Panic Selling Grips Wall Street

“Fundamentally strong,” as the New York Times reports:

One of the most stunning government bailouts in American history failed on Wednesday to stem the runaway fears engulfing the global financial system.

Investors embarked on a frenzied flight to safety on Wednesday, just hours after the Federal Reserve and the Treasury Department propped up American International Group, the ailing insurance giant, with an $85 billion loan. And many wondered which once-proud institution would be the next to fail.

“There’s a growing sense that there’s no end to this in sight,” Edward Yardeni, the investment strategist, said…

Stress showed in all sectors of the global financial system. The cost of insuring corporate bonds spiraled higher, particularly for Morgan Stanley and Goldman Sachs, venerable investment banks that are commonly considered among Wall Street’s strongest brands.

“These are levels we haven’t seen before for these names,” Dave Klein, a manager at Credit Derivatives Research, said.

And the Boston Globe reports:

As they tussle over who can best fix the faltering economy, a new poll taken during the current Wall Street turmoil found that voters have somewhat more confidence in Barack Obama than John McCain, though neither gets very high marks.

The findings from the New York Times/CBS News poll, posted online this afternoon, said that about six in 10 voters say they’re very or somewhat confident in Obama’s ability to make the right decisions about the economy, while only 53 percent as are confident in McCain’s ability.

The poll uncovered stark pessimism about the direction of the economy — nearly 80 percent rated economic conditions as negative and 6 in 10 said is getting worse. One in 3 say their family is worse off today that it was four years ago — a higher percentage than leading up to the last presidential election in 2004.

126 Community Comments, Facebook Comments

  1. Laughing Boy says:

    is that our economy IS fundamentally strong.  Election year bumper stickers do not economic policy make.

    • Danny the Red (hair) says:

      weak $

      Inflation

      large deficits (trade and budget)

      rising unemployment

      frozen credit

      collapsing equity markets

      collapsing real estate markets

      There is nothing strong about the economy.

      There are many causes and many have been developing for close to 30 years.  Many smart people argue about the causes, but it is pure foolishness to say that the “fundamentals are strong.”

    • bob ewegen says:

      George W. Bush DO economic policy make;-(

    • Fidel's dirt nap says:

      The reason we are in this mess is that the fundamentals of our economy are NOT strong.

      The weak dollar.

      Crippling deficit.

      85K bailout out AIG.

      Lehman and Bear bite the dust. Lehman was 158 years old.

      Wall St. plummeting 400 + points plus, twice in 3 days.

      high grocery prices.

      Unemployment is high.

      consumer confidence is low.

      GM teetering.

      high gas prices.

      Trade Deficit.

      Lowest housing starts in decades.

      foreclosures and mortgage backed securities.

      China owning our debt.

      What other fundamentals are there ?

    • PERA hopeful says:

      I’m a lawyer, not an economist. What the heck are the strong fundamentals of our economy? I’m skeptical, but just because it seems to my untrained eye that our economy is going to hell in a handcart and I don’t see any underlying strengths. I readily confess I’m ignorant, so please explain.

      • Fidel's dirt nap says:

        purchases of ground mooseburger are way up, and Billy Mays and the shamwow guy continue to jam useless shit for $ 19.95.  

      • Another skeptic says:

        A strong rule of law and a relatively honest judicial system have helped America become the strongest economy in the world.

        We also have a highly-educated, very creative and hard working workforce. Our natural resources, transportation system and capitalist approach to life make us unbeatable.

        And our resilience when confronted by adversity and new competitors is unmatched around the world.

        Most important, we accept our mistakes and failures, let failing companies go under so they can be replaced by innovators and new competitors. We encourage entrepreneurialism more than almost any other developed country.

        Our regulated free markets create relatively free playing fields for all competitors, producers and consumers, and our belief in integrity gives us a huge edge.

        We’re not run by unions. Politicians don’t run our businesses and dictators don’t rob us of our wealth.

        That America’s a democracy with relatively transparent governmental agencies and publicly-owned businesses makes us strong and wealthy.

        Class warfare always threatens to destroy our prosperity, but so far, the populist demagogues haven’t been able to turn us into Venezuela, try as they might. Obama’s trying to destroy our economy, and I hope he fails.

        American volunteers also important contributors to our prosperity, and no other country matches our sense of community nor our volunteerism.

        These are the fundamentals that make us prosperous and economically strong, even when things look bleak.

