Wow. Just watched the McLaughlin Group and in the predictions segment, Mort Zuckerman

predicted the worse recession since the "Great Depression".

He had related dire comments on the economy earlier in the program.

When the 'money people' such as Zuckerman seem paniced, you know that the crap is about to hit the fan.

They don't have the transcript up for this week or I would have posted his exact comments.

Was it Mort Kondracke?


On Edit: Never mind. I've never heard of Zuckerman before. My bad. Carry on...

She wrote about it in a book I think. He is kind of a charming guy, in his own way. I took another look at him when I heard he had charmed Gloria. She said she leaned on him too much...it was interesting to read that she said that.

Completely.

:puke:

If anything, I feel sad for her. She was going through a bad time in her life and became dependent on him. Sometimes, in life, we all have to have people "into whose arms we can fall" as I described it to a friend of mine who sought solace after a horrendous experience watching her brain damaged husband deteriorate for 2 years before he finally died. She did nothing "wrong" at all. She was and is a highly intelligent, well educated and nice person. People go through grueling times that can take a toll on their emotional lives. I think what happened to Gloria then was understandable in the context of her life at that point. We don't know -- perhaps he showed her some tenderness and understanding at a time when she needed it badly. Don't judge her too harshly...

At least not completely ruined.

in this country. She did some amazing things in her day. I recently saw her on Amy Goodman's "Democracy Now" program, talking about Hillary and how there is still a lot of prejudice against women. She was as beautiful as always, aging in such a lovely way. If anything, her confession about her period of depression and confusion made me think more of her, not less. I guess it humanized her...

Citibank and Merrill Lynch are inches from bankruptcy

it's ugly out there....

Feeling fine, that is.

waiting for the right wave. You know that soon you will be moving w/it ...

It's the interns I've been mentoring recently - from all over the world but they all respond. See my tagline for details. They'll go back, bringing the lessons home.

How could I feel any less than hopeful, doing what I do?

I think they did, read Harding and the Great Depression, when productivity was growing the fastest, the Harding administration allowed companies to reep the benefit, while workers made so little they couldn't afford the products they were making. Sort of like big oil today...

It was more then income inequalities that caused the depression, another big cause was the lack of safe guards in the market.

People were doing stuff like taking out loans to invest in the stock market, hoping to get rich, then losing all of their money and not paying back the bank.

When things started to get really bad people started to go to banks and withdraw their life savings, bankrupting banks that didn't have that kind of money on hand. No bank can survive if everyone who stores their money there suddenly comes in and says "I want all of the money in my account in cash right now".

There were other safeguards lacking to I believe, but I can't think of any off the top of my head. Income inequality like you said though certainly was a big problem that helped make the depression get so much worse, but if banks hadn't had trouble then things wouldn't have been quite as bad.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoueh1XysDoc&refer=home

Ambac Insurance Loses AAA Ranking at Fitch Ratings (Update6)

By Christine Richard

Jan. 18 (Bloomberg) -- Ambac Financial Group Inc. became the first bond insurer to lose its AAA rating after Fitch Ratings downgraded the company.

Ambac Assurance Corp. was lowered two levels to AA and may be reduced further, New York-based Fitch said today in a statement. The downgrade ``reflects the significant uncertainty with respect to the company's franchise, business model and strategic direction,'' Fitch said.

Without its AAA rating New York-based Ambac may be unable to write the top-ranked bond insurance that makes up 74 percent of its revenue. Ambac may quit the business or sell itself, said Robert Haines, an analyst at CreditSights Inc., a bond research firm in New York. The downgrade throws doubt on the ratings of $556 billion in municipal and structured finance debt guaranteed by Ambac.

more at the link...

uh-oh.

OUR Monies....

He overspent his Political Capital also...

He is outta control....

and now we all look at his LEGACY...a nearly Broke USA....Did he ever fuck America...Yes he did...

Let's see, just for today - Patriots-Chargers or The McLaughlin Group? Hmmmm...

Tough choice. But, I agree with Zuckerman. Fasten your seat belts. The economy is just one disaster we will encounter in 2008.

People are maxed out on their credit cards. Banks aren't giving home-equity loans like
they were. For a long time, our economy was propped up, and appeared healthy--due to
these financial devices.

People were spending money they didn't have and now that's going to come to a grinding halt.

And how convenient...we have a bankruptcy law that prevents people from starting over and wiping
out their debts. People are going to be screwed up against a wall. Grocery and gas prices are
through the roof, while all of this is happening.

