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U.S. Consumer Credit falls by $7.9 billion, the most on record
Borrowing by U.S. consumers unexpectedly fell in August by the most on record as banks shut off access to loans, a report from the Federal Reserve showed.
Consumer credit fell by $7.9 billion, the most since statistics began in 1943, to $2.58 trillion, the Fed said today in Washington. In July, credit rose by $5.2 billion, previously reported as a $4.6 billion gain. The Fed's report doesn't cover borrowing secured by real estate.
Consumer spending, the biggest part of the economy, is likely to keep faltering as banks hoard cash, job losses mount and property values drop. The decline in borrowing underscores why Fed policy makers today announced they will create a special fund to purchase commercial paper in a bid to open the flow of credit to the nation's businesses.
Economists forecast an increase of $5 billion in consumer credit during August, according to the median of 29 estimates in a survey conducted by Bloomberg News.
According to the Fed, total consumer borrowing dropped at a 4.3 percent annual rate in August, the most since January 1998, during the Asian financial crisis.
Figures released last week show auto sales tumbled 27 percent in September as the credit crisis and slowing economy dragged the industry to its worst month since 1991. Borrowing by U.S. consumers unexpectedly fell in August by the most on record as banks shut off access to loans, a report from the Fed... more -
Real Patriots Don't Spend - TIME
For nearly 3 million years of human history, saving and investment was a dumb idea. We hunted, we gathered, we consumed, and we moved on to greener pastures. Only when migrating tribes learned to settle down and farm did they need to save and plan, storing seeds and surpluses to tide them over from season to season. We've had 10,000 years to absorb the truth that cultures that don't value THRIFT ultimately flame out and die. Apparently that isn't long enough to learn the lesson.
Judging from tales about the rise and fall of empires, there is always a point when things are going so well that the emperors doubt that anything could ever go wrong. "THRIFT," warned Nero's adviser Seneca, "comes too late when you find it at the bottom of your purse." In the Old World, nations grew fat and then lazy, until they collapsed under their own weight.
Thrift died with the baby boom, but it had been ailing ever since the Depression, argues cultural historian David Tucker in The Decline of THRIFT in America. That crisis, he writes, invited economists to recast THRIFT as "the contemptible vice which threw sand in the gears of our consumer economy." A White House report in 1931 urged parents to let children pick out their own clothes and furniture, thereby creating in the child "a sense of personal as well as family pride in ownership, and eventually teaching him that his personality can be expressed through things."
Somewhere along the way, THRIFT did not just stop being a value; it became a folly. Saving was for suckers; you'd miss the ride, die leaving money on the table when you could have lived it up. There are no pockets in a shroud, as the saying goes. We once saved about 15% of our income. By the roaring '80s the rate was 4%; now we're in negative numbers
The average American has nine credit cards with a total $17,000 balance. We borrow against our houses and pensions to live in a way that dares us to actually grow old. "Never invest in any idea you can't illustrate with a crayon," Fidelity mastermind Peter Lynch advised, but we embraced all kinds of investments about which we understood nothing except the hollow promise that they would never fail. When the economy began to swoon we kept spending, effectively sending ourselves rebate checks from accounts already way overdrawn, as if it would make us feel better to buy a new TV and charge it to our kids.
George W. Bush has never been reluctant to frame policy debates in moral terms, targeting an "axis of evil," casting tax cuts as the removal of "unfair burdens" on hardworking people, calling tariff reduction a "moral imperative." But THRIFT is one virtue he never invokes, and a restoration of restraint is a strain of conservatism he seldom promotes. In fact, it was after the most tragic day in modern U.S. history, when Bush urged people who wanted to help to "go shopping," that profligacy officially replaced prudence as a patriotic duty.
There's no way to tell during this current distress whether we're repenting or just retrenching. THRIFT-store sales are up. Cars are shrinking. P. Diddy retired his private jet to save on gas. In hard times, people often rediscover the peace that prudence brings, when you try to spend a little less than you have because tomorrow might be worse. But that feels almost un-American; we're optimists by nature, and we've been living large for so long that solvency feels like a sacrifice. It will take some sustained character education--and leadership--to understand that morning in America is more likely to come again if we prepare for midnight. For nearly 3 million years of human history, saving and investment was a dumb idea. We hunted, we gathered, we consumed, and we moved ... more -
Jobless father kills family, then turns the gun on himself
A man distraught because he could not find work shot and killed his mother-in-law, his wife and three sons and then killed himself inside a home in an upscale San Fernando Valley neighborhood, police said.
The two-story rented home is in gated community in Porter Ranch, about 20 miles northwest of Los Angeles.
