dow closes below 8k
sweet adeline
Posts: 2,191
okay thats it, this is the bottom. 
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As individual fingers we can easily be broken, but together we make a mighty fist ~ Sitting Bull
Where I'm not ugly and you're lookin' at me
2009 is going to be a lean year...
During every recession, the S&P and Down lead peaks and troughs in the business cycle by 6 to 9 months. Most economists are predicting a 14 month recession, which started in April 08. That means, we will see a business cycle recovery in the third quarter.... Hence, get your money ready.
Buffet was a leader in stuff like this. People panic, but should actually be excited (as an investor) in times like this. It's his "cheap hamburger" analogy.
i'm hardly a voice of reason, you of all people should know this
i'm not worried though, however, i'd be a little nervous if i was about to retire and had to pull money out now for income purposes. always good to have a bond portfolio for times like these.
Well, I am not near retiring but will have 2 kids in college next year. Sucky timing on that!
Where I'm not ugly and you're lookin' at me
Yup.
The funny thing is, my mom was in town for lunch,
and i JUST finished telling her that everything i was seeing in the price movement for the DOW was indicating a sharp loss of 1000 points.
I said, "I'm not trying to be negative, but i wouldn't be suprised if we go to 7500 by the end of the week."
I knew the market was down 200 when i left, but actually thought it would close nearer to the zero mark than farther.
Can't believe i come home to a 400 point drop.
6500 by Februrary.
This thing still has some ugly legs to run away.
This could be a new round of panic.
Especially with not only the automakers on the brink, but also CITIBANK is around $7 a share! :(
If I opened it now would you not understand?
I hope you are wrong but I can definitely see it dropping below 7000 especially if GM has to go into bankruptcy. My buddy keeps saying that a drop below 7500 could be really bad because then there is no telling where the bottom lies.
The biggest problem we have right now isn't even the DOW.
The HUGE red flag that just got hung in front of the globe is that CPI here just went DOWN.
Largest drop on record, in fact.
That means DEFLATION, and that is NOT what you want to be hearing about.
As bad as inflation is,
the fact that we are in such a severe slump that prices across the board are dropping like flies is a HUGELY NEGATIVE OMEN.
This is endgame scenario type stuff.
Turn on Fast Money right now if you want to hear some doom&gloom.
Big big problems.
If I opened it now would you not understand?
I have to admit that my knowledge in this area is limited so how is deflation bad.
http://www.google.com/hostednews/ap/article/ALeqM5iYwB5yO5SxYP2KXGaD8TzRYofP8wD94HHQI00
I like how the article neatly skirts the issue of "when have we seen deflation" by simply saying "The U.S. hasn't seen year-over-year declines in the Consumer Price Index for almost six decades" ...
A more honest and telling answer might have been, "the worst deflation on record was experienced during The Great Depression when the money supply shrank by over 25%".
The article otherwise if rather acurate, save for the fact that it actually tries to ignore the money supply as a factor.
Sure prices fall because producers slash them to attract penny pinched buyers ... but lets not also forget that those penny pinched buyers are in fact pinched because the entire money supply has shrunk.
If more dollars chasing the same amount of goods creates higher prices;
fewer dollars chasing the same creats lower prices.
And what we are going through would be fewer dollars chasing more goods, since less demand equals more supply on the S\D curve ...
so its doubly bad.
A deflation spiral is the death knell of a deflationary depression.
I once again ask those interested to listen to this guy, who calls himself Mr. Fed.
His end game scenario involving a deflationary, interest rate skyrocketing doomsday sounded totally out of step with where the market was only a month ago ... and these videos are from like March ...
When i saw them, i though, "Holy shit. This is actually dead on." ... because no one on the street was forcasting a scenario as glum as this guy was ... YET ... now WE ARE THERE ...
consumer demand plumeting, and equity bubbles across the board, and of course massive deleveraging in the financial markets lead to prices falling everywhere ... in spite of the fact that the Fed was "easing" its ass off ... dropping money from helicopters at the speed of light ...
