US regression is already here

[lord_casek]

Re: US recession is already here

 

this is pretty interesting. do you file your taxes casek?

 

 

 

i'd rather not say.

[Poesia [ ] T]

Shit is getting serious since last night.

[Poesia [ ] T]

Dollars tough to sell on streets of Amsterdam

 

AMSTERDAM (Reuters) - The U.S. dollar's value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.

 

"Our dollar is worth maybe zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in front of the Anne Frank house. "It's hard to find a place to exchange. We have to go downtown, to the central station or post office."

 

That's because the smaller currency exchanges -- despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency -- don't want to be caught holding dollars that could be worth less by the time they can sell them.

 

The dollar hovered near record lows on Monday, with one euro worth around $1.58 versus $1.47 a month ago.

 

(Reporting by Svebor Kranjc, writing by Reed Stevenson)

[IOU]

Superclass, thats where its at.

[Poesia [ ] T]

America was conned - who will pay?

 

The South Sea Bubble ended in riots as trust was lost. Wall Street also duped the public

 

 

About this article

 

This article appeared in the Guardian on Monday March 17 2008 on p30 of the Financial section. It was last updated at 00:05 on March 17 2008.

 

Bear Stearns marks the moment when the global financial crisis went critical. Up until last Friday, it had been possible - just about - to believe that the worst was over and that things were about to get better. That pretence was stripped away when JP Morgan, at the behest of the Federal Reserve, stepped in when the hedge funds pulled the plug on the fifth-biggest US investment bank.

 

It is now clear that no end is in sight to the turmoil, and the reason for that is that the Fed and the US treasury are no closer to solving the underlying problem than they were eight months ago. The crisis will only end when house prices stop falling and banks stop racking up huge losses on their loans. Doing that, however, will require the US government to intervene directly in the real estate market to end the wave of foreclosures. Ideologically, it is ill-equipped to take that step and, as a result, property prices will fall and the financial meltdown will go on and on.

 

Ultimately, though, action will be taken because there will be political pressure for it. Indeed, it is somewhat surprising that there is not already rioting in the streets, given the gigantic fraud perpetrated by the financial elite at the expense of ordinary Americans.

 

The US has just had its weakest period of expansion since the 1950s. Consumption growth has been poor. Investment growth has been modest. Exports have been sluggish. But if you are at the top of the tree, the years since the last recession in 2001 has been a veritable golden age. Salaries for executives have rocketed and profits have soared, because the productivity gains from a growing economy have been disproportionately skewed towards capital.

 

Patriotic

 

For ordinary Americans, though, it has been a different story. Real wages have been growing slowly; at just 1.6% a year on average over the latest upswing, well down on the experience of earlier decades. Business, of course, needs consumers to carry on spending in order to make money, so a way had to be found to persuade households to do their patriotic duty. The method chosen was simple. Whip up a colossal housing bubble, convince consumers that it makes sense to borrow money against the rising value of their homes to supplement their meagre real wage growth and watch the profits roll in.

 

As they did - for a while. Now it's payback time and the mood could get very ugly. Americans, to put it bluntly, have been conned. They have been duped by a bunch of serpent-tongued hucksters who packed up the wagon and made it across the county line before a lynch mob could be formed.

 

The debate now is not about whether the US is in recession but how deep and long that recession will be. Super-bears have started to say that this is perhaps "The Big One", by which they mean the onset of a new Great Depression. The need to rescue Bear Stearns has done little to still those voices.

 

As the economics team at HSBC recently pointed out, there has been a "catastrophic breakdown" of trust, and when that has happened in the past - the US in the 1930s, Japan in the 1990s - chucking extra money at the banks in the hope that they will start lending again proves ineffective.

 

It's not hard to see why trust has become such a rare commodity: Wall Street at the height of the securitisation mania had, in effect, become London at the time of the South Sea Bubble crisis in 1720. Vast quantities of funny paper were changing hands even though those involved in the deals had no idea of their true worth. Nor did they care. Inevitably, now the bubble has burst and the huge Ponzi securitisation scam has been exposed, there has been a reaction. The securitisation market is dead, there is less money sloshing round the system, banks are hoarding their cash.