        Since 2000, we’ve gone through the biggest boom in history, and that boom came on top of the Reagan boom.

        We’re spoiled and whining because the Dairy Queen is closed for the winter.

        • ClubTwitty says:

          Pls. send that ‘talking point’ to the McCain campaign.

        • parsingreality says:

          How can ANYone be so wrong as you?

          Clinton’s economic growth is the longest expansion of ANY president.  Reagan had a boomlet at best.  

          Bush? Boom? Oh, god, my side hurts laughing at your comic fodder.  

        • Ray Springfield says:

          The boom was the Clnton boom.

          Wall ST went up since 2003 due to the rob the country blind policies of Bush/Cheney.

          The gig is up and your analysis is silly..

          Obama is not the President.

          The largest element of communism is defined as lack of private property. Your President has overseen state run mortgage companies,and a state run insurance company all in the last two weeks.State run banks and bailouts of GM, Ford and Chrysler are not on the agenda, but these companies will be penny stocks soon.

          Bush has sold us out to China by financing the war and the tax cuts to the rich through T-bills bought by real communists.

          He has been the real Manchurian candidate, and his supporters might as well be  Maoist communists.

    • redstateblues says:

      John McCain said yesterday that the fundamentals of the economy are the American workers. It’s hard to disagree with him there (nobody thinks Americans don’t want to work hard for what they have) but I think he’s oversimplifying things.

      The economy is a massive, complex beast. There are more factors to it than Wall St., working Americans, businesses, and all the other things that make it up.

      Obviously the economy is not going to collapse tomorrow, but if there is a run on the banks, or a huge sell-off on Wall St. because of a panic, then we could be walking down a road that will take years to get back on track.

      The fundamentals may be strong, but who can honestly say that economy itself is strong? If the economy itself is weak, then those fundamentals will bring it back, but how much are we going to hurt before that happens?

      • Half Glass Full says:

        He was just desperately trying to correct himself without making it seem too obvious. Although it was.

      • debuenas says:

        I believe that one of the qualities of leadership is to provide calm assurance in the face of mass hysteria. Right now,Wall Street is running on paranoia. Remember what FDR said on his inaugural address after winning the Presidency in rallying the country after the Great Depression – “..the only thing we have to fear is fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

        • themonk77 says:

          I think that confidence is necessary for folks, but trying to say the foundation is fine when the house isn’t confidence building, its clueless.

          Real leadership is saying that the house is on fire, but lets get some buckets and water hoses and fix the problem.  Not seeing a lot of that in a fundamentals are fine.

        • The credit rating agencies are taking a look at the balance sheets of these companies and are correctly if painfully downgrading their credit ratings.  It’s no different than getting your personal credit rating downgraded for having too much debt or missing payments – which these companies were having/doing.

          Once the company’s credit rating tanks, they can’t raise the capital to stay afloat.  Their assets have tanked from the bad housing market and the fact that they were holding too many mortgage consolidation instruments.

          Investors react to the fact that the company is in financial trouble by dumping stocks, and the company goes deeper under ’cause they can’t issue new stocks to raise more cash.  The stock market is a great money generator, but it can also turn a company’s financial difficulties into an instant bankruptcy, no panic needed.

    • One Queer Dude says:

         In economics, like in politics, perception becomes reality.  In fact, I would say more so in economics because of the herd mentality.

    • Another skeptic says:

      The left ignores the fact that despite predictions that we’d be in a recession by last spring, we’re still growing, albeit more slowly than before and than we’d like.

      We’re correcting from a housing bubble promoted by Democrats who supported the highly over-paid Obama financial advisers  who mismanaged Fannie and Freddie in the ’90s and early 2000s. And we’re suffering the melt down that John McCain  and many others predicted in 2005 and for years before that.

      During the last eight years, Barney Frank and Chris Dodd have supported the mismanagement of Fannie and Freddie and blocked reforms proposed by Bush.

      Whether McCain and Palin can effectively explain that history remains to be seen. Voters may not be willing to listen to them.

      What’s interesting is that of all members of Congress who received contributions from Fannie and Freddie lobbyists, Obama ranks in the top 3 and McCain received virtually nothing from those government sponsored enterprises (GSEs).  

    • Another skeptic says:

      From The Corner:

      John McCain. 25 May 2005, speaking to the Senate:

      Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.

      The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.

      The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.

