Posted on 08/11/2011 6:14:42 AM PDT by blam
The Stock Market Crash Of 2011?
August 11, 2011
How far does the stock market have to go down before we officially call it a crash? The Dow is now down more than 2,000 points in just the last 14 trading days. So can we now call this "The Stock Market Crash of 2011"? Today the Dow was down 519 points. Yesterday, an announcement by the Federal Reserve indicating that the Fed would keep interest rates near zero until mid-2013 helped the Dow surge more than 400 points, but all of those gains were wiped out today. It turns out that the Federal Reserve was only able to stabilize the financial markets for a single day.
Fears about the European sovereign debt crisis and the crumbling U.S. economy continue to dominate the marketplace. With each passing day, things are looking more and more like 2008 all over again. So what is going to happen if "The Stock Market Crash of 2011" pushes the U.S. economy into "The Recession of 2012"?
Just like in 2008, bank stocks are being hit the hardest. That was true once again today. Bank of America was down more than 10 percent, Citigroup was down more than 10 percent, Morgan Stanley was down more than 9 percent and JPMorgan Chase was down more than 5 percent.
Bank of America stock is down almost 50 percent so far this year. Overall, the S&P financial sector is down more than 23 percent in 2011 so far.
How soon will it be before we start hearing of the need for more bailouts? After all, the "too big to fail" banks are even bigger now than they were in 2008.
All of this panic is causing the price of gold to reach unprecedented heights. Today, gold was over $1800 at one point. If the current panic continues for an extended period of time, there is no telling how high the price of gold may go.
In the United States, much of the focus has been on the fact that the U.S. government has lost its AAA credit rating, but the truth is that the European sovereign debt crisis is probably the biggest cause of the instability in world financial markets right now.
The European Central Bank has decided to start purchasing Italian and Spanish debt, and there have been rumors that French debt could be hit with a downgrade. Europe is a total financial basket case right now and unless dramatic action is taken things are going to get progressively worse.
Of course the U.S. is also certainly contributing greatly to this crisis. The federal government is on track to have a budget deficit that is over a trillion dollars for the third year in a row. The U.S national debt is a horrific nightmare, but our politicians keep putting off budget cuts.
The debt ceiling deal that was just reached basically does next to nothing to cut the budget before the next election. Unless the "Super Congress" does something dramatic, the only "budget cuts" we will see before the 2012 election will be 25 billion dollars in "savings" from spending increases that will be cancelled.
The modest spending cuts scheduled to go into effect beginning in 2013 will probably never materialize. Whenever the time comes to actually significantly cut the budget, our politicians always want to put it off for another time.
But in the end, debt is always going to have its day. Our politicians can try to kick the can down the road all they want, but eventually a day of reckoning is going to come.
In fact, if the U.S. and Europe had not piled up so much debt, we would not be facing all of the problems we are dealing with now.
Things could have been so much different.
But here we are.
The truth is that this debt crisis is just beginning. There is no magic potion that is going to make all of this debt suddenly disappear.
Most Americans have no idea how much financial pain is coming. We have been living way beyond our means for decades, and now we are going to start paying for it.
Now that long-term U.S. government debt has been downgraded, huge numbers of other securities are also going to be affected. In fact, according to a recent Bloomberg article, S&P has already been very busy slashing the ratings on hordes of municipal bonds....
Standard & Poor’s lowered the AAA ratings of thousands of municipal bonds tied to the federal government, including housing securities and debt backed by leases, following its Aug. 5 downgrade of the U.S.
That is the thing about financial markets - once the dominoes start to fall, the ripple effects can be felt for a long, long time.
So if this stock market crash gets even worse, will the Federal Reserve respond with even stronger measures?
They have already basically promised to keep interest rates near zero for the next two years. So what else can the Fed do?
Well, many now believe that there is a very good chance that we could see another round of quantitative easing.