 

Having allowed the housing boom to rage out of control for too long and then delaying cuts in interest rates until the housing market was gripped by recessionary forces, the Fed is now trying to make up for lost time with a burst of hyperactivity. It will cut interest rates on Wednesday and keep cutting them: financial markets expect the Fed funds rate to be 1% by the summer, and they are probably right. In most downturns, easier monetary policy does the trick. Lower interest rates make it cheaper to borrow and also change the trade-off between saving and spending. This may not be the usual sort of downturn, however, with consumers going through a period of debt revulsion after the excesses of recent years, even so the consensus is that after two or three quarters of falling output, a slow and sluggish recovery will be under way.

 

Deflation

 

These hopes are likely to be dashed, unless there is intervention at home and internationally to tackle the crisis. Domestically, the priority should be to stop homes that have been foreclosed being auctioned on the open market, since by selling them at a 50% discount property prices are driven down. The US does not seem to have learned the lessons from Japan, which encouraged a fire sale of property in the 1990s and was sucked into a classic debt deflation trap as a result. Those who argue, with some force, that it would be counter-productive to intervene in the market because the US needs to work the rottenness out of its system must recognise that the cold turkey option will be very long and painful.

 

The second form of intervention should be to shore up the dollar, the collapse of which is worrying countries that rely heavily on exports and is the main reason for the surge in commodity prices. Co-ordinated intervention by the major central banks needs to be at the top of the agenda at next month's G7 meeting in Washington, and there could be action even sooner if the dollar continues to tank.

 

In the longer term, lessons must be learnt from the turmoil. One is that you don't solve the problems of a collapsing bubble by blowing up another, which is what Alan Greenspan did after the dotcom fiasco in 2001 - the most irresponsible behaviour of any central banker in living memory.

 

The second lesson is that there has to be far stricter regulation not just of the US real estate market but of Wall Street, to prevent the return of irresponsible lending as soon as the recovery is firmly under way. If this is, heaven help us, The Big One, one of the only consolations will be that the repugnance at the orgy of speculation that has sapped the strength of the US economy will put a new New Deal on the political agenda.

 

But for this to happen there has to be a political response and even though this year's presidential election will be held in the shadow of recession, there appears not to be a potential FDR among the contenders for the White House. Yet if this crisis really does get as bad as some are forecasting, the public will rightly demand more than a slap on the wrist for Wall Street.

larry.elliott@guardian.co.uk

[Spitfire15]

Were getting pwned.

[nightsblood]

Re: US recession is already here

 

uh, the stock markets reached insane heights this year. of course there's a fucking recession. what, they're going to keep posting record breaking numbers every day? shit was ridiculous for the last few years, houses were selling for waaaaaaaaaaaaaaaay more then they were worth, people piled on the debt like it was going out of style and now shit is about to get back to sane levels.

 

 

the recession is going to be nothing but good news for me, and alot of people in my position.

 

*i have a steady job with a solid company who is continually growing, and is in a growth industry that will only be spurned by technological advances in every day commerce.

 

*i have no debt.

 

finally i'll be able to buy a house soon that i can actually afford, and not with some bullshit interest only adjustable rate mortgage from some bullshit loan shark. there are so many forclosures right now that i'll be able to snag a bargain. there's one street in this city that holds the record for most forclosures on one street in the country. of the 50-odd houses, 17 are in forclosure. that's almost 40%! the ones that have forclosed are selling for as low as $86,000!!! they were going for over $250,000 2 years ago!

 

 

bring on the crash!!!!!!!

 

 

well it would be nice if prices dropped that much everywhere, but so far, they are a long way from doing so in most major metroplitan areas. this needs to continue for 5 more years if you ask me. i find the analysis of housing prices in the media ridiculous in that the prospects for home ownership of young people who arent super rich are never taken into account. i've yet to read or hear any pundit or high profile journalist point out that lower housing prices might let all those people under 30 move out their mom's basement.

