Wednesday, October 29, 2008

MCR wrote:


Instead of cutting rates by .75 points today the Fed cut by .5. What effect did it have on the Dow?

A few years ago Japan mistakenly cut rates down to nothing. They couldn't give money away. We're moving sharply in the direction and the Fed knows it will have to cut again and again to simply delay the inevitable. The Fed Funds rate is now 1 per cent.

But when rates get to zero there's nothing left to cut is there? Usually that's the time when there must be enough left to cut to do some good. I see this short-lived rally as a failed last ditch effort to help McCain. Also as pump and dump, pump and dump.

In the meantime the auto industry is shaking out. Kerkorian is liquidating Ford stock and GM and Chrsyler look certain to merge. That means that Ford must go down, and I suspect it will be very hard. Just think of all the ancillary shutdowns that must follow: parts manufacturers and suppliers, trucking companies, dealerships, tire companies, steelmakers, car rentals, ad infinitum.

What will that do to the Dow? How many jobs go then on top of the 750,000 already lost and the maybe million more that are already in the pipe to go from the lack of spending thorughout the economy.

A bottom in the Dow 5000s look pretty good right now, but maybe not. It might go lower. It's just like what happened when they took oil prices that should have been around $110 a barrel and spiked them to$147 in the name of demand destruction. A storm was unleashed that couldn't be controlled. It still can't. Once they saw the effects ofthe $147 spike they had to shut things down faster than I think they had planned. Now, it's just fire-sale, grab-what-you-can-and-run time for TPTB. That's what happens when you play with fire.


As I recall, Citigroup and Ford have had a long history going back to the financing for the Model T. I also seem to recall that somewhere Citi bought Ford's Finance arm, but I might be wrong there. I'm not going to look it up but I wonder which bank handles Ford's banking services. So which bank would lose Ford's cash -- the money it useswith fractional reserve banking to create $9 or more in loans to buoya drowning balance sheet?I'm not going to take time to look all this up, but I just grinned a little.This will probably eventuate in a US gov't bailout of Ford and/orCitigroup. Let them fail or save them; either way, it's the anvil thatbroke the camel's back.

Drum roll please. Can someone please shout, "Timber!"?

JO wrote:

Nouriel Roubini's Blog
Peak Money
Spy Fears: Twitter Terrorists; Cell Phone Jihadists
World's Mammals in Crisis (apart from the economic)
McCain's Real Petraeus Doctrine
US Special Forces Counter-Insurgency Doctrine
The Woman Greenspan, Rubin and Summers Silenced
GeoEye Releases First Half-Meter Color Satellite Image
Army of the Republic (novel)
From the book's jacket: "Read it while it's still fiction."


Arlen said...

Hmmm . . . Is anyone worried about big brother in the sky?

- Arlen

brell said...

you might want to check this-


Paul Davis said...

Peak Oil news story here. It's starting to flood mass conciousness. Peak Oil hits the Daily Mirror tabloid in the UK. Not as influential as "The Sun" but still a working class tabloid of note:

Oil crisis bigger than terrorism

Dwindling oil supplies pose a greater global threat than terrorism, business leaders warned yesterday.

They said oil prices will soar above this summer's record levels, causing misery for families for years to come.

The news follows reports oil production is declining much faster than feared.

Without billions of pounds invested in finding new wells, experts think output will slump by 10 per cent a year.

Yesterday's report was put together by eight companies, including Virgin, Yahoo and bus and train firm Stagecoach.

It warns that reaching peak oil - when supplies start to dwindle - will have a devastating effect on the economy.

It says: "The risks to society from peak oil are far greater than those that tend to occupy the Government's risk-thinking, including terrorism, climate change and the credit crunch."

FTW admin said...

andrea murrhteyn, aka lara braveheart has posted a letter to The Nation at

Green2Go said...

Citi – Ford History Together

Timeline shows history of The Associates until it became part of the Citi Family

Associates First Capital Corporation's (The Associates) history began in 1918 when E.M. Morris built the foundations of the company on car and real-estate loans in the midwest U.S.

With $100,000 in capital to finance Ford "Model T" motor cars, E.M. Morris founds Associates Investment Company in South Bend, Indiana.

On October 29, Paramount Communications Inc. (the name Gulf+Western Industries, Inc. assumed in 1989) sells The Associates to Ford Motor Company for $3.35 billion, the largest acquisition in Ford's history. The Associates becomes part of the Ford Financial Services group, one of the largest financial operations in the world. Ford was founded by Henry Ford in 1899 as Detroit Automobile Co.

On April 7, The Associates becomes a fully independent company again with the spin-off from Ford Motor Company in the form of a dividend to Ford shareholders. Associates First Capital Corporation is added to Standard & Poor's Financial 500 Index.

djmagic said...