The Fed has shot most of its guns now ... the rate is nearly at the floor ... and we are experiencing DEflation ???
Folks, you need to look at this as a VERY glum sign.
:(
A deflationary sprial, followed by treasury fall out and the ensuant raise in interest rates could cause unending and totally unmanageable deflation and depression.
you would be looking at a government insolvency \ global depression \ currency revaluation \ martial law Alex Jones Wet Dream End Game scenario.
Not fearmongering.
Truth.
:eek:
If I opened it now would you not understand?
Or, check this out. We'll have a boom, and then be back here in 5 more years, like we are at 2003 levels right now.
Except the chart looks more like a "double top" at this point, and if you zoom out for a 100 year chart of the Dow, it SURE LOOKS LIKE WE HAVE A LONG WAY TO FALL!
I'm not being alarmist with that.
I don't mean we ARE going to drop all the way to 100 or 200 on the DOW.
I'm just saying that the overall graph of the DOW very neatly mimicks a similar graph of inflation ... save for the 2 peaks at the top, which (at least, to me) are indicative of a fundamental limit of the inflationary system. We have now tried TWICE to break through that ceiling (14,000) ... and the laws of growth are catching up with us ...
i found this article and charts to be VERY informative and telling. Note the chart with the arrows pointing down to the curve?
I think the guy has a valid case ... especially in this brave new deflationary world.
If I opened it now would you not understand?
:(
and reveling in it's loyalty. It's made by forming coalitions
over specific principles, goals, and policies.
http://i36.tinypic.com/66j31x.jpg
(\__/)
( o.O)
(")_(")
Those passed already and they took down a few banks in the process, i.e. Washington Mutual.
That Gerald Celente guy (hour interview here) says they will start in earnest by February.
He says this is still the disbelief period, where everyone is banking on Christmas, and to a lesser extent Obama's "Change" ... but that by February the situation will have deteriorated, and with christmas and the swearing-in ceremony out of the way, sentiments and the market will plunge.
Of course, this interview was BEFORE this afternoon, the FOMC announcement of serious DEFLATION concerns, and a big drop on Wall Street.
Maybe it's moved up a month?
If I opened it now would you not understand?
That's only true if there wasn't massive inflation which the deflation offsets.
What you have to keep in mind is that since 2001, salaries did a very poor job of keeping up with inflation.
This means that if deflation doesn't happen, the middle class will become very, very small.
So, within the current context, deflation = good.
http://forums.pearljam.com/showthread.php?t=272825
By definition, deflation occurs 95% of the time after the economy slows or growth goes negative. Deflation was very very predictable and not a sign of anything more than prices adjusting to the decline in aggregate demand. I'd say it's more of a positive than anything.
Stagflation is the real scary thing. And we don't have to worry about that now at all.
http://forums.pearljam.com/showthread.php?t=272825
all i can say is that, respectfully, you and saveuponlife are just flat out wrong.
YES.
Deflation accompanies downturns (almost by definition), but the point here is that the intention of the Federal Reserve is SUPPOSED to be to INFLATE OUR WAY OUT OF A DEPRESSION.
What an acknowledgement regarding oncomming deflation, and possibly RAPID deflation, means for the world is that The Fed has VERY FEW OPTIONS LEFT TO MITIGATE THE PROBLEM.
They already have the rate at just above zero ... and members of the FOMC are expressing, IN WRITING, their concern that the rate WILL GO TO ZERO.
AFTER THAT, THE FED IS ALL BUT POWERLESS.
They have effectively lost control of the market.
Lending rates at institutions can no longer be affected by outright manipulation (or by what the fed likes to call "policy").
Saveuponlife, you are CORRECT, inflating the currency through liquidity injections (t-bill auctions and currency swaps, etc) offsets deflation TO A DEGREE.
BUT THE TWO ARE NOT INHERENTLY EQUAL.
If REAL demand continues to decline, prices will fall further.
Falling prices -- in stocks and houses -- would be, BY ITSELF, nearly catastrophic for this market.