      For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac-known as Government-sponsored entities or GSEs-and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

      I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.

      I urge my colleagues to support swift action on this GSE reform legislation.

      Link:

      http://corner.nationalreview.com/

      • That bill was Republican-sponsored, but it never got out of the Republican-controlled committee – several years running.  You might reconsider just who killed the bill, or if it was just a fig leaf, never meant to pass.

        Also, I’m not sure, but I think the prime issue with Fannie and Freddie right now is that they were allowed and encouraged (read: required) to pick up the bad debt from other mortgage lenders less than a year ago, to try and head off the crisis we see now.  Golden parachutes are a minor problem in comparison.

        • Another skeptic says:

          Fannie and Freddie weren’t required to take bank’s subprimes, or we wouldn’t have so many banks writing off subprimes.

          The bill was blocked by Chris Dodd and Barney Frank. They were defending their contributors at Fannie, Freddie and the trade associations representing home builders and mortgage bankers who wanted the party to last as long as possible.

          • Rep. Barney Frank supported and worked on the House version of the reform bill in 2005, and spoke on the Congressional record in favor of both it and its various provisions.  The House vote was 330-90, strongly bi-partisan.

            It appears that McCain’s bill was caught up in committee competing with the House version of the reforms, not because “Dems blocked it”.

            When Frank became the head of the committee, one of his first acts was to work with the administration to pass similar reforms.  Senate Republicans blocked its passage for most of a year, threatening a filibuster.

            Next time, please don’t get your “facts” from the opinion page of the Wall Street Journal in a piece written by a former Bush advisor.

            • Nancy L Baldwin says:

              And NEVER, NEVER get your facts from a hate filled Blogger.  

              • Middle of the Road says:

                And NEVER, NEVER get your facts from a hate filled Blogger.  

                You heard it from the woman herself–never get your facts from Nancy.  

              • No wonder you are where you are.  If you want to trust the WSJ, at least stick to the news pages.  The “funnies” are more than a bit lopsided to the right.

                The House vote (H.R. 1461, 109th Congress) is public record – you might try http://thomas.loc.gov ).

                It was much harder to dig up the rest, and I’m still not 100% sure of what happened, but competing bills dying a mutual death is not at all uncommon in Senate committees, especially when one already passed the House and the other is a Senate-initiated version.  I can’t seem to find the page that finally gave me a partial retelling of the tale; the short version is that the bi-partisan, R-originated House bill had set-asides for affordable housing and a slightly more permissive investment regime.  My guess is the Senate Republicans couldn’t stomach the set-asides – if it were just the investment details, they would’ve gotten it through and out to a Conference Committee.

                Learn as you will.  I’ve never claimed to be unbiased, only fair.

    • Half Glass Full says:

      He claims he was talking about the “fundamentally strong” American worker.

      The economy? It’s “a mess” to quote Sarah Palin.

  2. Nancy L Baldwin says:

    So what is a safe investment in this market?  If Money markets are failing etc.  What alternatives do we have?

    I know the banks say they insure up to 100K but in the case of Indymac bank the depositors won’t get their own money back for up to 1 year.

    If we take it out in dollars and stick in the back yard – it looks like our dollar is falling against other currencies.

    Gold?  How do I pay my mortgage in gold?

    Especially if my bank fails?

    You know they will still want my house payment – even if they no longer exist.

    • Fidel's dirt nap says:

      the fundamentals of the economy are strong. That is all you need to know.

      Troll.

      • Nancy L Baldwin says:

        If there is anything I know about the economy it is based on good faith and trust.  If a country is facing a possible financial crisis does which candidate is being more responsible?

        Candidate A:  “The sky is falling – the sky is falling and it is all the other guys fault.  Take your money run for the hills but vote for me.”

        Candidate B:  “The fundamentals of our economy are sound.”

        Well, in light of bank failures which are compounded by panic – I would say Candidate A is compounding the problem.  I would also postulate that candidate A believes he will benefit if he can just cause more widespread panic.

        Candidate B seems to be acting in the best interest of his country.

        Hmmmm…

        But this is probably over your head.

    • Danny the Red (hair) says:

      I do not know your particular situtation so I can’t give you specific advice.

      Large banks like Citi are better positioned than small banks like Indymac.  JPMorgan is probably best positioned.  Don’t worry too much about the banks in general if you are in a big bank, but do pay attention to the news about your specific bank–Indymac has been weezing for a long time.

