[tt] the unfolding economic collapse

Wed Sep 17 08:29:48 CEST 2008

----- Forwarded message from Kragen Javier Sitaker <kragen at pobox.com> -----

From: Kragen Javier Sitaker <kragen at pobox.com>
Date: Tue, 16 Sep 2008 15:59:22 -0400
To: kragen-fw at canonical.org
Subject: the unfolding economic collapse
User-Agent: Mutt/1.5.13 (2006-08-11)

In my calendar, there is this entry:
2007-06-13 US economy crash announced: "The Takeover Boom, About to Go Bust"

I added it on 2007-09-04, and then last month added the notation “(economic
collapse)”, because I had been unable to find it earlier searching for
terms such as “disaster”, “collapse”, “depression”, and so on, but I had
coincidentally found it while searching my calendar for something else.
The reference is to a [Washington Post column][1] by Steven Pearlstein,
their business columnist; it’s about a mounting credit crunch in
corporate M&A.  It persuaded me that the US economy was starting to
collapse.

[1]: http://www.washingtonpost.com/wp-dyn/content/article/2007/06/12/AR2007061201801.html

I guess nobody ever called me an optimist.

Here are the unedited “Top Stories” from finance.yahoo.com right now:

> Top Stories
> 
> Fed May Cut Interest Rates Again After All — AP
> ==========================================
> 
> Economists were split on whether the central bank would actually cut a
> key rate when officials meet Tuesday, but it was widely agreed that
> the Fed will at least open the door to reducing rates in the weeks
> ahead if financial markets do not stabilize.
> 
>     * AIG shares plummet as cash crisis mounts — Reuters
>     * Stocks fluctuate as investors mull future of AIG — AP
>     * Goldman posts worst quarter since going public — AP
>     * Dell sees further signs of weak tech spending — Reuters
>     * Oil prices sink below $93 on falling demand — AP
>     * Barclays confirms interest in Lehman Bros. assets — AP
>     * Fed pumps $70B into nation's financial system — AP
>     * Video: AIG's Former CEO Greenberg: "It is in our national
>       interest that AIG survive" — CNBC
>     * Merrill Faces 'Calamity' If Deal with 'Fragile' Bank of
>       America Collapses — Tech Ticker
> 
> » View more top stories

Reading this I can’t help but laugh out loud; I feel like I’m in a
crappy Hollywood apocalypse flick.  The hurricane damage in Texas,
combined with the sight of three concurrent Atlantic hurricanes a week
or two ago, does nothing to dispel this feeling.

Fortunately, I live in Argentina, where people have lots of experience
dealing with economic collapses.

URLs with more details on the unfolding economic panic:

<http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091502886.html?hpid=topnews>
Paulson’s gamble that Lehman’s collapse won’t cause a market meltdown
will look like a stroke of genius if yesterday’s 504-point drop in the
Dow Jones Industrial Average isn’t “followed by another and another.”

<http://www.bloomberg.com/apps/news?pid=20601087&sid=amuMN6feT0kE&refer=home>
AIG falls 43% (after falling 61% the day before, down 93% since
peaking at US$190B at the end of 2006) after S&P lowers its debt
rating to A-2.  An AIG collapse would “be a much bigger problem than
most that we’ve looked at,” says BofA CEO.

<http://finance.yahoo.com/banking-budgeting/article/105753/10-Ways-to-Protect-Your-Finances-From-the-Crisis>
Wall Street Journal column by Brett Arends recommends spreading your
money across multiple banks and stockbrokers, refinancing your
mortgage, setting up a home equity line of credit, buying stock, and
worrying about taxes going up: “If you think Lehman Brothers was bad,
you should look at Uncle Sam.”

<http://biz.yahoo.com/hmoney/080915/091508_broker_leak_moneymag.html?.&.pf=banking-budgeting>
how to protect your money if your broker goes belly up

<http://www.survivalblog.com/2008/09/a_quantum_leap_toward_socialis.html>
“The decision by Ben Bernanke to slash the Fed Funds rate to 2% (a
three hundred twenty five basis point reduction) was just the opening
act in this Republican administration’s socialism play.”, on a site
“Edited by James Wesley, Rawles, the author of the novel *Patriots:
Surviving the Coming Collapse*”

<http://www.reuters.com/article/ousiv/idUSN1559809120080916>
Washington Mutual cut to junk (BB-) by S&P

<http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/16/cnlehman116.xml>
Lehman’s collapse into bankruptcy protection is the biggest corporate
debt default in history: US$150 billion outstanding, compared to
Worldcom’s US$23–30 billion; its debt is now trading at 40¢ on the
dollar.  By comparison, when the sub-prime crisis struck last year,
the initial cost was estimated at $200bn, though it has turned out to
be multiples more.

<http://finance.yahoo.com/q/bc?s=^dji>
basic DJIA chart

<http://globalguerrillas.typepad.com/globalguerrillas/2008/09/financial-meltd.html>
“The global financial system is now in free-fall. The bankruptcy of
Lehman, the government take-over of Fannie/Freddie (essentially, a
gov't takeover of the entire US mortgage market), the fire sale of
Merrill Lynch ... the looming failure of AIG (the world's biggest
insurance company), the impending failure of Washington Mutual (which
will deplete the entire FDIC fund in one whack) all point to tougher
times ahead.”

----- End forwarded message -----
-- 
Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org
______________________________________________________________
ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org
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