January 19, 2008

The Wall Street Journal says we're now in "Panic Stage", warns of crash


It's kinda weird when reading the WSJ is like reading HP, complete with references to our bible "Manias, Panics and Crashes". First time I've seen the book cited in the MSM. Too bad, people could have really benefited if they had just known, like HP'ers.

Man, this is getting really scary really quick now. Feels like everything HP'ers have predicted is happening, and it's all coming to a boil in real time.

So, are you all ready? Time is running out.

The Panic Stage

In his book "Manias, Panics and Crashes," the economic historian Charles Kindleberger describes the stages of financial boom and bust. Students of the good professor will recognize where we now are in the current credit crisis: the panic stage.


It isn't a pretty sight, but a crash is far from inevitable if political and economic leaders keep their wits about them and focus on the proper remedies.

Amid the daily market turmoil, and to help prevent a crash, it helps to step back and remember how we got here. With the benefit of hindsight, everyone can see that the U.S. economy built up an enormous credit bubble that has now popped. Our own view -- which we warned about going back to 2003 -- is that this bubble was created principally by a Federal Reserve that kept real interest rates too low for too long.

Enter the panic stage. The desire for debt has turned into a stampede to quality, especially Treasury bills.

The danger now is that this panic becomes a self-fulfilling prophesy and talks us into a crash.

60 comments:

amigauser said...

If the main street media are telling the sheeple to sell, it must be time to start buying.
You should remember, that Wall Street will never allow the Bush administration to end its presidency looking like they were economic failures.

decaffeinated said...

An interesting question springs to mind:

"Will Bush leave office before the markets crash down to the point that 401K bagholders feel like they've been sawed in half?"

Greenspan managed to exit the stage with his reputation largely intact, insofar as the MSM is concerned (no HP'ers, your opinions don't count). And I'll bet that Dubya is desperate to get out of town before a nasty recession is tattooed on his legacy.

I guess we'll get to see just how long Bernanke and/or Paulson can keep the hamster(s) running.

Anonymous said...

Bloomberg reports that Investors are also exiting Mutual Funds suspecting the questionable debt side of the fund.

Seems exciting, but with Dollars sloshing around outside US, keen to find a parking place, seems crash may be little far off.

A Wise Man Said said...

Now may be a time to review the things that really matter. Is your job the center of your identity? Things? Is money the only thing that brings security? I do not want to lose everything, but should it happen, guess what? I'll still be here.

I'm very ready for us to move to a way of doing things that makes sense, which others here have suggested may require a major reset.

Teddy Jewski said...

Next up?????

Inflation...... Weimar style. You know who to thanks folks. The same people the good, hard working and oppressed Germans were 'thanking' in the late 30's and 40's.

Anonymous said...

Yeah, I'd say....

http://www.phillyburbs.com/pb-dyn/news/111-01192008-1473827.html

StockBroker said...

.
.
*** Too late LOOK! ****

AMBAC Inc (NYSE:ABK)
6.300.10 / 1.61 Jan 18 7:59pm

Close:6.24
Open:7.15
High:7.47
Low:6.00
Volume:25,429,877<----******
Volume Avg.:10,478,500
52wk Range:4.50 - 96.10<----****
Market Cap (mil):629

Anonymous said...

While your Republican president borrows money from China to cut checks to the sheep (like you), China has become the biggest producer of gold in the world. No Fiat bull$hit there:

Financial Times -- China tops global gold mining

China has ended more than a century of South African dominance of the gold mining industry to become the world’s biggest producer of the ore.

Chinese gold output jumped to a record high of 276 tonnes last year, a 12 per cent increase over 2006, while South Africa produced 272 tonnes, the London-based precious metal consultancy, GFMS, said on Thursday.


Enjoying your GOP and El Presidente Bush yet? You better since you voted for them TWICE, bunch of geniuses. Now back to your hamster wheels because you gotta make money to pay your masters, the Chinese and the Arabs. Geniuses!

Anonymous said...

"but a crash is far from inevitable if political and economic leaders keep their wits about them and focus on the proper remedies."

One proper remedy would be for the federal and state governments and municipalities to stop issuing any more debt and start to live within their means. This would free up capital for the private sector, and bring interest rates down.

Not that I'm holding my breath.

LauraVella said...

Good Lord. I have a feeling Monday isnt going to be a good day.

we'll find out how well the automated trading system really works.

Buckle up and hold tight everyone.

Ed said...