      Foriegn banks like UBS are a mixed bag, but I’ve always liked UBS and HSBC (and Barclays which is buying pieces of Lehman)

      Notes on the Money Market failure.  1. it still will pay out 97 cents on the dollar–not a particular large loss, but a “loss” in a safe investment always hurts.  2.  If a MMKT has a large or diversified parent, the parent is likely to buy out bad securities and work them out, but there is no guarantee.  3.  Look for a real management team, many places under staff their MMKT teams.  4. Look for a place that doesn’t do institutional money markets–its the big investors that really pace the pressure on the managers to reach for yield.

      Gold is a commodity and commodity investing is hard.  You really have to pay attention if you are going to do it.  Gold isn’t just a store of value, it is also an industrial metal and with a global recession, who knows if the industrial declines counterbalances the store of value buyers.

      For your longterm investments.  If you are well diversified for your time horizon, collapses are manageable, but I recommend you get some professional help.  Be careful choosing advisors though, many are too much chearleader and too little sceptic.

    • Another skeptic says:

      Money markets still look best to me; treasury bills are paying nil. Buy some dividend paying stocks like DD, kmb, MCD. Avoid dividend exchange traded funds like DVY because most dividend stocks are still sinking. PIck and choose strong dividend paying stocks.

      Gold is a commodity. It’s volatile. It will come back down sooner or later, but if you want to play it, buy the exchange traded fund, GLD.

      • Fidel's dirt nap says:

        if the fund had a good previous year, it’s a five star.  If the fund had a bad previous year, it’s a one star.  Therefore it is redundant – just look at the performance of the fund.

  3. Ray Springfield says:

    Main street now starts to focus.

    If the  government had not acted then  I’ve read that roughly 1000 estimated banks would have failed domestically with ripple effects in the globalized economy.

    The roll back  of regulatory oversite,  naked short selling of predatory hedge funds, massive deficit spending, neocon war profiteering, and basic unsound leadership in the mortgage crisis has shown what liberals have warned about for 7 years to be true.

    The consolidated news media feeds the fear when regular folk wake up to find the financial system fried.

    Pres. Clinton did play a role in agreeing to the repeal of the 2nd GLass-Steagal Banking Act which separated investment banks from deposit and loan banks in 1999.I still hold the Bush/Cheney policies which permitted little to no oversite responsibile for most of it.

    Most conservatives that I’ve spoken to, however, refuse to admit that this has been caused by  monetarist policy. They believe in lipstick on pitbulls but not pigs.

    This is a full blown crisis on the level of 1929.

    • Oh, yeah – Gramm-Leach-Bliley.  McCain voted for that bill.  And yes, Clinton deserves a boot to the head for signing it.

      We’re not to 1929, but the underlying signs are not promising.  If WaMu goes under, the FDIC will have to borrow more money from us (aka the government), and that may trigger a run on the banks, which could easily tip us over into a full-blown Depression.

      And with the government in bad financial shape, it cannot ride to the rescue without printing more money, triggering massive inflation.

  4. Nancy L Baldwin says:

    will calm the fears of the general populace.  Not fan the flames.  I believe Obama is fanning the flames.

    Same way he acted when he tried to prevent our troops from withdrawing in Iraq so he could continue to use this as a political weapon.

    Keeping our troops in harms way?  Eroding the confidence of people in their banks etc?  This is the Obama way.  Because if more people are killed under Bushes watch and more people lose their life savings.  Then, Obama benefits.  

    And in the grand scheme of Obama’s plan he doesn’t care what it costs as long as he gets elected.

    • Fidel's dirt nap says:

      and got us here where we are today.

      OWN IT.  

      • Nancy L Baldwin says:

        I am above blaming a specific party or person.  But if you want to be that shallow and blame Republicans – be my guest.  I’m not a Republican.

        However, I am a thinking individual and believe that name calling by one party to another isn’t going to solve anything.

    • bob ewegen says:

      will dance on her mother’s grave to push her twisted political agenda.

    • redstateblues says:

      is showing real leadership on this issue. Your idea of leadership is to rearrange the deck chairs on the titanic.

      It is NEVER bad leadership to be honest to your people when they are facing a tough time ahead. By your logic, Roosevelt shouldn’t have enacted the New Deal because it would have shown we were weakened economically.