The housing crisis is going to be so far-reaching, in it's impact. We're going to have millions
of upper-, middle- and upper-middle class people who will be starting their lives over in their
parents basements and in apartments. They're not going to be buying snowblowers, dining room
tables and granite counters, like they used to. There goes the economy.

How many movies will they go to....or vacations will they take...or computers will they buy...
when they have no money, no savings, no credit cards? Industries that rely on people spending
their discretionary income---will be hurting--and so will people working in those jobs.

What about the retail sector, which stands to lose so much business from people decreasing their
spending? Company profits will decline. They'll lay people off. Those people will be screwed
and spending less. An endless cycle.

The construction industry will suffer, as will home-improvement sectors and those in the real-estate
industry.

What happens to the schools that rely on property taxes---in the neighborhoods where people have abandoned
their homes? Many schools will have fewer dollars with which to work.

My husband works for an ISP. Many small businesses in the mortgage business are canceling. The
consequences of all of this is going to be dastardly and so far reaching.

Two years ago, when we were looking for a home--we started saving and reducing our spending. We saw those
"Get in this house for $500 per month!" signs and we knew when those ARMS kicked in and the interest-only
portion of the loan kicked in---all hell would break loose. BushCo knew this too. They gave Americans
just enough rope with which to hang themselves.

They're not telling us now----how disastrous this will be. They don't want us pulling our money out of
the stock market. They don't want panic. HA! They'll cow us into being blind, just as they cowed us
into spending, using credit cards, taking out risky loans, buying homes we couldn't afford, financing
cars for 10 years, using our homes at ATM machines and leaving us cash-poor. Anyone who thinks this
isn't 'by design' is living in a fool's paradise.

If you ask me, the Bush Administration, and those who allowed this to happen to our country--are guilty of
economic terrorism.

The state of the economy is my number one concern right now.

Bernanke will declare that we're in a recession.

"If you ask me, the Bush Administration, and those who allowed this to happen to our country--are guilty of economic terrorism."

Totally agree. You say that Bushco gave Americans just enough rope to hang themselves w/credit & that this is "by design". But what would be the point? What would the strategy be? To make the economy look better? But they had to know that the bubble would collapse eventually while Bush was still President?

If their wealth is safely locked in commodities that are inelastic (oil, gas, food production and distribution, land (i.e. rental property)), then they can buy a lot of good property at foreclosure for a lot less during a recession than they could without the recession.

They can also buy companies and commodities that are more elastic (cars, computers, software) for cheap and then wait for the economy to turn around and make a bundle.

Recessions can be (and usually are) very good for rich people. The poor and middle class may suffer, but do you think the rich care about that?

Besides, for all we know, * is just looking for a reason to declare martial law. A global financial crisis may be just what he's looking for.

-Laelth


Edit:Laelth--corrected sloppy error.

and smarter people than Zuckerman have been saying so. Notice the Democratic candidates are throwing terms like "jobs programs" around. :scared:

Or are we moving on from that history as well?

But by all means, lets vote for celebrities. Who needs issues voters?

will be seen in this is PMI (Pirvate Mortgage Insurance) which is required on every mortgage at 80% or less debt:equity.

When the PMI companies are called upon by the banks to finance the loans they are insuring that are going bankrupt, the entire industry will go in one fell swoop.

I hadn't thought about it, but my gosh!

And who knows what kind of investments the PMI people were making with those premiums.

If they invested in mortgage-backed, then their capital and their obligations will decrease together.

Let's hope that they are not that stupid.

Jim Cramer: Recession and Collapse
http://www.youtube.com/watch?v=4w-TwsvX4q4




              Edwards '08 tees!

Cramer can be a bit off the charts at times -- but there is always truth underlying his assumptions.

Will go and listen now.

:hi:

Thanks again!

How exactly is he a 'money' person?

I would call that someone "in the know".

When the Wall Street Big Boys(ie. Citigroup, Merrill Lynch, etc) finally are quoted terms by Middle Eastern Investors too onerous to accept, they won't be able to cover all the hidden obligations and losses -- and that will send a shock wave through the stock market that has not been seen since 1929, AND there will be an immediate run on the banks. Guaranteed.

The full extent of losses on Wall Street have been hidden for months. Over a Trillion dollars in derivatives and other exotic investment vehicles.

It will be like the Titanic --what was generally agreed to be impossible.... will happen.

tied up in the next 9 months will that be soon enough?

There is not boing to be any way to hide the effects in the next round of corporate earnings reports.

The scrambling that will go on leading up to that will ratchet up the pressure, and likely bring things to a head.

to prepare, in your opinion? I'm trying to figure out if I should take savings out of a mutual fund/stocks & into something more secure. But it seems like, if there is a deep recession w/high inflation, the savings will be eaten up regardless.

