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Stocks pile on losses amid worries on economy

nijato said:
The problem is not politics. The problem is not even fiscal or monetary, at least not in the traditional sense. The problem is growth.

Infinite growth on a finite planet is not only impossible, it is a logical absurdity. This is an important point: think about it until you understand that it is incontrovertible.
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I'm jumping in here before I read the rest of your post. I agree with this but I'm interested to note this now and then see where you are going.

The problem is resource scarcity, or more to the point peak oil. For the last 250 years, civilization has had ever increasing amounts of energy available to grow, diversify, and increase in complexity. Since debt is predicated on the belief in the ability to be repaid in the future, it is the most forward-leaning aspect of a money economy. Therefore, when reasonable, rational people wonder if they will ever be repaid (with money that has any meaningful value), debt instruments are the first to not perform according to expectations.
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Just to note, we can succeed without oil.

Since the economy is based on the lending of money at interest, that means this is it. In the words of Fred Sanford, "I'm coming Elizabeth, this is the big one!"

This is not a correction, recession, or depression which will be muddled through before the "normal" of 3% YoY GDP growth returns.

This is the end of growth. Plan accordingly.
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The end? I think after a pretty painful correction we can grow again. I believe some of the expectations of the past should be scaled back. One does not have to grow yearly at 13% to be successful, damned with how you get there.

One other thing I noticed in this thread: I am a fan of conspiracy theories... even more I enjoy actual conspiracies. The fact that commodities, stocks, and treasury bond yields were all down on the same day is not the result of one however.
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Not as in some one manipulating things, I agree. I do believe it is in part a hissy fit on the part of the markets because they haven't been fed more of the taxpayers money.

This is what happens during fast falls when traders need to cover margin calls and raise cash by selling assets that have appreciated recently. Not a rat... finance.
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Margins need to be far higher than what they currently are.
 
The Giant Noodle said:
No more borrowing man. That ship has left..... and sunk. Like Ive said before many times.... this Country needs heros. And those heros are the wealthy. I dont want to sqeeze them like a tube of toothpaste but now its the only way to save what we have. It wont go on for 10 years, but until these fools in congress get their head on properly, the only way is to cut back and the wealthy to give back. Orrrrr..... we destroy automation and make things by hard thus reviving our manufacturing. Oh..... also kick the Illegals out OR not give them a DIME of funded help.
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In a way, when the treasury borrows from the fed, it's the same as redistributing wealth. The poor and middle class don't have much cash, wealthy people and corporations and foriegn countries hold the cash (and cash like investments). We can essentially redistribute their cash to the poor and middle class by borrowing from the fed (printing up money) and inflating away their cash. Of course so far that hasn't worked to well because we haven't redistributed the printed up money to the poor and middle class, we've been redistributing it to the rich.

At some point, maybe after QE36, we will wise up, make that one time redistribution to the poor and middle class, and jump start our economy.
 
Lord Tammerlain said:
Inflation was created due to high debt levels in the US. Both private and public. The debt levels are at such a level that paying them back will be difficult, if not impossible. So instead of a default, possibly leading to a deflationary spiral, of default after default. The fed made the decision to create inflation or at least prevent deflation. The inflation, provided incomes do not decrease, will tend to make paying back debt that is generally of a fixed rate easier to pay back. Deflation is something Bernanke is quite afraid of
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Bernie is afraid of his own shadow. So the arguement goes, we must create inflation because we are so far in debt and then we need to add to this debt?
 
AdamT said:
Absolutely, I agree that top rates have to move up. Hell, ALL rates have to move up. But the top rates go up first. ASAP. But the economy can't wait for the Bush cuts to expire. We need a liquidity injection quick.
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If rates that tax the consumer class go up, it will harm demand and create more unemployment.

We actually need to move the top income tax bracket up to around $400k-$500k and increase the hell out of the rate to make up for 10+ years of the top tax rate being way to low. We will probably also need to eleminate all taxes for the consumer class, at least temporarally, to allow them to keep enough revenue to increase consumption.
 
haymarket said:
from Iamgep




Changing what would constitute their best interest perhaps would motivate them?
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It would be in their best interest as a group, but not as individuals. Individuals don't do what is best for the group, they do what's best for themselves.

Currently I am farming out intelectual work to India. I HAVE to do that for my business to remain economically viable.

What would make me stop doing that and hire an American to do the job? Nothing, unless it benefitted me. Now my employees rarely make purchases from me, so there is no advantage to me paying an American more than I have to pay the guy in India.

I would love for someone else to stop outsourcing jobs oversease and to hire more people, because THEIR employees would be my customers and their doing that would benefit me.

Businesses are always going to be about operating as profitably as possible as individual companies, they don't give a rats arse about you or your company.

I'm not trying to be ugly about it, but that's the way things work, and the way things work is exactly what people who have never owned a business don't understand. They don't understand individual business behavior.
 
