How low will the Dow Go?

Billy T,

Here you go again Billy, with libelous and false accusations. I agree the war on Iraq was a very bad judgement call, but it is simply false and libelous to state Bush started the war to "steal France and Russia's oil contracts" for Halliburton and Blackwater. Halliburton was given the contract to REPAIR the oil fields damaged after the war began. The critizism was that the contracts were awarded without competitive bids. Blackwater is a private security operation that has nothing to do with oil.

You predicted oil at over $200 a barrel, the Dow over 15,000, and a hyperinflating dollar. You essentially based those predictions on the high costs of commuting due to the high cost of gas because the US was too 'spread out' instead of everyone living inside the cities and taking public transportation.

Bush's main mistake was the expensive and ill-concieved war in Iraq. 9/11 happened during his watch, but can hardly be blamed on Bush since he was only in office a short time. The stock market and economy crashed after 9/11 and Bush did what most all economists recommend to quickly stimulate the economy. He lowered taxes. Corporations as well as individuals pay taxes and the idea was that they would reinvest the money in the economy. What he and his adminstration had stupidly forgotten was the changes in trade policies by Bill Clinton. Clinton was responsible for ramming NAFTA and admitting China to the WTO during his adminstration. Like you said, the investments went to Mexico and China instead of the US, good for them but bad for US workers. The importers and retailers made out like bandits, while manufacturing jobs disappeared for the US workforce. Easy money came from China as they could not spend the US dollars there, so they supplied much of the money that eventually funded the housing bubble. If Greenspan had half the smarts he was credited for, he would have recognized the bubbles forming from the easy credit and increased lending rates. He didn't. The economic mess started with Clinton's free trade policies, was enhanced by Bush's tax cuts not being eliminated after recover started again after 9/11, and by Greenspan's inaction on interest rates. The US congress contributed greatly by changing the law to allow commercial banks and insurers to operate as hedge funds, risking people's savings in high risk financial instruments. There is plenty of blame to spread around, not just on 'GWB'.

I like Obama personally, but I have come to be much less 'impressed' with his intelligence and deep understanding. I have seen him make several errors that I detected instantly. I don't consider myself intelligent enough to lead the country, yet I can see blunders he makes. For instance, on the Jay Leno show, Obama was speaking of future hybrid and electric cars and stated his desire that the batteries for such cars be made in the US, instead of Japan as they are now. The lithium batteries he was referring to are not made in Japan, but in China and South Korea. GM is supposed to assemble cells imported from South Korea into battery packs for the Volt-type cars and eventually LG is supposed to build a factory in the US to make the cells IF and WHEN the cars have a large enough sales volume to support a special battery cell factory. Obama is usually very good at reading from a teleprompter when making a speech, but he also recently made a stupid mistake reading a hosting governor's speech instead of his own, thanking himself for being there.

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He seemed clueless when expressing his 'outrage' at AIG when it was his own adminstration that OKed the bonuses. Is he as prone to making goofs as 'GWB'?

 

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Bush knew that the 9/11 terrorists came from or were trained in the madras of Saudi Arabia, but they were long time supporter of both father and son Bush so he did not attack them. GWB also knew that Saddam was a ruthless tyrant who did not allow any organization like alcada to exist inside Iraq. He knew that Saddam had noting to do with the 9/11 attack. He also knew that there were much worse non-democratic regimes in the Gulf area. - For example his friends the Saudis. In Iraq women had essentially the same rights as men certainly could drive cars walk outside the house without a male relative etc. He knew France and Russia were the ONLY major powers benefiting from the Iraq oil. (Russia mainly supplied the oil field equipment and repairs - Halliburton now does that.) If not to get those oil contracts from the French (Total mainly), why was Iraq his target? Why did France so adamantly oppose the invasion?

Answer:* France, like me, understood it was all about oil and who was profiting from it. - Pre-invasion that was France´s Total, post invasion that was war-hawk Chennie´s Hallaburton. Iraq War had nothing to do with Saddam´s evil nature. Chennie was in Iraq a few years earlier shaking Saddam´s hand and promissed that: Yes, the US spy satellite photos would be available in almost real time to guide his bombers dropping posion gas on the Iranian troop concentrations, etc. The photo of that handshake is very well know - surely you have seen it.

Why was France not allowed to even bid on the reconstruction jobs? (Especially THE RESTOPRATION OF THE TELEPHONE system, WHICH WAS FRENCH MADE and for which US parts were incompatible - this delayed restoration of telephone service for more than a year.) You can believe the Iraq war was for any of the several stated reasons if you like, but as I think most wars have an economic basis, in the case of the Iraq war, I think it was to get the lucrative contracts from the French company Total for GWB´s contributors.

Yes, Blackwater is not directly related to the oil cause of the Iraq war, but the owner is one of the top 10 individual contributors to Bush´s campaigns (more than a million dollars, annually as I recall, but channeled via others, I think because of some legal limitations. No wonder it was not necessary to bid for the job. GWB has a long history of rewarding his friends, and they in turn him – how his 0.5% investment in the Texas Rangers grew to 10% at no expense to him, etc.

