Independent UK: Wall Street fears for next Great Depression

[marmar]

Wall Street fears for next Great Depression
By Margareta Pagano, Business Editor
Sunday, 16 March 2008


Wall Street is bracing itself for another week of roller-coaster trading after more than $300bn (£150m) was wiped off the US equity markets on Friday following the emergency funding package put together by the Federal Reserve and JPMorgan Chase to rescue Bear Stearns.

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed's emergency funding procedure was first used in the Depression and has rarely been used since.

A Goldman Sachs trader in New York said: "Everyone is in a total state of shock, aghast at what is happening. No one wants to talk, let alone deal; we're just standing by waiting. Everyone is nervous about what is going to emerge when trading starts tomorrow."

In the UK, Michael Taylor, a senior market strategist at Lombard, the economics consultancy, said on Friday night: "We have all been talking about a 1970s-style crisis but as each day goes by this looks more like the 1930s. No one has any clue as to where this is going to end; it's a self-feeding disaster." Mr Taylor, who had been relatively optimistic, has turned bearish: "It really does look as though the UK is now heading for a recession. The credit-crunch means that even if the Bank of England cuts rates again, the banks are in such a bad way they are unlikely to pass cuts on."

Mr Taylor added that he expects a sharp downturn in the real UK economy as the public and companies stop borrowing. "We have never seen anything like this before. This is new territory for us. Liquidity is being pumped into the system but the banks are not taking any notice. This is all about confidence. The more the central banks do, the more the banks seem to ignore what's going on."

Mr Taylor added that the problems unravelling at Bear Stearns are just the beginning: "There will be more banks and hedge funds heading for collapse." ......(more)

The complete piece is at: http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html

[JDPriestly]

1. So, now, Messierurs Reagan and Bush.

Are you and your supporters finally ready to admit that your economic theories don't work, don't work at all and never have worked.

[Generic Brad]

2. Just in time for the GE

Looks like we need a whole bunch of Democrats to get us back on track.

[Mojambo]

3. How much money did Dick Cheney take home last year?

Oh, they work alright. They work very well.

[antigop]

I think Bill Clinton had a hand in it as well by 1999 repeal of Glass-Steagall

http://www.creators.com/opinion/paul-craig-roberts/how-to-end-the-subprime-crisis.html

In 1933, the Glass-Steagall Act separated commercial banking from the securities business. It prevented securities speculation from destroying bank capital and shrinking bank deposits from bank failures and runs on banks by depositors. Congress and President Bill Clinton foolishly repealed the Glass-Steagall Act in 1999.

[magellan]

12. He did

There have been a lot of contributers to this over the last few decades, from both sides of the aisle.

Anyone still have the cajones to defend the corporatist Dems?

[krkaufman]

20. As someone said recently, Bill Clinton failed to change the direction of the country.

He mostly continued the Conservative/Republican/Reaganomics policies.

[PDJane]

4. Their policies work......

for the people who count :sarcasm:

[bajamary]

5. It's very frightening

I also see the economics of the Right as the architects of this disaster, which does look like a major recession.

But many so called Democrats have voted to support the ice corporate control of our economy.

I fear the coming darkness.

[malaise]

6. All I want is to see a few of them climb to the top of their building

and jump. Show some remorse you criminals.

[gordianot]

7. Why I am retiring and why we refuse to sell the farm.

Mad Max world or something close is on the way. Similar government and financial denial reactions occurred in the the 1920's and 1930's. Last time the right people started to pick up the pieces I doubt that will happen next time.

[RainDog]

8. I think this is part of the appeal of Obama

because he's trying to make peace across the aisle with sane (i.e. fiscal) republicans in order to create a coalition to fix this huge mess.

These problems will not be solved with the idiots in power now. But, yeah, some democrats have helped this deregulation crisis along too. If even Paulson has said deregulation went too far - the "idea" of it is something out of Dickens - except Scrooge was the good guy for "trickling down."

I have never understood why non-millionaire republicans never understood this. It's now been shown demos are good for the economy 3 out of 4 years over 50 years of presidencies. accounting for the lie republicans claim about demos benefiting from repuke policies.. just another lie.

