Is the world heading into recession?

**Thormaturge** · 22-01-2008, 09:58 AM

The FTSE has lost around 1,000 points in the past month or so. I recall seeing it at 6,500 once.

The major point here is that some of the largest investors in the stock market are pension funds. No bonuses going into the with-profit pension funds this year if this continues, so retirement will be pushed back for many unlucky souls.

We will soon discover if any of the major pension funds are in trouble.

**Spin** · 22-01-2008, 10:47 AM

Originally Posted by Hootad Binky

Wonder what's gonna happen when NYSE opens tomorrow?

Indiscriminate selling of just about everything including the kitchen sink?

I'll be adding to my short positions, opening a beer and watching the market capitulate with a smile on my face

**Hootad Binky** · 22-01-2008, 11:52 AM

Will it crash?

**Mid** · 22-01-2008, 01:18 PM

Asian markets continue plunge
updated 12 minutes ago
From Jim Boulden

HONG KONG, China (CNN) -- Hong Kong's Hang Seng index fell 8 percent in early afternoon trading Tuesday as global markets tumbled on fears that a U.S. economic slowdown will lead to a global recession.

Tokyo investors are worried about how a possible U.S. recession could hurt exporters' profits.

Japan's Nikkei index plunged below 13,000 for the first time in more than two years, down 4.5% in afternoon trading.

South Korea's Korea Composite Stock Price Index fell 90.03 points, or 5.4 percent, to 1,592.63.

Australia's benchmark S&P index was down 6 percent.

The Singapore stock exchange was down 4.5 percent, and Taiwan's benchmark Taiex was down 6.6%.

Trading was halted in Indian markets Tuesday as shares plunged on opening, with the benchmark index falling 9.5 percent. Shares in India's Sensex fell nearly 11 percent -- a four-month low -- on Monday.

Europe's main three indices, the FT-100 in London, the CAC 40 in Paris and the DAX in Frankfurt fell between 5 and 7 percent on Monday.

snip

edition.cnn.com

**chinthee** · 22-01-2008, 05:20 PM

Fortune
The economy in crisis

Monday January 21, 7:58 am ET
By Shawn Tully, editor at large

The wobbly economy is overtaking Iraq as the issue weighing most heavily on the minds of America's voters.

Just how low will the economy go? There are conflicting signals. It's clear that the economy is losing steam. The plummeting value of America's houses is chilling consumer spending, layoffs are mounting, and banks and other creditors burned by the subprime crisis are far more reluctant to lend to everyone from small-business owners to private equity firms.

But GDP increased by 4.9% in the third quarter, and economists estimate that GDP was still growing in the fourth quarter. Exports are strong, thanks to the weak dollar. The Fed did a brilliant job last summer by flooding the banks with money to prevent a full-scale credit crunch. Credit is far more expensive today, but it's also becoming more plentiful, as demonstrated by the falling rates on everything from LIBOR - the rate at which international banks lend to each other - to junk bonds.

So while a recession is a real possibility, it's not inevitable - even the Fed is not forecasting one this year. And if we do get one, it may be brief and shallow, like the one we had in 2001 - with economic growth falling by perhaps half a percentage point for a couple of quarters, and unemployment rising from its current 5% to 5.5% or 6%.

The economy in crisis: Financial News - Yahoo! Finance

**Spin** · 22-01-2008, 06:20 PM

Originally Posted by Hootad Binky

Will it crash?

Dow jones futures right now indicate a drop of 955 points to 11,145 this is a 7.88% drop and the market doesnt even open for another 3 hours!

S&P500 is down 55 points to 1270, a drop of 4.1%

It looks like panic is setting in

**baldrick** · 22-01-2008, 08:09 PM

^ the panic is just beginning

The "monoline" insurance business, as we've known it, is done and the value of the insurance they're written is evaporating by the day. The market is now desperate to determine which financial institutions (and there are many) have purchased large amounts of (now suspect) insurance for hedging purposes, as well as other financial companies that have in one way or another participated in the credit reinsurance market.

alot of these spankers have to release the truth in the next week or so - insured debt with worthless insurance is worth fcuk all

**keda** · 22-01-2008, 09:23 PM

No panic at all...it is cool and calculated, the big boys are smashing it down so they can buy back cheap.