Authorities said the man had an MBA in finance but appeared to have been unemployed for several months and had worked for major accounting firms, such as Price Waterhouse, police said.
The shootings were discovered at 7:15 a.m. Monday, when a neighbor called police to report that the wife had not picked her up as she usually did to take her to her job at a pharmacy, Moore said.
The mother-in-law was 70; her daughter was 39; and the sons were 19, 12 and 7, Moore said. All were found inside bedrooms. A handgun, which was bought September 16, was recovered, he said. A man distraught because he could not find work shot and killed his mother-in-law, his wife and three sons and then killed himself ins... more -
Garrison Keillor: Where's the Outrage!!!
They're Stealing from You and Me -- Where's the Outrage?
By Garrison Keillor, International Herald Tribune. Posted October 6, 2008.
It wasn't their money Wall Street was playing with. It was ours.
Where were the cops?
It's just human nature that some calamities register in the brain and others don't. The train engineer texting at the throttle ("HOW R U? C U L8R") and missing the red light and 25 people die in the crash -- oh God, that is way too real -- everyone has had a moment of supreme stupidity that came close to killing somebody. Even atheists say a little prayer now and then: Dear God, I am an idiot, thank you for protecting my children.
On the other hand, the America's federal bailout of the financial market (yawn) is a calamity that people accept as if it were just one more hurricane. An air of crisis, the secretary of the Treasury striding down a hall at the Capitol with minions in his wake, solemn-faced congressmen at the microphones. Something must be done, harrumph harrumph.
The Current Occupant pops out of the cuckoo clock and reads a few lines off a piece of paper, pronouncing all the words correctly. And the newscaster looks into the camera and says, "Etaoin shrdlu qwertyuiop."
Where is the outrage?
(...more @ link) They're Stealing from You and Me -- Where's the Outrage? ... more -
The American economy lost 159,000 jobs in September
The American economy lost 159,000 jobs in September, the worst month of retrenchment in five years, the government reported on Friday, amplifying fears that an already painful downturn had entered a more severe stage that could persist well into next year.
For the first eight months of the year, the economy lost an average of 75,000 jobs each month. September’s report more than doubled the pace.
Employment has diminished for nine consecutive months, eliminating 760,000 jobs, according to the Labor Department’s report. And that does not count the traumatic events of recent weeks, as a string of Wall Street institutions collapsed, prompting the $700 billion emergency rescue package approved by Congress on Friday.
Only a few weeks ago, many economists still held hopes that the economy might recover late this year or early next. But with the job market now contracting faster, and fear dogging the financial system, the broad assumption has taken hold that 2008 is a lost cause.
Most economists have concluded that the economy will struggle well into next year. More pessimistic forecasts envision the economy remaining weak through most or all of next year. The American economy lost 159,000 jobs in September, the worst month of retrenchment in five years, the government reported on Friday,... more -
Hollywood Gets Cut of Bailout
Hollywood would get a little unexpected boost from the proposed $700-billion bailout of the nation's financial system.
The bill wending its way through Congress would provide tax breaks worth more than $470 million over the next decade for movie and TV producers that shoot in the U.S Hollywood would get a little unexpected boost from the proposed $700-billion bailout of the nation's financial system. ... more -
We are Programmed to Crash
Here is another name they do not teach you in American history, Albert H. Wiggin. Head of Chase National Bank in the 1920s, he set up dummy companies in the name of family members so that he could short sell his own company’s stock, i.e. bet that his own bank’s stock would go down in value. This made him millions of dollars during the banking crises that rocked the nation between 1929-1232. Try to imagine how easy it would be for the guy in charge of a bank to bet that his own company’s stock would take a dive (in someone else’s name, of course) and then leak some “bad news” so that the stock would take that dive just as he predicted. And it was all legal at the time. That was before FDR was elected and Ferdinand Pecora held his public hearings which exposed the immoral, greedy practices of America’s bankers---or banksters as TIME magazine dubbed them.
More on Wiggin at
http://en.wikipedia.org/wiki/Albert_Wiggin
Note that he never paid for his crimes. Instead, the FDR administration attempted to put a stop to the practice of insiders manipulating the price of their own company’s stock, wrecking havoc with the finances of mom and pop investors and costing employees their jobs, all for the sake of a few more million dollars that they did not really need.
For those like me who do not have economic degrees, here is a link to the wiki entry for short selling .
http://en.wikipedia.org/wiki/Short_ (finance) Here is another name they do not teach you in American history, Albert H. Wiggin. Head of Chase National Bank in the 1920s, he set up ... more -
Reid: Major Insurance Co.on Verge of Bankruptcy
"There are companies that have functioned in America for decades by borrowing money overnight. The cannot find money to borrow overnight."
