistent way

Misery may be just beginning, warns International Money Fund

The consequences of this episode should not be underestimated and the adjustment process is likely to be protracted. Credit conditions may not normalize soon, and some of the practices that have developed in the structured credit markets will have to change

In its latest update of its economic forecasts next month, the IMF is expected to slash its forecast for US economic growth next year – perhaps to as low as 1pc-1.5pc

Dow 5000

Dow Jones at 5,000 within 5 years? (October 3, 2012) Will history repeat itself? It's certainly a possibility . Get ready for recession if we are lucky, another great depression if we're not

"We will not have any more crashes in our time"
- John Maynard Keynes in 1927

Need to Read Financial Articles below

Learn from the fall of Rome, US warned

Bankers Fear World Economic Meltdown

Twilight of the Gods

Final Stop: Soup Kitchen U.S.A

American Economy: R.I.P

A debt culture gone awry

Are we headed for another Great Depression

In the case of empires, a way to gage solvency is, how big is their own reserves compared to the size of these same currency reserves held by potentially hostile rivals? In the case of the USA, we send dollars out as fast as we can print them

The Credit Crisis Could Be Just Beginning

Massive levels of debt underlying the world economic system are about to unwind in a profound and persistent way

Misery may be just beginning, warns International Money Fund

The consequences of this episode should not be underestimated and the adjustment process is likely to be protracted. Credit conditions may not normalize soon, and some of the practices that have developed in the structured credit markets will have to change

The Impending Global Liquidity Crisis 06/04/07

The Cash Cows of Personal Debt 12/15/06
The Credit Card Industry and Predatory Capitalism

An Outcry Rises as Debt Collectors Play Rough 07/05/06

Dow 5000

Dow Jones at 5,000 within 5 years? (October 3, 2012) Will history repeat itself? It's certainly a possibility . Get ready for recession if we are lucky, another great depression if we're not

"We will not have any more crashes in our time" - John Maynard Keynes in 1927

Need to Read Financial Articles below

In the case of empires, a way to gage solvency is, how big is their own reserves compared to the size of these same currency reserves held by potentially hostile rivals? In the case of the USA, we send dollars out as fast as we can print them

Massive levels of debt underlying the world economic system are about to unwind in a profound and persistent way

The consequences of this episode should not be underestimated and the adjustment process is likely to be protracted. Credit conditions may not normalize soon, and some of the practices that have developed in the structured credit markets will have to change

The Impending Global Liquidity Crisis 06/04/07

The Cash Cows of Personal Debt 12/15/06 The Credit Card Industry and Predatory Capitalism

An Outcry Rises as Debt Collectors Play Rough 07/05/06

"We will not have any more crashes in our time"
- John Maynard Keynes in 1927

The Cash Cows of Personal Debt 12/15/06
The Credit Card Industry and Predatory Capitalism