Not that more quantitative easing is going to help much of anything. Rather than helping the economy, the last round of quantitative easing just pushed commodity prices through the roof. But the Fed is unlikely to just sit there and do nothing while financial markets struggle.
But it is not just the financial markets that are having a difficult time right now. Bad news is coming in from all over the economy. The possibility that we could soon slip into another major recession is growing by the day.
Unfortunately, our economy is so weak already that a new recession would probably hurt even more than the last recession did.
Mark Zandi, the chief economist at Moody's Analytics, says that if we have another recession it "won't feel like a new recession. It would likely feel like a depression."
But the American people are in no mood for more economic pain. Every recent poll shows that Americans are already fed up.
For example, a brand new Reuters/Ipsos poll found that 73 percent of the American people believe that the country is "on the wrong track".
So let's certainly hope that the current stock market crash does not set off another major global recession. We certainly do not need things to get significantly worse than they are right now.
But whether it hits now or later, the truth is that a whole lot of economic pain is on the way. The U.S. and Europe have been making really, really bad decisions for decades, and we are not going to be able to escape the consequences of those decisions.
The global financial system is one huge mountain of leverage, risk and debt. A collapse is inevitable.
When you build a house of cards on a foundation of sand, you should not be surprised when it comes crashing down.
The next wave of the economic collapse is coming, and those that are wise will get prepared.
It won’t be known as Black Monday or Friday, it will be known as Black August.
and there is absolutely nothing Obama can say to fix it, short of “I resign”.
Uh, that'd be racist with a International Socialist mulatto in office.
You won't even miss the 25 or 50 cents, but at the end of the month you will have at least $5 to donate so FR can operate smoothly, or you will moan and grown and go into withdrawal when it is down, because of broken parts, or over loaded servers during crisis events.
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I’m stupid I know but it seems to me like we know what has to be done but the politicians just won’t do it. They are divided and won’t do what is right. I guess they just don’t believe in it.
1. Cut spending, real cuts and they have to be in entitlements... leave the old folks alone. Cut at least $0.5 trillion a year. We can’t shock the system though. the 1% cuts proposal surely sounds reasonable.
2. Reform the tax code, make everybody pay and pay the same percentage. Not to exceed 20% sounds like a good number to me, 15% sounds better. Get everybody that works to have skin in what the government spends.
3. Get rid of all deductions
4. Reform welfare, make them work at something and supplement workers in low paying jobs. Don’t just pay them not to work. Surely, with all the trash and filth we have things that can be done.
5. Abolish obama care.
6. Get rid of Base Line Budgeting... it is an incomprehensible waste. Incentivize good management.
7. Reform Medicare and Medicade with lifetime maximum benefits and co-pays. The free and unlimited cycle has to stop. Also introduce competition to the medical system. Look what competition has done for the price of Lasix vision correction.
8. Reduce regulation DRASTICALLY.
We've been frugal our entire lives, never wasting, always economizing, trying to save for college for the kids, being diligent about paying off the house, and socking away as much as we can to retire. We drive old cars, hardly ever vacation, live in a smallish 1950s ranch house, etc. Just like most of you.
We've paid trillions and trillions to the parasites over the past six decades and what have we got to show for it? Crumbling society, constant hectoring about how we've lived "beyond our means," and perpetual warnings of the looming financial apocalypse that is going to wipe us out. Aaaarrrggghh! Forgive me for saying it, but I hope the entire ruling class (with a very few exceptions) roasts in Hell for all . It is these bastards from both parties who have destroyed our great nation to satisfy their own egos, lust for power and avariciousness.
Just as I and a few other people predicted what will happen to real estate, mortgage lending and the American economy way back in 2004 -- 2005 -- and 2006. And now proven 100% correct.
