[ArkTwo email] Tuesday the Terrible

Discussion in 'Financial Cents' started by melbo, Jan 21, 2008.

  1. melbo

    melbo Hunter Gatherer Administrator Founding Member

    <table class="header-part1" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td>Subject:
    [Arktwo] Tuesday the Terrible</td></tr><tr><td>From:
    "Bruce Beach" <language@webpal.org></td></tr><tr><td>Date:
    Mon, 21 Jan 2008 12:26:38 -0500</td></tr></tbody></table><table class="header-part2" border="0" cellpadding="0" cellspacing="0" width="100%"><tbody><tr><td>To:

    Monday being a US Holiday -
    (Martin Luther King Day)
    the time table therefore targets terrible Tuesday.

    Nothing is for sure -
    but I feel sure
    Tuesday will come -
    (although perhaps not
    for you or I specifically).

    Whether or not Tuesday will be terrible
    is less certain -
    but the event itself
    is one of those
    many situations in life
    that are certain
    even if the timing of the event is not.

    I am of course talking about
    the eventual collapse of the Dow.

    In October,
    the Dow closed
    at an all time high of

    On Christmas Eve,
    it closed at 13550,
    just 614 points below that high.

    On Friday
    the Dow closed at 12099,
    2065 points or 14.6 percent
    below the high.

    All other major stock markets
    in the world also have fallen.
    I think we could almost say -
    followed and fell,
    usually between 8 - 12 percent.

    The world watches the Dow.
    The world watches the Dollar.
    Whither go the dollar and the Dow -
    so goes the world.

    The Dow is determined
    by the US economy.
    The Dollar is determined
    by the world economy.

    The reason for the latter
    is that the US has positioned
    the US dollar
    as the world 'reserve' currency.

    By that it is meant that
    all countries kept US dollars
    in reserve
    to settle their international debts.

    Since the US printed the US dollar -
    it was able to print as many as it liked
    to settle its debts.
    Mainly debts for conducting wars
    in other countries.

    This did not please some of the other countries -
    that they were paying for the US wars -
    so they started to diversify
    into other major currencies
    and the US dollar has fallen
    to HALF its value
    against an average
    of those main currencies.

    (At one time the dollar
    was valued at 140 against them
    and today it is 76.)

    The “bottom”
    (the lowest point that the dollar has EVER reached)
    was its close of 74.86
    on November 26.

    I pointed out in my previous newsletter -
    the massive intervention
    last week
    to bring it back up
    when it headed that way again.

    These massive interventions by
    the US Treasury,
    the Federal Reserve,
    the PPT (Plunge Protection Team)
    other concerned central banks
    and other concerned foreign holders
    of massive US debt and investments
    either in stock or currencies
    will not continue to be successful -
    as the requirements for intervention
    become greater and greater.

    So the dollar is desperate -
    but so is the Dow,
    because the US economy is dying.
    One of my economic gurus
    tells me that the US economy
    is basically sound.
    Those are also the almost exact words
    of President Bush.

    While there is not unanimity
    about my position -
    I can tell you
    that I am not alone in it.

    Why might I say that
    the US economy is dying?
    Well, for one thing -
    in the past year,
    US goods producing industries
    lost 374,000 jobs.

    US manufacturing employment
    fell to 13.91 million in 2007.
    The last time US manufacturing employment
    was below 14 million
    was in 1950!

    There are a lot more people
    in the US now
    than there were in 1950 -
    but fewer jobs.
    Tell me that unemployment is
    as low as reported.

    I think that unemployment figures
    are a pack of lies.
    During WW2 everyone could get a job.
    Even Rosie the Riveter.
    Later in university I was told
    that was 'over employment'.

    I was unemployed in 1958.
    As I watched the unemployment rate climb -
    I hoped for it to go over 10%,
    because I thought the government
    would then do something.
    It did.
    And they did.

    They redefined unemployment.
    Before then -
    the unemployed were those
    able and willing to work.
    Then the unemployed were those
    able and willing and looking for work.
    (That is to say they hadn't become discouraged.)
    Next it became those who had gone on unemployment benefits -
    and now it is those whose unemployment benefits haven't run out.

    In some black ghettos
    forty percent of the males
    didn't have a job -
    but that didn't count -
    then or now.
    Neither do the people that we institutionalize.
    The US has the largest population percentage
    in prison
    in the world.

    Lots of kids are in college -
    because they can't find a job.
    The gigantic military forces
    are full of people
    who couldn't find a civilian job.
    And then there in underemployment.
    People with college degrees
    flipping hamburgers.

    But -
    I digress.
    My source says that
    Financial services have lost 7,000.
    Now I wonder how that could be
    when I hear of Citigroup alone -
    laying off 20,000.
    Maybe the numbers are running behind.

    Construction also lost 49,000 jobs.
    Again -
    I could point out many ways
    that is undercounting.

    Where have the jobs gone?
    Like where does the dark go -
    when the sun rises.
    Many people say -
    That need not be -
    because there is never a shortage of work.
    Oh, well -
    I won't try to explain that.

    But for those who worry about such things -
    the imbalance in US trade
    grew 9.3 percent in December alone
    to $US 63.12 Billion.

    While for 2007 household debt
    achieved a record 133 percent
    of disposable personal income.
    In 2000, it was about 60 percent.
    By that measure Americans doubled
    their private debt
    in seven years.

    The theory is that debt,
    like housing,
    other categories of expenditures,
    should generally not exceed
    a certain percentage of income.
    But -
    Americans have been going into debt -
    for their consumer lifestyle.

    For awhile many Americans thought
    they were doing well
    on a net basis
    because the value of their homes
    was going up.

