The Stock Market is About to Crash; By Mike Whitney

The Stock Market is About to Crash; By Mike Whitney

Ref - http://www.lifeaftertheoilcrash.net/Archives2007/WhitneyStockMarketCrash.html

EXCERPTS:

The stock market is about to crash. The only question is whether it will quickly drop down the elevator shaft or follow the jerky flight-path of a man pushed down a stairwell. Either way, the outcome will be the same; stocks will nose-dive, the dollar will plummet, and the bruised US economy will be splattered on the canvas like George Foreman in Rumble in the Jungle. Troubles in the sub-prime market have just begun to materialize and already 38 main sub prime lenders have gone kaput. Foreclosures have reached a 37 year high, and an estimated 2 million homeowners will be put out on the street in the next few years.

Kitco.com’s Doug Casey puts it like this:

“The rocket-shot rise of hedge funds and the advances in financial modeling techniques have spawned something of a competition among the so-called best and brightest to find ever-more-complex ways of skimming pennies from very large piles of money. The collective result is that our financial system has been wired up to $370 trillion dollars of privately negotiated investment contracts. They’re usually written to shift risk from one bank, pension fund, insurance company or brokerage firm to another. And many are linked together in long chains, with each contract providing collateral for the next.

It’s all very clever, but layering the enormous size– $370 trillion dollars, far more than the net worth of all the financial institutions in the world – on top of all that complexity is downright scary. In simpler times, a home loan going bad would affect only the particular lender. Enough defaults would put the lender out of business. And that would be the end of it. But today a wave of defaults can send a shock through the portfolios of financial institutions around the globe, including hedge funds, banks and pension funds far removed from the troubled borrowers.

The rest of the world is eying America’s housing slump with growing apprehension. The downturn in the sub prime market is just the first crack in the façade. Other disruptions are bound to follow. Another jolt from the Yen “carry trade” or a sudden blip in the Chinese stock market could send Wall Street sprawling and put the economy on a fiscal-respirator. A substantial dip in securities could trigger a liquidity crisis which would traumatize our credit-dependent society. If consumer spending slows down, the economy will grind to a halt and living standards will sharply decline. The sub primes are just the first domino.

A cloud of uncertainty has descended on the over-leveraged United States of Foreclosure. The storm is just ahead. The stewards of the system--Paulson, Bush, Bernanke--could care less about the public welfare. All their energy is devoted to building a lifeboat for themselves and their fat-cat buddies. Once, they’ve robbed the last farthing from the public till they’ll be gone, and we’ll still be marching along the path to national calamity.

High-flying US fund manager Jim Rogers summed up the impending crisis like this:

“You can’t believe how bad it’s going to get. It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops. Real estate prices will go down 40-50% in bubble areas. There will be massive defaults. And it’ll be worse this time because we haven’t had this kind of speculative buying in U.S. history.”

Then he added ominously, “When markets turn from bubble to reality, a lot of people get burned.”
_________________
Regards,

Ken Illingsworth

Author	Message	Add Your Reply
The Stock Market is About to Crash; By Mike Whitney
Ken Joined: 11 Jul 2006 Posts: 24	Dated: Wed Mar 21, 2007 5:53 pm Subject: The Stock Market is About to Crash; By Mike Whitney
Ken Joined: 11 Jul 2006 Posts: 24	The Stock Market is About to Crash; By Mike Whitney Ref - http://www.lifeaftertheoilcrash.net/Archives2007/WhitneyStockMarketCrash.html EXCERPTS: The stock market is about to crash. The only question is whether it will quickly drop down the elevator shaft or follow the jerky flight-path of a man pushed down a stairwell. Either way, the outcome will be the same; stocks will nose-dive, the dollar will plummet, and the bruised US economy will be splattered on the canvas like George Foreman in Rumble in the Jungle. Troubles in the sub-prime market have just begun to materialize and already 38 main sub prime lenders have gone kaput. Foreclosures have reached a 37 year high, and an estimated 2 million homeowners will be put out on the street in the next few years. Kitco.com’s Doug Casey puts it like this: “The rocket-shot rise of hedge funds and the advances in financial modeling techniques have spawned something of a competition among the so-called best and brightest to find ever-more-complex ways of skimming pennies from very large piles of money. The collective result is that our financial system has been wired up to $370 trillion dollars of privately negotiated investment contracts. They’re usually written to shift risk from one bank, pension fund, insurance company or brokerage firm to another. And many are linked together in long chains, with each contract providing collateral for the next. It’s all very clever, but layering the enormous size– $370 trillion dollars, far more than the net worth of all the financial institutions in the world – on top of all that complexity is downright scary. In simpler times, a home loan going bad would affect only the particular lender. Enough defaults would put the lender out of business. And that would be the end of it. But today a wave of defaults can send a shock through the portfolios of financial institutions around the globe, including hedge funds, banks and pension funds far removed from the troubled borrowers. The rest of the world is eying America’s housing slump with growing apprehension. The downturn in the sub prime market is just the first crack in the façade. Other disruptions are bound to follow. Another jolt from the Yen “carry trade” or a sudden blip in the Chinese stock market could send Wall Street sprawling and put the economy on a fiscal-respirator. A substantial dip in securities could trigger a liquidity crisis which would traumatize our credit-dependent society. If consumer spending slows down, the economy will grind to a halt and living standards will sharply decline. The sub primes are just the first domino. A cloud of uncertainty has descended on the over-leveraged United States of Foreclosure. The storm is just ahead. The stewards of the system--Paulson, Bush, Bernanke--could care less about the public welfare. All their energy is devoted to building a lifeboat for themselves and their fat-cat buddies. Once, they’ve robbed the last farthing from the public till they’ll be gone, and we’ll still be marching along the path to national calamity. High-flying US fund manager Jim Rogers summed up the impending crisis like this: “You can’t believe how bad it’s going to get. It’s going to be a disaster for many people who don’t have a clue about what happens when a real estate bubble pops. Real estate prices will go down 40-50% in bubble areas. There will be massive defaults. And it’ll be worse this time because we haven’t had this kind of speculative buying in U.S. history.” Then he added ominously, “When markets turn from bubble to reality, a lot of people get burned.” _________________ Regards, Ken Illingsworth
Back to top
Add New Topic		Add Your Reply
Page 1 of 1