Markets & Recession

This morning the Federal Reserve cut interest rates to 3.5% after a global sell off caused by fears of a US recession. As economic optimists become more scarce and the chance of recession seems increasingly imminent, the markets may have started to follow the larger economic trends. Recession, however, is predicted far more often than it occurs. Is this a steep correction, or the start of an anticipated recession?

Recession & Policy

CUNNING REALIST - Monetary policy as usual, with heaping portions of expediency and no doubt some taxpayer-financed bailouts, eventually sending oil well over $100, gold to $1000 and higher, and the dollar further into the crapper. Then, when all that hits the economy, lower rates again. Wash, rinse, repeat, until the next war or terrorist attack provides some much-needed cover by conveniently distracting voters from the failure of policy and providing an excuse to take rates back to 1%. (Can there be much doubt that some in Washington would secretly welcome that scenario right now?) Keeping in mind that Bernanke's...

Political Context of Our Markets

BRAHMAN COLORADO - January's decline in the S&P 500, the benchmark for American equities, marked the worst start in the index's history. The Federal Reserve's three interest-rate cuts since September haven't encouraged stock investors about the prospects for the economy. Equities are the cheapest relative to bonds since 1974 since the disastrous Republican Ford administration. When Republicans and Democrats learn that the majority of poor, working class and middle class common people are provided universal education, universal social security, universal voting rights, social safety nets, universal employment...

History of the Credit Crisis

A RANDOM WALK TO WEALTH - Around the same time the LBO market was imploding, Main Street was getting introduced to what was alternatively referred to as the "mortgage meltdown" and the "subprime crisis." For a while we couldn't go to a cocktail party without discussing the intricacies of "subprime", "alt-a","no doc", "pay option", "neg am" and all sorts of ridiculous loan programs. Then we watched and laughed as the mono-line mortgage companies like New Century Financial and Accredited Home Loans went under even though Tom Brown assured us these were solid companies. Once those guys failed we realized that a lot of their...

1.22.08

03:45 PM -

Recessions Don't last

Anonymous - The length of a recession is under a year. We'll be coming out of this thing by July. It's natural that the markets purge themselves. We should be happy that it wasn't a sudden offset - if the US economy goes into recession, at least it wasn't a surprise

02:54 PM -

Scary!

stickywicket - We all know where this is going. Today would have been a blood bath if Bernanke hadn't responded so quickly with rate cuts. But how much lower can he go? He's spent his goods. And then when things keep going down, then what? The truth is that the fundamentals are so bad - we are so overextended in so many ways and places - that we were bound to see this. It was just a matter of when. The music has stopped, and now we have a tough time ahead of us. Let's just hope that it will not be as painful as we know it has the potential to be.

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