      Your idea of leadership is the same as President Bush’s: deny, deny, deny.

      • Nancy L Baldwin says:

        is what props up any economy.  Obama has no confidence in our economy, no confidence in our troops, no confidence in the American people.  

        Honesty has nothing to do with it.  Obama is the furthest thing from honest.

        Fear – that is what will elect Obama.  He is sure trying to play the fear card here.

        And, as a presidential candidate he is acting irresponsibly.  Just goes to his poor judgement again.

        Fan the flames of fear so Obama can get elected.  Great strategy.  But unfortunately the people lose.

        • redstateblues says:

          I forgot why I don’t respond to you. Thanks for reminding me.

          You think OBAMA is trying to use fear?? Please. We both know which party uses fear as an electoral tool.

        • JeffcoBlue says:

          The idea that we should prefer being lied to by McCain versus being leveled with by Obama is truly one of the sickest things I have ever heard. It’s so reprehensible and Orwellian that I can hardly believe I’m not reading a satire.

          If you really believe this, you are a showcase of everything that’s wrong with America.

        • John McCain has been using fear and dishonesty as his primary campaign tactics, and you want to call out Obama for it?  That’s rich.

          We’ve spent much of the past 7 years in the same denial that we spent the first ~6 years of the Reagan administration.  Economy strong?  Tax cuts!  Economy weakening?  Tax cuts!  War?  Tax cuts!  Spur the economy?  Deregulation!  Collapsing mines?  Deregulation!  Failing financial institutions?  Deregulation!  When all you have is a hammer, everything looks like a nail.  (No, that’s not a sexist comment.)

          Real leadership is acknowledging problems and proposing solutions.  Obama does both.  McCain has trouble doing either.

        • Ray Springfield says:

          There is no confidence in the Bush government.

          Didn’t the McCain campaign state that they would vigorously challenge blogs with paid

          staff trolls?

          He should have thought about hiring one that knew a little bit more about economics than Sen. McCain himself.

          I have a question for you.

          If Palin is indicted for abuse of power before January,and McCIan wins the election, then who does the campaign tell you will replace Palin as the VP?

           

        • Gilpin Guy says:

          He/she/it can’t keep straight whether to be a disgruntled Clinton supporter or a “Drill Now Drill” McCain fanatic.

          Like I said yesterday, I don’t agree with Laughing Boys politics but his writing is authentic and intelligent compared to this garbage.  We have some good conservative writers on this forum.  I’m embarrassed for them that they have to consider this fool part of their tribe.

          Only respond to this troll if you want to ridicule it.

        • PERA hopeful says:

          LB, you remember the other day when I said you were were trolling like Nancy?  I’m so sorry, I’m so sorry, I’m so sorry, sorry, I’m so sorry, I’m so sorry, I’m so sorry, I’m so sorry, I’m so sorry!

      • Nancy, showing her true Republican roots, apparently thinks that Reaganomics is “true leadership”.  Even Bush 41 saw the flaw in that (as did Reagan before he left office, assuming he was still with it enough to initiate policy changes like that…)

    • ClubTwitty says:

      Nancy L Baldwin–regretfully, you are an idiot.

    • Half Glass Full says:

      That smear about Obama “trying to prevent our troops from withdrawing” has already been debunked. Move on to the next smear, you troll.

      That’s pretty ironic saying Obama will do anything to get elected, when of the two candidates it’s McCain who’s totally sold out every principle that he was espousing in 2000-2007, including his own opposition to offshore drilling, etc. etc. etc.

    • Another skeptic says:

      Good comments.

  5. Danny the Red (hair) says:

    both Japan and Scandanavia were going through banking crises like we are now.

    Sweden (and the other Nordic countries) acted decisively: Japan did not.

    Sweden cleaned up its problems relatively quickly and had a massive post collapse boom–Japan has had a lingering recession for most of a generation.

    What did Sweden do?  They federalized any bank that went to technical insolvency.  Then they fired all the senior management, wiped out the shareholders and nursed the banks back to health and then floated the banks in the private market to compensate taxpayors.

    It sounds expensive, but it is cheaper than the Japaneese “wait and see” method.

