Global Economy Slumps: U.S. 'Best Looking Horse in the Glue Factory'

The U.S. just happens to be the only one of many pigs with lipstick on.

Stop being selective with these programs! everymanplan.com

Obama lied, the economy died!

Well yeah, there are only American insiders. Everybody else is an outsider and didn't know when to pull out. Sorry Europe, sorry Asia, you needed someone on the inside. Live and learn...

How is the U.S.A. going to come out of this first? That's all we do is consume, consume, consume. The only way we can continue to consume is through a never ending credit line. We need to find somebody else to con them out of several trillion to keep us going for a couple of more years, but most countries are hip to our game after the bunsh of crap we sold them. It's actually sorta funny you know. If you read some of the foreign language press, all of these other countries are telling their people the same exact thing, i.e., Europe will be first out, Brasil will be first out, so it goes.

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. Before Bernanke's work the dominant monetarist theory of the Great Depression was Milton Friedman's view that it had been largely caused by the Federal Reserve reducing the money supply. Bernanke focused less on the role of the federal reserve, and more on the role of private banks and financial institutions[17]. Bernanke found that the financial disruptions of 1930-33 reduced the efficiency of the credit allocation process; and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand, identifying an effect he called the financial accelerator. When faced with a mild downturn, banks are likely to significantly cut back lending and other risky ventures. This further hurts the economy, creating a vicious cycle and potentially turning a mild recession into a major depression.[18] Economist Brad DeLong, who had previously advocated his own theory for the Great Depression, notes that the current financial crisis has increased the plausibility of Bernanke's theory.

During the Great Depression Britain was the declining hegemon but enjoyed the most financial experience. It came out of the crisis first ( 1931), 3 years before the US (1934) and 5 years before France (1936). Unfortunately their global political system started to crumble the very year their economy restarted (1931: Japan invades Mandchouria jeopardizing British 50% share of Chinese trade). Here for the US the same story: I am confident that by 2010-2011 Washington will be going again but the rest of the World could still be in shambles causing far more serious international relations problems.

penny for your thoughts ... i mean, for 1 share of your GM stock!

penny for your thoughts ... i mean, for 1 share of your GM stock!

The charts say the Dollar is about to fall off a cliff. Given the action in our market, I think the dollar is about to follow it down. Our Fed has been handing out money globally, and treasury yields are creeping up. Also consider that many suspect AIG is a conduit to spray dollars all over Europe like a firehose.

Dow, S&P, … graphs are starting to look eerily similar to the Great Depression … only greatly time-compressed. We live in much faster-paced times, and the world is smaller. BTW, anyone noticed that the inflation-adjusted DOW (See http://www.dogsofthedow.com/dow1925cpilog.htm for a slightly out-of-date version) has fallen almost back down to it’s 1966 peak value? Right now it’s down below $550, vs. just above $500 in 1966 (in 1932? $$), right before the beginning of the long bear market.

Yahoo! Finance User - Friday March 06, 2009 03:40PM EST Buy Golly, you are right. Bernake is buying stock in volumes of 5 million stocks at a pop! And he is doing it the same time every day. I wonder if one could exploit this to their own gain somehow???? Hmmmm? Think maybe???

Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002 Deflation: Making Sure "It" Doesn't Happen Here Deflation: Its Causes and Effects Deflation is defined as a general decline in prices, with emphasis on the word "general." At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling. Price declines in a specific sector may occur because productivity is rising and costs are falling more quickly in that sector than elsewhere or because the demand for the output of that sector is weak relative to the demand for other goods and services. Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation. Deflation per se occurs only when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines. The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.1 Likewise, the economic effects of a deflationary episode, for the most part, are similar to those of any other sharp decline in aggregate spending--namely, recession, rising unemployment, and financial stress. However, a deflationary recession may differ in one respect from "normal" recessions in which the inflation rate is at least modestly positive: Deflation of sufficient magnitude may result in the nominal interest rate declining to zero or very close to zero.2 Once the nominal interest rate is at zero, no further downward adjustment in the rate can occur, since lenders generally will not accept a negative nominal interest rate when it is possible instead to hold cash. At this point, the nominal interest rate is said to have hit the "zero bound." Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be.3 To take what might seem like an extreme example (though in fact it occurred in the United States in the early 1930s), suppose that deflation is proceeding at a clip of 10 percent per year. Then someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn.

Is this a good time for John Thain's replacement to re-decorate the Merrill Lynch office? Worked last year afte Merrill announced a huge loss.

Remarks by Governor Ben S. Bernanke Before the National Economists Club, Washington, D.C. November 21, 2002 Deflation: Making Sure "It" Doesn't Happen Here Deflation great enough to bring the nominal interest rate close to zero poses special problems for the economy and for policy. First, when the nominal interest rate has been reduced to zero, the real interest rate paid by borrowers equals the expected rate of deflation, however large that may be.3 To take what might seem like an extreme example (though in fact it occurred in the United States in the early 1930s), suppose that deflation is proceeding at a clip of 10 percent per year. Then someone who borrows for a year at a nominal interest rate of zero actually faces a 10 percent real cost of funds, as the loan must be repaid in dollars whose purchasing power is 10 percent greater than that of the dollars borrowed originally. In a period of sufficiently severe deflation, the real cost of borrowing becomes prohibitive. Capital investment, purchases of new homes, and other types of spending decline accordingly, worsening the economic downturn.

I keep remembering being told our economy is fundimentally sound. So what's everybody worried about. Probably should sit back and do nothing. Remember we can trust wall street to police themselves. Think I'll move to New Orleans...Yeah that's the ticket

I can't believe that Citi and BofA is on the dollar menu.

When will everybody learn that Obama isn't the answer. Throwing billions of your grandkids money (your money was spent long ago) at the banking system isn't going to fix it. The problem is that people were too greedy when it came to housing. Credit was easy for people that couldn't afford variable rate mortgages with a balloon payment after two years. That created a false market bubble that inflated house prices and led to easier credit for people who shouldn't have been able to buy a house to begin with. Now that the bubble has burst, banks are left with all these mortgages that nobody wants on houses that were sold with inflated prices. Foreclosures increase, driving the perceived value of houses down in that area, forcing homeowners who would normally be able to afford their mortgages, underwater, buying a house that is no longer worth what they have left on the mortgage. It comes down to being a perception problem, and it won't go away until perceptions change. Hoarding your money now won't help either, because it will only be worth less next week. We all need to spend, spend, spend and get the economy moving!!!

The need many have to blame Obama for this is very interesting. Sounds very much like the attacks on him from before the election, and just as illogical. The recession started 14 months ago, when he was still trailing Hillary. There is absolutly zero possiblitiy that he had a hand in AIG, GM or Citibanks problems. The economy slashes 500,000 jobs a month in the 2 months before he became president. But its all his fault. Wingnuts should have waited a few months to star blaming him, when it was actually plausible. Thats what happens when you work with half your brain tied behind your back.

I liked your host. You should invite him more often.