Dow is Down 300 at Midday… What Next?

October 24, 2008

 

Yeah, we all saw this coming. (Yahoo! News, Grand Rants, and countless others…) Who knows what’s coming next. And that’s exactly the point of this post.

Ok, now we’re down 400 430 450. Here’s the deal as I see it. The real magic number is 8,000.  When/if the market hits that number, it should have the effect of $4.00/gal gas. “Eight K” is the real attention getter.

Three things to watch for:

  • A quick, automatic shutdown of the market if things go goofy
  • The last hour of the day
  • The last 15 minutes of the last hour of the day

Here we go… But at some point there are fantastic deals to be had.

Alan Speakman


Black Friday? DJIA Look Out!

October 24, 2008

 

Yeah, the dollar is still strong compared to the Euro (as if that’s anything to brag about). But as of right now (7:09 AM EST), the Asian and European markets are really struggling (or simply preparing to struggle). And OPEC (our best buddies – not!) are drastically cutting supply to meet a dwindling demand.

This could be a very bad day… Hope I’m completely whacked.

Alan Speakman


The Debate and the Economy

October 8, 2008

 

Just was listening to a bit of the debate and heard how Obama was going to deal with fixing Social Security.

If the comment wasn’t so absurd and tragic, it would have simply been pathetic.

Let’s see if we can’t put the impending financial disaster in perspective…

The bubble chart above was created in MS PowerPoint (though any number of SW packages can do likewise). But what do the numbers mean? Well, they’re in billions of dollars and represent the following American and U.K. situations:

  • The little dot on the bottom represents the $25 billion Bradford and Bingley nationalization
  • The $85 billion is destined to AIG
  • Two hundred billion (in blue) is for good old Fannie and Freddie
  • $215 billion to prop up the flailing British mortgage lender Northern Rock
  • Ah, the good stuff… $700,000,000,000.00 for the current U.S. rescue… That’s in red.
  • The $2,470 is the entire U.K.’s GDP in billions
  • $14,294 is the U.S. GDP in billions
  • But what of that monster in the background? What of that $50,000 billion bubble that runs off the screen? That’s the $50 trillion social security disaster that’s waiting for Americans down the road.

The numbers are kind of mind numbing ain’t they? Well, amateur arm-chair astronomy being a hobby of mine, maybe some “planetary perspective” here will help. Speaking in terms of diameter, in the image above, the $200 billion blue orb (aka “Planet Freddie and Fannie”) would be something of the size of the pipsqueak planet Mars in our solar system. The “$700 Billion Bailout” planet in red would represent earth. And the massive $50 trillion outer giant is our sun. Ouch.

Look, I tried to be conservative with the numbers, and yes those numbers are going to change… But the magnitudes are probably correct. It is to scale, and you can easily reproduce it.

My gripe isn’t just with Obama. And it isn’t just with McCain. And it isn’t just with Bush II, or Clinton, or Bush I or… The problem (now a towering disaster) of Social Security and Medicare/Medicaid has been lurking for decades, and our politicians simply keep making empty promises that they’re going to fix it just so they can get elected. It is what it is. Is Glen Beck the only one who gets it?

I apologize for playing the same video or at least pointing to the same video or graphics as in previous posts. But this is important. Truth should be persistent.

Look, fiscally speaking, we’re in a land of hurt, and politicians and talking heads just want to play politics – future be damned. And if you think Obama or McCain is just going to flop down into 1600 and fix this horror, you’re a damned fool. The coming storm is something like America has never seen before.

Oh, the collapse probably won’t happen tomorrow, or even next year. But it will happen. Stars like Obama and McCain may lie, but the numbers never do.

Alan Speakman


Is This When the Global Economy All Goes to Hell?

October 7, 2008

The title is a fair question really. Take a look at the this BBC 10/7/08 news headline. Japan, China, Germany, Iceland (Iceland?). They’re all scared. Are we facing an “Uh oh” on a global scale?