  6. Danny the Red (hair) says:

    I still have some of his books on my shelf from long before he won his two Nobels.

    http://www.cnn.com/2008/POLITI

  7. Gilpin Guy says:

    How much money do you think the Feds. are going to have to borrow to finance the socialization of our banking system?  Is an 800 billion deficit this year unreasonable?  We know that it was already suppose to be around 483 BILLION dollars.  That was before Fannie Mae and Freddie Mac.  Who’s next?  Washington Mutual or CitiBank?  It is a brewing financial failure that can have staggering consequences.

    LB says the fundamentals of our economy is strong but I look at the manufacturing sector and the only saving grace is that maybe transportation costs will make it attractive to relocate manufacturing back in the US.  We have lost over 4 million manufacturing jobs since 2000.  I would call that fundamentally strong.  The housing sector is glutted with foreclosed homes.  Builders are shutting down or pulling out.  I wouldn’t call that sector fundamentally strong.  The financial sector?  Nope.  About the only sector that has shown any growth at all are arms and government and that is at the high cost of a national deficit that is skyrocketing.  I have to disagree with LB on this one.  The economy is exactly were Bin Laden wanted it to go when he goaded goat boy into invading Iraq.  We’re screwed until we exit Iraq.

    • Gilpin Guy says:

      We have lost over 4 million manufacturing jobs since 2000.  I wouldn’t call that fundamentally strong.  

    • redstateblues says:

      Fannie and Freddie were bailed out for $200 Billion, AIG for $85 Billion. Adding those to the $483 Billion figure puts us very, very close to the $800 Billion you were talking about.

      Talking about deficits of that scale almost immediately brings us back to inflation, which, in case people hadn’t noticed, was already sky high.

      I will ask it again, as I did in another thread: when is the Fed going to cut the discount rate again? We can’t keep up with this debt if they keep it at the already insanely low figure of 2.00%. The only problem is that if they cut it any lower, we are putting our financial security AND our national security on the line because China can buy even more of our economy on the cheap.

      Again, if we’re talking about those fundamentals of our economy (not workers, ingenuity, etc.) then we are on very thin ice. (read as: not particularly strong)

    • Ray Springfield says:

      S+P lowered GM to sell.

      A terrorist attack also took place today.

      It barely made the news cycle.

      The Bush policies have not only sold the country out to the communists (China).

      I have to agree with you completely that

      the US economy is exactly were Bin Laden wanted it to go

      • ClubTwitty says:

        a car bomb at the US embassy that killed 16.  Not even on NBC News as far as I saw.  This nation is being flushed down the toilet, and the blame lies with Dubya.  

        Vote Hoover/Palin for more of McSame.

  8. Gilpin Guy says:

    Social Security failed?  Obama should hammer McCain on supporting the privatization of Social Security.  Just hammer him on it.

    What a legacy goat boy would have left to put the country into the dumper and dissolve Social Security all in eight years?  You would have had paupers standing on every street corner.  Still might.  What a disaster the Bush years have been for the country.  He reminds me of the jinxed character in Lil Abner Joe Btfsplk.  He is our countries jinx.

    http://www.lil-abner.com/famil

  9. Republican 36 says:

    Senator Obama is surging in the polls.  The latest Gallup poll has him leading Senator McCain 47% to 45%.

    In three of the most important states, Senator Obama is surging.  The figures I cite are from RealClearPolitics.

    In Ohio, Senator McCain led by four points.  Today, Senator Obama took the lead in Ohio, 49% to 47%.

    In Florida, where Senator Obama was also down four points yesterday, the race is now tied 48% to 48%.

    In North Carolina, where Senator Obama trailed by 17 points on September 10th, he now trails by one point, 47% to 48%.

    The Palin affect is over.  The economic and financial meltdown on Wall Street has overshadowed her.  People are now looking at a very complicated financial situation and they intuitively know that her ability to field dress a moose isn’t the kind of experience we need to lead our nation and perhaps the world through this crisis.

    In addiiton, the McCain campaign is (inadvertently) belittling Gov. Palin in the eyes fo the voters.  They have protrayed her as a crusading reformer who stands against special interest yet the McCain campaign is now requiring that she and all of the executive branch departments in Alaska state government refer all press inquiries to the campaign communicaitons staff.  Apparently, they don’t trust her ability to answer quesitons about the government she has been the chief executive of for the past two years.

    Senator Obama now has a great opportunity to charge ahead and stay ahead.

  10. Go Blue says:

    Even though his campaign can try to claim inventing technology that McCain doesn’t know how to work, the public isn’t going to buy it. The American people are not as dumb as John McCain thinks they there.