1Perry said:
Bernie is afraid of his own shadow. So the arguement goes, we must create inflation because we are so far in debt and then we need to add to this debt?
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Not so much add to the federal debt but engage in QE 3-8
 
1Perry said:
...So the arguement goes, we must create inflation because we are so far in debt and then we need to add to this debt?
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That, and other stuff. Deflation tends to disentivise investment. Deflation tends to disentivise consumption.

So some controled inflation not only makes it easier for debtors (individuals, companies, and governments) to repaid their debts, it also the grease tat keeps our economic wheels turning.
 
Big drop, but the bigger ones are still going to hit from 2012 t0 2014, when a massive amount of corporate debt from LBO's and all those 'private equity' deals come due; they dwarf the government debt, and of course some 30 years of a tax code that rewards financial speculation and stock market gambling over real investment, coupled with outsourcing high productivity jobs while at the same time population increase is far outstripping job creation, is reaching it's 'logical' conclusion. The government has been lying about real GDP and the real inflation rates for a long time now, and it's getting increasingly hard to kick that can down the road, to steal a popular meme going around.

!2% of the crop land in the U.S. is also under extreme drought conditions as an added 'bonus'.
 
imagep said:
That, and other stuff. Deflation tends to disentivise investment. Deflation tends to disentivise consumption.

So some controled inflation not only makes it easier for debtors (individuals, companies, and governments) to repaid their debts, it also the grease tat keeps our economic wheels turning.
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Yes, well, deflation is inevitable when wages have been stagnating, down to about a third of 1972 buying power. Good luck trying to maintain asset inflation indefinitely; so far housing is going no where, and it was the primary leader out the last two recessions, only they were bubbles, not real growth.
 
imagep said:
That, and other stuff. Deflation tends to disentivise investment. Deflation tends to disentivise consumption.
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Investments should be based upon creating something, not in how much more expensive we can make something.
 
1Perry said:
Sure, put more people out of work. That's going to help the debt.
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People were going to be put out work with or without QE, I expect that fewer were put out of work with it, with the problem that what money they were getting would buy less
 
Lord Tammerlain said:
People were going to be put out work with or without QE, I expect that fewer were put out of work with it, with the problem that what money they were getting would buy less
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When buying less, more people get laid off. No?
 
teamosil said:
350 points is not a big drop. Fluctuations like that happen every day. So the panic is misplaced.
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WRONG! Large swings in the markets DON'T happen like this every day. You may see a rise or drop of a few points here or there, but NOT -512 pts in a 24-hour period! The last time the Dow hit this low mark was 12/06/10. And just so we understand what's happening here, the lowest the DOW has been over the last 12-months was 10,059 on or about 8/26/10. Since that date, the DOW had been slowing climbing upward. It didn't start trending downward until 7/22/11 - right about the time Speaker Boeher called off debt limit negotiations w/the President and Tea Partiers dug in on their position of spending cuts and a balanced budget amendment.

From theHill.com:

After Thursday, the Dow had lost over 1,200 points since July 25, the first day of trading after talks between President Obama and Speaker John Boehner (R-Ohio) on a big debt deal broke off.
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You can test my claim by going to CNBC.com and using their interactive stock market graphic using the 1, 3 or 5-year grids.

So, America, you can blame the GOP/Tea Party for the billions of U.S. dollars our economy has lost since 7/22/2011.

So, yeah, pretty awesome performance. It has doubled since it's low just 6 weeks after Obama took office.
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I'd give him credit where credit is due; atleast actions neither by himself nor of his Administration caused the markets to take a nose dive. If anything despite all the negative complaints of the President and his Administration by the GOP since he came into office, he has not done anything to cause the markets to tank like this!!!
 
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Objective Voice said:
So, yeah, pretty awesome performance. It has doubled since it's low just 6 weeks after Obama took office.
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All while putting more people in the unemployment line. Way to get your priorities where they belong.

QE2 had one undeniable effect though. It caused investors to go crazy with misconception. And much of this was implemented with borrowed dollars. NYSE margin debt soared throughout the program and declined by $10MM for the first time in June in anticipation of the program’s end. That loud sucking sound you heard in the market Wednesday was the margin calls that these traders are now receiving.

Margin Debt Declines With the End of QE2 - Seeking Alpha
 
Objective Voice said:
How do you figure that?
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I've done this 4-5 times today alone. QE causes inflation. Gas and food goes up. People spend what money they have on gas and food at the cost of the rest of the economy. Businesses don't hire.

Wall Street didn't take this windfall and invest it in jobs. They invested it in commodities. They will do the same with QE3. Wait until gas hits $4.50.
 
Gill said:
Oh well, guess I'll be working til I'm 75 at this rate.
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You'll likely never retire with social security or medicare. It wont be there.

