How long will the economic/credit crisis last?

[Stocktrading101]

Interesting article suggesting we could be heading for the next great depression,

30 Reasons For Great Depression 2 Before 2011

First 15 reasons:

1. America's credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion

[TSS]

Predictions are fun. It's good times to argue with my trading buddies and see what other people are thinking and feeling.

When it comes to making money, and that is all the market is to me, it is a waste of time and effort. If you think we are at a low, scale into positions that you like, using smart stops.

I ALWAYS assume that I am wrong. I assume that my actions are too obvious. If the market proves me right, I add in and treat that trade with a high degree of skepticism.

My current trading thesis is simple: all rallies are to be shorted into. I don't put up 50% positions in this market, I scale into my shorts smartly, take profits quickly and cut losses immediately.

As far as economic news telling you where we are - I don't buy it for a second. All of that news is manipulated to one degree or another. Most people don't know whats looked at, how its measured, what's excluded...

Keep it simple, the trend is down - short. the trend is up, buy. there is no trend, fish.

[TSS]

Originally Posted by Stocktrading101

Interesting article suggesting we could be heading for the next great depression,

30 Reasons For Great Depression 2 Before 2011

First 15 reasons:

1. America's credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion

This was a good read. Sad,scary and true...

[aquaswim47]

I have a different ideology. I think we go down another 25%, but we avoid another depression. We start to get better in the 3rd quarter of 2008 and we start to see improvements in the leading indicators and market by 1st quarter of next year, but only after the market hits 6,500. We hit an unemployment rate of between 9.5% to 10.5% (much more than the 8% currently predicted). To me, it's like lets get done with it and lets move on.

We are putting in a bottom, but Ford seems to be the Goldman Sachs of the auto industry (the lone survivor). Ford has too many receivables, GM has too many liabilities to assets, and Chrysler while solvent appears that its difficulty might be liquidity (but the main problem is the financial statements 12/31/2007). I think the bailout will be helpful but the only way the automakers GM and Chrysler can succeed is to cut their expenses, reduce their loan exposures, and drastically cut their pension obligations. I think that can only occur in a Chapter 11 bankruptcy, however, to make sure they reputation isn't affected, four things must happen:

1) The government guarantees all NEW warranties on cars up to 10 year 120,000 mile warranties

2) The government acts as a creditor of last resort and is willing to provide up to $40 billion to Chrysler, $70 billion to GM and $15 billion to Ford for a total package that is 5 times what is being offered now! The condition is that all three firms must file for Chapter 11 for the funding to be provided.

3) The government forces creditors to take a substantial loss on their senior securities ranging from 30 to 70 cents on the dollar depending on how weak the financials of a firm is. This means subordinated debentures, preferred stockholders, and common stockholders lose their entire investment.

4) The Pension Benefit Guaranty is utilized to help remove pension obligations from the firms.

[jamespike]

i love stock, S&P and NASDAQ are my favourite Index.

[Keith Best]

Cheers man! My favorite indexes are DJIA, S&P and NASDAQ. I have some favorite companies, do you have?

[Fredledingue]

Sad, scarry and true, but also telling about past, current and future events alltoghether. I mean some point are past, some will pass and other are still to come.

We are at a conjunction of several negative factors by bad luck.
We had an US administration almost entirely focused on the Iraq war ignoring domestic, social, energetic and economic issues. We had a corrupt and inneficient banking leadership. And now we have a retarded and obsolete auto industry....
We laso had accounting rules which forced companies to post losses while they didn't. At the same time these rules were necessary to point to those who realy lost money...

The economy takes blows on every sides. Hence a political reaction which seems eratic, improvised or conflicting. Yet I still hope it will be cured, by the end of next year, because the rection to the crisis is the right one.

The problem is not the free market or the economic model of the industrialized world. The problem is that an infinite loop in the credit chain has been created while no one was aware of it. Everybody, individual or organisations -not only banks-, at some point was lending to borrow and borrowing to lend.
That ended up like an Esher staircase: 4 four stair rows forming a square, those climbing coming back to the first step by an incomprehensible spacial illusion.

http://www.artchive.com/artchive/e/e..._ascending.jpg

Same with lending, the lender, making profit went back to the first step where they needed to borrow, where they were lower than before for a incomprehensible reason.
The whole economy looked like that and now it broke because the illusion was impossible to keep on in the reality.

The good thing is that the credit addiction will be cured. Poeple and companies are learning to work with money on hand, and that's healthy. Of course we have to go through this recession before seeing the effect of it.