Wall Street fears "next Great Depression"

[Mr. Authority]

Wall Street fears for next Great Depression
By Margareta Pagano, Business Editor
Sunday, 16 March 2008

Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150bn) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns.

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed's emergency funding procedure was first used in the Depression and has rarely been used since.

A Goldman Sachs trader in New York said: "Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we're just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow."

In the UK, Michael Taylor, a senior market strategist at Lombard, the economics consultancy, said on Friday night: "We have all been talking about a 1970s-style crisis but as each day goes by this looks more like the 1930s. No one has any clue as to where this is going to end; it's a self-feeding disaster." Mr Taylor, who had been relatively optimistic, has turned bearish: "It really does look as though the UK is now heading for a recession. The credit-crunch means that even if the Bank of England cuts rates again, the banks are in such a bad way they are unlikely to pass cuts on."

Mr Taylor added that he expects a sharp downturn in the real UK economy as the public and companies stop borrowing. "We have never seen anything like this before. This is new territory for us. Liquidity is being pumped into the system but the banks are not taking any notice. This is all about confidence. The more the central banks do, the more the banks seem to ignore what's going on."

Mr Taylor added that the problems unravelling at Bear Stearns are just the beginning: "There will be more banks and hedge funds heading for collapse."

One of the problems facing the markets is that, despite the Fed's move last week to feed them another $200bn, the banks are still not lending to each other.

"This crisis is one of faith. We are going to see even more problems in the hedge funds as they face margin calls," said Mark O'Sullivan, director of dealing at Currencies Direct in London. "What we are waiting for now is for the Fed to cut interest rates again this week. But that's already been discounted by the market and is unlikely to help restore confidence."

Mr O'Sullivan added that the dollar's free-fall is set to continue and may need cuts in European interest rates to trim the euro's recent strength against the dollar. "But the ECB doesn't like cutting rates," he said.

On Europe, Mr Taylor said that while the German economy remains strong, others such as Italy's and Spain's are weakening. "You could see a scenario where the eurozone breaks up if economies continue to be so worried about inflation."

European financial markets were relatively unscathed by Wall Street's crisis but traders expect there to be a backlash when stock markets open tomorrow.

The Fed's plan will give 28 days of secured funding to Bear Stearns, which saw its value slashed over the week by more than a half to $3.7bn. JP Morgan will provide the funding, but the Fed will bear the risk if the loan is not repaid. Fed chairman, Ben Bernanke, who pumped $200bn of loans to cash-strapped institutions last week, said more would be available to help others in distress.

Wall Street fears for next Great Depression - Business News, Business - Independent.co.uk

So not only is the US going to experience a Depression, but other countries in the world are going to experience it as well. Yet we have no word of this from our mainstream media (cuz they're so busy with the whole Spitzer sex BS).

See this is what happens when you have wars that can't be won, few people with wealth and products that are made of shitty quality in low-wage countries. It's the fault of the corporations and the governments that allowed this to happen.

[Grimmlok]

that's what happens with conservative "let industry regulate itself" policies.

THEY DO NOT SELF REGULATE. THEY ARE IN BUSINESS TO MAKE MONEY. THEY WILL ALWAYS GO FOR SHORT TERM GAIN.

Business needs regulation, it needs oversight, and it needs to be policed. It always has, and always will.

[NicoleWasHere]

Thanks... Mr. President. *spits* Thanks a fucking lot.

My family isn't made of money, so paying for gas is damn near impossible now. We spent $13 dollars on four gallons of gas, and that's all we could afford at the moment. And the tank is still almost empty.

So, yeah... Thanks, Bush. You fucking bastard. You're making families like mine even poorer, and the world's going into crisis because of you.

[celeb_2006]

Originally Posted by Grimmlok

that's what happens with conservative "let industry regulate itself" policies.

THEY DO NOT SELF REGULATE. THEY ARE IN BUSINESS TO MAKE MONEY. THEY WILL ALWAYS GO FOR SHORT TERM GAIN.

Business needs regulation, it needs oversight, and it needs to be policed. It always has, and always will.

Yup, this crisis has a lot to do with sub prime loans, and guess what, unscrupulous lenders were giving out loans left and right to anyone that breathed. They're reaping now what they sowed.

[*DIVA!]

Gas: $3.26 a gallon
Milk: $4.57 for a gallon
No one saw this coming..This always happens when we have a republican in office..this shit will get much worse, before it gets better.

[JamieElizabeth]

If this madness is so far along now, how is about to transition?

[Mr. Authority]

Speak of the Devil:

Asian markets plunge on Bear news
Asian investors snub news of JPMorgan's acquisition of Bear Stearns and Fed's liquidity move.
Last Updated: March 16, 2008: 10:43 PM EDT

SEOUL, South Korea (AP) -- Asian stocks plunged Monday after JPMorgan Chase said it would acquire troubled U.S. investment bank Bear Stearns. The U.S. dollar fell sharply against the Japanese yen.

Japan's benchmark Nikkei stock index and Hong Kong' Hang Seng index both fell more than 4%. The Korea Composite Stock Price Index in Seoul declined more than 3%. Markets in Australia and New Zealand also fell.