  11. DavidThi808 says:

    Ok, this is a somewhat small data point but everyone I talk to in the high-tech community that sells to companies is doing ok. They’re all worried but sales are holding steady. And that means big companies are continuing to make regular purchases.

    I think what’s we’re seeing right now is a major problem in the financial sector. And that has wider ramifications than any other sector. But we do have financial institutions that are sound and some are using the opportunity to grab weaker ones.

    There have been a ton of mistakes made by the Bush administration, Congress, the companies themselves. But what this also is is a market correction and elimination of weaker companies. It happens in every other industry – why not for very large financial institutions?

    • Western Way says:

      This is more than just a “Bush problem,” “a Democrat problem,” or a “Republican problem;” it is a systemic problem.  Individuals, corporations, and the government have been playing with fire for a long time and now we are all getting burned, and what’s more, we deserve it.  We voted for these policies (this is a bi-partisan), we borrowed money that we couldn’t pay back, bought mortgages we couldn’t afford, and we invested with companies who used these worthless subprime-morgtage backed securities to hedge against the market.  

      No bullet was in the chamber today, when AIG was bailed out, but will we be so lucky next time the chamber spins?  “We” as a people, need to seriously engage each other and discuss what caused this as rational human beings, because that is the only way we are going to solve this, if we just continue to try to score points (as I have seen on the campaign trail), then God help us all.

      • Western Way says:

        i meant to say (this is a bi-partisan problem)

      • Aristotle says:

        that banks used to turn down people who couldn’t afford loans and mortgages. Easy credit is biting us hard now. I don’t know if government is to blame to any extent, but the rise of easy credit coincided with deregulation which was championed and implemented under Reagan (and continued, IIRC, under Bush I and Clinton).

        Basically, this is a failure of the free market model and a good argument for regulation.

        • Western Way says:

          It is not just the failure of the free-market. It is the failure of people to realize that there is a “free-market” and the responsibility that that entails.  

          See, deregulation happened, but people forgot they were responsible for the consequences.  Today, people are not conditioned for the “reality” of consequences, I guess case and point for that is the fact that Wall Street has begun to build in a “bail-out” variable with respect to stock-prices.  

          • Aristotle says:

            if the same sort of shenanigans didn’t happen before there were government bailouts (See: Great Depression, Panic of 1893, and a few other collapses). Apparently the lack of bailouts wasn’t a disincentive to rash and short-sighted business practices then, so it doesn’t make sense to claim that they let business leaders be reckless now.

      • parsingreality says:

        Our current mess is indeed due to many factors and there is plenty of blame to go around, but the underpinnings are 100% Republican/Conservative philosophies. Yes, the Dems bought into those philosphies along the way as the policies of the New Deal faded into the collective memory hole.  

        In everyone’s defense, the “regulatory workaround” of collateralized obligations was a new kid and no one really understood how to regulate them, or what could happen.  And indeed, things went swimmingly for many years.  

        But, in the short term, greed always wins.

        • Western Way says:

          It’s underpinnings are not conservative/Republican, it is elected officials in general.  Elected officials have sold their souls’ for votes and  they thought, “what is good for my re-election campaign,” was the philosophy they should live and vote by. I’ll elaborate later, because I’m a bit busy.

          • parsingreality says:

            Of the two parties, historically since the 1870’s, has stood for more regulation and created many of our regulatory bodies?  Answer:  The Democratic Party

            Which of the two parties always fought regulation and when the opportunity arrived with the election of RR (although Carter was starting to do some careful work in deregulation) kept harping about getting gummint outta da way of The Market Place? (Genuflect now.)  Answer: The Republican Party.

            If you will note my previous comments, I fully agree that the Dems of late have abandoned many of their historical principles and dropped to their knees before Wall Street.  BO and HC aren’t exactly choir boys/girls in this matter.

            Possibly it could be thought of as the R’s have been active, the Dems complicit.  

  12. RadioFreeDenver says:

    I started listening to Bad Money by Kevin Phillips last week. From Amazon:

    In Bad Money, Phillips describes the consequences of our misguided economic policies, our mounting debt, our collapsing housing market, our threatened oil, and the end of American domination of world markets. America’s current challenges (and failures) run striking parallels to the decline of previous leading world economic powers-especially the Dutch and British. Global overreach, worn-out politics, excessive debt, and exhausted energy regimes are all chilling signals that the United States is crumbling as the world superpower.

