by
Chris Martenson
Even as the stock market grinds on through its bear market rally, the real economy continues to slide off its narrow shelf like a boneless chicken seeking someplace lower.
First, factory activity plunged to its lowest reading since 1982. How significant is this? Well, in 1982 we were in the depths of a very severe recession. (This one hasn’t even officially started, according to the NBER, who are squirming desperately to avoid proclaiming one right before an election). For factory activity to plunge like this at the outset of a recession speaks to a very deep economic hit in our near future.
Factory sector weakens sharply in October
WASHINGTON (MarketWatch) — The nation’s manufacturing firms reported the worst level of output in 26 years, further evidence that the economy is slumping sharply, according to a closely followed survey of top executives released Monday.The Institute for Supply Management index fell to 38.9% from 43.5% in September, below the 41.5% expected by economists surveyed by MarketWatch. See Economic Calendar.
The result is the lowest reading since September 1982. The indexes for production and new orders fell to their lowest level in 28 years.
What do factories make? You know, cars and things. Perhaps these two news items belong together, then:
Tough economic times (cars, factory output, and bankruptcies)
by Chris MartensonEven as the stock market grinds on through its bear market rally, the real economy continues to slide off its narrow shelf like a boneless chicken seeking someplace lower.
First, factory activity plunged to its lowest reading since 1982. How significant is this? Well, in 1982 we were in the depths of a very severe recession. (This one hasn’t even officially started, according to the NBER, who are squirming desperately to avoid proclaiming one right before an election). For factory activity to plunge like this at the outset of a recession speaks to a very deep economic hit in our near future.
Factory sector weakens sharply in October
WASHINGTON (MarketWatch) — The nation’s manufacturing firms reported the worst level of output in 26 years, further evidence that the economy is slumping sharply, according to a closely followed survey of top executives released Monday.The Institute for Supply Management index fell to 38.9% from 43.5% in September, below the 41.5% expected by economists surveyed by MarketWatch. See Economic Calendar.
The result is the lowest reading since September 1982. The indexes for production and new orders fell to their lowest level in 28 years.
What do factories make? You know, cars and things. Perhaps these two news items belong together, then:
by
Chris Martenson
Happy Halloween!
One of my kids is going out dressed as the queen of hearts…only the front flips open and it says in blood red inside "Your 401k – down 50%!"
We’ve already decided to split any candy that spills to ground between the kids and dad.
More frightening yet are the "next shoes" that lurk in the insurance industry. Like the now blood-red pension industry (great summary here by Mish), the insurance industry took all the premium money and sought a slightly better return by placing it in financial exotica.
Hartford and AIG – ghoulish results
by Chris MartensonHappy Halloween!
One of my kids is going out dressed as the queen of hearts…only the front flips open and it says in blood red inside "Your 401k – down 50%!"
We’ve already decided to split any candy that spills to ground between the kids and dad.
More frightening yet are the "next shoes" that lurk in the insurance industry. Like the now blood-red pension industry (great summary here by Mish), the insurance industry took all the premium money and sought a slightly better return by placing it in financial exotica.
by
Chris Martenson
I nominate this for understatement of the year:
Ryan Says Treasury to Need `Unprecedented’ Financing
"This year’s financing needs will be unprecedented,” said Anthony Ryan, the Treasury’s acting undersecretary for domestic finance, at a Securities Industry and Financial Markets Association conference in New York, where he was a last-minute substitute for Treasury Secretary Henry Paulson.
"Unprecedented" hardly does this justice; we need a more superlative word. "Ginormous" comes to mind.
Perhaps the Germans have a single word that means "future destroying" that we could use.
Treasury seeks “unprecedented borrowing”
by Chris MartensonI nominate this for understatement of the year:
Ryan Says Treasury to Need `Unprecedented’ Financing
"This year’s financing needs will be unprecedented,” said Anthony Ryan, the Treasury’s acting undersecretary for domestic finance, at a Securities Industry and Financial Markets Association conference in New York, where he was a last-minute substitute for Treasury Secretary Henry Paulson.
"Unprecedented" hardly does this justice; we need a more superlative word. "Ginormous" comes to mind.
Perhaps the Germans have a single word that means "future destroying" that we could use.
by
Chris Martenson
Fed cuts rates half-point, leaves door open for more
WASHINGTON (MarketWatch) – The Federal Reserve on Wednesday slashed overnight interest rates by a half-point to 1.0%, and signaled that downside risks to growth remain, indicating even more rate cuts could come.
