Global Markets Get Hammered As US Recession Reality Sinks In

A fresh wave of selling hit global stock markets Monday as weak economic news from around the world and confirmation of a US recession prompted a massive pullback from last week's gains.

The Dow Jones Industrial Average sank 679.95 points (7.70 percent) to close at 8,149.09, in the fourth-steepest point loss in history for the blue-chip index.

Read the whole story here.

Comments

[Sundialsvc4]

I've got a novel idea: why don't we pay less attention to "the stock market" and start looking instead at "the market?"

The market for ... THINGS.

Just one generation ago ... in a time our surviving grandparents still well-remember ... the United States of America was a manufacturing million-pound-gorilla. "Dude, we were IT."

We recently had to close our only recent domestic attempt to build a factory to make ... shoes. Why? Because all of the SATELLITE factories that produce shoe PARTS are today found only in China.

This is not a workable situation for either America or China.

I know that, throughout the United States, all of that industrial infrastructure is still there. Those plants used to be here, and they need to be here again ... as well as in China, because everyone on this planet (ought to) wears shoes. My point is: it cannot be an "either here or there" choice.

Even though the Treasury says blandly that it can create $5 trillion at the wave of a legislative pen, the reality is otherwise. The only way to create value is to create some thing. A phalanx of related industries (service and otherwise) spring up around that core activity.

America should remember: "We Can Do It! (Again)"

Let's stop wringing our collective hands and get to work. There are REAL fortunes to be made in the process of doing it. I said, REAL ones.

[LookingGlass]

My man Mike Whitney over on the Counterpunch website says "Regardless of what the new administration does, the stock markets will take another leg down between the end of 2009 to early 2010, finding a bottom on the Dow of 4,500 or thereabouts. 70 per cent plus declines took place on the NASDAQ following the dot.com bust, Japan during the 1990s "lost decade" and the Great Depression.

In none of these cases was the bottom reached in the first year. Hedge fund redemptions will force more deleveraging and more wild swings in volatility. The banks, which have accounted for nearly half of their losses, will need to write off another $800 to $900 billion before its all over.

Unemployment will skyrocket, housing will overshoot to the downside, and there will be the first random incidents of political instability in major US cities. The economy will remain flat on its back for some years into the future.

Economic authors Millet and Toussaint say, "Some expected Barack Obama, the newly elected president of the United States, to appoint a completely new economic team so as to implement another New Deal. Obama was going to completely change capitalism, since he couldn"t actually do away with it, and a whole new series of economic regulations were supposed to be on the books.

Instead Obama has selected the most conservative among the Democrats advisors; the very ones who organised frenzied deregulation when Bill Clinton was president at the end of the 1990s."

[Sundialsvc4]

When stories of "inevitable gloom and doom" are tossed-around like that, I recall the story of the Allied commander who was surrounded by the Germans. When asked to "sensibly" surrender, he famously sent back a one-word un-encoded telegram: "NUTS."

Let's stop looking to "the President" to solve this problem, and stop digging foxholes (graves?) for ourselves when he or she inevitably doesn't. Although we should certainly arrest and prosecute "any civil officer" (or "former civil officer") who broke the law in the process of getting us to this place, we should also remember that "this is the United States of America we are talking about here."

I don't think that any of the 305,792,450 people who at-this-moment live here should plan to "roll over and die," no matter what the stock market does.

We have been sold down the river by people who honestly believe that you can invent $5 "T"rillion right out of thin-air. That no matter what situation you find yourself in, you can flick your pen and buy your way out of it. That's leprechaun talk.

The reality is... we need to dust off the machinery (it's still here) and the factories and the self-reliant business smarts that is sitting moribund in damn near every little town in THIS country. It's impossible for two countries to trade with each other unless both of them have DOMESTIC production-capacity.

"We Can Do It! (Again)"

[kapo]

Markets are reacting stupidly. Everyone knows the reality of the situation, but some eggheads declare that that reality is a recession, so the markets have a conniption. I would think that it was more good news than bad, since this would mean the recession is more likely to be nearer the end rather than the beginning, based on the average length of recent recessions. The reality is that in practical terms, this news is more meaningless than meaningful, but humans like a good scare. It is amusing that in good times, news is framed from that positive perspective and in bad times the opposite occurs. To put this in perspective, if the US came under attack tomorrow, nobody would care about a recession.

[metfan5567]

Want a good scare? Think where the markets would be if the US Government hadn't spent the last 2 months dumping trillions of dollars into the markets.

[Sundialsvc4]

Stock-market traders are just plying their trade ... collecting commissions on every transaction that occurs. Good news or bad news, they just look at the trading volume. Multiply that number by four cents (or whatever), and that's how much cash they made that day.

[Dayahka]

There seems to be a collective state of denial in the US about the economic situation. People are still acting as if this is just a part of some cycle--of ups and downs--and waste their intellects wondering when the cycle will end, long long before it ends, and when will things turn up again and the good times roll. But the reality is that this so-called crisis is not part of some cycle--but the end of a system of economics. Instead of wondering when this will end maybe people should be asking some fundamental questions like: What do we need, really need, beyond water, food, shelter, energy, and transportation to enjoy a good life? Should these necessities be nationalized and made available to everyone? Should our basic necessities be subjected to the rules of profit? How many of the millions--if not billions--of "inventions" that are produced and marketed around the world are really needed? How much "useless consumption" do we really need for a good life? Is the old system of borrow-and-spend sustainable? What sort of monetary system would be better, if any, than our current fiat money, money created out of thin air? Do we really need a thousand varieties of every consumer item under the sun? Do we really need a "family" car for every individual? Do we all really need mega-mansions?

[LookingGlass]

No.

[Sundialsvc4]

Oh, I think we do. Yes, we do. If we want them, we should be able to "not only live, but live well."

The notion of "from each according to his abilities, to each according to his needs," has already been tried ... and somehow the lush villas enjoyed by the top-dogs in that government looked a whole lot nicer than the unadorned apartments in town. No, people want to pursue their own dreams and they generate a lot of power by doing it.

Our trouble, for the moment, is that we listened to a leprechaun. And now, it's morning.

So we walk downtown and sit on the steps of the shuttered factory and wring our hands and wonder what "Uncle Sugar" is going to do ... to bail us all out of this mess.

Idea: "Who's got the key to the padlock on the door to this factory? Or that one? Gee, what did THAT factory do? Let's go ask grandpa... he worked there."

"We, the People" are more than 305 million people. We've been taken to the cleaners by a financial leprechaun but all his "gold" didn't really exist anyway.

Idea: "Who's going to REALLY 'bail us out?'" We are.

[NorthernCross]

During the 90's we were tugboat economy keeping the global economy moving when a significant portion of the world was in a slowdown. Maybe it's time for the rest of the world to pick up the slack, at least until we get back on our feet.

In the meantime, America for the Americans and not foreigners.

[Sundialsvc4]

Were we really a tugboat, NC? Or were we being pushed by the trillions of dollars we merely thought we had?

And now, the rest of the world is supposed to "do us a gratuitous favor?"

"Turn your eyes back to your own fields, that may be worked by your own hands, for it is from only there that you may truly prosper."

We don't have to lock-out other countries in order to rebuild our own. We've GOT the capacity... we're just not using it at the moment. What we need to do is to show those other countries "a little Yankee domestic competition."

What if, instead of driving our trucks to a loading-dock in Los Angeles, a thousand miles away, we instead drove them to a loading-dock just down the street?