**daveboy** · 22-01-2008, 11:24 PM

The US Federal Reserve has cut interest rates to 3.5%, a shock three-quarters of a percentage point reduction.
Aimed at staving off a US recession, the move failed to calm investors, with shares continuing to fall sharply as Wall Street opened for Tuesday trading.

**Sir Burr** · 22-01-2008, 11:28 PM

Yeah, but it's now bounced back. Watch the world markets tomorrow go skyward after the heavy losses today.

**Spin** · 23-01-2008, 02:12 AM

^ Yep, another Bernanke Put saved the day.

**John** · 23-01-2008, 10:42 AM

Greenspan (Mr. Bubble) who caused all this mess is followed by Bernanke (Mr. Panic). Let's sum it up politely - there is no QUALITY in the USA - or better not much thinking.

On the other hand it fits to the government there. But who needs the USA really? Let them die and so do what they want to achieve. Have a nail clipper from USA - it still works - will it get more expensive :-))))))))))) Looking for one made in China!!!

PS: Still have some traveler checks from American Express - will change them now after 10 years...and a 50 percent loss. There is nothing to win with this currency. The future seems to belong to traveler checks in Euro. I made hugh mistakes with my trust in USA - I do not want to repeat them. They simply want to get rid of their obligation by devaluating their currency. It is the biggest robbery in history as far as I know. Endless countries and people get robbed!!!

**Spin** · 23-01-2008, 12:13 PM

I wonder how others feel about this interest rate cut?, my feeling is that the markets need to adjust themselves, correct if you like. The Fed throwing in big rate cuts to stop natural market reactions to economic data stinks.
There was no new data out yesterday that indicated any dire need for the feds action, perhaps they know much more about the direction of the US economy than they are letting on?
I'm staying short financials and real estate.

**baldrick** · 24-01-2008, 05:09 AM

Originally Posted by Spin

I'm staying short financials

the speculation seems to be that there will be an infusion of money into the insurers

US stocks rallied late in the session overnight, led by rising shares of financial companies on speculation about capital infusions for bond insurers.

they will be saying they need to prop up the market to avoid a depression - but the overall scale I think is larger that they optimistically want to admit

**Boon Mee** · 24-01-2008, 05:18 AM

Well, it's pretty clear from watching MSM these days - especially outlets like the NYT - that since the Surge is working, it was time for a recession.

War News Good? Let's Create A Recession | Sweetness & Light

btw - DJ Industrials up > 200 points today...

**Butterfly** · 24-01-2008, 07:52 AM

Originally Posted by Spin

I wonder how others feel about this interest rate cut?, my feeling is that the markets need to adjust themselves, correct if you like. The Fed throwing in big rate cuts to stop natural market reactions to economic data stinks.
There was no new data out yesterday that indicated any dire need for the feds action, perhaps they know much more about the direction of the US economy than they are letting on?
I'm staying short financials and real estate.

The Fed will only be fueling a bubble in a new industry, and yes the political pressure has become so high on the Fed that it can't operate completely independently. You should have seen the comments and reactions from CNBC (traders, host shows etc...) about the Fed chairman, they were going mad and extremly virulent. These people must be on drugs or they have no idea what they are talking about.

**chinthee** · 24-01-2008, 09:06 PM

By ANDREW TAYLOR, Associated Press Writer 1 minute ago

WASHINGTON - House Democratic and Republican leaders are looking for imminent agreement with the White House on an emergency package to jolt the economy out of its slump after negotiators on all sides made significant concessions at a late-night bargaining session.

