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Republican governments leaving behind unemployment, debt, and recession? Wow!

I've been selling batches of stocks for the past 2 weeks as they fall to a -10% loss. Short fund is going to skyrocket.

I don't know enough about the market economy as I'd like, but a few pieces of information lately really doesn't seem to be very comforting:

Disappointing retail sales:

quote:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $382.9 billion, a decrease of 0.4 percent (�0.7%)* from the previous month, but 4.1 percent (�0.7%) above December 2006. Total sales for the 12 months of 2007 were up 4.2 percent (�0.4%) from 2006. Total sales for the October through December 2007 period were up 4.9 percent (�0.5%) from the same period a year ago. The October to November 2007 percent change was revised from +1.2 percent (�0.7%) to +1.0 percent (�0.2%). http://www.census.gov/svsd/www/marts_current.html

Retailers reacting:

quote:

The retail industry appears to be skidding toward its first big wreck in 17 years. Chains are slamming the brakes on store openings, cutting back on inventory and girding for leaner times as consumer spending chills. The speed with which sales slowed during the holidays caught even cautious retailers off-guard, prompting a flurry of profit warnings. http://online.wsj.com/article/SB120...59.html?mod=DRE

And doesn't consumer spending make up something like 70% of the US GDP? Seems that a combination of a weakening job growth and an increase in gas and food prices really aren't helping this out much.

And inflation is at some very serious high levels now:

quote:

US inflation for all of 2007 hit the highest rate for 17 years, as surging energy and food costs pushed up prices, official data has shown. Consumer prices rose by 4.1% for all of 2007, up sharply from a 2.5% increase in 2006, the US Labor Department said. http://news.bbc.co.uk/2/hi/business/7191970.stm

Asian markets slumped huge today:

http://www.marketwatch.com/news/sto...BF98E8F5AF5%7D:

And could someone explain what's going on with the "Monoline insurers", and why some folks I've read in other blogs are claiming that AMBAC, the largest of the monolines, being downgraded is pretty serious?:

http://www.bloomberg.com/apps/news?...iZok&refer=home

In layman's terms would be good, please .

And finally, it looks like we need to grab our butts and hold on for a bumpy ride tomorrow (there goes my 401K, dammit!):

quote:

If futures contracts traded on a day when U.S. stocks weren't even due to open are anything near accurate, then markets will be in for a major decline on Tuesday, with concerns about bond insurers and the health of financial institutions dragging markets lower. The Dow Jones Industrial Average futures contract was recently off 520 points at 11,586, the Nasdaq futures were at 1773.25, down 76.25, and the Standard & Poor's 500 futures recently were at 1265, down 60.3. Futures contract don't move in complete lockstep to the underlying indexes, but by comparison, the Dow industrials fell 382 points on Sept. 20, 2001, just days after the terrorist attack on the Twin Towers, and by 387 points on Aug. 9, 2007, shortly after the recent credit crunch first emerged. http://www.marketwatch.com/news/sto...18EE41CA5D1C%7D

Get ready for today's dip!! SHORT SELL SHORT SELL SHORT SELL!!!

looks like a bloodbath...I wouldn't be surprised if the fed jumped in today with an emergency rate cut of 1%

Governments across the world are going to flood the market with new money and hope to prevent a collapse.

what to do...what to do...

quote:

Originally posted by Capitalizt looks like a bloodbath...I wouldn't be surprised if the fed jumped in today with an emergency rate cut of 1% Governments across the world are going to flood the market with new money and hope to prevent a collapse. what to do...what to do...

Fed decided on .75% rate cut. Too little, too late. FINALLY, oil has been knocked down. Better now we have a pullback in prices than later. It would've happened one way or the other.

quote:

Originally posted by Krypton Fed decided on .75% rate cut. Too little, too late. FINALLY, oil has been knocked down. Better now we have a pullback in prices than later. It would've happened one way or the other.

Would it be safe to say that the Fed is putting a band-aid on a gaping wound? Seems like the market needs a correction that the Fed is trying to control a bit too much. I understand the need to try and stimulate with a lower interest rate, but isn't he setting the stage for inflation worries in the not-so-distant future?:

quote:

But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer. Meltzer, who is finishing the second volume of his history of the Federal Reserve, warns that Bernanke is risking a disastrous replay of the 1970s, when high oil prices fueled double-digit inflation. Every time the Fed started to tighten and unemployment jumped, chairmen G. William Miller and Arthur Burns lost their nerve. They lowered rates to boost job growth, and inflation inevitably revived, causing a vicious price spiral. The Fed let the disease rage for so long that it took draconian action by chairman Paul Volcker in the early 1980s to finally defeat inflation. The price was a deep recession, with unemployment hitting 11% in 1982. "The mentality is the same as in the 1970s," says Meltzer. "'As soon as we get rid of the risk of recession, we'll do something about inflation.' But that comes too late." Indeed, while the economy is sending mixed messages about growth, the signs of increasing inflation are flashing bright red. For 2007 the consumer price index rose 4.1%, the biggest annual increase in 17 years. Gold, historically a reliable harbinger of inflation, set an all-time high of more than $900 an ounce. The dollar is languishing at a record low against the euro and a weighted basket of international currencies. "Flooding the market with liquidity is a disaster for the purchasing power of the dollar," says David Gitlitz, chief economist for Trend Macrolytics. http://money.cnn.com/2008/01/18/new...dex.htm?cnn=yes

Agree or disagree?

They lower the rates; money becomes cheaper; inflation goes up; the dollar drops; commodities prices rise; etc. etc. The chain is long. Anything the Fed does today will do little to stoke the economic sentiments of the market. There has been so much money lost that banks are reluctant to make loans. Greenspan lowered rates to 1% in 2003 and 2004 to offset the decline after the 911 attacks the bearishness when Bush invaded Iraq. Many say the extremely low 1% rate was a major cause of the housing bubble.

quote:

Originally posted by MisterOpus1 Would it be safe to say that the Fed is putting a band-aid on a gaping wound? Seems like the market needs a correction that the Fed is trying to control a bit too much. I understand the need to try and stimulate with a lower interest rate, but isn't he setting the stage for inflation worries in the not-so-distant future?: Agree or disagree?

Abso-fucking-lutely. In fact, we have used that exact analogy in some of our monthly updates. I believe the friendly term is "pushing on a string."

quote:

Originally posted by Krypton Fed decided on .75% rate cut. Too little, too late. FINALLY, oil has been knocked down. Better now we have a pullback in prices than later. It would've happened one way or the other.

To little?

I'm going on to much. Stability and inflation are needed, not pandering to investors. The economy needs to get some real strength not financial miracle work.

As if there aren't enough reasons to call the green back a useless piece of paper. Not to mention the 145 billion or so that Bush and Bernake want to use as a "stimulous".

Seriously, any one who gets that cash from a stimulus package is just going to invest in China or India.

quote:

Originally posted by MisterOpus1 Agree or disagree?

Completely agree.

I'm mostly concerned about a situation similar to what happend in Argentena in 2000 emerging in the US. The two macro-economic settings are very very similar.

The IMF report on what went wrong said that the problems came from loans that were used in non-productive assests (such as luxury goods and housing) in addition to being off-shored (invested out of country).

Debt should be only used to finance things that will produce gains.

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