Not a single apology from the 'Bernanke can do no wrong' crowd -- better known as Banksters
” Just as I and a few other people predicted what will happen to real estate, mortgage lending and the American economy way back in 2004 — 2005 — and 2006. And now proven 100% correct. “
You and I have been involved with high level mortgage banking for years. Go back to the FR posts in the spring and summer of 06, when we both posted often that a mortgage crash of epic proportions was coming. I think I used the word “ bloodbath” We warned FReepers not to speculate in California and Nevada real estate, and to get out while you could.
It worked fine......we were mercilously flamed....LOL!!
It worked fine......we were mercilously flamed .... LOL!!
Pretty much summarizes what happens to truth tellers anywhere: They are castigated and smeared and disparaged by criminals and greedy profiteers . . . Why ___ ?
Because organized criminal activity really works as long as the sheep remain stupid and ignorant and silent
Sadly though, most people do not want to hear the truth or what reality is coming down the road when it interferes with their plans.
The stock market didnt crash in 2011 IT WAS BLOWN UP...
It was specifically and in your face torn apart..
FUBAR’ed...
Cloward-Piven WORKS... the system got overwhelmed ON PURPOSE.. its not an accident..
Beck warning about it.. AND its not over yet..
Top down, Bottom up, inside out must still HAPPEN...
http://www.youtube.com/watch?v=wZeoTskdsUM
Where did all those critics disappear off to? They used to descend like a pack of jackals on any thread warning of a housing disaster to come.
” Where did all those critics disappear off to? They used to descend like a pack of jackals on any thread warning of a housing disaster to come.”
They lost their shirts, that’s for sure : )
Maybe they were on Angelo Mozilo’s payroll......
I used to suspect that a lot of them were either mortgage brokers or real estate agents. They had pinned their future on the idea that the easy money would never end.
Excerpt:
'Since we’re on the subject of thugs; what about banker thugs? How many banker thugs are in jail for the mindless violence they have caused? Clearly the banker thugs are the primary motivator of the street thugs, because the life necessaries of the street thugs have been systematically removed from the streets, to the degree that crime is the only option, because there are no jobs there and there is no education on offer, because these thugs are not an operative part of the system of the banker thugs. Of course, these individuals from the street could not be part of their system and were never intended to be part of their system because, lacking the programmed, brainwashing education necessary, they are too smart to buy into it in the first place. * * *The reality is that we live in a criminal society. Sh*t flows downhill. Corruption at the top ensures corruption at the bottom. Why should street thugs not steal and why should they get the bare subsistence jobs that turn into a variation on ‘theft of services’, when the same thing is taking place at a much higher level, in the ranks of those above them, whose operations are creating the conditions that the people in the street are rioting against?
You can make all kinds of arguments against the reality of this condition but, slice it anyway you like, it’s the reason for it. We can wring our hands all we like and cry out that honest people don’t do these sorts of things but, honesty is for chumps in this time and place. Honesty is where you pull your pants down to be of assistance to the high born thugs, whose purpose is to sodomize you senseless. The street criminals insist that you pull down their pants by force. This serves the passionate preferences of people like Strauss-Khan, so it’s win-win for the banker, booty bandits either way. You bend over in anticipating acquiescence, with the de rigueur deliquescence, or you fight the ass raping by some means of personal initiative. * * *
“Cloward-Piven WORKS... the system got overwhelmed ON PURPOSE.. its not an accident..”
Occam’s Razor works. Cloward-Piven has nothing to do with it.
The US stock market has been going down as the dollar strengthens against the Euro. The Euro is in danger of breaking up due to the debt crisis of Greece and the rest of the PIIGS. Europe is in danger of heading into recession. Europe is China’s biggest customer. If Europe goes into recession China will follow. The US bond market has been attracting the scared money.
Cloward-Piven is a strategy for overwhelming a government welfare program in order to break it. A government program isn’t a market. You can’t “Cloward-Piven” the stock market.
” I used to suspect that a lot of them were either mortgage brokers or real estate agents. They had pinned their future on the idea that the easy money would never end.”
I’m certain at least half of them were agents or brokers.
They should have known better, but STUPID never takes a day off : )
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