by Popmayhem
Well, the Dow has broken 8,000. As Jane noted there is no technical support below 8K, so where it ends now is not known. A historical low for a bear market, as I’ve written in the past is 6K, which is about 7 times earnings.
The issue isn’t just technical trading, it’s the spiral of margin calls, where the lower the market goes, the more investors who have borrowed funds to invest have to sell in order to keep enough value in their accounts to cover the loans they’ve taken out. The term for this is an Ohmstead break, and if one occurs, the drop will become uncontrollable.
In the meantime, I am amused that the same White House and Senate who supposedly passed the bailout bill to save the market weren’t willing to push cough 25 billion to stop this meltdown from occuring. When the White House and Congress failed to pass a restructuring bill, investors got scared, because even if politicians are stupid enough to be stampeded by Paulson, then too stupid to understand what 3 million job losses will do the US economy, investors know that it would devastate the economy.
But hey, the real job of the bailout was to save Congress’s white collar friends. The real goal of not passing a bill that gives auto companies 25 billion, a fraction of the 700 billion given to Wall Street so they could give themselves 70 billion of bonuses, is to destroy a major union.
Priorities, ya know.
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- FDL Book Salon Welcomes Barry Ritholtz – Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
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cash value for the S+P including inflation is 600; now that the 775 support has been broken, that’s where it is headed. Look for a massive rally soon.
Thanks Ian.
digg
Something is missing from this paragraph – can you fix it
I just erased my comment on the devastate correction…!
We’re heading to 4000.
There will NOT be a massive rally. There will be a depression that will make the 1930s look like good times.
woops, errors fixed. Trying to blog on the move from a laptop.
How long until they try to tell us that things are getting better because even though the market is losing about 5% on bad days, the actual number of dollars we’re losing on those days is going down as our portfolios shrink?
Thanks, Ian, and here I thought the last nail in the GOP (we lost because of the wall street melt down) coffin was the outrage by conservative voters over the bank bail out. Well I will be laughing when all these southern conservative congressman and women vote to oppose the auto bail out, then they will realize too late that the auto industry does not just exist in Michigan. There are manufacturing and parts plants, auto dealers, and all that all through the south and I am sure it will have an effect on southern voters come election time.
When you start adding up the sectors affected if there is no bailout and the additional sectors the UAW touches, the list is long.
Congress needs to realize, this is no joke. I don’t think we can wait until December.
Retail is at an all time low, unemployment is at an all time high and climbing –all this while going into what is to be retail’s biggest season of the year. Many industries have announced restructuring in the face of economic realities. People are scared. No one is buying, except for essentials.
A responsible government would have suspended trading about six weeks ago, sorted the bailouts/rescues completely, and then resumed, first with two-hour sessions to avoid insanity. The idea of keeping the casino open while revaluing the color of every single chip makes absolutely no sense.
I’m sure the Bush and Cheney money is appropriately parked to avoid all this chaos.
We are watching the formation of the Bush legacy. After all, as a candidate in 2000 he said that the economy’s not that good. Now, at the end of 2008, he’s finally finished making that concretely true. Mission Accomplished!
Yep, in Dubai’s Haliburton HQs…!
All the money handed out to folks they wont tell us about.
The Carlyle Group is laughing.
Ian, would you support an lbo by the unions to buy the automakers?
Thanks Boo for the Digg Link!
6000 here we come!! This administration and the Rethuglians are trying to make sure Obama inherits the biggest mess they can create so it will look like it is his failure when we slip into the next Depression.
A responsible government would not have started and continued two wars for seven years now and ballooning the enormous defict we are faced with today. If these conflict were handled responsibly, we probably would not be in this economic mess to begin with.
How ya doin’ Teddy!
This business report at BBC shows the market results on the right hand side. Note OIL prices in another link:
http://news.bbc.co.uk/2/hi/business/default.stm
the dollar is about $1.253 per Euro and finding some stability at that level
If they’re going to pull the market out tomorrow, it will be with a Timothy Geithner announcement (Treasury Secretary designation).