BUT GIVEN THE DELICACY OF THE SITUATION ... given that banks own a lot of houses outright, and a lot of mortgages ... and that if house prices go down they are fucked even worse ... we have serious problems.
As house prices trend downward, LESS PEOPLE BUY, ANTICIPATING FURTHER DECLINES ... thus ACCELERATING the spiral.
And then finally, the death throws ...
if the large institutions loose SO MUCH MONEY that they ARE FORCED TO SELL TREASURY SECURITIES ... we could fall in to the worst of it. Forced sales could beget more t-bill sales, driving the interest rates in this country (and around the world?) through the roof.
Again, you think its bad that housing prices are going down NOW?
How about a vicious cycle where low prices cause bank deleveraging and tbill sales, which cause rates to rise, which cause homesales to slow, which cause prices to sink, which cause banks to deleverage, and rates to rise ... ETC ETC ETC ...
DEFLATION CAN CAUSE A VIOLENT SPIRAL, where as inflation usually has more LONG TERM affects, deflation can have QUICK AND DEVASTATING effects on entire economies.
Remember Japan for over 10 years?
Or the Great Depression?
Those are deflationary events of somewhere NEAR the magnitude of what we could face.
Given that the fed is running out of ways to inflate, and given that banks simply aren't able to find lenders on the scale of leverage they need to reinflate their balance sheets ... i think we may be in a terminal illness here!
:(
If I opened it now would you not understand?
Milton Friedman talking about the Fed and The Great Depression ... probably nothing most of you didn't know ...
but just remember, while the Fed has "responded properly" this time around ... well, in theory, and arguably (they sure were too slow for my taste on the easing) ... THEY ARE NOW DANGEROUSLY LOW ON ALTERNATIVES FOR INFLATING THE ECONOMY.
So while its all fine and dandy to say, "Hey, this time we have a Fed that knows the RIGHT things to do" ... it's another thing entirely when you realize that they have already DONE what they could do, in large part.
If deflationary pressures (and the ensuant spiral) get worse ... there is VERY little the Fed can do to combat the situation.
We would simply sit and watch as trillions more "dissapear", the real economy falls apart, and employees and employers both go hungry.
:(
If I opened it now would you not understand?
Other things may be bad, but that aspect certainly isn't.
What about the potential for increased liberty?
A big factor in the deflationary spiral is that employers can no longer pay the inflated salaries once the inflation has retracted. Employers either go broke or they start laying off employees.
The big difference here is that employers weren't really paying out enough to keep up with inflation. There was some increase, but not a lot. As as far the stats are concerned, the biggest increase in salaries was measured by increases in health care costs.
Normally when people aren't being paid enough, they either go broke or become homeless.
This didn't happen because for the first time in the history of our economy, 20 somethings all over the nation were living with their parents. We all know probably more than a few 20 somethings who were hard-working, intelligent, and even advanced-educated people who were just getting squeezed by the sky-rocketing cost of living.
And not only were they living with their parents, but they were also taking out huge debts to finance a standard of living well beyond their means.
This means that despite the set-backs in the economy, banks are still collecting interest on all that debt. And I doubt few would argue there's a whole lot of it. In fact, I wouldn't doubt that the interest from all that debt is what is actually keeping banks afloat right now when they should be crumbling to pieces.
As for slipping housing prices causing a deflationary spiral, I'd say it's not impossible. But, I think one thing to remember is that a house is an asset that is so fundamentally different from any other, that it really isn't entirely feasible to hold it up to conventional economic models.
Not only do houses put a roof over peoples' heads, but they have yet another intrinsic value that in it of itself actually appreciates in a deflationary economy: the mortgage interest tax deduction.
http://forums.pearljam.com/showthread.php?t=272825
hey, drifitin' with Citi so low, do you think this would be a good time to buy or should I just wait it out....?
my gf works for Citi and I've been watching the stock fall fall and fall some more...I've been wanting to jump in, but have been fearful...
I don't see Citi failing...but then again, who knows...
My words but a whisper -- your deafness a SHOUT.
I may make you feel but I can't make you think."