Sunday, 11 November 2007

The Last Dead Bull On Wall Street

What a week for the stock market. On Wednesday the market took a 360 point nosedive followed, two days later, by a 220 point belly-flop. By the time it was over, the trading pits looked more like a sausage-packing plant than the world's financial epicenter. After the bell, downcast traders could be seen tiptoeing through the carnage on their way to the local liquor store to load up on "Stoly" and boxes of Franzia---anything that would steady their nerves and put the week behind them.
The country is headed for recession and there's nothing that Bernanke can do to stop it. The only question is whether we'll be facing a colossal economy-busting meltdown like 1929 or a milder 5 or 6-year slump. That's up to the Federal Reserve. If the Fed chief decides to pit himself against the falling markets by slashing rates and destroying the currency; then we are likely to be digging-out for years. But if Bernanke steps aside, and lets the chips fall where they may, then the pace of recovery will be quicker.

Whatever choice he makes, there's no avoiding the inevitable downturn. The hammer is poised to strike the anvil. The stock market will fall, the over-extended banks and hedge funds will collapse, and the country will go into a protracted, economic tailspin. That much is certain. Economic fundamentals can only be shrugged off for so long. When markets correct it's like a tidal-surge that sweeps-away the deadwood of bad bets and over-levered investments leaving behind a broad-expanse of empty beach.
By Mike Whitney at

Contrary to repeated claims about the US economy made in the mainstream media, with all their up beat "market jitters" evaluations (that the recent instability would pan out) - we can now see that the fundamentals are NOT good. The self delusionary and superficial views on the US economy are being exposed as misguided to say the least.

The US economy is headed for a recession which means stalled economic growth, reduced consumer spending, company losses and failure, down sizing, job losses, rising unemployment - all manner of hardships.

For the rest of the World an economic "failure" in the US will cause similar slow downs and difficulties- especially for those economies in which the citizens are carrying a high level of personal debt.

No comments: