This was the worst week financially for the world in our lifetimes and in memory (unless one was born before 1920): at least since the early to late 1930s. Indices across the board lost about 20 % of their value in just several days, making their cumulative losses around 40 % and more in the last year. The outlook ahead is not promising whatsoever. The foundations of capitalist economies have turned to slop and the news ahead will be even more troubling and startling to most. The basis of the looming bad news will be continued declines in home values, slumping home sales, increasing unemployment, reports of business failures and setbacks, collapses of banks both nationally and abroad, and perhaps most importantly, the beginning of the consequences of wild financial instruments such as derivatives and credit default swaps that reportedly total tens of trillions of dollars that will swamp the financial and banking institutions across the planet with oceans of red ink and losses that are all but incomprehensible. Markets everywhere are in a panic and a meltdown. And credit remains completely unavailable as those markets are being described as totally frozen.-
Most people that have any sensibility have already pulled much of their money from the collapsing markets and put their financial assets wisely into islands of relative security such as banks and treasury bills and notes, while others have put their money unwisely under a mattress or other perceived kind of safe place. Sensible people have ceased spending money on all but essentials and only on the minimal of pleasures; in essence they are hoarding their cash and trying to be prepared as much as possible for the immediate future in light of the ongoing crash and the uncertain major side effects that may occur. Anyone buying real estate, making large purchases such as automobiles and appliances, making investments on anything (except for gold), and wasting money on trivial and selfish foolish pursuits is absolutely stupid at this time.
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Financial experts and world leaders are conferencing in hopes of finding an answer to this crash and crisis, but it is probable they will not go beyond what steps have already been taken. Here in the US, we have a lame duck administration ( in more ways than one) that is already impotent and without the political will, capital, or standing to do anything further or meaningful. With a national election coming in slightly more than three weeks, the time for massive changes to be made by the Bush people has now past. Changes will come, but not until after the inauguration of Barack Obama in January. Some small policy actions make take place in the interim, as a secondary financial incentive program is being bandied about by Democratic leadership in Congress, but it is by no means a certainty and probably will not be enacted until after Thanksgiving at the earliest and what it will consist of is still be to be specifically determined and strongly subject to political bickering, infighting, and horse trading. One thing is for certain: any legislation that does make it out of the Congress will be swollen with pork and earmarks as in the recent bailout bill, as is any and all legislation for that matter.
Financial experts and world leaders are conferencing in hopes of finding an answer to this crash and crisis, but it is probable they will not go beyond what steps have already been taken. Here in the US, we have a lame duck administration ( in more ways than one) that is already impotent and without the political will, capital, or standing to do anything further or meaningful. With a national election coming in slightly more than three weeks, the time for massive changes to be made by the Bush people has now past. Changes will come, but not until after the inauguration of Barack Obama in January. Some small policy actions make take place in the interim, as a secondary financial incentive program is being bandied about by Democratic leadership in Congress, but it is by no means a certainty and probably will not be enacted until after Thanksgiving at the earliest and what it will consist of is still be to be specifically determined and strongly subject to political bickering, infighting, and horse trading. One thing is for certain: any legislation that does make it out of the Congress will be swollen with pork and earmarks as in the recent bailout bill, as is any and all legislation for that matter.
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What will develop in the coming few years will be serious reforms and legal measures to deal with the crash and crisis and all of its origins and consequences . One important measure that must occur is a serious restucturing of our tax system that ends the long free ride wealthy elites and corporations have been on with out paying what is fair into the federal as well as state treasuries. A just progressive tax system hopefully will be put into place in 2009. There are a number of other serious reforms to our economic system that must be implimented.
-The absolutely amazing thing about all this is the all but complete repudiation and surrender of Absolutist Market Capitalism by powerful and influential individuals throughout business and government. This was completely unimaginable just a few months ago. The frightening thing, however, is a worse development: State Capitalism, where taxpayer money is directly invested into banks and other financial institutions in a desparate move to save capitalism as a viable economic system. This move has grave consequences in the future for the middle class, working class, and poor, as democracy is sure to suffer under such a system with a loss of rights, liberties, and freedoms in order to satisfy the state capitalists and their clients. Many of these people are criminals or abettors to criminals directly or indirectly responsible for our current crisis and crash and should be dealt with harshly including prison time and virtual complete personal assets forfeiture.
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How bad will things get during the week of 13 to 18 October 2008 ? I hope I am incorrect, but I foresee the Dow Jones Index dropping below 7000, perhaps even 6500; the S & P 500 dropping beneath 500; and the NASDAQ sinking to less than 1200. Other indices will be as ugly in their continuing downturns.
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And we still will not be at the bottom of all of this, nor will we anytime soon. The worst is yet to come...
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