The Masters Of The Universe know when they are going to announce it, and will kill the shorts when they do..making a killing themselves in the process.
When they let it break support like this, it’s usually followed by a massive news-driven event that eviscerates the shorts.
Only a Geithner announcement accompanied by an instant plan will turn the market higher. Look for JP Morgan / Chase (Rockefeller, Inc) to swoop in and acquire the assets of Citi.
It’s good to be king.
Case in point…!
I have to say that the economic crisis is a fitting end to the W regime. We expected no less from him.
Regulation? We don’t need no stinking Regulation! The markets can take care of themselves!
Too True. And the Pols take care of their chums.
In July, Lindsey Williams warned anyone who was willing to listen that the masters of the universe were going to crash the price of oil to $50. He was told so by a top oil industry executive. It’s totally manipulated.
July 28, 2008
http://www.youtube.com/watch?v=kKSfnAXGnVY
no, but i expected more from the 110th congress. my bad.
A sure sign our addiction to foreign oil is chronic.
But, but, but, you don’t understand.
We’re now heading into a new non-divisive era.
Let bygones be bygones.
True, true. A grave disappointment.
Here’s one to rev you up for political system change.
http://antiwar.com/radio/2008/…..h-sottile/
Well I did’nt name any names, did I? :)
Here’s an interesting way of looking at the cheaper gas prices helping the economy.
http://seekingalpha.com/articl…..b_articles
Tula’s upstairs with 12 steps to stopping a Depression…
$25 billion for 3 million workers is objectionable but they will trip over themselves to shove more money at AIG when it loses another 65 bn on GM’s demise and subsequent cds losses
Hope your laptop isn’t plugged in while you walk around :D
Limpy Limbaugh, the Republic water-carrier and Bush son wannabe, is desparately trying to make this all Obama’s fault. His true-believers have already adopted his spin.
I had asked Dean Baker about this in his post about the bailout (#1 at Oxdown)
The MSM is saying that deflation is such a scary bad thing; I realize the problems in the long term, but it seems to me that in the short term lowered prices are a good thing, especially for the people hit hard by lack of discretionary income, i.e. the lower and middle class.
What am I missing here?
There is no cash flow -$1.46B.
The company can’t support more debt at $45B.
This would be a distressed asset equity play out of bankruptcy.
A Chapter 7 liquidation.
i’m behind. just listened to giraldi last night. gotta learn not to do that or i’m going to start having nightmares.
The current economic crisis had little to do with W, with the exception of his idiotic bailout idea..this has been car crash waiting to happen for years now and just reached a head. Heck, both McCain and Obama touted how they called to everyone’s attention in 2003 the problem with Fannie/Freddie, yet no one did anything about it. Now we are stupid enough to give 700 billion, excuse me 850 billion to the same people (forgot about the fine senators who had to add their pork projects to such a critical bill) that broke the system in the first place? Now we aren’t even bailing out what was stated originally, we get to add the car industry. This is going to get worse before it gets better, and we are making a big mistake by not letting the free market economy do its job.
Exactly, The Hegelian Dialectic
Probably.
Have you ever listened to Limbaugh? He doesn’t get along with Bush too well on most issues, and has been more critical of him than most democrats. Try listening before making a blind observation like that
I’m a few threads behind but this is what I wrote below:
The Dow closed at 7,552.29. Apparently dithering in the face of disaster isn’t the winning strategy that politicians thought it was. Maybe it would help if we gave Henry Paulson some more money.
The oil futures contract was tading at $48.85. I said some months ago (back when it was well over $100) that the rational price of oil was $50. That was based on the 2001 price plus a very generous dollar devaluation factor of 50%. If I had chosen a 30% factor, the price would be $42. But what is important to keep in mind here is that we are mighty close to oil’s floor. If it breaks $45, this would be an important indicator that we are entering not recession but depression.
