US stock prices plummet

[Dover]

US stock prices plummet

Yesterday's record-high on Wall Street is a fading memory as stock prices take a battering this morning in New York. There has been a flurry of financial reports from American companies, among them a floundering Ford Motor Company.

The giant car maker has suffered a record loss in the red to the tune of $12.7 billion for 2006, mainly due to restructuring costs....>

http://www.abc.net.au/news/newsitems/200701/s1834095.htm

[global1]

1. * Says - If You Won't Let Me Have My War - I'll Take It Out On The.....

economy.

[Robbien]

2. Housing sales are in the crapper

The cheerleaders were out all month talking about how the bursting bubble is over and the games can resume. Too bad. Reality hit them in their cheerleading faces.

[fasttense]

3. Hmm, the housing market is dead, let's move on to the next bubble.

Foreclosure rate is up 35 percent from December 2005, according to RealtyTrac. I've heard other stats that had it up 42% year over year.

But defense contracting and any industry tied to medicine are doing fine.

[0007]

4. Aw yes! AARP has the full court press on and the medicine industry are trying

to tell the older folks everything is okay and nothing needs to be changed on the new prescription health plan.

My doctor says, "that a speeding bullet is fastest than a speeding train wreak"

[reprobate]

9. I dropped my AARP membership. They'vd become just anothe insurance broker.

[0007]

11. I did also. But they won't leave me a lone with all their fancy

mail packages to sign me up again.

[Dogmudgeon]

5. Agricultural real estate for the ethanol boom

--p!

[Vidar]

6. On the plus side, music was really swinging in 1929.

[CountAllVotes]

7. it sure was!

Check out Louis Armstrong in the late 1920s-1930s! Woah! AWESOME he was! :D

[Vidar]

8. Artie Shaw is my favorite, but you can't beat Satchmo.

[On the Road]

10. Just Another Turn of the Screw

the markets are range-bound and oversold. Will be up a little next week, and possibly through the first few days of Feb.

[sarcasmo]

12. The real question is, when does the bottom fall out?

[On the Road]

14. We Don't Know

it could go sideways for the next twenty years.

The more I do technical analysis the more I have learned to have no opinion on the next major move. That is a difficult but important attitude to avoid losing your shirt. It is accepted wisdom that the market goes against the consensus, and that there are more factors to take into account than we can possibly know.

One side effect of the rich getting richer and the economic boom in China and India is that there are billions of dollars more to be invested. Bush's deficits are continuing to add a huge fiscal stimulus to the economy even though it's all borrowed. Money has been coming out of real estate over the last year and is looking for another home. And the decline in the dollar means that stocks are cheaper for overseas investors.

All of those factors could make the market go up this year, even though it seems perverse. It's always counterintuitive.

If the market does correct, I suspect it will be like 2000, except that the Dow and the S&P will take a bigger bath than the Nasdaq. And it will recover just like the last few years.

[pinniped]

13. Ford should lose a little less now that the Taurus was discontinued.

.

[Thor_MN]

15. A second recession for DoubleDip seems appropriate...

[AdHocSolver]

16. The quantity to look at is debt and the ability of debtors to pay it off.

The stock market doesn't drive the economy. It is the other way around. Our economy is being propped up by foreign creditors buying our debt. When China, Japan, and our good buddies in Saudi Arabia decide they are not going to prop up our economy any more, the implosion will occur.

Greenspan of the Federal Reserve for years arbitrarily kept interest rates low to make it easy for businesses to borrow money cheaply and to push people to invest in stocks speculatively since they were making no interest on their cash. So we got stock price inflation due to all the money thrown into the stock market into Enron-type schemes and encouraged people to outspend their income due to cheap credit. Then the Republicans cut taxes for the rich as they increased spending for things like the Iraq war and raided the Social Security fund to cover up the real deficit.

Most of the jobs created by the "rich folks" from their windfall tax refunds were in China and India. I heard on the radio recently that the Buick plant GM built in China is doing a huge amount of business. Unemployment in the U.S. is grossly underestimated, a majority of the population is overextended, many people who bought houses at inflated prices based on low-interest Adjustable Rate Mortgages are due for sticker shock when their ARM's start to "adjust".

The "implosion" may be closer than people realize. Interest rates are rising, housing prices are faltering, so all those people who thought they would buy more house than they could afford based on low ARM rates, and sell when the uptick came, are going to be rudely shocked. And last, but not least, I vaguely remember hearing that one of our big trading partners was going to accept payment in Euros, rather than dollars, which means they will have less loose cash around to buy U.S. debt.

And one more rant. G.M. and Ford are laying off 1000's of employees because they are losing money. They complain they can't compete with Japanese car manufacturers on price, and they complain that employee health benefits are bankrupting them. Hogwash. They are losing money because nobody wants to buy their gas-guzzling behemoths. Many Japanese branded cars are made right here in the U.S. by U.S. labor using U.S. parts.