Deal near on economic rescue package - Yahoo! News

bkkandrew · 25-01-2008, 04:22 AM

Originally Posted by Spin

^ Yep, another Bernanke Put saved the day.

On a serious note, there is more to this than meets the eye. Perhaps the FED was duped into the .75% cut (with the resulting consequences for USD values) by this event. See:

Rogue French Banker

MarketBeat Blog - WSJ.com : Was the Fed Tricked?

**Hootad Binky** · 25-01-2008, 05:36 AM

Originally Posted by Boon Mee

since the Surge is working, it was time for a recession.

War News Good? Let's Create A Recession | Sweetness & Light

Well, that's ironic, the usual remedy for a recession is another war!

**Hootad Binky** · 25-01-2008, 06:41 AM

I Can't change this font! Sorry. Looks like things have settled down, but a friend sent me this:

The Clusterfuck Nation Chronicle

Knees knocked last week from sea to shining sea as the shape-shifting monster of economic reality cut a swathe of destruction through the markets and financial ranks. The exact nature of this giant beast still remained largely concealed in a fog of accounting gambits, policy blusters, and reporting dodges, but a few intrepid scouts who glimpsed the behemoth up close said it looked like Godzilla with Herbert Hoover's face.

George W. Bush tried to appease the beast by offering each American adult the dollar equivalent of half a month's mortgage payment -- with the exhortation to drive forthwith to the nearest WalMart and blow it on salad shooters and plasma TV's -- but Hooverzilla just laughed at the offering and pounded the equity markets further into the dust of loss, while the "bank-like" guardians of wealth lay in the drainage ditches bleeding from their ears and eyes.

My favorite moment was seeing Treasury Secretary Paulson and one of his fellow shaved-head deputies at a press conference rostrum frantically trying to calm the news media rabble like a couple of extraplanetary high priests from a Star Trek episode -- the batteries having run down in their laser wands, and their incantations ("liquidity! liquidity!) veering into mystifying glossolalia.

I resort to such admittedly extreme hyperbole because it may be the only language that an infotainment-drunk society can still process in the face of an epochal calamity that will transform the lush terms of everyday life as we've known it into something like a bleak surrealist landscape in the manner of Tanguy. That crashing sound out there is the armature of confidence needed to support an economy based on faith that borrowed money will be paid back. It's as simple as that. (Doesn't seem so exciting now, does it?)

The United States is so broke, its people at every level from the Federal Reserve on down don't know whether to shit or go blind. The homeowners cringing in the media rooms of their 5000-square-foot personal family resorts don't know how long they can stay put microwaving pepperoni hot pockets with the default clock ticking. The mortgage "servicers" don't know how they will persuade interested parties like, say, the Illinois State Cafeteria Workers' Pension Fund (holder of X-amount of mortgage-backed securities underwritten by, say, Merrill Lynch or Deutsche Bank) to foreclose on properties scattered everywhere from Key West to Bainbridge Island -- or if there is actually any legal mechanism known to man that would make it possible to "work out" the sliced-and-diced collateral. The millions of maxed-out credit card holders and the issuers of their plastic are stuck together paddling a leaky tub in a sea of troubles every bit as wide, deep, and polluted as the one the mortgage junkies and their enablers are sinking in.

The developers of malls, office parks, and power centers are weeping into their filing cabinets as the harsh daylight of insolvency stops the orgy of "consumption" and the retail tenants pack up their unsellable goodies for the liquidators, and the rent checks stop arriving in the mail, and the notes on this mall and that mall enter the eerie realm of "non-performance."

And, of course, there are the genius wonder boyz and Wall Street playerz whose algorithms and turpitudes underwrote the script of this horror show -- for all I know they'll end up laughing into sugary skull drinks on a beach in the Cayman Islands, or doing Chinese fire drills in federal prison (or simply ass-fucked on the granite countertops of their Tribecca aeries by mobs of angry, repossessed, swindled former American dreamers pouring into Manhattan from the tract house dormitories of New Jersey and Long Island).
There's a lot to be concerned about out there. I don't mean to be too cute about it. But, as the master once said, nothing is funnier than unhappiness.