JPMorgan Chase said Sunday that it would acquire its rival in a deal valued at $236.2 million - or $2 a share and that the Federal Reserve would provide special financing for the deal.

News of the acquisition of Bear Stearns, one of the world's largest and most venerable investment banks, came just before the opening of markets in Tokyo and Seoul.

The buyout was aimed at averting a bankruptcy and a spreading crisis of confidence in the global financial system. The Fed and the U.S. government swiftly approved the all-stock deal.

"We are worried about the next step," Shim Jae-youb, a strategist at Meritz Securities in Seoul, said of nagging concerns in Asia that the trouble in big U.S. banks was unlikely to be contained just to Bear Stearns.

U.S. stocks fell sharply Friday after the announcement of a Fed plan in conjunction with JPMorgan Chase (JPM, Fortune 500) to alleviate the liquidity crisis at Bear Stearns (BSC, Fortune 500) touched off concerns about the severity of credit troubles in the world's largest economy.

The Dow Jones industrial average fell 194.65, or 1.60%, to 11,951.09 in New York on Friday after dropping as much as 313 points earlier.

In Tokyo, the Nikkei 225 stock index, Asia's biggest bourse, fell 514.61 points, or 4.2%, to 11,726.99 at the close of the morning session. The index lost 1.54%Friday.

Investors sold shares exporting companies as the dollar sank to 97.11 yen, its lowest level since Sept. 1995.

Australia's benchmark index fell 2.9%, while the New Zealand stock market, the first to open in the Asia-Pacific, fell 2%. To top of page

Asian stocks fall sharply on Bear news - Mar. 16, 2008

Here we go folks.

[Grimmlok]

I work for a custodian that deals, primarily, with stupid hedge funds.. the crappy mutual funds that were the core of the sub-prime mortgage fiasco.

Let me tell you, EVERYBODY is selling or shifting their assets around.. almost nobody is buying.

[travelbug]

I suggested to someone the other day that we need to put a freeze on gas prices and they looked at me like I was crazy. Remember in fall of 2005 during the last gas spike? The oil companies had record profits that quarter. Nuff said.

[Grimmlok]

The oil companies have been making money hand over fist.. for the last 3 years they have seen obscene profits, and yet the Repthuglicans in charge keep giving them massive tax breaks and, for some reason beyond me, insane amounts of corporate welfare.. they are GIVING them money for "drilling" because the poor widdle fabulously wealthy oil companies just cant affoerd to drill on their own.

Can you imagine?

[travelbug]

Well, there is something to be said for supporting programs that will eliminate our dependency on foreign oil. I don't know if that is why the government is giving them money or not, though.

When I was on a tour around Rocky Mountain National Park last year, the tour guide mentioned that there is a huge natural resource of oil under the mountains, but no one has figured out how to get it out yet.

Rocky Mountain Oil

Wonder if gas prices would drop if we could tap into that? Or would the oil companies just keep charging $3.25/gal and racking up record profits?

Have any of the presidential candidates mentioned price freezing?

[buttmunch]

All the evergy companies are making record profits yet, because they've been de-regulated, they're making money hand over fist. Look at the situation here in the UK. Last quarter gas and electric bills went up by an average of over 10%. A month or two later all the companies posted record profits in the billions. And this is under new Labour, which is just another word for incompitent wankers who have no sense. I hate all politicians right now because they make my life harder than it needs to be and they spend way too much time telling people that they're too stupid to know what's good for them.

[Grimmlok]

They can't freeze the prices, because the oil cartel OPEC is much too happy building ridiculous skyscrapers, creating entire islands and turning Dubai into some sort of Disneyland crossed with Las Vegas nightmare with those dollars.

They control the oil, and in turn the price of it.

Tapping MORE oil in the rockies isn't going to solve anything because the companies are happy as clams with prices the way they are and aren't going to be lowering them any time soon. They'll always claim some hurricane, earthquake, riot or some other reason as the excuse for high prices like they do now, which is patently ridiculous considering those never seemed to affect oil prices that much before.

Maybe if they threw all those hundreds of billions at research of non polluting, renewable energy sources we'd be further along, but then they wouldn't make ridiculous amounts of cash, would they.

[Mr. Authority]

Maybe if they threw all those hundreds of billions at research of non polluting, renewable energy sources we'd be further along, but then they wouldn't make ridiculous amounts of cash, would they.

Exactly. A "Green Revolution" is what this whole world needs to get off of blood ridden oil. Funding alternative energy is the answer to get rid of oil once and for all and create jobs (cuz you need researchers and engineers) to tap into that. Plus we could develop electric cars to get off the ethanol mess so our food prices will go back down and our farmers can palnt more food instead of fuel.

Of course it'll never happen because our governments don't care about the people, just the war loving, money-hungry corporations that have ruined not only the US but the world as well. *sigh*

[crumpet]

Originally Posted by celeb_2006

Yup, this crisis has a lot to do with sub prime loans, and guess what, unscrupulous lenders were giving out loans left and right to anyone that breathed. They're reaping now what they sowed.

Unfortunately none of them had to pay back the huge commissions they made. We all get to reap what they sowed.