If they were in full control they would never have let it break support at 8000, because airc (I don’t have my charts in front of me right now) there’s no support below that.
Uh, would that be the Limbaugh who admitted earlier this year that he had “carried the water for the Bush Administration” for the last 8 years?
Which meant that he offered public support to Bush for 8 years?
So if he wasn’t “getting along with Bush on most issues” he did one hell of a job of hiding the fact.
30 is where I put the floor of oil, but I wasn’t expecting that for a year or so. You’re absolutely right, it’s dropping too fast now.
What was that for? Conservatives were doing that (not just Limbaugh) because Bush would not stand up for himself when critized on actions he took relating to the war. It is something that drove conservatives crazy that Bush thought the office of the presidency was about such petty squables. Bush has since changed his tune on that.
I’m in for a little more today. If you’ve got a while before retirement, this time of financial turmoil seems like a fabulous time to add a few more dollars into your IRAs.
I have listened and Limpy loved George H.W. Bush.
Interesting that you term debates about an undeclared war “petty squabbles”
What part is the re-valuation of the dollar playing in all of this?
Also, I read somewhere that Morgan Stanley was the largest holder of futures oil (and other commodity) contracts and they were suspiciously not as hurt by the initial credit crunch because of this. Is it possible that the speculators such as Morgan Stanley are not bidding up the price of the contracts?
Just wanted your input – I have no empirical evidence for this.
IIRC it was $32/bbl when Bush came into office. This is going to play hell with oil producing economies because they are so dependent on oil cash flows, and these countries are some of the most unstable even at the best of times. Even before it was a joke that OPEC was going to enforce production cuts. The pressure is, in fact, always exactly the opposite. At times of high prices, they want to pump more to maximize profits. In times of low or declining prices, they need to pump more to minimize losses.
They can use the low prices to liquidate their long positions which were based on high prices.
The smart ones will have saved their Bush windfalls.
He does that, along with a lot of the other Republicans under the guise that Bush has failed conservatism, not that conservatism is a failure in and among itself.
It is why you hear conservatives say that McCain was not conservative enough and why Palin (and Fred Thompson !) is so popular among them.
I look at Media Matters so I don’t have to listen to Rush – they do a pretty good job archiving what he actually says and when what he says is relevant to the larger discourse. What he says, unfortunately, is either a lie or a lie by omission.
they = Morgan Stanley and other speculators, correct?
BTW, you were right and I was wrong about Obama and appointments the other day – you might have missed my mea culpa…..
where?
maybe some nice cdo investments?
you think there is a $60 drop due to demand destruction?
Gold bars!
Double quotes work good for a lot of things, but don’t take the words out of context. Those are Rush’s words explaining how Bush view’s various aspects of the war.
I read that too – thought it was Goldman Sachs but you’re probably right about Morgan. Anyway, what I remember is that they put together a private oil trading bourse (?) trying to find the link
Cool, Media Matter’s huh! I didn’t even need to let their splash page load to get an idea what they are all about. From their ‘about us’:
“Media Matters for America is a Web-based, not-for-profit, 501(c)(3) progressive research and information center dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media.”
Right off the bat they are not objective in their mission statement. I would be very interested in who funds this ‘Not-for profit’ organization. Wonder if the person has the last name of Soros. Like how they use ‘progressive’ instead of liberal.
It may be a good idea for you to listen to Rush, get some of your info there, then Media Matters, then whole host of other places. If you get your info from just one place, ignorance will be your best defense in arguments. We can probably agree that the news industry sucks eggs, so it is up to you to get accurate info.
Found the link. Not oil per se, but a private stock exchange.
http://online.wsj.com/public/a…..tors_picks
“Dow 36,00
0!”Glassman and his co-author could recycle their books using a magic marker. ;-)
I had a big short on SPDR’s. I told my financial advisor to sell this morning, thinking the fall was going to bottom out soon, and wanting to lock in some very considerable gains. Bad call.