A whole closet full of "other shoes" is now waiting to be dropped. Surely the biggest clodhoppers in the closet belong to the hedge funds, representing trillions and trillions of dollar-denominated "positions" which, however hallucinatory, had previously yielded enough real "money" year-by-year to keep all the realtors and Humvee dealers in the Hamptons goose-stepping to Goldman Sachs's drumbeat. These "positions" can't help now from moving into counterparty crisis territory, especially as the bond insurers such as MBIA and Ambac go up in a vapor, and if that happens the damage could be so colossal globally that Stephen Hawking might have to be brought in to run the Federal Reserve. This is going to be a rough week. Fastening your seat belts may not be enough for this ride. Better superglue yourselves to the floorboards and pray for God's mercy.

**Boon Mee** · 25-01-2008, 07:20 AM

Originally Posted by Hootad Binky

Originally Posted by Boon Mee

since the Surge is working, it was time for a recession.

War News Good? Let's Create A Recession | Sweetness & Light

Well, that's ironic, the usual remedy for a recession is another war!

Sounds like we may get one if John McCain is elected, eh?
Recall his take-off on the Beach Boys 'Barbara Ann' song earlier on the campaign trail?

"Bomb, bomb, bomb - bomb, bomb Iran..."

Can't be any worse than what Slick Willie did when the Lewinsky trial was going on. Shot a Thomahawk missle into an empty camel tent!

**baldrick** · 25-01-2008, 09:11 AM

Originally Posted by Boon Mee

Shot a Thomahawk missle into an empty camel tent!

a few tomahawks taking out floating mansions in the Caribbean, full of wall street spankers ,a few years ago might well have kept the turd in the flaming paper bag on the doorstep away.

**Frankenstein** · 25-01-2008, 11:28 AM

^Sounds interesting. Any links?

**Rattanaburi** · 27-01-2008, 04:03 PM

People around the world are feeling inflation. It's a lot worse here in Thailand I'd say. Some foods are up 10 to 20% from what I've seen and heard from others. For the workers this has to really hurt. Imports of luxury foods are going to suffer from this.

I just don't see a bright future right now. Many of those who make money from the markets keep talking up the markets. They may not have a choice. You can clearly see a lot of people in company management getting out of the business now. They don't want to deal with the shit that is about to happen, and if they get now they won't get too much criticism for their generous exit packages. When things get worse in the near future the media is going to rant about how the CEOS and others who are leaving are getting great packages for leaving. this might cause some problems for them.

As for the markets, why should prices be outlandishly high? If they can go up 50% every two years why can't they come down 10% 20%, or more? It's all abig joke.

George Soros stated that he thinks this is the worse situation since WW2. There are others like him. So I see more doom and gloom.

bkkandrew · 28-01-2008, 04:12 AM

Originally Posted by Rattanaburi

People around the world are feeling inflation. It's a lot worse here in Thailand I'd say. Some foods are up 10 to 20% from what I've seen and heard from others. For the workers this has to really hurt. Imports of luxury foods are going to suffer from this.

I just don't see a bright future right now. Many of those who make money from the markets keep talking up the markets. They may not have a choice. You can clearly see a lot of people in company management getting out of the business now. They don't want to deal with the shit that is about to happen, and if they get now they won't get too much criticism for their generous exit packages. When things get worse in the near future the media is going to rant about how the CEOS and others who are leaving are getting great packages for leaving. this might cause some problems for them.

As for the markets, why should prices be outlandishly high? If they can go up 50% every two years why can't they come down 10% 20%, or more? It's all abig joke.

George Soros stated that he thinks this is the worse situation since WW2. There are others like him. So I see more doom and gloom.

I think you are bang on the money. The world economy has an unreal feel about it right now. Too many imbalancies, too many contradictions.

History has shown that Mr Soros is seldom wrong...

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