Investments in precious metals, coins, gems, etc. might hold relative value but there are usually costs involved in purchasing, storing and selling them. Plus they do not provide any kind of interest payment on the investment.

Look for things that will always be in demand that have a use beyond their monetary value.

But don't hold cash or stocks which are going to devalue.

the Bohemian Crown, some of the largest rubies in the world

being as I have little cash, I am collecting food for the pantry. Yes, canned goods are not terrifically healthy, but their great advantage is they are already cooked. And the cans can be used for all sort of things.

The tar and feathers...you can probably guess what they are for...

I'm not an economist, but what I'm thinking is that if this is a "normal" recession or even a depression, the stock market/bond market will eventually recover. Even after the Great Depression, stocks eventually regained their value & appreciated. Also, government bonds have always been safe, and TIPS bonds can protect against inflation. So in normal circumstances, it seems like a diversified investments/savings plan should be relatively "safe".

Of course, if the economy totally collapses, and bonds become worthless, FDIC can't cover the banks, & inflation spins out of control, all bets are off. But it seems like, if we really do have a historic, catastrophic depression, precious metals won't be worth much either. As another poster pointed out, you can't buy houses with rubies. And if there's runaway inflation, like in Germany circa 1930, it doesn't seem like people will be bringing their wheelbarrows of cash to buy gems - instead it's more likely that people will hock precious jewelery for bread. So I'm not sure if there's any safe investment in the US if things really collapse. So.. maybe I'll get a TIPS bond & hang tight & hope.

"Annual Purchase Limit For Savings Bonds Set at $5,000
FOR IMMEDIATE RELEASE
December 3, 2007

The annual limitation on purchases of United States Savings Bonds will be set at $5,000 per Social Security Number, effective January 1, 2008."

I just noticed that the US gov. put a $5000.00 cap on savings bonds beginning Jan 2008. They knew what was coming.

what exactly is a run on the banks? How does it affect the little people?

... demand payment of their funds on deposit with the bank or other financial institution.

The problem banks have today is that they have not held sufficient reserves to balance demands for repayment as they have been heavily involved in lending and investment activties which have seen a substantial downturn in value.

Holding a secured interest in mortgaged property has a value tied to the fair market value of the collateral. So if the home was valued at $300k to secure the making of the loan, and today that same home is worth $200k, then the value of the collateral has been reduced by 1/3 -- and if the loan was for 240k and the borrow defaults on payments, the bank cannot recoup the proceeds loaned nor the profit anticipated.

Those loaned funds came from either borrowed funds which have to be paid back with interest, OR from depositors' funds on account. When the depositors show up and demand repayment, the bank may not have enough $$$ to pay the depositor their funds because they did not put aside enough reserves to protect against such a situation.

Take the above scenario and multiply by 100 or 1000 times and you might come close to the situation that large investment banks are facing with 'off the books bad loans' looming, and their biggest investors 'underwater' in the millions of dollars each.

Watch the movie "It's a Wonderful Life" and you will see the 1929 version of a run on the bank.

so i wonder if the time frame from here to the bottom of the sea floor is a quick trip

We are headed for an unstoppable major recession. It will be dangerous times.

the war in Iraq is a "minor drag". Who does he think he's fooling?

Republicans=war=money to the military-industrial-complex=widening wealth gap=broke and depressed people=bad economy=depression disguised as "recession"=panic=NEW DEAL=short properity=new WAR=start all over again...

War is a Racket: Gen. Smedley Butler: http://www.ratical.org/ratville/CAH/warisaracket.html

"WAR is a racket. It always has been.

It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.

A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.

In the World War a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows. How many of these war millionaires shouldered a rifle? How many of them dug a trench? How many of them knew what it meant to go hungry in a rat-infested dug-out? How many of them spent sleepless, frightened nights, ducking shells and shrapnel and machine gun bullets? How many of them parried a bayonet thrust of an enemy? How many of them were wounded or killed in battle? Out of war nations acquire additional territory, if they are victorious. They just take it. This newly acquired territory promptly is exploited by the few -- the selfsame few who wrung dollars out of blood in the war. The general public shoulders the bill.

And what is this bill?

This bill renders a horrible accounting. Newly placed gravestones. Mangled bodies. Shattered minds. Broken hearts and homes. Economic instability. Depression and all its attendant miseries. Back-breaking taxation for generations and generation

right off the cliff these last few years all giddy with his globalized portfolios, profits and 'irrational exuberance', now he's all "Wah!!! It's getting cold in here!" the money people/investor class is so pampered, when they wave their hands about it's easy to see how pale, callous-less, and work free they really are

separating church & state is one thing, i think it's nearly time to start separating economy & state as well :patriot:

my community, my friends, my family,

we've already been in the worst recession of my lifetime (50+ years) for the last 7 years. It's been spiraling down steadily.