No prob. We are all trying to understand what is going on, disheartened by what we see, and hoping reason will prevail and things will get better.
Prices fall faster than wages, which makes it more costly for employers to maintain employment. The result is rising lay-offs. This is why we are so afraid of deflation, and why it is worse than moderate inflation.
There is also the matter of debt. Paying off debt whether it is a mortgage or business debt the fewer dollars cannot meet debt obligations and the asset value backing the debt isn’t there.
Now, when I hear more about Paulson and the collapse of Wall Street, why am I thinking about Katrina, NOLA, and Brownie?
In both, here’s part of the recipe:
* Ignore signs of trouble ahead (embankments that won’t withstand a storm surge, deregulation of barriers to bad mortgages, etc.)(also think Enron, Lehman brothers, and actual warnings about toxic mortgage debt)
* Agencies intended to prevent catastrophes run by incompetent heads (Brownie, Paulson)
* Once disaster strikes, the Fed Agency in charge of helping doesn’t act, or acts way late, or acts ineffectively or wrongly.
* Brunt of the disaster is felt primarily by poor and marginal people; fat cats manipulate the system to take advantage (um, who’s getting that $700 billion, please?)
I don’t have time to sharpen the parallel, but perhaps you can see the outlines.
Bob in HI
What does this statement mean??
wasn’t willing to push cough 25 billion to stop this meltdown from occuring.
I’ve been thinking the same thing for the past 2 months or so. Shut the damn thing down.
Is this for real? I mentioned the other day the auto co’s should ask oil co’’s for a loan but I was thinking more like Halliburton.
I forgot to link to CTuttle @ 19.
Here’s some info and charts on oil.
http://www.hgs.org/en/articles/printview.asp?432
Like the threat of the Chinese not putting money in our markets to stabilize them and then discovering that they might destroy our consumer base and their own sales the Republicans should be careful what they wish for when they seek to destroy the unions which are connected to the car company industry which is connected to the South.
Be careful what you wish for.
Part of the auto bailout out plan should be that all the executives at the big 3 start working for minimum wage until all the money is payed back.
It seems that the Republican, as they always do, are looking for a way to destroy the UAW. It’s not enough that they have pretty much eliminated the middle class in the last 8 years, they want to destroy the institutions that can help the middle class recover.
Support is an imaginary “floor” below prices. Typically, if support holds, prices don’t drop below support, at least not without a fight. Support exists “technically” if price has been at that level before, and demonstrated that there is support by not dropping through. If that has happened once or more times, then traders and speculators know about it, and tend to buy those lows, or liquidate their shorts at or above those lows.
In the case of the Dow Jones Industrial Average, in October of 2002, the index moved down to about 7,200, then recovered from those lows. (actually, it made kind of an inverted head-and-shoulders with shoulders around 7,500 – minor support levels). Before that, price had dropped and headed back up right around 8,000 (September, 2001). So, with 8,000 taken out, and sitting at 7,500, the next target is around 7,200, and then… you have to go back to the rise in the late ’90s, and no support levels were established.
And it just happened now because of the crisis and the crisis isn’t being dealt with properly by Paulson who answers to W. Hmmm.
Do you believe in fairies?
Yes. And, if he runs for president it won’t matter how much his true believer followers suck up to him he will just show himself to be another annoying flash in the pan. He won’t get to Iowa.
rice for dinner: Nobody could have expected this…
I like this page better.
March 31, 1946 $1.37
http://www.ioga.com/Special/crudeoil_Hist.htm
When schrub & shooter came into office oil was in the $20.’s The previous 8 years only saw oil raise about $10. a barrell.
