Tougher Times Ahead

[hypnodoc]

Ahhhhhhhhhhhhhhhhh, maybe we are all going to end up driving Taxis as the lucky country follows the rest of the world and transfroms quickly into Keatings once prophesisd Banana Republic. I was at my solicitors yesterday and he said, insolvency, which is one of their specialties has increased 300% since Jan and "it was still gaining momentum like a downhill snowball" unquote.

A lot, not all, of the recently paper rich are now massively over committed to the eyeballs and quickly falling from the Penthouse to the Sh!thouse.

[lil_bodes]

I'l dig ditches to keep a roof over My wife's and my own head. Gen Y is in for a major shock when the cookie crumbles.....

I head a little while back that Dominio's pizza where paying $25 an hour to make pizza. That'd be better than sitting on a dole que!

Quite right Luke (& Mat) you will do what you have to. I've had a couple of shocker jobs, peeling prawns for restaurants & working at a fishmongers was the least favorite but I got paid. Also managed to pick up some skills ( can fillet fish superbly) and make some great friends.

Funnily enough that its not all doom & gloom, and may just be the wake up call we need. Mark is still busy (new housing) and I work for the home lending division of a bank. We are so busy the guys are working weekends???? Go figure that one out. Their are plenty of houses for sale around our place and many of them are lasting just days and weeks instead of the months they were hanging around last year.

Think about the stories your parents have told you about how they walked 50 miles to school and got by on vegie soup... Not quite that tuff but they have all been there before and survived. Yes you may need to ditch the Foxtel or work out a better way than faning the T all the way to work, but you'll live thru it and be better prepared for next time.

Life goes on & what doesnt kill you makes you stronger.

D

[Ralph Wiggum]

Well said De

[hypnodoc]

Its Getting More Interesting By The Week

George Soros gave an interview to Reuters Financial Television today, in which he continued his push for an international currency, and added that the U.S. banking system was "insolvent" and that Germany had to step in and bail out the banks operating in eastern Europe.

Soros specifically suggested that the IMF's Special Drawing Rights (SDRs) should be considered as a possible world reserve currency, saying, "in the long run, having an international accounting unit other than the dollar may be to our advantage." He did not expand on just whom he had in mind in his use of the word "our."

Concerning the United States, the financier stated "the [uS] banking system as a whole is basically insolvent," adding that nationalization of the banks "was out of the question." Soros pointed to the US deficit, ballooning under the weight of the Obama stimulus and budget programs, saying "that is coming to an end," then ominously adding that, "it will not be allowed to recur. There will have to be some change." He undoubtedly has in mind the kind of slashing of entitlements and budgetary austerity that his former patrons in Nazi Germany made famous under central banker Hjalmar Schacht.

As for Germany today, the largest economy in the Euro-Zone, Soros demanded that they take on more debt, noting that although Germany "had been the most reserved about being the deep pocket for the region," they had now recognized their responsibilities toward Eastern Europe, and were coming around to the need to step in and bail them out.

Reuters did not post the actual video of the interview, perhaps because George again affirmed, as he did on 60 Minutes in 1998, that his youthful days working for the Nazi Wehrmacht were the "happiest time of my life," and most definitive of his character.

Edited 08/04/09 06:18 AM by hypnodoc

[XR06T]

we really do need to move away from the us being the world superpower, because they aren't any more. there currency is knackered, and not going to get any better if they print another few trillion $$. welcome to zimbabwe.

I think we need to get back to having only tangible things worth something, like gold for example, not paper or 1's and 0's.

I must say I would be very surprised if the asx gets back to 3200, and I have noticed a little life in the derivatives market too!

[hypnodoc]

When They Sneeze We Catch A Cold

After four weeks of emotive driven gains, the market has been on a slippery slope this week. Still, we could see stocks rally though the end of this month or even longer. But the bear is out there, my friends.

Here are seven reasons why ...

Reason #1:

The Banking Crisis Still isn't Fixed ...

It's Getting Worse!

The U.S. government has allocated at least $356 billion bailing out the banks alone. Most of that has been thrown down a rat hole. For this same amount of money, 10 new banks could have been chartered with $35 billion each and they could have loaned out funds at 10-to-one leverage, creating $4.5 trillion of new financial muscle.

Instead, we're spending hundreds of billions to make sure that AIG executives get their bonuses and Goldman Sachs, JP Morgan and all the other financial institutions that were counterparty to AIG's enormously bad trades get paid off in full. In short, the Obama administration, rather than chart a new course to fiscal sanity, is intent on re-inflating the bubble.

And how is it getting worse? The International Monetary Fund (IMF) just announced that toxic debts could reach $4 trillion, up from an estimate of $2.2 trillion that it made in January. Then just yesterday, the news came out that. The Financial Times tells us that U.S. banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets from other banks. So what's to prevent all these banks from overpaying for each other's assets with our money ... overpayments that would leave Uncle Sam holding the bag? Absolutely nothing.

If we don't address the core problems of the financial crisis — companies that got "too big to fail" while at the same time stretching their treacherous tentacles throughout the halls of power in Washington — this problem will NEVER go away.

Reason #2:

Job Losses are the Worst Since the Great Depression

The March employment report saw nonfarm employment drop by 663,000 and the unemployment rate rise to 8.5 percent. Now, bulls will tell you that job losses and unemployment are both lagging indicators. True. But as this chart shows, the pace of job losses is worse now than in the past five recessions...

