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Thread: America slides deeper into depression as Wall Street revels

  1. #1
    Elite Member witchcurlgirl's Avatar
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    Default America slides deeper into depression as Wall Street revels

    The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3 %. That is the one that matters.

    Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

    The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

    Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

    Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

    This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

    This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (83bn) of "option ARM" contracts due to reset violently upwards this year and next.

    US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before in a nightmare."

    David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

    Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.

    The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

    Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

    This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

    How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.

    Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.

    His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" exactly as they are today and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks.

    America slides deeper into depression as Wall Street revels - Telegraph
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    Elite Member Grimmlok's Avatar
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    *watches the US circle the drain*
    I am from the American CIA and I have a radio in my head. I am going to kill you.

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    Elite Member MohandasKGanja's Avatar
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    Looking at Ambrose Evans-Pritchard's other columns, he is basically predicting the whole world is going to hell in a CPI handbasket of 1929 goods.

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    Friend of Gossip Rocks! buttmunch's Avatar
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    Quote Originally Posted by Grimmlok View Post
    *watches the US circle the drain*
    That's pretty much what I'm thinking. It's getting all kinds of crazy in so many ways and this on top of it? Doom.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

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    Elite Member McJag's Avatar
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    Quote Originally Posted by MohandasKGanja View Post
    Looking at Ambrose Evans-Pritchard's other columns, he is basically predicting the whole world is going to hell in a CPI handbasket of 1929 goods.
    Right up there with The End Is Near people!
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    Elite Member Sojiita's Avatar
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    Tax the shit out of those banks Obama! Especially CHASE! Fuck them and tax those fuckers!!!

    we as taxpayers bail there asses out with trillions of dollars, and they are making record profits and giving giant bonuses? FUCK WALL STREET!!!!!
    Don't slap me, cause I'm not in the mood!

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    Elite Member KandyKorn's Avatar
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    Quote Originally Posted by Grimmlok View Post
    *watches the US circle the drain*
    Yep, 25 years of hard work, investing, saving...all gone in 6 months for me. NEVER again.
    I'm not quite drunk enough to really care, but is this her violation of her violation of her violation of her violation of probation or her violation of her violation of her violation of her probation????? ~MontanaMama on LL's latest arrest.

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    Elite Member NVash's Avatar
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    See, this is that mess. What irks me the most is that no one is hiring anyone. I dont know how economics work but Im pretty daggone sure that people hiring people again will help America out of this. Everywhere I go no one is hiring. They keep firing people left and right, never replacing them, forcing more people to work harder daily and even forcing people to quit. Yet they never replace these people and Im sure the heads of the Corporation are pocketing that extra cash that should and could be someone elses salary.

    I so wish Obama could do something about this. It really should be illegal.

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    Elite Member celeb_2006's Avatar
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    Quote Originally Posted by NVash View Post
    See, this is that mess. What irks me the most is that no one is hiring anyone. I dont know how economics work but Im pretty daggone sure that people hiring people again will help America out of this. Everywhere I go no one is hiring. They keep firing people left and right, never replacing them, forcing more people to work harder daily and even forcing people to quit. Yet they never replace these people and Im sure the heads of the Corporation are pocketing that extra cash that should and could be someone elses salary.

    I so wish Obama could do something about this. It really should be illegal.
    To me it would seem that if a company is not making any money, then they have that much less to pay their workers. As long as the economy seems to be doing bad, maybe the employees are not wanting to hire?

  10. #10
    Elite Member NVash's Avatar
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    Yeah, they say they arent making money as they have lines out the door. They have no money as you see the lines only getting longer. Whatever. I dont believe that mess for a minute.

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    Quote Originally Posted by celeb_2006 View Post
    To me it would seem that if a company is not making any money, then they have that much less to pay their workers.
    They seem to pay their executive bonuses just fine.

    I just don't get my country. Even the stock holders are hurting - BADLY. But no one will criticize/tax/accuse the execs. WTF is going on here?

    And it ain't gonna change. We just keep on taking it.
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  12. #12
    Elite Member NVash's Avatar
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    I dont understand it either, truthfully. I keep saying, dont they know the worse it gets here the worse it gets for them? The more money you take from the people the less they can give back, hence the recession, right? No one can pay any bills anymore because everyone is unemployed.

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