Great Depression Online Archive Issue:

The Same Story, Yet More Delusional

Great Depression Online
Long Beach, CA
December 02, 2008

Inside This Issue You Will Discover…

*** Easy Come, Easy Go
*** The Consumer Cry’s Uncle
*** The Same Story, Yet More Delusional
*** And More

Easy Come, Easy Go

World markets opened their eyes yesterday and shrieked.  First they thought they were staring down a long dark tunnel with no light at the end.  But then they blinked, and screamed, for it was the barrel of a loaded gun.

Then someone in Japan shouted “sell!”

And so they did.

First the Japanese Nikkei 225 shed 67.14 points.  Then the U.K. FTSE 100 dropped 222.52 points.  And here in the states, the DOW dumped 679.95 points…wiping out a little more than half of the previous five trading day’s historic gains.

Easy come, easy go.

The Consumer Cry’s Uncle

“You can get almost 40 percent off stuff if you work the coupons,” was the advice from Daphna Stepen of Chicago, and reported by AP.

The fifth-grade teacher, “spent Black Friday hunting for deals inside Macy’s and at the Limited Too clothing store and headed out again Saturday.”

~~~~~~Top Secret~~~~~~

Top Secret: Government “Bailout” Planners Don’t Want You to Read This!  Inside this Free Report, our friend and Wall Street Legend Bob Prechter offers blunt commentary and sharp analysis that reveals the truth about what’s really going on in the U.S. financial markets, in Congress, and at your very own bank.  Break the cycle of misinformation here: Top Secret: Government "Bailout" Planners Don't Want You to Read This!

~~~~~~~~~~~~~~~~~~~~~~~~~

The big kick-off of the holiday shopping season can be summed up as high volume, low margin.

“Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets.”

“But the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation’s retailers had to slash prices to attract the crowds in a season that is expected to be the weakest in decades.”

After carrying the economy for years, the consumer appears to be crying uncle just when he’s needed most.  In fact, the Commerce Department reported last week that consumer spending was down 1 percent in October…the fourth straight monthly decline and largest since September 2001.  And when consumer spending accounts for 70 percent of the nation’s economy, this can only mean one thing: recession.

Of course we’ve known we’re in a recession for quite a while now.  We’ve known this not because we’re all that smart…it’s because it has been so obvious.  That is, obvious to anyone who bothered to lick their finger and hold it up to the economic wind to see which way it was blowing.

Still, it took the academics at the National Bureau of Economic Research until yesterday to finally figure it out.  And more importantly, to notice that it “officially” started a year ago…in December 2007.

The Same Story, Yet More Delusional

Yet things could be worse.  We could be the U.K.…where they’ve managed to maneuver their economy into quite the predicament. 

It’s the same story as the U.S.…yet the preceding act was much more delusional.  Housing prices are crashing.  New mortgage loans are nonexistent.  And the banks are teetering on the brink of a systemic collapse. 

But that’s not all…the U.K.’s also been caught stumbling around with their pants down around their ankles.  For the U.K. founded nearly three times their entire economy on the housing bubble based economic growth model whereas the U.S. only piled a fifth of its economy on this fast eroding foundation of sand.

In fact, James Saft at Reuters tells us that “Bank liabilities in the United States are about 20 percent of the size of the economy.  In Britain, the figure is 285 percent.” 

The solution, “as endorsed by finance minister Alistair Darling, is to plaster a government guarantee on up to 100 billion pounds of mortgage securities.”

“The theory is that investors may not want to buy mortgage backed securities, which look a bit dubious given the expected fall in house prices, or lend to British banks, which look a bit dubious for the same reason and several others, but will be very happy to buy bonds that while backed by the British government pay a fair whack more than government debt.”

Sounds like a nifty theory…good luck finding the buyers to validate it.

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  It seems there’s a new bailout every week.  Just what should you make of it?  Inside this Free Report, our friend and Wall Street Legend Bob Prechter offers blunt commentary and sharp analysis that reveals the truth about what’s really going on in the U.S. financial markets, in Congress, and at your very own bank.  Break the cycle of misinformation here: Top Secret: Government "Bailout" Planners Don't Want You to Read This!

 

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