Reid also warned that a member of the Democratic caucus had warned a major US firm was among those at the risk of foundering if a bailout bill was not passed soon.
"One of the individuals in the caucus today talked about a major insurance company, a major insurance company, one with a name that everyone knows that is on the verge of going bankrupt.
"That is what this is all about."
Reid did not identify the company, and it was not immediately clear which firm he was referencing." "There are companies that have functioned in America for decades by borrowing money overnight. The cannot find money to borrow ov... more -
Upset About $700B? How about $1 Quadrillion?
[YouTube Description: 6:52 mins.]
From: corbettreport
Added: October 01, 2008
Voters are rightly furious at the proposal to spend $700,000,000,000 that the government doesn't have to bail out Wall Street bankers who created the current economic crisis in the first place.
But why then aren't we concerned about the trillions of dollars the Federal Reserve is pumping into the system?
Or the trillions missing from the Pentagon?
Or the quadrillion dollar derivatives bubble.
For more news and economic analysis, visit:
http://www.corbettreport.com [YouTube Description: 6:52 mins.] From: corbettreport Added: October 01, 2008 ... more -
Bailout is for Foreign Investors
[YouTube Description: Market Ticker Forums; 9:31 mins.]
From: kdenninger
Added: September 30, 2008
Its not about you. Its not about Main Street. Its not even about Wall Street.
No, its about Shanghai, London, Berlin and Sydney. And no, I'm not kidding.
The cover was blown this evening on Kudlow. If you don't get this video into the hands of the entire American Population within the next 24 hours, you are going to be paying taxes to cover the bad debt on a failed office building - or a hundred of them - in China.
Spam everyone you know and send them to http://supportedthebailout.org and http://FedupUSA.org.
Tomorrow won't do - this bill is being ramrodded through the Senate tomorrow, and then through the House.
Original CNBC Video is at http://www.cnbc.com/id/15840232?video... [YouTube Description: Market Ticker Forums; 9:31 mins.] From: kdenninger Added: September 30, 2008 ... more -
CNN LOU DOBBS: BAILOUT BYPASSES CONGRESS TO SENATE WED.
YouTube Description: Lou Dobbs announced tonight, September 30, 2008, that the Bailout bill will go straight to the Senate without Congress' approval.
Marcy Kaptur and Peter DeFazio were his guests. DeFazio suggested to flood the Capitol switchboard beginning October 1st to show your disapproval. YouTube Description: Lou Dobbs announced tonight, September 30, 2008, that the Bailout bill will go straight to the Senate without Co... more -
That Explains It: Mercury in Retrograde
Things Can Get Worse: Mercury in Retrograde
By: Natalie Josef
Excerpt: Beginning September 24, 2008 through October 15, 2008, Mercury will start doing its moonwalk across the sky again. Because Mercury will turn retrograde in the sign of Libra (the sign of balance, harmony, and justice), we may feel off-kilter and unable to effectively manage the many balances we juggle daily. But that’s not the extent of it; Mercury will cast its chaotic spell in many ways. Things Can Get Worse: Mercury in Retrograde By: Natalie Josef ... more -
Democracy Invigorated
Bailout Rejection Sends out Financial Shockwaves, But It's Also an Invigorating Moment for Democracy
By William Greider, TheNation.com. Posted September 30, 2008.
Bowing to public outrage, the House rejected the bailout and Wall Street swoons. The political bedlam in Washington is as real as it gets.
Excerpts:
The political bedlam in Washington is as real as it gets.
The party leaders will probably try again. I doubt they have the energy or courage to renegotiate the terms in any serious way. A majority of Democrats voted for the measure, but most Republicans took a walk. They will be scolded -- and pounded by captains of industry and finance -- for being "irresponsible." But I doubt the public will agree.
It adds another deep shock to the system, both in politics and economics, but what an invigorating moment for democracy. Bailout Rejection Sends out Financial Shockwaves, But It's Also an Invigorating Moment for Democracy ... more -
Financial Fears Mount as Congress Heads for Holiday
One day after the House of Representatives shot down the $700 billion bailout package for Wall Street, many fear that the markets will plunge further. Political leadership, though, will have to wait -- until after a two-day holiday.
As if Monday wasn't bad enough: The US House of Representatives in chaos; the markets in freefall; the surreal appearances of two presidential candidates, both of whom swore bipartisanship only to attack each other in the very next breath.
And yet, as strange as Monday seemed, the day could very well be trumped by the rest of the week. The spotlight will likely be focused on stock market trading floors to see just how traders and investors react to Congress' shocking rejection of the $700 billion bailout package. But when it comes to scurrility, it will be difficult to beat the halls of the US Capitol, ground zero of this economic catastrophe.