Things to think about…

  • The U.S. GDP is roughly $13 trillion.
  • According to treasurydirect.gov, we’re $10,186,269,007,199.11 in debt right now. That sounds monstrous but we’ve seen worse. $10 trillion is somewhere around 75% of the GDP, and that puts us on par with post WWII. So far, so good. The last eight years have been a horror show. Given 9/11, fighting radical Islam wherever we can find it including Afghanistan, Iraq (and the moon if we have to go there), Enron et al, Katrina, Rita, and a basic bank implosion. Given all that, 75% ain’t a bad number.
  • And here’s where I get to tick off both political parties… Check out who’s at fault for this mess, and who’s been cooking the federal books to make the problem look “manageable”.
  • Nope, if the truth be told, we’re roughly $50,000,000,000,000.00 in the hole. (Jezuz, I hope that number is right. I’m an engineer, and even I’m starting to lose track of the zeros.) Anyway, the amount is a looming $50 trillion dollars.
  • Look, in our gut, I think most people thought that sooner or later all this would catch up with us. I for one thought it would be “later” vs. “sooner”. Now I’m not so sure. Earlier today, I watched an interesting financial news piece on the state of the situation. As the story went to wrap, the talking head went out of his way to make clear that there has been a run on safes. And in a similarly chilling vein, a friend and local businessman told me that local gold was not to be had for love or money.

I still don’t believe it, but is this the time when the global economy goes to Hell?

Alan Speakman


Don’t Give Up. Now Is the Time to Show Our Best.

September 24, 2008

For the past week, we’ve been inundated with various economic doomsday predictions due to the Fannie Mae and Freddie Mac debacles. We’ve yet to see the potential depth of the abyss. Oh, we can see the hole in the earth, we just don’t yet have a light beam strong enough to see absolute bottom.

And so come the questions:

  • What will it take to fix this mess?
  • Do we have the ability to fix it?
  • How bad is this, really? No, really.

As Americans, this is where we look for that instant solution, that panacea. “Yeah, yeah, alright, let’s get on with it already! I’ve got stuff to do and places to go!”

Only this one is going to be felt. This isn’t a situation for a band-aid. We’re talking a body cast and full traction, folks. We will feel this impact, potentially, for years to come. And that’s only if we do this the right way… the HARD way. But this is not necessarily a bad thing completely. In point of fact, it’s actually an opportunity for us to “right” this ship we’re on. Let me explain.

Here are a couple of points not open to debate:

  • We are not going to make it through this economic event unscathed. The only question is how badly will we each be affected?
  • Character: You either have it, or you don’t. There’s no way through this kind of event without it. Those without character will stick out like Barack Obama at aToastmaster’s meeting without his teleprompter.
  • The Good News: This is the kind of event that defines our character, that lets us show who we really are. And those who do NOT havecharacter will have the chance to develop it.

Sadly, we know there will be people in our society who won’t be able to deal with the changes we’re likely to see. Some may use the current situation as an excuse to resort to violence, rioting (depending on how bad things get), and perhaps worse.

Stay with me for a moment. Some five years ago, I lost just about everything I owned. I was out of work for nearly a year except for what I was able to scrape together with my photography and my writing. There were times when I felt I wouldn’t make it. But, like Peter Gabriel’s inspirational song, “Don’t Give Up,” I quickly discovered I had friends to encourage me when times got rough. And ROUGH it got…

in this proud land we grew up strong
we were wanted all along
I was taught to fight, taught to win
I never thought I could fail
…”

Just when things seemed to be hopeless, I had that moment of clearness some speak of. It no longer became a question of how long my situation would last. The answer was, “Only as long as you let it.”

It wasn’t easy, but I sucked it up and some two years later when I made it back on my feet financially, I looked back and realized how much of my misfortune turned out to be a blessing in disguise. I was forced to make changes to my lifestyle that ultimately made sense and helped me to “right my own ship.” It made me realize how insignificant so many things I used to worry about were. In fact, I felt like I had climbed Mt. Everest. So will you. And when you reach the mountain top, just know it was character that brought you to the summit.

Sometimes it’s good to be forced back to discovering the basics about yourself and what you are made of. That’s what happened to those Americans who went through the depression. It built the kind of character needed by those who brought us through World War II victoriously.

It was the dream of those who got us through that war to create a world where we would never have to face the kinds of trials they did. And they were successful in doing that for some 60 plus years. Now it’s OUR TURN to do the same for the next generations. My question to you is blunt and simple: DO YOU HAVE THE CHARACTER TO MOVE FORWARD? Think carefully, because the answer to that question will determine what kind of country we leave for our children and their children… or whether we leave behind a country at all.

Gerry Ashley