I don't understand why the U.S. can't seize the assets of KBR and Halliburton and have a trial to see how much money they've stolen from the govt while in Iraq.

Part of this is b/c of deregulation, and part of it is because Lil Bush had a tax cut for the FIRST TIME EVER in a war. because he asked no sacrifice of anyone except for the soldiers and their families... and then paid them so little army families in San Diego were getting food assistance! support the troops, you republican fuckwads. The callousness with which the Bush regime has destroyed this nation across the spectrum is astonishing.

Surely Poppy knows, but cannot force himself to admit, that his family legacy will be the one about his son ruining the U.S.' standing in the world, starting a war that turned the entire world against us, brought on a recession and then a depression (never in my life have I heard so many fears about this from financial writers and economists) while lying that everything was great... AND fucking over the constitution and aggressively torturing and raping innocent people (the int'l red cross noted that at least 75% of the people in Abu Graib, where women and children were raped, were innocent of any crime.

excuse me, Ms Pelosi... how can you walk around upright knowing you took "impeachment off the table" for these fucking war criminals and petty thieves?

I saw a guy on Charlie Rose last night from the NYTimes and he was talking about us being in uncharted waters.. that no American alive has experienced a situation like this and no one knows where it's going (good or badly) -- and I thought... you know, ppl have demonstrated these are bad policies over and over... we have to have a fucking depression for ppl to get it?

what a bunch of dumbasses on Wall Street. Maybe they should return some of their million-plus dollar bonuses since it was that work, fucking over the financial well being of this nation, that got them the big bucks anyway.

how many times do we have to go through this before ppl say.. okay, republicans suck about the economy, as well as just about everything else... I can't even think of something they don't suck at while doing it.

[lonestarnot]

9. K & R ing this thread for this post!

:applause:

[RainDog]

13. that's so sweet of you to say.

here's a .pdf link to the study by Bartels at Princeton. Titled: Partisan Politics and the U.S. Income Distribution

http://www.princeton.edu/~bartels/income.pdf.

here's an article from Kevin Drum in the Washington Monthly from a while back

http://www.washingtonmonthly.com/archives/individual/2005_05/006282.php

[lonestarnot]

14. Thanks for the links!

:)

[lonestarnot]

15. Everyone should be made to read the first!

And the second "Bottom line: if you're well off, vote for Republicans. But if you make less than $150,000 a year, Republicans are your friends only one year in four. Caveat emptor." But we knew that before we read it didn't we? :P

[antigop]

10. "I have never understood why non-millionaire republicans never understood this"

I can only tell you about the non-millionaire republicans I have come in contact with.

They bought the "smaller government" BS hook, line, and sinker without understanding what that really meant. They didn't understand that "smaller government" means less regulation.

[gordianot]

11. In spite of the clouds on the horizon people are going about their lives.

What is coming:

Increasing gas prices which is driving inflation and is threating consumer life styles.

Continued credit problems.

Monetary crisis.

Major Banks will continue to close as financial intuitions collapse.

Foreclosures are not going away, equity in property will continue to fall. Many more homeless.

There will be increasing conflict between farm production for energy and food. This has the potential to create a world wide food crisis.

Wasting American treasure and lives on wars of adventure.


When the remaining factories close, the creditors start to collect, the environment continues to turn ugly, the semi's SUV's are parked, food becomes scarce and too expensive in the Supermarket, the dollar loses value a perfect storm is coming. The terror will not be from foreign terrorists. Hard times please come no more, very few living Americans have seen the real hard times or can imagine what they may be like.

The next President will need to be a real cheerleader to restore confidence and creative in designing recovery legislation.

This time the architects of disaster need to be confronted and not allowed to continue predatory profit.

[marvinsmith]

16. gordianot

Excellent post.

[area51]

17. Welcome to DU, marvinsmith. (n/t)

[marvinsmith]

19. hello and

thank you, area51

[JohnnyCougar]

18. Isn't the free market awesome?

Down with regulation! Let lenders do whatever they want! You're a communist if you want to regulate business!!