I'm taking the contrarian view on this one. If the WSJ says the crash is coming, then it's time to start buying (stocks not real estate obviously).

I know I will never time the market perfectly. That's fine. What I'm buying today I plan on holding long term. So I am nibbbling a little here and there. I've gone from less than 5% stocks to 25% stocks in the last couple of days

I'm seeing/hearing a lot of shoe shine boy moments these days but on the downside. If everyone's talking negative then you know positive is not too far behind.

happy homeowner in the stix said...

I'm just gonna wait and see what the major newsweeklies have on their front covers over the next couple of months. They usually take their cues on financial topics from the WSJ. If there is one "Why Real Estate Sucks" cover on Time/Newsweek/US News, it may just be the "bottom" we've been hearing about for months.

Note to some of the more extreme posters here who are about to have a conniption: I didn't say it was based on anything rational. I also didn't say that we're gonna be having house prices go up 10+% per year. I'm just saying that the news mags are usually a good indicator that some boom or bust is over. Once they embrace something....git on out of it!

Anonymous said...

Like morrison sang so long ago:"this is the end my friend,my only friend the end".

Ambac Downgraded, Cities Seen at Risk
By STEPHEN BERNARD and LESLIE WINES (AP Business Writers)
From Associated PressJanuary 19, 2008 6:45 AM EST
NEW YORK - A downgrade of bond insurer Ambac Financial Group Inc. is likely to have far-reaching effects, making it more difficult for cities to issue new bonds and forcing further write-downs at financial services companies, analysts said Friday.
After Ambac scrapped plans to raise $1 billion in capital, Fitch Ratings cut the company's crucial financial strength rating to "AA" from "AAA."

cracker said...

"Enjoying your GOP and El Presidente Bush yet? You better since you voted for them TWICE, bunch of geniuses. Now back to your hamster wheels because you gotta make money to pay your masters, the Chinese and the Arabs. Geniuses!"

Ever hear of a guy named Robert Rubin? Along with our old buddy Alan Greenspan, Rubin cooked up the plan that opened our markets to China. Another guy named Clinton gave the plan his blessing, some say in exchange for Chinese campaign cash. Now Bush can certainly be faulted for some of this economic mess, but let's not forget its origin, and the "geniuses" who conceived it during the height of Clinton's power as President.

thomas jefferson said...

And they be jumpin' off da bridges, TOO!!
Linky to jumpy:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/01/18/national/a172052S04.DTL&tsp=1

Mark in San Diego said...

Herbert Hoover from Wikipedia:

"He tried to combat the Depression with volunteer efforts and government action, none of which produced economic recovery during his term"

Hmmmm. . .$500 tax breaks anyone. . .Hoover/Bush II. . .will go down in history as Depression Presidents.

Shakster said...

The birds outside my window don't seem worried.
Go figure.
Fa La la lalalalalalalaaaa

Anonymous said...

2 little 2 late, a-holes.

Anonymous said...

Ever hear of a guy named Robert Rubin? Along with our old buddy Alan Greenspan, Rubin cooked up the plan that opened our markets to China.


Nice try, but Nixon and Bush the First's efforts to open China preculed Rubin.

Anonymous said...

LauraVella,

Try Tuesday... nothing's going to happen on US stock markets on Monday.

Anonymous said...

Enjoying your GOP and El Presidente Bush yet?

As if the DemoRats are any different. They passed NAFTA and Cliton signed it into law. Clinton gave China Most Favored Nation trading status. Clinton signed the US into WTO and GATT. Obama and Clinton want amnesty for 30 million illegal immigrants and another 30 million of their family members, including parents and grandparents who will suck social security and medicare dry. They got us into Somalia and Bosnia and other UN conquests (it's ok if the UN is the aggressor). Clinton ruled over the dotcom ponzi scheme. Tell me how that is any better than the GOP?

Anonymous said...

Nice try, but Nixon and Bush the First's efforts to open China preculed Rubin.


So Rubin didn't have any choice due to Nixon's actions 25 years earlier? If that's the case, why bother voting DemoRat if they are unable to make any changes?

Anonymous said...

Most historians and economists agree that FDR's policies wrosened and prolonged the Great Depression. Being the typical liberal, it was all feel-good fireside chats, empty promises and hot air along with high taxes that destroyed businesses.

Anonymous said...

Keith,

I was thinking. You should have an HP party. I mean a real party where we can all get together, drink, celebrate, commiserate. Maybe the next time you come to US we could all meet somewhere.