Or, to be more precise, in the empty halls of the Capitol. After the US Representatives drop-kicked the bailout bill, triggering another Black Monday -- and leading to a 777.68 point drop in the Dow Jones industrial average -- Congressmen and women headed home to their constituencies. The occasion is Rosh Hashana, a congressional holiday.
It is difficult to believe, but on the day after the disaster, the doors of political process in Washington are closed and will only be opened for business again on Thursday. And even as Rosh Hashana traditionally marks a period of limited trading on Wall Street, it isn't just those in the financial world who will be looking in vain to Washington for some sort of political leadership amid the market storm.
(continues at link) One day after the House of Representatives shot down the $700 billion bailout package for Wall Street, many fear that the markets will... more -
1929 vs. 2008 Financial Crisis
Financial crisis - then and now.
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Ummm, Yeah, That's the Ticket, $700B
"You know where that very important $700-billion figure came from?
Here's a quote from that Forbes story:
"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."
They made it up to be sufficiently ginormous to frighten everyone into rapid action.
And it worked." "You know where that very important $700-billion figure came from? Here's a quote from that Forbes story: ... more -
Fed Adds $620B to U.S. Economy
Fed pumps more dollars into global markets to ease strains
By Greg Robb
Last update: 10:02 a.m. EDT Sept. 29, 2008
WASHINGTON (MarketWatch) -- The Federal Reserve on Monday announced that it was providing more liquidity into global money markets to ease recent strains. The Fed said it was boosting the size of its auctions of liquidity to commercial banks and the size of its swap agreements from a number of foreign central banks to $620 billion from $290 billion. Fed pumps more dollars into global markets to ease strains By Greg Robb Last update: 10:02 a.m. EDT Sept. 29, 2008 ... more -
The 'victims' of the economic crisis!
BBC Interview with Bear Stearns employee who was let go
“I was very surprised when I was called into the head of the hedge fund group’s office and told that due to restructuring reasons, I was being let go.”
“Wow,” reporter Karen Nye responds.
On voiceover, Nye continues: “For one of the financial industry’s worker bees, living in a big city without an income is NOT easy.”
McCutcheon agrees: “You know, I’m not one of these… uh… storied Wall Street workers who makes millions of dollars in bonuses. You know, I had to pinch my pennies and really tighten my belt.”
So maybe we shouldn't feel so bad for the people who worked in these big companies! She never mentioned her position at Bear Stearns, but obviously she must have been low-level and really struggling.
I was curious, so I looked her up on LinkedIn: http://www.linkedin.com/pub/5/405/448)
* Vice President at Bear Stearns
* Product Manager at Bear Stearns Asset Management
* Senior Associate at LECG
Oops! Needless to say, I doubt she will be advertising the intricacies of her job as VICE PRESIDENT.
I have a feeling she may have a hard time getting another job now... BBC Interview with Bear Stearns employee who was let go ... more -
Bailout plan: robbery under our noses
Australia’s Response to the U.S. Bailout Plan
By Dan Denning • September 26th, 2008
Normally, bank robberies work the other way. An armed and masked gang walks into the bank, fires a few shotgun blasts, tells everyone to get on the floor, and asks the clerks to fill up canvas bags with the fabulous moolah. It's simple.
That is not the way it works in modern central banking, though. Today, it's as if Hank Paulson is pointing his "big bazooka" bailout plan at Wall Street and demanding it opens up its wallet so he can fill it with other people's money. The Paulson Gang (or Goldman gang) is lining up for its share of the loot accordingly. But the real robbery is taking place in Washington.
Today's theft is a lot more subtle, mostly because it's taking place right underneath your nose. That is the trouble with the obvious. You become so used to it that you fail to find it unusual. Sadly, it is as business as usual in Washington D.C. this week.
(more...) Australia’s Response to the U.S. Bailout Plan By Dan Denning • September 26th, 2008 ... more -
Hey U.S., welcome to the Third World!
Hey U.S., welcome to the Third World!
It's been a quick slide from economic superpower to economic basket case.
Rosa Brooks
September 18, 2008
Dear United States, Welcome to the Third World!
It's not every day that a superpower makes a bid to transform itself into a Third World nation, and we here at the World Bank and the International Monetary Fund want to be among the first to welcome you to the community of states in desperate need of international economic assistance. As you spiral into a catastrophic financial meltdown, we are delighted to respond to your Treasury Department's request that we undertake a joint stability assessment of your financial sector. In these turbulent times, we can provide services ranging from subsidized loans to expert advisors willing to perform an emergency overhaul of your entire government.
(more at link.) Hey U.S., welcome to the Third World! It's been a quick slide from economic superpower to economic basket case. Rosa Brooks ... more
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