What you describe has been happening everywhere, but it is happening in the other America - the invisible America - so rarely talked about here.

Dems turn to clean up the shit pile.

We have checks coming in the mail! All of this will be taken care of by the smart people we have running our government. Our beloved leader is going to send us all a check to make things better. Its so generous of him and our elected officials to give us money! Im gonna get my car fixed finally and maybe even pay off my energy bill Im behind on...WOO HOO! Im so glad we have someone as smart as George W Bush to solve these really complicated problems. /sarcasm

Zuckerman knows less about economics than my dog.
The Professor

you have proven to be the best informed, imo.

You may know that right here in these forums, i have been saying the economy is recessionary, whether or not it fits the narrow definition of recession, for about 4 years. So, i'm not saying things won't get worse than they are.

But, since Zuck is a completely buffoon, i would predict against a major, deep and severe recession simply because he thinks it's going to happen. Since he knows nothing, it's safe to bet against him.

My models show a slowing of growth that will continue once a new administration gets in and has to reprioritize spending and reduce borrowing. That will have a downward effect on the GS portion of GDP, which will slow real growth.

So, it'll get worse before it gets better, and my guess is about 18 to 20 months from now it will have bottomed out and begin to recover.
The Professor

I've been reading DU since around 2002 and "the big crash" has been about to happen since then.

I'm not a betting man but I'm willing to suggest that although times are tough and the stock market is undergoing some long overdue corrections, our society and financial markets are not going to collapse anytime soon.

so pick your point and catch a falling knife then if you have such confidence

Sorry, but that's completely wrong. The economy in the 20's was based upon far less diverse elements, and the current market is far more tightly regulated, meaning that the inertia due to its size, and the regulations in place make massive plunges far less likely.

So, you think you're comparing apples to apples, but you're not. In addition, these drops in value pale in comparison to those of 1929. (As a percent of total market value.)

In addition, the market is a notoriously POOR indicator of macroeconomic health. So, you can overlay charts of markets all you want, but that's like looking at the xray of a dog's leg and trying to troubleshoot the space shuttle. Both highly technical but mostly apropos of nothing.

Another thing; What percentage of today's equity and capital markets are held at margins below 50%. Answer: None. What was the percentage in 1929? The market was not sustained at that time by real capital but merely a promise to pay for it later. When it fell, there was no air in the balloon.

Lastly, since the microeconomic drivers that aggregate up to the macro are so different than that simpler and more cohesive period, even a sudden fall of the market would have a lesser immediate impacat on a macroeconomy this large.

The facts do not support your contention, nor does theory.
The Professor

the current market is far more tightly regulated, meaning that the inertia due to its size, and the regulations in place make massive plunges far less likely.

The largest market by far is the Over The Counter derivatives market, which is almost completely unregulated. According to Bank for International Settlement, the OTC Derivatives market was $415 Trillion as of 4Q06. It is probably in the vicinity of $500 Trillion now.

Another thing; What percentage of today's equity and capital markets are held at margins below 50%. Answer: None.

That is certainly not true of the market for things like credit default swaps or even for collaterized debt obligations. In 4Q06, CDS stood at $28 Trillion, and were growing fast. Hedge funds also borrow to buy CDOs with large amounts of leverage. These are the markets that are/have seized up due to opaque counter-party risk, which is greatly increased if the debt insurers go belly up.

even a sudden fall of the market would have a lesser immediate impacat on a macroeconomy this large.

It depends on the size of the fall, and how long the market stays down. While the immediate effects are the inability of investors to access cash from investment funds, a severe drop in the stock market will likely to throw various pension and insurance funds into insolvency. Once these have to file regulatory reports with "mark to market" numbers, the losses will become visible to all and the economy will contract severely.

The outcome now depends on who are on the right side of the derivatives contracts. Theoretically all the losses and gaines should net to zero (aside from the investment bankers' fees), but there could be some pretty big losses.

earlier in the show he also commented how the Iraq war has had no effect whatsoever on the U.S. economy. This is complete b*llsh*t.

The debt racked up in spending over a trillion dollars on the occupation of Iraq has directly influenced the fall of the dollar and in turn the rise in oil costs that now are tanking the U.S. economy. (it isn't that complicated)

He either flat out lied about it not having any effect, is in denial or doesn't know what he is talking about.

He's probably right!! GOODBYE!!!!