[Poesia [ ] T]

The Fed’s Forced Marriage of Bear Stearns and J.P. Morgan

 

By Dean Baker - March 17, 2008, 9:07AM

 

The news that J.P. Morgan bought investment house giant Bear Stearns for just $236 million, or $2 a share, sent tremors through financial markets around the world today. This is company whose stock was worth almost one hundred times as much a year ago. Its building alone is valued at close to $1 billion, which suggests that all the other assets of this 85 year-old investment bank had a negative value – Bear Stearns liabilities exceed its assets.

 

Further confirming this view is the fact that the Fed apparently had to make guarantees to J.P. Morgan of $30 billion in order to get the bank to take Bear Stearns even at this price. That suggests the bank had a lot of real garbage on its books. The markets are right to be worried. Of course with the $8 trillion housing bubble in full meltdown, there will undoubtedly be much more bad news for the banks in the months ahead.

 

One person who does not have to worry is James Cayne, the recently departed chief executive of Bear Stearns. According to the New York Times, he walked with $232 million in compensation over the period from 1993 to 2006. This is just another example of how the global economy rewards extraordinary talent.

 

The official line is that the Fed had to get involved and make the guarantees in order to keep the markets in order. This is not clear. It is not easy to accept Fed pronouncements these days. After all, just last year Chairman Bernanke was telling us that the problems in the subprime market were likely to be contained. It is time that the Fed comes clean with both an honest assessment of the severity of the problem and increased transparency in its behind the scenes deals with the big banks.

 

There is something a bit obscene about billions of taxpayer dollars going to the country's richest people, when average workers can't afford health care for their kids.

[Poesia [ ] T]

Whistleblower exposes insider trading program at JP Morgan

 

From Wikileaks

 

 

 

Description of JP Morgans stock program from page 21 of the leaked document.

 

LEGAL INSIDER TRADING IN THREE EASY STEPS, BROUGHT TO YOU BY JP MORGAN AND THE SEC

 

KEVIN WILSON, MARIA CHRISTINA PADRO, JULIAN ASSANGE & staff

Monday March 17, 2008

 

A confidential memo obtained by Wikileaks shows that not only has the U.S. Securities and Exchange Commission created an insider trading loophole big enough to drive a truck through, but that Wall Street is taking full advantage of it, establishing 'how-to' programs and even client service divisions to help well-heeled clients circumvent insider trading regulations.

 

Most of us think of insider trading as illegal. It allows those with inside knowledge to tilt the playing field, with the small investors invariably losing to the privileged few. Unfortunately for the small investor, the big boys get to play by different rules, and it has all been made legal, thanks to the SEC.

 

In 2000 the SEC promulgated Rule 10b5-1. The new Rule was designed to address the confusion caused by a series of court decisions that had left investors uncertain about what constitutes insider trading. Rule 10b5-1 was designed to "clarify" what constitutes illegal insider trading.

 

But top Wall Street houses were not to be deterred from advantaging their big clients at the expense of their small ones. Wall Street firms like JP Morgan found loopholes in Rule 10b5-1 that allowed them to continue trading on inside information "legally." Indeed, JP Morgan has gone so far as to set up an entire 'selling program' within its Securities division to help their clients profit from the loophole.

 

Documents obtained earlier this month by Wikileaks from JP Morgan Private Bank, which subtitles itself as "World class solutions for wealthy individuals and families", show the firm has a dedicated '10b5-1 Selling program,' along with a 'dedicated 10b5-1 team' to help its clients take advantage of the loophole.

 

Here's how it works:

 

1. An insider client transfers all or a portion of their company stock into a JP Morgan Securities Inc. brokerage account.

 

2. The insider then develops, in conjunction with the 10b5-1 team, a 'phased, pre-planned sales program to be executed at either market or

 

specified prices'.

 

3. Depending on the information available to the insider (but not the public), the insider can decide whether to execute the sale or not.

 

By gaming the system this way, JP Morgan teaches insiders how to use their knowledge to create a rigged market, one in which it is the "house" that always wins, and the small investor that always loses.

