what if markets are indeed heading down south? I have no idea what happened during 1998, but i remembered it was pretty grim with the asian financial crisis. Was it the same situation? I dont recall US and Euro being impacted that much during those times…
I don’t think we’re heading for an economic capitulation either. This sort of thing is healthy for the most part. There was too much animal spirits built into the markets up until the summer. When Blackstone went public, that was the beginning of the end IMHO. Tommorow will definetly be ugly though,and when you start seeing down numbers the likes of which many of us have never seen, it is a bit frightning. All the same, we will persevere and prosper.
FrankArabia Wrote: ------------------------------------------------------- > NVan, i agree with no rate cuts. The subprime > thing was a mistake. people have to be punished > for their mistakes. a depression will NOT set us > back 50 years. 30-50 years is probably an exaggeration but definitely considerable number of years…and recovery will be slow and painful…and needless to say US will lose its status in world economy as a leader and fall behind as it already has somewhat.
N.VanCandidate Wrote: ------------------------------------------------------- > FrankArabia Wrote: > -------------------------------------------------- > ----- > > NVan, i agree with no rate cuts. The subprime > > thing was a mistake. people have to be punished > > for their mistakes. a depression will NOT set > us > > back 50 years. > > > 30-50 years is probably an exaggeration but > definitely considerable number of years…and > recovery will be slow and painful…and needless > to say US will lose its status in world economy as > a leader and fall behind as it already has > somewhat. It’s already lost it’s status as the leader, yet we’re coughing and everyone else is sneezing? Might want to rethink that.
ancientmtk Wrote: ------------------------------------------------------- > what if markets are indeed heading down south? I > have no idea what happened during 1998, but i > remembered it was pretty grim with the asian > financial crisis. Was it the same situation? I > dont recall US and Euro being impacted that much > during those times… No they weren’t, but that time the crisis was largely born in the emerging world, particularly the Asian tigers where massive skyscrapers were being built all over cities like Bangkok and Kuala Lampur. The buildings were for office space and condos which weren’t filled, and for condos with no prospective owners. It was all finance by agressive banks and overseas investors (particulalrly Japanesse ones if my memory serves) whom were attratcted to high growth rates in these economies and financed with cheap debt at economically unsustainable exchange rates. Then, the cat got out of the bag and investors quickly learned that the central banks of these countries didn’t have the resverves to defend their aggressive exchange rates. This caused massive capital flight, invesment restrictions, and political turmoil. Then the same thing happened in Russia where the government had virtually no experience in collecting taxes, and most of their revenues came from selling oil and gas (which is I am sure still true today), of course oil was dirt cheap, so they weren’t able to make their bond payments. Everyone figured, the west, particularly the US, which had been bailing out everyone the past few years including Mexcio and South Korea, would bail them out because they had nukes, but no dice. So Russia defaults. Then LTCM collapsed. Long story short, the Asian contagion started in the emerging markets and spread to developed markets. This time though, the economic crisis was born in the states and a few other developed markets. That much we know. Everything else, time will tell. I’m not sure how I did there with my economic history. If your very interested in this sort of thing ancient, read Commanding Heights, The Battle for the World Economy by Stanislaw and Yergin: http://en.wikipedia.org/wiki/Commanding_Heights:_The_Battle_for_the_World_Economy
I think the depression idea is overblown and I’m a bear here. If a depression is a decline in GDP of 10%, that would make the current situation worse than in 1973 when the worst recession since the 30’s happened. From '73-'75, GDP declined by 5% peak to trough. It was awful (in the Great Depression it was down 33%). The US and the world was in awful disarray in '73 from Vietnam, Watergate, Arab-Israeli war and the oil embargo, Bretton Woods collapse, Cold War problems everywhere, Soviet crop failure, and others. The stock market declined almost 50% during that period. We’re not close to that yet but there’s time. The way we are going to get out of this is the way we get out of all of these problems - we work productively focusing on economic problems instead of fighting idiotic wars and dealing with unproductive political issues. We have a powerful Fed that may not be the brightest Fed in recent memory but at least they keep their eye on the ball. A depression would be a monumental failure for them. In 1973, my Mom worried that driving me to my Boy Scout meeting would mean that my father couldn’t go to work because there was no gasoline. One night she drove me to my meeting and a gas station that had been closed for weeks got a delivery of gasoline and opened up as we drove past. Mom turned around and was literally thanking God when the guy let her fill up the whole tank instead of just selling her $5 worth. My Dad could go to work! Yay! Hard to imagine problems like that this time, and GDP only declined half as much as is required for a depression.