Nonfarm employment has dropped by 5.1 million, or 3.7 percent, since its peak in December 2007. In the 1981-82 recessions, employment fell 3.1 percent, and in 1974-75 it fell 2.8 percent. In fact, the only time that America shed jobs faster was during the Great Depression, when a third of all nonfarm jobs disappeared. Making matters worse, according to a recent poll, more than 6 in 10 Americans are concerned that someone in their household might lose his or her job in the next year. We haven't seen the bottom in the job market, and until we do, a pall of fear will probably hang over the economy and the stock market.

Reason #3:

The Deleveraging of the U.S. Credit Bubble Has Already Begun. And It isn't Pretty ...

Household deleveraging is just starting, and it's going to get ugly. Consumer wealth is evaporating like water in the desert.

The Fed reported in March that households lost $5.1 trillion, or 9 percent, of their wealth in the last three months of 2008. That's the most ever for a single quarter in the 57-year history of record keeping by the central bank. For the full year, household wealth dropped $11.1 trillion, or about 18 percent. That's the largest decline EVER recorded.

So Americans are feeling poorer, with good reason. Is this the kind of environment where people open up their wallets and spend?

Heck no! It's the kind of environment that could suck a trillion dollars a year from the U.S. economy.

Reason #4:

Credit Cards are Imploding

Banking analyst Meredith Whitney — who called the bank bubble quite loudly when many others ignored it — was forecasting that nervous bankers would eliminate at least $2 trillion of available credit on credit cards by the end of next year. That was six months ago. Now, she thinks she underestimated the cutback and has revised the number to $2.7 trillion (about half of available credit). The effect of those cutbacks on already anxious consumers is bound to be enormous.

Reason #5:

It's Probably WA-A-A-AY Too Soon To Call a Bottom in the Housing Market

The number of seriously delinquent loans was accelerating through the fourth quarter. What's more, the S&P/Case-Shiller 20-City Composite Home Price Index for January fell 19 percent compared to the same month a year ago, reflecting an acceleration from the 18.6 percent year-over-year decline reported for December.

And the problem is likely to get worse ...

Some 700,000 homes across the country stand in what's called a "shadow inventory.'' These are houses that have been taken back by banks but not yet given to a real estate agent to sell.

Here's another frightful: U.S. home prices have never bottomed while unemployment is still rising. And as in reason #2, we haven't seen the high tide in job losses yet.

Bottom line: We won't know we've hit bottom in the housing market until after the fact. And it will take months, maybe years, for the housing market to work off its problems.

Reason #6:

It's a GLOBAL Recession

When Japan slid into its economic "lost decade," the rest of the world kept chugging along, which was a factor in pulling Japan out of its rut. Today, the World Bank says global economic growth will slow this year by far more than previously estimated, thus sending the global economy into its first contraction — a drop of 1.7 percent — for the first time since World War II.

While the World Bank expects developing nations to keep growing — at a much slower pace — the decline in GDP for developed nations in the Americas and Europe will be sharp and painful.

In a separate report, the Organization for Economic Cooperation and Development (OECD), which includes the United States and other industrialized powers, estimated that the economies of its 30 member countries would shrink by an average of 4.3 percent this year. At the same time, the OECD predicted that global trade would shrink by more than 13 percent. One final point: We are only one year into the current crisis. After the crash of 1929, the world economy continued to shrink for three successive years, and world trade is falling much faster now than in 1929-30.

Reason #7:

The Market is Bearish

Until Proven Otherwise

With all the bearishness I've just listed, where is the bullishness?

In the price ...

The S&P 500 and Dow are way off their lows. Nonetheless, we've seen big upward swings in this bear market only to see them crushed later on.

This rally is one of the biggest yet. But so far, the onus is on the bulls to prove it's real.

According to The Big Picture blog, the only times we have ever seen the stock market surge close to this much in such a short time frame were:

• December 1929

• June 1931

• August 1932

• May 1933

• July 1938

• September 1982

Only September 1982 and May 1933 saw the beginnings of new bull markets.

Earnings season officially started yesterday with Alcoa, but it really kicks off next week. For the S&P 500, analysts are expecting earnings will decline 37 percent from the year-ago period. All 10 groups in the S&P 500 are expected to show a year-over-year decline in profits; that hasn't happened in the 10 years Thomson Financial has been tracking this data.

In sum, fundamentals are terrible, and they haven't improved enough to justify this rally. What's more, the market is overbought. So does that mean it's time to get short? Not really — the market can get a lot more overbought. One thing that could drive prices higher is that so many Wall Streeters remain cautious. And if S&P 500 companies start beating drastically lowered expectations, we could run all the way to 1,000 or higher on the S&P 500.

In fact, the market may get even more overbought and overextended, as we saw in the market 'recovery' of 2004-2006 when the U.S. equity indices were managed up to new highs. At the same time, the rot in the real economy spread, crumbling the foundations of wealth.

Regardless, the market for natural resources could lead any recovery ...

For instance, China's copper imports in the first two months of 2009 were up 71 percent from last year. Many copper insiders think there is value in the sector. Charlie Sartain, head of Xstrata's copper division, told Bloomberg that his company is now looking to buy smaller producers whose stock valuations have collapsed over the last 18 months.

[Dagabond]

Drudgin it up again....

Yet another 44 let go this afternoon.

Making it 80 in total in the last 6 months let go.

[RHR]

44. Sounds like you had a sh*t day

[tab]

Fark me

Can't be too many left now?

[Dagabond]

Only had to tap 18 of my guys on the shoulder, the rest were from dayshift.....

I would honestly rather pull my finger nails out.

25 of us left on arvo's ....for now...