    But in the last three months
    that value -
    based on an annual rate -
    has been tumbling
    in many markets.

    Las Vegas, 18.9 percent
    San Diego, 20.3 percent
    Miami, 22 percent
    And so goes the house prices
    and net worth of Americans
    over much of the country.

    Also so go the homes -
    with a forest of 'for sale' signs
    in some neighbourhoods.
    And a new term called -
    "Jingle Mail"
    as they drop their keys in the mailbox -
    and walk away.
    Yesterday - a report from my son -
    than some in anger -
    are trashing the homes
    before they leave.

    Living high in recent years -
    they have spent 130 percent
    of their earned incomes.

    In November
    they raised their credit card debt
    at an 11.3 percent annual rate
    following an 8.5 percent rise
    in October.

    But now,
    for many million Americans
    much of their pay check is eaten up
    by servicing charges on debt.

    Millions of Americans
    are in the position
    where they cannot service
    (let alone pay)
    their existing debts
    without running up even more debt
    on their credit cards.
    And many of those have maxed out
    their credit cards.

    Money, interest, taxes -
    are all a chimera.
    But never mind -
    the government has a solution,
    just as it does for unemployment.
    Change the numbers.
    Lower taxes for those who have none.
    (Also lower taxes for the wealthy.)

    It is not just an American problem.
    Inflation, debt, unemployment,
    are mounting around the world.

    The US Government debt
    is about to go over $10 Trillion Dollars.
    You can say it.
    But can you understand it?
    I can't understand that number.

    A billion is a thousand million.
    Okay - I can maybe wrap around that.
    But -
    a million million.
    Nope - no way.
    During my days of economic training -
    we maybe heard of a trillion stars -
    or a trillion atoms -
    but never of a trillion dollars.

    In 1958 when I was unemployed -
    and looking for a job -
    with unemployment at 10% -
    the US population
    was 175 million.
    Now it is 300 million.

    Back then US Treasury debt
    was about $US 260 Billion
    or $1,485 per person -
    less than THREE PERCENT
    of today’s total of $US 9,200 Billion
    or $30,670 per person.

    That means that you, your wife -
    and each of the children in your home,
    theoretically all owe over $30,000 each -
    besides what you owe
    on your credit cards,
    mortgage -
    and so forth.

    Pay up!
    Even if they cash out everything -
    most people can't do it.

    (one fifth of the world population)
    whole economy in 2006
    was US 2.67 TRILLION,
    less than one third of the money -
    owed by the US Treasury.

    So -
    Down goes the US.
    Down goes the dollar.
    Down goes the Dow.

    But why Tuesday?

    Well, when the forest is dry -
    lightening can strike anytime.
    And lightening may have struck
    last week.

    The government / courts got after
    rating companies
    for doing phoney ratings
    on stock companies and bonds.

    So the rating companies
    have started changing their ratings.
    Some big banks
    and other financial institutions
    are in trouble.

    One particular group
    got the rug pulled out from under them -
    last week.
    The bond insurers.

    There ratings of the insurers themselves
    were changed
    and in three days,
    shares in Ambac plunged 71 percent.
    In four days,
    shares in MBIA Inc plunged 47 percent.
    Since the start of this year,
    Ambac and MBIA Inc shares are down
    93 and 88 percent respectively.

    These were the key companies
    that insured the bonds
    (of big companies,
    and cities).

    When stocks were weak -
    investors fled to bonds -
    and now -
    the bonds are gone -
    and maybe also the Dow.

    Oh, things are bad -
    except for big government contractors,
    like Brown and Root,
    and Blackwater,
    and the oil companies,
    and the Arab Royalty
    in its Golden Palaces.

    But the men who built
    the house of cards did okay.
    They took the crown jewels with them -
    as they left.

    Dynegy's outgoing CEO,
    Charles Watson,
    walked away
    with a $33 million exit payment --

    Tyco's Dennis Kozlowski,
    although indicted for tax evasion,
    is slated to receive
    a handsome exit package.
    $135 million,
    plus $3.4 million per year
    for a 30-day-per-year consulting contract for the rest of his life.

    K-Mart former CEO Charles Conaway
    got more than $20 million
    in salary bonuses
    and severance payments
    after less than two years.
    (The company is closing 283 stores
    and laying off 22,000 employees.
    They won't be getting bonuses).

    Loser Countrywide Financial's
    chief executive,
    Angelo R. Mozilo,
    is getting $115M in severance bonus.

    Merrill Lynch's Stan O'Neal,
    after a string of billion dollar write-downs,
    left with a $161 million payoff.

    The list just goes on and on.
    Citigroup is of course my favourite.
    Still, never mind.

    The house that greed built -
    is falling down -
    but the rats have left the ship.
    I could continue,
    but space does not permit.

    Tuesday, Tomorrow,
    sometime soon.
    Very possibly it may drag on
    for weeks.
    Some think until never.
    But not you -
    and not I -
    which is why
    you read this newsletter.

    Peace and love,
    DawnSayer@webpal.org </pre>
  2. dannyb05

    dannyb05 Monkey+++

    Greenspan, Mozzilo, and countless others should be shot, Enron looks like the boy scouts compared to these guys. Im a natural optimist, and have a econ degree but one thing i do know is something doesnt add up, I just cant believe that the powers at be would just allow this to happen without some sort of agenda, there is no way this outcome could not easily have been seen. Whats sad is that the public is in denial, go talk to random people about whats going on and you will be amazed at what they dont know, or brush off with a sheepish mentality over this issue. Its just a matter of time now, watching it in slow motion is surreal, I am a moderate on most issues and it is wierd having people looking at you like a nut job when they ask me my opinion(im a mortgage guy) but i dont want to lie, which is rare in my line of work
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