In its statement, the Federal Open Market Committee said the pace of growth has slowed "markedly" and the extraordinary financial market stress could put the economy at greater risk.
The Fed said that inflation was no longer a threat and that the central bank will cut rates as needed to boost the economy.
No real surprise here, but I will make a comment or two. The Fed, representing status quo interests, is desperately trying to recreate the exponential expansion of credit and debt that marked the last 2 decades (but really picked up steam from 2000 onwards).
The Fed cuts rates to 1.00% – the war on savers continues
by Chris MartensonFed cuts rates half-point, leaves door open for more
WASHINGTON (MarketWatch) – The Federal Reserve on Wednesday slashed overnight interest rates by a half-point to 1.0%, and signaled that downside risks to growth remain, indicating even more rate cuts could come.
In its statement, the Federal Open Market Committee said the pace of growth has slowed "markedly" and the extraordinary financial market stress could put the economy at greater risk.
The Fed said that inflation was no longer a threat and that the central bank will cut rates as needed to boost the economy.
No real surprise here, but I will make a comment or two. The Fed, representing status quo interests, is desperately trying to recreate the exponential expansion of credit and debt that marked the last 2 decades (but really picked up steam from 2000 onwards).
by
Chris Martenson
Tuesday, October 28, 2008
In this report I will review the advice and predictions I made on May 27, 2008 (exactly five months ago) in a report entitled Charting a Course Through the Recession.
In striving to be accurate, fair, and complete, and in the spirit of constant improvement, it’s important to review where we went right and where we went wrong. I’m pleased to say that many of my predictions were right on target. I didn’t anticipate such an aggressive dollar advance, but now I see this trend continuing for awhile. I am continuing to recommend some of the same prudent actions as always. Stay out of debt, keep cash close by, get some money out of the dollar (gold), and know your neighbors. And stay tuned for more from me in future reports.
Market Predictions and Outlook Update
PREVIEW by Chris MartensonTuesday, October 28, 2008
In this report I will review the advice and predictions I made on May 27, 2008 (exactly five months ago) in a report entitled Charting a Course Through the Recession.
In striving to be accurate, fair, and complete, and in the spirit of constant improvement, it’s important to review where we went right and where we went wrong. I’m pleased to say that many of my predictions were right on target. I didn’t anticipate such an aggressive dollar advance, but now I see this trend continuing for awhile. I am continuing to recommend some of the same prudent actions as always. Stay out of debt, keep cash close by, get some money out of the dollar (gold), and know your neighbors. And stay tuned for more from me in future reports.
by
Chris Martenson
As bad as the US is, there are worse problems elsewhere. This is why I think this credit crisis will not play out like any previously and why I think there’s a better than even chance of a systemic banking crisis.
In times past when a country experienced a bubble or a banking crisis, there was always a country next door that hadn’t where the savvy could hide out. Where does one hide out today?
Europe on the brink of currency crisis meltdown
The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis,” this time unfolding in Europe rather than America.
Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.
Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.
Those figures in the bottom two paragraphs are quite the eye-openers. Somehow Austria’s bank system loaned out 85% of Austria’s GDP to emerging markets that are even now resorting to emergency measures to stem the erosion of the their currencies against the dollar. The problem, apparently, is that these countries were loaned vast amounts of money denominated in dollars. The faster their currencies fall, the more it costs them to pay back their loans.
Some of these currencies have fallen by 40% in a matter of weeks.
International instability
by Chris MartensonAs bad as the US is, there are worse problems elsewhere. This is why I think this credit crisis will not play out like any previously and why I think there’s a better than even chance of a systemic banking crisis.
In times past when a country experienced a bubble or a banking crisis, there was always a country next door that hadn’t where the savvy could hide out. Where does one hide out today?
Europe on the brink of currency crisis meltdown
The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis,” this time unfolding in Europe rather than America.
Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.
Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.
Those figures in the bottom two paragraphs are quite the eye-openers. Somehow Austria’s bank system loaned out 85% of Austria’s GDP to emerging markets that are even now resorting to emergency measures to stem the erosion of the their currencies against the dollar. The problem, apparently, is that these countries were loaned vast amounts of money denominated in dollars. The faster their currencies fall, the more it costs them to pay back their loans.
Some of these currencies have fallen by 40% in a matter of weeks.
Total 4947 items