HISTORY OF ILLINOIS BASIN POSTED CRUDE OIL PRICES
Crude Oil Price
Chart from 1977 to 2003
Monthly Price Chart 1998 to July 2006
History & Analysis of Crude Oil Prices from WTRG Economics
Year, Month, Monthly Average, and Yearly Average
2008
January $84.70 July $126.16
February $86.64 August $108.46
March $96.87 September $96.13
April $104.31 October
May $117.40 November
June $126.33 December
2008 Average* $105.22
*Through September
2007
January $46.53 July $65.96
February $51.36 August $64.23
March $52.64 September $70.94
April $56.08 October $77.56
May $55.43 November $86.92
June $59.25 December $83-46
2007 Average $64.20
2006
January $58.30 July $66.28
February $54.65 August $64.93
March $55.42 September $55.73
April $62.50 October $50.98
May $62.94 November $50.98
June $62.85 December $54.06
2006 Average $58.30
2005
January $42.21 July $52.13
February* $42.91/$41.11 August $58.07
March* $48.55/$47.80 September $58.56
April* $46.63/$46.38 October $55.12
May* $43.27/$43.02 November $51.18
June* $49.56/$49.80 December $52.31
2005 Average* $50.04/$49.81
*From February through June the posted price was not the same for all three crude purchasers in the Illinois Basin. The first price is Countrymark Coop posted price average, the second price is Plains/Bi-Petro posted price average.
2004
January $30.87 July $36.25
February $31.03 August $40.67
March $33.48 September $41.25
April $33.08 October $48.71
May $36.31 November $44.30
June $33.80 December $39.20
2004 Average $37.41
2003
January $29.44 July $27.39
February $32.13 August $28.33
March $30.26 September $25.14
April $25.22 October $27.07
May $23.61 November $27.66
June $27.23 December $28.83
2003 Average $27.69
2002
January $16.65 July $23.69
February $18.88 August $24.90
March $20.97 September $26.28
April $22.83 October $25.38
May $23.79 November $22.92
June $22.16 December $25.25
2002 Average $22.81
2001
January $28.66 July $23.58
February $26.72 August $24.08
March $23.96 September $20.82
April $26.77 October $19.04
May $25.44 November $16.45
June $24.27 December $16.21
2001 Average $23.00
2000
January $24.11 July $27.17
February $26.54 August $28.27
March $27.44 September $30.88
April $22.99 October $30.01
May $26.06 November $31.16
June $28.57 December $25.50
Yearly total Average $27.40
Cut backs on imports, reformulated gasoline, and taxes caused record high gasoline prices in Midwest, reaching over $2.00 per gallon. Saudi Arabia wanting to boost import levels but other OPEC nations against it. (June & July)
http://www.ioga.com/Special/crudeoil_Hist.htm
All Media Matters does is provide verbatim quotes as well as audio if Mr. Limbaugh says something of note that might find its way into the general discourse via Drudge, an English newspaper (Murdoch has a way of doing that sometimes) to our regular media folk. Bob Somerby famously calls this “the script”.
I read National Review and Townhall, for example, thank you very much, and I have to tell you that their material is generally poorly sourced, misleadingly sourced, or both.
While other commenters on this board do have a tendency to use derogatory nicknames, I am not one to do so (although sometimes it is very, very tempting)
I posted an article from a Milwaukee magazine last week, which gave a behind the scenes look from a Program Director how righty talk radio manipulates their audience. Mike Stark has proven several times that Limbaugh and Hannity both operate in a similar fashion.
If you are yourself with enough facts, the things that Limbaugh says sometimes are great comedy. That’s why Sadly No! is one of my favorite blogs – they usually are spot on why you people on the right (I know I am making an assumption here – correct me if I am wrong- but the “Soros funded” quote is a dead giveaway, it’s been thoroughly debunked) evoke so much snark when you’re attempting to make a serious argument.
Huh? Your sentence doesn’t make sense
If you listened to Limbaugh, you would know his view on running for public office. That being…he won’t as he can’t afford the pay cut.