Yes I expected the dollar to collapse (still do) and did not foresee that many would still consider it to be a safe haven. I expected this because of GWB´s rapid increase in US debt and the destructive policy of transfer wealth from typical Joe American to his rich supporters - foresaw that housing was a bubble and would collapse with Joe American’s DECREASING salaries in terms of purchasing power. (If you like I can probably find the late 2005 posts where I stated this and explained why -I think it is in tread I started about the "6 L cycle")
You have slightly confused my comment about the "US´s suburban infrastructure. That was not the cause of my still predicted collapse of the dollar and resulting high level (in nominal terms) of both the dollar price of oil and the DOW. That was why the US would suffer more than the EU and others where years of relatively expensive gasoline had made smaller cars, better public transport, higher population density instead of suburban sprawl - still also true that US will suffer more because the infrastructure it has is ill suited to the expensive energy era.

I tend to agree with much of this, and also blame Greenspan by name back in 2005.- See the first or second L of my "6 L cycle thread OP. I think that even if Bush did not neglect the greater globalized world effect he made a serious mistake with taxes relief for the wealthy. I have long ago posted that I first realized how stupid that as stimulus was while standing in bank line to deposit the $300 check I received from Treasury as "stimulus" in GWB´s first recession. Another man was doing the same. Banks already had more cash than borrowers. If you want stimulus you give the refunds to the poor, not the rich who will just save it. "Helicopter Ben" once understood this, but I am not sure he still does. WAITING IN THAT BANK LINE IS WHEN I REALIZED HOW DUMB GWB´S ECONOMIC POLICIES WERE. (sorry about all caps –an accident.)
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*Also worth noting is that the very first US troops to enter Bagdadd when straight to the oil ministry building to protect it (and records in it) from looting etc. but mankind´s priceless historical artifacts in the national musuem got no protection for about 10 days and most were looted.

 

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Zinquisitive you do limbaugh proud. First, Microsoft did not employ lobbyists until the government under George II in league with Microsoft competitors tried to break up the company using the power of government. It became very obvious that in order to survive, Microsoft needed to jump into the game in a big way with lobbyists in order to stay in business, and so they did.

http://news.cnet.com/2010-1071_3-1021938.html

As for Buffett, he is still a big Obama supporter. His concern is that Obama may get unfocused by trying to attempt too many things at once. And this is a legitimate concern. But Obama knows that this is a crisis and time is a very limited commodity. Obama has momentum and he does not want to loose it. He knows that time servers his poltical enemies and not him.

http://www.cnbc.com/id/28725005

As for the political affiliations of Gates and Buffet, they have both supported members of both political parties. I would say they are better classified as independents. Now I know this runs against what is being posted on the Republican and right wing websites...but it is truth...verifiable truth and not spin.

The issue here is not political affiliation, but these subject matter experts (Gates & Buffet), self made billionaires, endorse and support the economic policies of the Obama administration and not the crap coming from the Republican party and their ditto heads.

 

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joepistole,

You retard, I am not a neocon. I am not a Democrat nor a Republican. I will attack all stupid political comments as I see fit in the ECONOMICS forum.

Another stupid politically motivated comment. Microsoft hired their first full-time lobbyist, Jack Krumholtz, in 1995. The anti-trust lawsuit against Microsoft was brought by the Department of Justice and about 20 state's AG's in 1997, in response to MS egineering Windows to perform poorly under any browser except Windows. MS had hidden code in Windows to make browsers like Netscape Navigator perform poorly. The trial began on May of 1998, by which time Microsoft had a small army of lobbyists. Nothing to do with 'Bush ll', just more of your made-up lies.

No, those statements are political spin. Buffet and Gates are both life-long Democrats. Gates supports the Democratic party, some executives in the Microsoft Corporation have given to the Republican party. Buffett, on the contrary, does not hire lobbyists and is not a huge political contributor, though almost entirely to the Democtatic party. He did make small contributions to a couple New England Republicans, such as Chris Shays, which were known as Republican in name only. I don't read right wing websites and I don't read left wing websites. Seems that is all you do, read biased opinions and attempt to classify anyone that is not on the far left as 'Rush Limboughs".

There are ditto heads in both parties and crap coming from both parties. Most politicians are clueless nincompoops only concerned with their own re-elections. They sell their votes for bills if they can attach a pork barrel amendment benefiting their home districts, buying votes back home. Members of both parties do this. They lie and try to place blame on 'the other party' for their own shortcomings.

 

kmguru,

I stand corrected. I had looked up the political contributions of Microsoft, which were largely Democratic, rather than William H. Gates.

 

For summary of Geither's plan and my comments see:
http://www.sciforums.com/showpost.php?p=2203470&postcount=69
with links to both the white paper on it and the Treasury statement of it.

If it works, it will answer this tread's question: I.e. The recent bottom was it.

 

I think we have seen the bottom. I bought into the financials in a big way about two weeks ago. And I am obviously very pleased with the result. Obama has implemented a good portion of the recovery plan.

 

Good for you joe, but I would not ride the rise too far.