Oberon said:
Big drop, but the bigger ones are still going to hit from 2012 t0 2014, when a massive amount of corporate debt from LBO's and all those 'private equity' deals come due; they dwarf the government debt, and of course some 30 years of a tax code that rewards financial speculation and stock market gambling over real investment, coupled with outsourcing high productivity jobs while at the same time population increase is far outstripping job creation, is reaching it's 'logical' conclusion. The government has been lying about real GDP and the real inflation rates for a long time now, and it's getting increasingly hard to kick that can down the road, to steal a popular meme going around.

!2% of the crop land in the U.S. is also under extreme drought conditions as an added 'bonus'.
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Quoted for truth.
 
evanescence said:
Quoted for truth.
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One also has to add in the coming end to many unemployment benefits and the fact that there is still a huge inventory of empty houses. But the problem is that Wall Street isn't growing fast enough I suppose.
 
teamosil said:
So, yeah, pretty awesome performance. It has doubled since it's low just 6 weeks after Obama took office.
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First off, while the above quote is true, I can't take credit for it. It was teamosil who said it, not me.

Second...

1Perry said:
All while putting more people in the unemployment line. Way to get your priorities where they belong.
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You need to be saying this to the GOP! They are the ones whose actions at the state and federal levels have forced people into the unemployment lines. Even now their irresponsibility in the debt limit debates are costing American jobs!! It's a shame folks who think as you do can't see that!!! Granted, the unemployment numbers haven't improved all that much since the President has been in office, but even you have to admit that there has been private sector job growth under this president. Even you have to admit that until recently unemployment had been holding at or around 9.3%. And now look at what's happening.

You guys want to lay this on the President!?! Nope!!! Had the GOP agreed to a clean debt limit from the start none of this would be happening right now. If the GOP hadn't been so eager to clear up state budgets by forcing public employees out of work, the unemployment numbers likely wouldn't have increased as they have. If GOP Governors had just used the Stimulus money to actually create jobs, our nation's economy might actually have improved significantly.
 
Red Crow said:
TWO FACED NoBAMA WENT TO CHICAGO FOR A FUND RAISER MINGLING WITH THE RICH CORPORATE JET OWNERS, THE SAME PEOPLE WHO HE PUT DOWN AND COMPLAINED ABOUT, WHILE ALL THESE BAD NEWS IS GOING ON. WHAT A LEADER!!!!
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God, you are almost the worst partisan hack on here.

If Obama wrote an "R" after his name, you'd be telling us how the economy is fine.
 
1Perry said:
When buying less, more people get laid off. No?
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Yes

But you seem to ignore the probability of even higher unemployement without QE in the first place. The debt created, did allow for money to be put into the economy, keeping up demand that would not have existed. The problem being it is pulling demand from the future to the present of course

So without QE, people would have bought less, and more people would have been laid off
 
Objective Voice said:
You need to be saying this to the GOP! They are the ones whose actions at the state and federal levels have forced people into the unemployment lines. Even now their irresponsibility in the debt limit debates are costing American jobs!! It's a shame folks who think as you do can't see that!!! Granted, the unemployment numbers haven't improved all that much since the President has been in office, but even you have to admit that there has been private sector job growth under this president. Even you have to admit that until recently unemployment had been holding at or around 9.3%. And now look at what's happening.
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For the billions upon billions we have spent, surely we would get a little of something in the way of jobs. Any imbecile with billions of dollars at his disposal can create some jobs.

What's happening? We are broke. We no longer have billions to create a handful of jobs.

You guys want to lay this on the President!?! Nope!!! Had the GOP agreed to a clean debt limit from the start none of this would be happening right now. If the GOP hadn't been so eager to clear up state budgets by forcing public employees out of work, the unemployment numbers likely wouldn't have increased as they have. If GOP Governors had just used the Stimulus money to actually create jobs, our nation's economy might actually have improved significantly.
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I've said it over and over that it's not all Obama's fault. I'm not sure how your accusations make you any different than those you complain about.

If we ony had unlimited money for the government to spend all would be rosy. When are you going to start demanding that Obama collect the billions that GOldman Sachs owes us?
 
Lord Tammerlain said:
Yes

But you seem to ignore the probability of even higher unemployement without QE in the first place.
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Explain to me how it's created jobs. I've explained how it costs jobs and you've agreed.

The debt created, did allow for money to be put into the economy, keeping up demand that would not have existed. The problem being it is pulling demand from the future to the present of course

So without QE, people would have bought less, and more people would have been laid off
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"People" have not benefitted from QE. Wall Street has and those who have supported QE have only bitched and moaned that those profiting are sitting on the money as opposed to helping the economy. No?
 
1Perry said:
Explain to me how it's created jobs. I've explained how it costs jobs and you've agreed.



"People" have not benefitted from QE. Wall Street has and those who have supported QE have only bitched and moaned that those profiting are sitting on the money as opposed to helping the economy. No?
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QE has kept interest rates low. Lower interest rates allow businesses to borrow on the cheap and they are about the only thing motivating the moribund housing/construction industry. They have also allowed the dead-in-the-water banking system to stay in business. All of these things contribute to the overall health of the economy and therefore the employment situation.
 
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