Anonymous said...

For the banks and politicians because they have the true facts and figures of what is going on.

For the average Joe, its hard time but the average Joe seen it before.

The sad part is most Working Class American have very little in their saving to prepare for what about to come; therefore, many are still in the state of denial.

Anonymous said...

Watching the Nevada Caucus results and Ron Paul is tied for 2nd with Maccain...."First they ignore you, then they laugh at you, then they fight you, then you win." GO RON PAUL
*CNN actually has Paul's name on the pie chart!!!!

Anonymous said...

Keith,

I was thinking. You should have an HP party. I mean a real party where we can all get together, drink, celebrate, commiserate. Maybe the next time you come to US we could all meet somewhere.


I think the last time this was called the,"Philadelphia Convention."

Honest Abe said...

Most historians and economists agree that FDR's policies wrosened and prolonged the Great Depression. Being the typical liberal, it was all feel-good fireside chats, empty promises and hot air along with high taxes that destroyed businesses.

January 19, 2008 6:43 PM

FDR saved this nation from early disintregation (Just as Lincoln had done during the Civil War)you ungrateful twit.

Most historians and economists agree....

In case you hadnt noticed most historians and economists are incompetent boobs.

Lovingthat bush said...

Anonymous Anonymous said...
Most historians and economists agree that FDR's policies wrosened and prolonged the Great Depression. Being the typical liberal, it was all feel-good fireside chats, empty promises and hot air along with high taxes that destroyed businesses.
January 19, 2008 6:43 PM
----------------------------------
Nope. Only Libtards (Libertarian Retards) are saying that. FDR saved Capitalism in America.

Ed said...

damn happy homeowner, ESP or some shit going on

Ed said...

FDR turned a 5 year depression into a 10 year depression

He also gave us Social Security. For that alone I hope he burns in hell for eternity.

k.w. - southern, ca. said...

Some people blogging here have tried building up the markets - only looking at short-term gains.

The markets, overall are crashing, they have no choice - they are not detached from housing and the housing supply chain of goods and services.

Who ever is the next president, I wouldn't want to be in their shoes.

Talks is cheap, but these politcal talking heads better start putting action behind what comes out of their mouths.

Enorah said...

Anonymous A Wise Man Said said...

Now may be a time to review the things that really matter. Is your job the center of your identity? Things? Is money the only thing that brings security? I do not want to lose everything, but should it happen, guess what? I'll still be here.

I'm very ready for us to move to a way of doing things that makes sense, which others here have suggested may require a major reset.



Agreed. It is a shift in consciousness that is needed and is, in fact, underway.

Anonymous said...

FDR saved this nation from early disintregation (Just as Lincoln had done during the Civil War)you ungrateful twit.

Most historians and economists agree....


---

Most economists also said housing will rebound in 2007 and subprime was nothing to worry about.

Larry Yun is an economist. David Lereah is an economist. Ben Bernanke is an economist.

You were saying....

unomyname said...

Hey Anon 12:53 - I've worked in the building in the shadow of the Del. Memorial at the chemical plant there on the Jersey side. There's always a few jumpers (as there probably is at any big bridge). I'll have to call my buds and ask if anyone won the pool. But it was interesting that he was from a failed subprime outfit. Shame he had to take his wife.

Anonymous said...

But it was interesting that he was from a failed subprime outfit.

Too bad it's just the little guys that are doing it. Mozilo should take the lead, as Japanese leaders do.

Honest Abe said...

Nope. Only Libtards (Libertarian Retards) are saying that. FDR saved Capitalism in America.

January 19, 2008 8:12 PM

Libertarians dont believe in government. The memory of FDR is only 60 years old and yet alot of Americans have no idea just who he was and why his Presidency was absolutely crucial to saving the human race.

He was in a vicious war with Wall Street and the City of London.

Honest Abe said...

FDR turned a 5 year depression into a 10 year depression

He also gave us Social Security. For that alone I hope he burns in hell for eternity.

January 19, 2008 8:25 PM

Ed, you are a moron. And you might learn what it's like to burn in hell if there isnt an FDR style solution to this financial collapse.

FDR saved your butt, yo mommy and daddy's butt and your grand daddys butt.

Now at least learn to wipe yours.

Anonymous said...