Homes were the first shoe to drop. Here may be the second. (If credit card defaults do not beat it to the floor.):

“… The country’s 10 biggest banks have $327.6 billion in commercial mortgages, which face a wave of defaults as office vacancies grow and retailers and casinos go bankrupt. A projected tripling in the default rate would result in losses of about 7 percent of total unpaid balances, according to estimates from analysts at research firm Reis Inc.
Commercial property prices are down almost 20 percent in the past year, and with the global recession worsening, there’s “significant stress” in the market, said William Schwartz, a credit analyst at DBRS Inc. in New York. Moody’s Investors Service is reviewing the financial strength ratings of 23 regional lenders, as “these losses are likely to meaningfully weaken the capital position of many banks in 2009,” said Managing Director Robert Young in New York. …”

One example:
“Wachovia Corp., now owned by San Francisco-based Wells Fargo, foreclosed on the 46-store Bridgewater Falls mall in Hamilton, Ohio, in February. The borrower, Indianapolis-based Premier Properties USA Inc., defaulted on an $80 million loan from Wachovia at the peak of the real estate bubble. Wachovia sold the property to itself for $33 million, or 59 percent less than the original loan, after no higher bids emerged at an auction earlier this month. ...”

Quotes from: http://www.bloomberg.com/apps/news?pid=20601087&sid=aR72TKlxCQ7A&refer=home

 

Thanks Billy T, good advice. I have been thinking about that very issue.

 

Draging a "stop loss tail" behind your rise might be a good idea.

 

That we've seen the bottom may be the wrong way of looking at it.
What if we've seen the correction.
ie, the current prices are about right.

 

US banks are failing at rate of one every four calander days (more rapidly / business days) thus far in 2009.* The stress on FDIC must be bulding up - soon they will need some printing press money too if not already using it. -Any one know if they are already?
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*For facts about number 21, See :
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFh1powi5fbw&refer=home
where you can read:
"U.S. banks lost $32.1 billion from October through December, the first aggregate quarterly loss since 1990. The agency’s deposit insurance fund, used to reimburse customers of closed banks, tumbled 45 percent to $18.9 billion in the quarter from $34.6 billion in the preceding period following the closing of 25 lenders last year. "

Thus I would guess the FDIC is already making deposits good with printing press money.

 

Any idea how the credit card market is doing? I'm surprised it hasn't crashed yet.

 

The next shoe to fall is the commercial real estate market...it is a much smaller portion of the real estate and mortgage issue. But that is the next wave of trouble I think. As Billy T has pointed out there have been a number of large commercial deals default recently.

 

MONTHLY JOB LOSES
November -597,000
December -681,000
January -655,000
February -651,000
From: http://us.mg2.mail.yahoo.com/dc/launch?.gx=1&.rand=15tg928h3o0r9

Average is 646,000/ month for 1/3 of year. New data due out on 3 April. If less than this average, it will be a good sign things are at least not getting worse. I.e. slight downward trend of last three months is real.

 

i bought this lovely Indian car with my credit card. the car even comes with its own expiration date.

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You are doing the old limbaughite stuff again. When did I call you a neocon? When did I call you a Republican? Show me, and the reality is you cannot, because I did not. A lot of folks with your point of view are refusing to accept labels...running from those that they supported in the past. That is why I used limbaughite to describe your thinking as it mimics his line of propaganda. I hate to call it thought because it really isn't.

And you have already admitted your error with Gates and Buffet.

 

joepitole,

This is the second time you have inferred I am like Limbaugh. I made an earlier comment in response to Billy T's post praising Obama's intelligence and "deep understanding" of our financial problems. You responded by insulting me personally and again in this post by comparing me to Limbaugh. So, are you stating you believe Limbaugh is a Democrat and not a neocon Republican?

I refuse to be labeled a far-left Dumocrat or a far-right Republitard. I am more or less a centrist, slightly liberal leaning on social issues and slightly conservative leaning (not neocon) on fiscal issues. I actually support the Geitner/Obama PPI plan to rid banks of illiquid assets. I also support most of Obama's other agendas, except for the congressional pork attached to the stimilus bill and the free-spending (borrowing) budget bill with costly programs in a time of low tax revenues and already unprecidented expenditures needed to support the economy. My view is to trim the pork amendments from the stimilus package and delay health care reform until the economy recovers enough that taxes can be increased TO PAY FOR HEALTH CARE REFORM and other new shit that is costly, but not budgeted for. Those are ECONOMIC views and not anti-Obama nor pro-Obama political propaganda.

No, you are injecting political propaganda into the economic discussion, as you always do. If you think blindly supporting a particular political party is "thinking", I am back to my original response to you when you called me "limbaughite". If you want an example of "limbaughite" behavior (not thinking) just look in the mirror.

Can you read and comprehend what you have read? The obvious answer is no, unless you are just habitually dishonest. I admitted a mistake when I referred to Gates as a lifelong Democrat, and no mention of error regarding Buffett. Gates was a supporter of Bush/Cheney in 2004. He buys influence in both parties. Microsoft donations are largely to the Democratic party.