    “Bad money” refers to a new phenomenon in wayward megafinance-the emergence of a U.S. economy that is globally dependent and dominated by hubris-driven financial services. Also “bad” are the risk miscalculations and strategic abuses of new multitrillion-dollar products such as asset-backed securities and the lure of buccaneering vehicles like hedge funds. Finally, the U.S. dollar has been turned into bad money as it has weakened and become vulnerable to the world’s other currencies. In all these ways, “bad” finance has failed the American people and pointed U.S. capitalism toward a global crisis.

    Watching the events unfold this week has been truly frightening, especially since they all could have been prevented by leaders who actually believe in governing for the common good…

    • parsingreality says:

      Read that a few years ago, what a downer.  A comparison of the great merchant empires and attendent political systems of Spain, the Netherlands, Britain, and, oh by the way, the US.  

      The general pattern, IIRC, is that all started out actually trading STUFF and ended up trading PAPER.  Just like us. Now.

      Each of the other three nations ended up with rich financiers but the tradesmen and farmers getting nowhwere.  When I read a letter to the editor about how America is the greatest country in the world, or how it’s the land of opportunity, I want to barf.  We were. No longer.  And that is exactly how the average Brit ca. 1910 saw themselves, looking in the rear view mirror.

      The good news is that the UK found a new self and it took only maybe 90 years.  

  13. Half Glass Full says:

    No matter who wins, we will be in for a long hard number of years.

    • parsingreality says:

      and I think back to the personal and national optimisim that I grew up with….it’s depressing.

      The problem with a long hard number of years is that we don’t have the national will to have a Roosevelt or a Churchill tell us that and then we forge on.  When Carter tried that, everyone said Eff You and elected President Feel Good.

      A President Obama might, might pull of such a challenge to our nation character, but it won’t happen until his final term.  

  14. cpolevoy says:

    As a former securities analyst and mutual fund manager, it’s been pretty clear for two years that the stock market and economy had been heading for at least a mini-debacle. As much damage as has been done to the economy and the securities/money markets as a direct result of fed mismanagement, irrational deregulation and very bad judgment by “the best minds” on Wall Street, the stock market has quite a ways to go – down. Prepare yourselves for at least 9,500 on the Dow Jones Industrials Average and very likely below 9,000 before we are finished.

    • Nancy L Baldwin says:

      Since you seem to have such a good grasp of the market and that you saw it coming two years ago – can we assume you put your money where your mouth is and sold the market short?

    • Danny the Red (hair) says:

      I tend to agree that the problem was obvious, Jamie Dimon dodged most of it at JP Morgan.

      If there had been one wiff of proper regulation this didn’t need to happen.  If the NRSROs (fitch, moodys S&P) were subject to regulation, heck if they were subject to liability, this wouldn’t have happened.  Chairman Cox refused the authority to regulate the NRSROs–but then he refused money to hire aditional regulators.

      I worked a bit with the Basle II accords since I was a bank analyst and I worked alot with European financial regulators.  It was clear to me going back 10 years that securitization, while good for the system, was not being accounted for correctly.  It was OK when we were securitizing fairly homogenous loans, but once banks started securitizing non homogenous loans, or worse building SIVs out of bad paper that relied on the accuracy of NRSRO ratings.  What really got me was that they would make the loan, strip off the MSRs, and securitize the “risk”–no account that the value of the MSR was a credit risk.  After they sold the securitized loans off they would then end up buying them back in the form of SIVs or direct CLO traunchs in their trading portfolio.  They might even hold the Z traunches in their equity portfolios.  And they would say they weren’t holding any risk?

      BTW I went to Michigan State to get my PhD, couldn’t handle the weather (too cloudy) so no PhD for me.

  15. cpolevoy says:

    No interest rate cut? Every major investment bank failing or close enough to the brink. Investment banks able to use leverage to the tune of 30 to 1? And they receive federal bailouts/assistance? Let the market take its course. Let the free market solve the problems. Isn’t that the Republican Reaganesque mantra? Truly, someone needed to ride to the rescue, and yes, perhaps the Fed had to provide an assist in some way. But the Treasury has explicitly said, in rescuing AIG from immediate disaster – with more disaster at AIG yet to come – with $85 Billion, that there is $800 Billion available. $800 Billion of rescue dollars. Hold on to your pants. And your dollars.

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