Panic has NOT set in yet, the public is still throwing money into their 401K and has not thrown in the towel. Institutions are selling but in minor size. Manhattan real-estate is still sky high. We are AT THE END OF THE DENIAL STAGE. The WSJ article probably means we get a short term S&P bounce.

Daphne64 said...

To those that think we're at the bottom because of all the scared chatter:

The contrarian strategy doesn't work immediately. How long were all those real estate books and TV shows on? 3-5 years? Give it at LEAST that long.

We have 3 years of interest rate resets on mortgages to come, we just hit peak oil last year and haven't really seen shortages of oil yet, and lots of bad investments are yet to be revealed by our biggest companies.

Stick to the guns and precious metals for awhile.

Ed said...

Honest abe sounds suspiciously like bitter renter. You aren't fooling anyone dude.

FDR is the reason we're in the mess today. He started the country down the road to socialism. He is the reason 1/2 the country today lives off the government. You are obviously part of that half. You produce nothing, you make nothing, you just take from those that do and complain you aren't getting enough. 100 years ago you would have died of starvation and rightly so.

May you , along with FDR, LBJ and and every other socialist shitstain burn in hell.

Anonymous said...

While your Republican president borrows money from China to cut checks to the sheep (like you), China has become the biggest producer of gold in the world. No Fiat bull$hit there:

Hey retard, Bushes, Clintons, two fingers on the same hand. The American people are slow but they will have this all figuered out within a month. Just in time to cut off the other fingers, Hitlery, Osama Obama, Gulligirl, Hucklejoke, McShitstain. This one world open boarders, outsource Industry and make the big guys rich is done. Some believe there is a vast intellect behind the Clinton/Bush globalist monster. A bunch of corrupt greedy pigs. They will end up like the Nazis unless they run for their lives. The American people will not make good slaves like the Chinese or Mexicans. There are many Americans who never bought any of this chit that will have to pay. When they reaize who ripped them off and how they did it, just step out of the way. The Chinese, keep drinking the koolade. With out the one worlders selling us out to them they will be offered the opportunity experience some true competition. I will wave my flag and say USA kicks their ass in a trade war or shooting war. And if you don't thnk both are possilbe you truely are clueless as to the gravity of this situation and what free men are capible doing when it comes to feeding and defending their wives and chidren.

Clever Renter said...

Bwahahahaha! The experts at the WSJ have opened their eyes and 'declared' we are in the Panic Stage?

Actually, we're still in the Fear Stage, and what the WSJ is doing is called Bargaining. It goes something like this: "Let's call this the 'Panic Stage' because that would mean the bottom is near, and we can get back to business-as-usual."

Don't be lulled, people. Panic and Despair are still ahead of us.

Anonymous said...

FDR was an idiot and his Social Security and Medicare ponzi schemes will collapse before the baby boomers die off. LBJ's Great Welfare Society will also collapse. People are sick of you lazy worthless liberals sucking off everyone else's hard work. You socialist morons don't realize that $53 trillion will have to be paid out to the baby boomers because of that asswipe FDR. Where will that money come from, you damn morons? It was all a ponzi scheme to get votes. Free money for retirement, free medical care to get votes. That sucker is laughing at you from his grave. Get it through your thick, dumb skulls.

edd said...

If anyone reading has the ear of
a White House staffer, please ask them to suggest that GWB resign
due to 'chronic exhaustion'
or whatever ails him.

Cheny at least is more capable, and the office needs capability and
credibility, and very soon.

No punchline.
GWB should resign; and soon.

Anonymous said...

Nice try, but Nixon and Bush the First's efforts to open China preculed Rubin.

Nixon's client when he went to China as a private citizen was Pepsi. Typical US strategy. They get our good paying (for us) manufacturing and high tech jobs, in exchange we get the right to sell them soft drinks, hamburgers and fried chicken. No wonder the US economy is in the tank.

Shakster said...

Daphne64 said...
To those that think we're at the bottom because of all the scared chatter:

The contrarian strategy doesn't work immediately. How long were all those real estate books and TV shows on? 3-5 years? Give it at LEAST that long.

We have 3 years of interest rate resets on mortgages to come, we just hit peak oil last year and haven't really seen shortages of oil yet, and lots of bad investments are yet to be revealed by our biggest companies.

Stick to the guns and precious metals for awhile.
---------------------------
Excellent observation-

Anonymous said...

Please. Don't use "Bush" and "FDR" in the same sentence.

It cheapens the memory of one of Americas most courageos men, FDR.