CFA_Halifax Wrote: ------------------------------------------------------- > ancientmtk Wrote: > -------------------------------------------------- > ----- > > what if markets are indeed heading down south? > I > > have no idea what happened during 1998, but i > > remembered it was pretty grim with the asian > > financial crisis. Was it the same situation? > I > > dont recall US and Euro being impacted that > much > > during those times… > > No they weren’t, but that time the crisis was > largely born in the emerging world, particularly > the Asian tigers where massive skyscrapers were > being built all over cities like Bangkok and Kuala > Lampur. The buildings were for office space and > condos which weren’t filled, and for condos with > no prospective owners. It was all finance by > agressive banks and overseas investors > (particulalrly Japanesse ones if my memory serves) > whom were attratcted to high growth rates in these > economies and financed with cheap debt at > economically unsustainable exchange rates. Then, > the cat got out of the bag and investors quickly > learned that the central banks of these countries > didn’t have the resverves to defend their > aggressive exchange rates. This caused massive > capital flight, invesment restrictions, and > political turmoil. > > Then the same thing happened in Russia where the > government had virtually no experience in > collecting taxes, and most of their revenues came > from selling oil and gas (which is I am sure still > true today), of course oil was dirt cheap, so they > weren’t able to make their bond payments. Everyone > figured, the west, particularly the US, which had > been bailing out everyone the past few years > including Mexcio and South Korea, would bail them > out because they had nukes, but no dice. So Russia > defaults. Then LTCM collapsed. > > Long story short, the Asian contagion started in > the emerging markets and spread to developed > markets. This time though, the economic crisis was > born in the states and a few other developed > markets. That much we know. Everything else, time > will tell. > > > > I’m not sure how I did there with my economic > history. If your very interested in this sort of > thing ancient, read Commanding Heights, The Battle > for the World Economy by Stanislaw and Yergin: > Not too bad, but I would say that the Asian Contagion was a year before the Russian default and the subsequent LTCM collapse and that the Asian contagion caused the Russian problem only sort-of makes sense. There were some huge consequences in the developed world over the Russian default including some serious market vol. The only time (I think) we used the circuit breakers was during this period. It was really ugly.
Asian Contagion Sensation would be a good name for a band.
strikershank Wrote: ------------------------------------------------------- > Ugly. > > That’s the only way to describe it. Ugly. Cuz she > ain’t pretty. Well, shorting or buying at what’s perceived to be at a discount, could prove to be beer goggles. 
Wow… that’s a great gas story Joey. In a way… that’s real “systematic” risk I guess. I was talking to my japanese inlaws about stuff like that (320 yen to the dollar, gas shortages, etc.) … always helps with perspective
Well we have one market open in Asia now, New Zealand has opened down a little under 4%
Might pull an all-nighter and watch this continue to unfold on Bloomberg TV tonight.
Looks like NZX won’t be alone…ASX futures down 2.8% before open.
The early ones to watch are China and India. They’re bubbles now, and if they collapse it could get ugly! I was watching the Nikkei by chance last night, and didn’t really think much of the drop mainly because the Japanesse market had rallied Thursday night after the Thursday sell off. Then when I saw the European numbers, I was blow away.
FrankArabia Wrote: ------------------------------------------------------- > Discount Brokerage is also cutting jobs now. > > this has been a very exciting day so far. Yikes, seriously? I haven’t even been at mine for very long. Not looking good.
I checked the asian markets last night too before I put my son to bed and they didn’t look too bad (around 8 cst). With the market closed today I didn’t really bother checking morning news and just came in to work for a “few hours” to catch up on things. Been here since 8am preparing for tomorrow.
Aussie is down about 2.5% already. Thats’s 12 straight days down and enters the market into a bear, 20%+. Yikes
Yes, we are getting hammered over here, 3.5% down, not pretty. lots of margin calls
Positive Note: The Dow Futures have improved from -522 to -465 
BosyBillups Wrote: ------------------------------------------------------- > Positive Note: The Dow Futures have improved from > -522 to -465 Is that 465 from yesterday or from Friday. That seems rather low?? Other developed’s are down at least 5% since this started