 

According to a statistical research paper published by Stanford's Graduate School of Business in September last year, executive 10b5-1 trades beat gains relative to non 10b5-1 executive trades by more than 500%.

 

One can only guess at how many insiders profited under JP Morgan's "insider trading program," leaving small investors holding the bag.

 

See the full confidential JP Morgan Private Bank insider trading how-to here:

 

JP Morgan Private Bank insider trading how-to

 

JP Morgan Private Bank was successfully contacted by Wikileaks, but chose not to respond when asked to deny the report.

 

For more information on this release, please email press@wikileaks.org

 

Additional contacts:

 

JP Morgan Private Bank

 

* http://www.jpmorgan.com/pages/jpmorgan/private_banking

 

Prof. Alan D. Jagolinzer

 

* http://www.stanford.edu/~alanj1/

 

Tax Justice Network

 

* http://taxjustice.net

[IOU]

Cue the increase in violence among the poor.

[Poesia [ ] T]

Yes indeed shit is getting hectic. Not sure they know how to stop the bleeding.

 

It hasnt hit us yet as bad, but it will be hear soon. Say by Christmas this year record spikes in crime.

[IOU]

Hell yeah. Good time to invest in the privately owned prisons.

 

And to think all those people living beyond their means. Not only do they fuck themselves, but they fuck the economy.

[Poesia [ ] T]

Im already seeing murders up in the Country Club Suburbs. Home invasions and Robberies will be more Normal.

 

They coming for Me, i got to get myself Strapped.

[MOE-LESTER]

i just signed the papers on my strap poesia, gotta gaurd the nest.

 

 

 

what do you reccommend doing with dollars? i got alot of money just sitting around in bank accoutns earning shit interest, but now that the dollars worth shit i can see my balance shrinking. what should i do???

[Poesia [ ] T]

Im saying im about to start really investing in Art, not sure how to get it started still brainstorming but Art is one of the only investments left that can easily increase at crazy percentages.

 

But its all about really breaking it down.

[MOE-LESTER]

in the meantime im investing in the harvest season. crazy good interest on the buds. im not even selling any of this shit i have people doing that for me haha.

[Prime Chaos]

barrow money, shortsell stocks,invest in real estate, move to a cheaper location.

[Decyferon]

I was listening to a radio reportt this morning discussing with bigwigs in the UK banking and trade sectors and a lot of people have seen this coming.

 

At the moment the dollar is so unbelievably weak against the pound and euro its crazy, it isn't a good sign. They were saying this is only the start and a lot of the banks are going to require government assistance to stay afloat maybe even the nationalisation of certain parts of the banking system.

 

There is much worse to come

[DaCypha]

Re: US recession is already here

 

we've been in a recession

i'm sick of watching the news and all i hear is them hinting at the "threat of an oncoming recession".

 

i swear people are fucking blind until the news says so

real estate - been fucked

jobs - been lost

the dollar - been low

 

i can go on and on.

 

wake up you fucks!

 

lol.. true shit...

time to hustle

only the strong survive

[KM4RT]

wow. I just read the article about Bear Stearns getting bought. The last week or so I haven't really kept up with what's going on, but its certainly getting worse. I think anyone saying the US economy is not in trouble, or isn't in a recession already, is clearly lying to themselves.

[.coma]

Re: US recession is already here

 

In terms of remaining on topic.

 

 

 

This recession is gonna be make or break for America I think.

 

 

With the continual development and strengthening of the EU, we are going to have to start looking to similar structures and alternatives to our contemporary economy/government.

 

 

I am way curious to see how this all goes down.

 

I am just hopin to get into gradschool and get outa here before its way too fucked.

 

"crisis precipitate change."

 

rembemer guys, MOST of this shit falls under the "engineered economic fallout" tab. this country's being buttered up to BEG for change.

 

but at what cost?

 

also keep this in mind, for every improvement in processing power (almost seamless data transfers etc) you eliminate 5 human processes (and vice versa.)