Market Craters: Dow Falls 512 Points

[girl gone mad]

Market Craters: Dow Falls 512 Points
Yves Smith, Naked Capitalism
http://www.nakedcapitalism.com/2011/08/market-craters.html

What we are seeing today is not as bad as the worst days of the crisis, but it ins’t much consolation for investors who had gotten back in the pool on the belief that the system had been patched up reasonably well and the economy was on the mend.

All the authorities did was patch up a predatory banking system with duct tape and bailing wire and hoped enough cheerleading would restore confidence. And after the banks got their bailout money, the mood seemed to be “we spent so much on them, we don’t have anything left for anyone else.” The alarming rise in government deficits, which was primarily the result of the crisis (falls in tax revenues and increases in automatic stabliizers like unemployment payments) and not discretionary spending, has led to a deadly combination of austerian policies (which is making debt to GDP ratios worse, see Ireland, Latvia, and Greece for proof), dysfunctional government responses, faltering recoveries, and deliberate shredding of social contracts. It’s like watching a house burn and then having people throw Molotov cocktails at it.

The pattern of serious financial crises is the market meltdown hits first, then the real economy plunge takes place later. Our officialdom had been patting itself on the back that “better” policy responses had stopped the sort of damage that the US suffered in the Great Depression and Japan experienced in its post bubble hangover. But the GDP revisions of last week included some stunning reductions to 2008 figures which called the comparatively cheery story we’ve been told into question. And the powers that be have refused to take the important step of writing bad debt down. Zombification was treated as the solution to our woes, when the result of past financial crises shows that taking the losses early which does result in a worse initial GDP hit, leads to much better outcomes. And here, the casualty has been not only growth but to a fair degree our political system, as the corporocrats have used the crisis to solidify their position.

http://www.nakedcapitalism.com/2011/08/market-craters.html">more...

[doc03]

1. It's not that much of a drop percentage wise. n/t

[girl gone mad]

7. > 4% in one day is a pretty steep decline.

I think extend and pretend is over. Austerity reigns.

[doc03]

10. Doesn't even come close to making the top 20 worst

days. 10/19/1987 crash 22.61%
http://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

[girl gone mad]

12. Yes, it could always be worse.

That doesn't mean this is okay.

[azul]

17. is slowing the economy a good thing now?

What with unchecked economic growth leading to planetary pollution and mass extinctions, should not the popular economic goal be sustainability?

And is austerity an unacceptable way to rein it in?

[girl gone mad]

19. Yes. austerity is an unacceptable solution.

We should not put the burden of sustainability solely on the backs of the productive classes.

If you are serious about ecological and environmental sustainability, the solution is to invest heavily in alternative energy and new technology. Conservation and clean energy need to be mandated and subsidized at the corporate and state scale. Austerity takes us in the opposite direction and will leave society more dependent on big energy (particularly foreign sources) and less capable of innovating over the long term.

I do not believe that economic growth must always come at the expensive of the environment and must be accompanied by significant growth in energy consumption. We can learn to do more with less and invest in technologies and infrastructure that will allow us to adopt a less oil-dependent lifestyle.

What's more, it's not progressive or fair to ask the poor to sacrifice more and more so that the idle rich can continue to take and live lavishly as they shift capital into countries like China, which show little concern for the ecology.

[DCBob]

2. brutal...

the only silver lining of this mess is the possibility that the RW realizes austerity does not inspire the stock market.

[Lochloosa]

16. ,,,,,

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: Sorry....that was funny

[amborin]

3. K&R

[Aerows]

4. I'm waiting for the surprise at this news

No really - I had my fainting couch all ready to go for those who needed it, and handkerchiefs for those who needed to clutch their pearls.

We're all shocked - SHOCKED - that Wall Street is taking advantage of a shitty debt deal to engage in disaster capitalism.

It's stunning, incredible new news.

[Ian David]

5. Mission Accomplished!

Mission Accomplished!
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1663828

[sfpcjock]

15. l

-Mao

[banned from Kos]

6. Those crazy blogs can't make up their minds - banks are either

"zombies" or they are sitting on trillions in cash and won't loan to anyone while they prepare for strict Basel III guidelines.

But the "zombie" stuff sells - so Ms. Smith doles it out.

[MannyGoldstein]

8. K&R - bubble gum, packing tape, and Bondo is not the same as steel nt

[BeyondGeography]

9. Take two aspirin and call Ben in the morning

[kenny blankenship]

11. Zombie Banks come back to FEAST ON THE LIVING! (And their Renfield CRAs are still on the prowl, too)

Didn't our politicians watch ANY zombie movies growing up?

Seriously, this stuff is fundamental, people!

[OhioChick]

13. K&R n/t

[Taverner]

14. It didn't fall 512 points! It recovered 38 points...

From when it...er...fell 550 points... :scared:

[Lorien]

22. Heheh, that's pretty much what post #18 says

:crazy:

[DCBob]

18. funny, Nasdaq future are actually up a bit right now.

http://www.bloomberg.com/markets/stocks/futures

the stock market is like a manic/depressive... over-reacts to events.

[woo me with science]

20. K&R

I always appreciate your posts on the economy. Thank you.

[blkmusclmachine]

21. Here comes the financial "Shock and Awe" of the "Grand Ripoff, er, Bargain":

:nuke: Who could have predicted?! You don't negotiate with economic terrorists..

[KoKo]

23. Thanks! MUCH...Yves Smith is a Gem!

Glad to know you read her TOO! K&R

[girl gone mad]

24. Thanks, KoKo..

Longtime NC reader. :)

[indurancevile]

25. latvia is a basket case, and it's totally the product of the "free market" & austerity.

i had a teacher from latvia. per her, latvia was once a fairly "liberal" & relatively wealthy country.

now it's a basket case with about 1/4 of the population in or close to poverty & crime/racism/wingerness growing:

Gay rights activists blame Singh's death on what they call "The West Coast connection" or the "U.S.-Latvia Axis of Hate," a reference to a virulent Latvian megachurch preacher who has become a central figure in the hard-line Slavic anti-gay movement in the West.

http://www.splcenter.org/get-informed/intelligence-report/browse-all-issues/2007/fall/the-latvian-connection

now, having destroyed the economy, the international ruling classes are sending out ngo's to "empower" the people they impoverished.

"Empowering Latvians to break the cycle of poverty"

http://hopeforlatvia.org/

there was no "cycle of poverty" but the one those bastards created. it's so orwellian and sick. imo, they fund the wingnut movements too.

[Tx4obama]

26. The GOP is doing everything they can to crash our economy, then they turn around and ...

try to blame it on the Democrats and President Obama.