A Blog devoted to progressive politics, environmental issues, LGBT issues, social justice, workers' rights, womens' rights, and, most importantly, Cats.

Tuesday, January 22, 2008

Economy: Recession Fears Worldwide

Well, to no one's great surprise, BubbleBoy's bubble crashed spectacularly yesterday, taking the European and Asian markets with it. Raw Story reports that the Fed, in some desperate foot-shuffling, has cut the interest rate again. It's now at 3.50, and the Dow has gone from a loss of 465 yesterday to a trembling recovery, that is to say, loss, of 40 points. Better than 400, fershure, but nothing to feel jubilant about.

One financials CEO had this to say:
The rate cut helped stanch the stock drop because "the equity markets are so used to the kneejerk reaction that if it's cheaper for companies to borrow, earnings will go up," said Daniel Alpert, managing director of Westwood Capital LLC. "But throwing more cheap money into the equation doesn't help the fact that we have a credit crisis on our hands."
Telling it like it is. We're in crisis. The interest rate cuts can only go down by 3.5 more points. If the Fed cuts the interest rate to zero, we're going to drift, like Japan. Except that Japanese workers still have a better life than US workers.
It can take months for an interest rate cut to work its way through the economy. In the short term, it makes borrowing cheaper, but the billions of dollars in failed mortgages over the past year have made lenders wary of writing loans to almost anyone — consumers or corporations. And if consumers and companies aren't spending more, an economic recovery can be slow.

The Dow was down 38.04, or 0.31 percent, at 12,061.26. The Dow was last below 12,000 in March 2007.

The broader Standard & Poor's 500 index was off 6.10, or 0.46 percent, at 1,319.09, while the Nasdaq composite index fell 28.77, or 1.23 percent, to 2,311.25.
Are you spending more? We're afraid to. Our more buys less than ever, and we need every penny just to survive. We're cutting back wherever we can. Less eating out, less spent on entertainment, no non-essential purchases.

And, we're still looking for work. This is George Bush's legacy. No jobs, broken economy, trillions down the toilet in two failed wars.

Meanwhile, the Fed announces the reason for the rate cut:
The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.
In other news, the Bank of China is rumoured to be planning humongous write-downs as a result of exposure to the US subprime mortgage mess. Merril Lynch is reporting US$7.8 billion in losses; JP Morgan is reporting a $1.8 billion loss; Citigroup is reporting a $9.8 billion loss; BofA is reporting a 95 per cent drop in profits for the last quarter; Wachovia is reporting a 98 per cent drop in profits for the last quarter; Swiss investment bank UBS has written off approximately US$14 billion in losses; and Ben Bernanke, our Fed chief, is saying things are gonna get worse.

Auntie Beeb has a sort of beginner's guide to the mess, if you're an interested beginner; and a timeline of significant events, in case you want to use up your existing stocks of booze or antidepressants. Casa de Los Gatos takes no responsibility for your pretty-well guaranteed depression after you're done reading this.

We're simply amazed that the villagers haven't yet stormed the castle with pitchforks and torches and hanged every man jack of this pathetic misadministration.

Stumble It!


At 7:08 PM, Blogger Lizzy said...

I don't have language bad enough to the accomodating Democrats - and journalists - who have gone along with this for decades! They're like children playing games with no consequences at all beyond their own winning or losing.


Post a Comment

Links to this post:

Create a Link

<< Home