Bush (ANY Bush) the current idiot-in-chief cannot even find his way out of a room or off a stage without help.

FDR couldn't walk without help but that didn't stop him from trying any/everything to get America moving again.

George W. Bush couldn't push FDR's wheelchair...

Bush, synonomous with Failure, corruption and Shame.

Andrew Hac said...

"Panic Stage" my ass.

The Americano economy is going down the gutter at this very second.

Look at the value of the U.S dollar versus the Euro.

Look at the price of gold.

Look at the price of oil.

This freaking nation consists mostly of cheaters, liars, immoral S.O.B.

And you ask why the Wall Street is in a "Panic Stage".

Haaaah, a god damn house in the CA Bay Area cost average of 800K. That is eight hundred thousand dollars for a piece of shit.

Honest Abe said...

FDR was an idiot and his Social Security and Medicare ponzi schemes will collapse before the baby boomers die off. LBJ's Great Welfare Society will also collapse. People are sick of you lazy worthless liberals sucking off everyone else's hard work. You socialist morons don't realize that $53 trillion will have to be paid out to the baby boomers because of that asswipe FDR. Where will that money come from, you damn morons? It was all a ponzi scheme to get votes. Free money for retirement, free medical care to get votes. That sucker is laughing at you from his grave. Get it through your thick, dumb skulls.

January 20, 2008 1:35 AM

There is not alot of hard work taking place among the upper 20% income brackets. Shorting the markets and flipping real estate is not exactly the same as building new rail systems, infrastructure, etc.

Those who howl the loudest about "my money" actually did nothing to earn their money in the first place.

Now I'm told that the greatest President of the 20th Century was a liberal, who prolonged the depression, and created a socialist ponzi scheme.

The spawn of the baby boomer has grown up to become a dumber species than his/her baby boomer parents. Now that takes some doing.

Anonymous said...

FDR is a filthy piece of shit

Anonymous said...

Plunge Protection Team is running out of ways to bail us out.

eazy said...

The panic is on the way!

easyblack@yahoo.com

Anonymous said...

I hope McShitStain wins the presidency. It will be very satisfying to watch that smug prick trying to bail out the economy with that shit eating grin on his face. He might be able to lie his ass through a presidential debate but the true test will be dealing with the shit storm that Bushco left behind. Same goes for any of those other clueless morons that think they're presidential material.

Except Ron Paul of course.

Anonymous said...

About the Jumper: The guy that just jumped off the bridge was indeed facing bankruptcy due to his company failing in the sub-prime mess. But when they showed where he lived (looked like a Toll Brothers McMansion) the question of why he killed his wife became obvious.
She probably was nagging him to death about money to spend and mounting debt. They lived a very high end lifestyle in a cul de sac of McMansions in Jersey. Things probably started to catch up with them and they were no doubt losing the house and would have to return to poverty. Ask yourself if a "Bling" wife or "Trophy" wife would take this sitting down for "Love"?
They interviewed a neighbor who said they were a "quiet couple", which means she knew nothing about them. He blew her away and then took a giant leap off the Burlington Bridge. God help the others!
As to Wall Street: The "jumping out of windows of 1929" is a popular MYTH. NO ONE Jumped out of windows on Wall Street when the Stock Market Crashed back then.
In fact the suicide rate was down in that period. People were so interested in what was going on they hung around longer!
In '87 NYC police put up barricades on Wall Street in the mistaken belief of "jumping out of windows" suicides would occur, further pushing that MYTH from 1929. Also, that day, nothing happened.
It is about time we called this one in on facts.

Anonymous said...

Worst Ever:

#1 FDR
#2 Carter
#3 Bush II

Ruprecht said...

anonymous said...
LauraVella,

Try Tuesday... nothing's going to happen on US stock markets on Monday.

Here's why;
http://tinyurl.com/36tx3g
Sweet dreams...

Anonymous said...

**Speaking of crash**

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUST30931620080121

Princess Mononoke said...

Hi Keith, what happend to the open thread??? I don't know where else to post this news I'm seeing right before my eyes!

OMG! It's here... batten down the hatches!

I'm watching Worldwide Exchange on CNBC right now and ALL I repeat ALL of the global markets are suffering massive losses NOW!

I'm feeling a little strange about how the U.S. markets will fare today. Quite possibly Black Monday??? We'll see YIKES...

Princess Mononoke said...

Oh geez, I forgot it MLK day all U.S. markets are closed. Yep, Tuesday it will be. SHIT!