Daily Revolt

January 16, 2008

Global Markets Fall on Fears for U.S. Economy

It is getting very dangerous. This could easily snowball into a panic (I won't use the d-word). We need to wake up. There are very serious problems with the U.S. economy, and that impacts the rest of the world markets:
Global shares fell Wednesday as burgeoning U.S. mortgage loan problems and soft economic data provoked fears that the world's largest economy may enter a recession and drag down smaller economies with it.

The Nikkei 225 stock index fell 3.4 percent in Tokyo to its lowest closing in more than two years. The Hang Seng index in Hong Kong was off 4.3 percent. The CSI 300 index in China also declined 3.4 percent. The decline gave the Nikkei a return of minus 11.8 percent so far in 2008.

"Equity markets are declining as global investors are less willing to take on risk with subprime loans still in the news," said Kazunori Takahashi, Head of Equity Market Research with Daiwa Securities SMBC in Tokyo. "This is feeding concerns the U.S. economy may go into recession, which also makes it difficult to buy risk assets such as equities."

Citigroup, the biggest U.S. bank, on Tuesday reported a fourth-quarter net loss of $9.83 billion. The biggest loss on record for the 196-year-old company reflected write-downs on subprime mortgage investments of $18 billion.

This is what Glenn Beck had to say in November:
The national debt, just packed $9 trillion for the first time ever, and it took our country from George Washington all the way to Ronald Reagan to reach the first one trillion. Of course, the debt, largely owned by foreign countries like, let`s say, China, who when it`s in their best interest, will just get rid of that debt, collapse our economy and assume global dominance, all without ever firing a single shot. Never happened before in history.

That scenario, on top of everything from the housing recession to the dollar collapse, is what scares money manager Jim Melcher. He told "The New York Sun," quote, "I am worried about a recession, not a normal one, but a very bad one, the worst since the 1930s."

Jim is a Wall Streeter and a very successful Wall Streeter, so he didn`t want to say the actual words and ruin his credibility, so allow me. I`ve got no credibility. He`s talking about something on the scale of the Great Depression.

Meanwhile, despite the media`s indifference, our credit crisis is far from over. In the last two weeks alone, Citigroup came out and devalued another $11 billion in assets. Morgan Stanley wrote down another $6 billion. Bank of America just today wrote off $3 billion.

Wachovia and E*Trade have admitted to another billion dollars each. In E*Trade`s case, at least one analyst is concerned that nervous clients could be scared into closing their deposit accounts.

If I may translate again to English, I believe that`s called a run on the banks. I hope I`m wrong. It`s always triggered by fear, and it always leads to hunger.

So, America, here is what you need to know tonight. This is not about panic; it`s about information and preparation. Depressions cannot be predicted, so I`m not certainly not saying we`re headed for one. But mark my words, if you wait for fear and hunger to be your motivation to plan, then you`ll have waited far too long.

Something is happening. Something is coming. And if we`ve learned anything from history, it should be that, when it happens, our government will only make things worse.

- It is clear the politicians do not have an answer. We need the people to come up with solutions. There are plenty of part-time or retired participants in the stock market that probably have some insight into what is going on. Visit The People's Platform and share what you believe to be the answer.

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