Pray for all the little investors, too
Wake up and good morning. Surely there must be a prayer out there somewhere for Wall Street (and all our 401(k)s).
Yea, though I walk through the valley of the shadow of bears, I will fear no downturn....
I mean, how else can you react to the "how low can the markets go?" paranoia and today's New York Times story that starts with: "Could the Dow reach 7,000? 700? Seven?" It was only a month or two ago that the end-is-nigh talk from Martin Weiss and his Money and Markets crew over in Jupiter, Fla., sounded shrill at best. Now he's starting to sound almost bullish with his forecast of a Dow hitting (only ) 7,200. From the NYT story, here's what Owen Lamont, a former professor at Yale who has studied economic forecasting, says:
“To make a crazy forecast today is not crazy. It’s not crazy to predict the Dow is going to 2,000. That’s in the realm of possibility.”
Whew. Tough start to this new week! And new data show the job market is also weakening. Today's Wall Street Journal's front page story indicates the labor market is now the worst it's been since the two prior recessions in 2001 and the early 1990s. One of the starkest indicators is that the number of people who have been unemployed for 27 weeks or more reached 2-million in September. That's 21 percent of the total unemployed, and approaching the prior peaks of about 23 percent in 2003 and 1992. Also in September, companies saw 2,269 mass layoffs -- in which at least 50 people are let go at once -- more than at any time since September 2001. When October’s job losses are announced on Nov. 7, three days after the presidential election, many economists expect the number to exceed 200,000, the New York Times reports. The current unemployment rate of 6.1 percent is likely to rise, perhaps significantly. And it hardly helps the pessimism out there when GM (at the same time it asks the government for aid to merge with Chrysler) tells its non-union workers that it's going to stop matching their 401(k) contributions until "things improve." Tell me that's not a green light for more and more companies to follow GM's move.
Let's go to the videos. All this sets the stage for the financial mega-bailout and growing questions of whether U.S. Treasury Secretary Henry Paulson, who only a few years ago was heading Goldman Sachs' lobbying effort to do deals with higher risk, is the right guy to unwind a system he helped create. Check out this video report on Paulson's conflicts.
And for those of you who did not get to see former Federal Reserve Chairman Alan Greenspan admit last week that his let-the-markets-take-care-of-themselves beliefs did in fact help put us in this mess, check out this video of his mea culpa.
Greenspan's successor, Fed Chairman Ben Bernanke, is in a pickle. He and his Fed colleagues may eventually have to drive benchmark overnight interest rates close to zero to resuscitate the economy. The next installment comes Oct. 29 when, former Fed governor Lyle Gramley tells Bloomberg News, "the Fed is going to cut rates a half percentage point."
What seems global also feels local. At Saturday's Times Festival of Reading held on the campus of USF St. Petersburg, political-economic historian and author Kevin Phillips spoke before several hundred people appreciative of his skewering of American leaders who drove us into this mess. Phillips, author of the prescient book "Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism," won ample applause for his chronicling the lack of leadership or understanding of the crisis by President Bush, President Bill and Hillary Clinton (dubbed "Mr. and Mrs. Citigroup"), Treasury Secretary Hank Paulson and Robert Rubin as well as both Greenspan and Bernanke. One person from Saturday's audience stood up and asked Phillips, who once worked for Richard Nixon, if he would consider rejoining the government to help in this crisis. Phillips declined, signed some of his books, then left to go visit his 97-year-old mother.
-- Robert Trigaux, Times Business Columnist
Wake up! Grab your coffee and start a new daily habit of checking the
Venture blog. Just as your workday begins, business columnist Robert
Trigaux dishes his take on the latest news and views relevant to Tampa
Bay. Throughout the business day, Trigaux and his fellow journalists
bring you events, people, deals, triumphs and failures across the
Tampa Bay economy. It's an inside look at a most elusive species: our
business movers and shakers.
Robert Trigaux has worked as a St. Petersburg Times business columnist,
editor and reporter since 1991. He has covered business issues since the
late 1970s in Florida, Washington, D.C., London and New York. His 
Doesn't all this financial mess make you wonder if the economy was crashed on purpose - there's just tooooo much wrong with it - if there's no more middle class, the ruling elite could have world dominance much easier :)
Posted by: JB | October 27, 2008 at 08:51 AM