MCR wrote:
"In the meantime the auto industry is shaking out. Kerkorian is liquidating Ford stock and GM and Chrsyler look certain to merge. That means that Ford must go down, and I suspect it will be very hard. Just think of all the ancillary shutdowns that must follow: parts manufacturers and suppliers, trucking companies, dealerships, tire companies, steelmakers, car rentals, ad infinitum.

What will that do to the Dow? How many jobs go then on top of the 750,000 already lost and the maybe million more that are already in the pipe to go from the lack of spending throughout the economy."

Living in South-east Michigan for most of my life, I've unfortunately had a front row seat from which to watch the impact a failing industry has on its immediate community, and surrounding region. I have imagined (and the blueprint has already been drawn, in a way) how much worse it could be when one of the big one's goes down hard, as it appears Ford may.
As MCR highlighted the trickle-down effect, I fear the result could indeed be near-catastrophic. When associated and supporting businesses also suffer and fail, and lay-off's pile up, the spending power is indeed sucked out of a community and the local economy. And the trickle-down effect of *that* becomes regional. And the vacuum widens...
I've just returned from a trip to New Orleans, and especially in context of this conversation, can't help but make one comparison. Aside from murder rates and thieving, corrupt politicians, New Orleans and Detroit have another tragic similarity: there are portions of the both which are dilapidated or destroyed beyond repair, which look likely to never be rebuilt. Granted it took nearly two decades of mismanagement and decline to do to Detroit what Katrina (and the ensuing flood) did to New Orleans in just days...but one has to wonder, is this to be the norm for our poverty-stricken urban areas as things continue to worsen?

gildone84 said...

Regarding "World's Mammals in Crisis (apart from the economic)"

Particularly, the "apart from the economic" portion of the comment...

Until the human species recognizes that all of our economic wealth comes directly or indirectly from the environment, we are doomed. In other words, the environment IS the economic.

It doesn't matter whether it's the ancient sunlight preserved in the algae and plant remains that became our (now diminishing) fossil fuels or productive topsoils that allow us to grow crops, oxygen generation by the world's plants, water purification/filtration, climate regulation that the biosphere provided (that is before we screwed up the carbon cycle), etc etc, the environment is vital to our economy.

The environment supports life on earth, ALL life on earth and the ecosystem services the earth provides us-- free of charge to boot-- and which we humans are screwing up as fast or faster than we are depleting fossil fuels are vital to our economic future as well as our very lives.

Five years ago or so, Amory Lovins of the Rocky Mountain Insitute said "We have about 20 years to find out whether or not this grand evolutionary experiment of combining a large forebrain with opposable thumbs was really a good idea". Whatever your opinion of Mr. Lovins may be, he's right on with this statement.

The clock is ticking.

Cheers to all

NBPatton said...

Regarding: andrea murrhteyn, aka lara braveheart,...

Oh sweet jesus, I cannot stand reading her rants. I think she is intelligent and has good motives, but I also think she allows her emotions to cloud her communicative skills. Rather than the clear, thought provoking, and profound statements that I KNOW she is capable of making, we get this hate filled rant that turns a good message into an arduous and painful read.

Just my 2cents.

businessman said...

nbpatton...That was more like a quarter instead of just 2 cents. I agree with you wholeheartedly.

William Jorgensen said...

Bravo! The first time I've seen the oil spike and the financial meltdown mentioned in a same sentence not my own! However, even though the two are NOT mutually exclusive, the suggestion that either was engineered to compensate for the other is only speculative. But, the cause-and-effect relationship is entirely correct. When the made-in-America swindle of the world's economy was exposed the hunt for trading currency for commodities, mostly oil in irreversible decline, tipped the first domino. Now that particular currency (US world-reserve status dollars) is being artificially inflated by the deleveraging of the debt market, and so a time will come very soon when no-one wants to trade in non-tradable greenbacks and (especially) US treasuries that are as worthless as the paper they were written on. A US default is coming fast and the piper will want to be paid, when that tab isn't settled, IT'S ALL OVER, BABY!

Andy Edwards said...

In respect to MCR's vindication, I actually seen some signs for its potential. Note here via Lew Rockwell's site, the article by Andrew Bacevich where he lays out the essential 'balkanization' of the middle east. It's happening in real time, precisely as predicted.

Now, credit is due and whether not it finally arrives is totally unknown. Of course, the precedence is not there, however as I wade through this shit I very often find myself reorienting myself to the map laid out via FTW. And I don't think I'm alone in that. And I believe further, that if any of this storm blows over in a way that allows for continuation of scholarship, then MCR will indeed be cited, and often.

Here's the link, scroll down:

Andy Edwards said...

I should add that I don't necessarily endorse any one I've linked to above. Rather my point is that certain predictions made years ago are so blatantly obvious now that it will difficult to ignore them should we ever face a reckoning of the facts.

That said, I do like Bacevich for what he is and Lew Rockwell speaks a hell of alot of truth a hell of alot of the time. As Mamet says, Who among us is perfect?