BOOM! CRASH!

[Maraclea2]

Posted: 9/15/08 at 7:32am

This isn't really a surprise, rumors have been flying for weeks that at least one more financial giant would fall.
But two in the same weekend is a shock.

Break out those piggynanks kids, it's gonna be a bumpy recession.
Is AIG next?

[PalJoey]

Posted: 9/15/08 at 8:20am

And just this past March, March, Lehman Brothers CEO Richard Fuld was awarded a $22 million bonus for 2007.

Nice work if you can get it...

[best12bars]

Posted: 9/15/08 at 8:51am

I kept saying last year (even on BWW) that we were heading right into a depression (not recession) from the horrible botched real estate situation.

...and that the housing market was 3 times as high as it should be in order for people to actually be able to afford the houses they were in.

Yes, I'm wagging my finger now and saying, "I told you so."

This ain't over yet. Housing prices are STILL too high. No more "phony money" loans, where you pay a fraction of what you should be paying for 18 months and then watch your mortgages triple. That was designed for a house-flipping market, where you sold your house before the price went up. But that's a Pyramid Scheme. I can't believe the banks didn't see it. In truth, I'm sure they saw it, and didn't care, as long as they were making their "phony money" on paper. "Look, my $50K home is now worth $800K!" Well, no, it isn't. Because that's not a price that anyone can actually afford to pay off. Ever.

America isn't going to start recovering as a nation until it starts making THINGS again. We don't make them anymore. We make fake money by telling you "in theory" how much something we already own is worth, but the tangible "things" we used to make and sell are nearly all being made overseas now. Cars, toys, even DVDs and their packaging. The only people getting rich are the Americans who own those companies, who are farming all of this work out overseas because it's cheaper. So, 5 people who own the companies get rich, while the rest of us stopped making "things" and just told the world that our houses were worth millions when they weren't. And meanwhile the sweat shops overseas are on over-time.

I'm no expert in finances, but I can see the logic of it... and our national economy is in serious trouble.

[PalJoey]

Posted: 9/15/08 at 10:06am

I'm not an economist, but the real villain seems to be deregulation, which is of course a tenet of conservativism and Republicanism (although it has been supported by way too many Democrats in Congress).

It will be interesting to see if this becomes an election issue. Obama took the first step yesterday in placing blame on Bush and therefore on McCain. (But why does he have to be such a pUssy about blaming McCain?):

===

"The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren't minding the store," Obama said in a statement. "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression."

"I certainly don't fault Sen. McCain for these problems," Obama said, "but I do fault the economic philosophy he subscribes to."
Obama blames Wall St. crisis on Republican policy

[Maraclea2]

Posted: 9/15/08 at 10:09am

Washington Mutual is next.
I give them a week until bankruptcy.
The dominoes are falling.

[best12bars]

Posted: 9/15/08 at 10:28am

This is going to become THE election issue.

I just hope there isn't a panic today... or this week.

Everyone keeps saying this will all end when the housing market recovers.

The housing market ISN'T going to recover. It's still too high. It's going to drop for another year now, at least.

Do the math yourselves. The house you own should cost you around three times your annual salary. Pretty simple math.

If it doesn't (and most people's are MUCH more expensive now, especially if they bought in the last 5 years), there is no way you can afford the house you have. If you are "affording" it now, you probably have a "fake money" loan that includes ARMs or interest-only loans, or a combination of both.

Until you can actually afford to buy the good old-fashioned 30-year fixed, this isn't over. Which means housing prices must continue to fall.

This is a major "adjustment" in the market, but since so much of our economy is based on bloated, unrealistic real estate "paper money," it's collapsing now, in front of our very eyes. And the banks should have known better. THEY can do the math. Where did they think this "fake buck" was going to stop?

They just turned a greedy eye, and told us to go ahead and buy a $200K home for $800K, and "look how much money you have now! See how much we all made?"

God help us.

[Unknown User]

Posted: 9/15/08 at 10:32am

I'm a history buff. I used to beg my mom to tell me stories what the depression was like. Now I get to see for myself.

WaMu will probably go sooenr than later- with the shock of two big firms collapsing, people will be senselesly yanking their money out of the markte this week. We could see a few surprises.

[nygrl23]

Posted: 9/15/08 at 10:38am

The news hit me like a ton of bricks, even as we've all seen this coming, and I'm not even sure I totally comprehend everything, as much as I'm trying to read up on it. Bipartisanship and hockey moms? Please. How about stopping the locomotive before it heads over the cliff?

[Unknown User]

Posted: 9/15/08 at 10:38am

"CHICAGO (AP) - Democratic presidential nominee Barack Obama said Monday the upheaval on Wall Street was "the most serious financial crisis since the Great Depression" and blamed it on policies that he said Republican rival John McCain supports.
"This country can't afford another four years of this failed philosophy," Obama said after the shock-wave announcements that financial giant Lehman Brothers was filing for Chapter 11 bankruptcy while titan Merrill Lynch was being bought by Bank of America for about $50 billion.

Obama's statement, issued as he prepared to fly to Colorado to begin a swing through contested Western states, was intended to serve two purposes: to link McCain with the unpopular presidency of George W. Bush and to express sympathy with the anxiety of most Americans who say the economy is issue No. 1 in the election.

"The challenges facing our financial system today are more evidence that too many folks in Washington and on Wall Street weren't minding the store," Obama said in a statement. "Eight years of policies that have shredded consumer protections, loosened oversight and regulation, and encouraged outsized bonuses to CEOs while ignoring middle-class Americans have brought us to the most serious financial crisis since the Great Depression." "



Breitbart Updated On: 9/15/08 at 10:38 AM

[best12bars]

Posted: 9/15/08 at 10:39am

If people start freaking out and transferring/withdrawing money this week, we could have a MAJOR crash, as opposed to just a bad, downward spiral.

We have to stop using the "R" word (recession) and go right past what we've already been living in, straight to the "D" word.

Tonight we're gonna party like it's 1932.

[nygrl23]

Posted: 9/15/08 at 10:45am

The media needs to start focusing on the Depression and draw the significant parallels of the dangers of panic. I keep thinking of train imagery for some reason...like the Republicans got caught text messaging at the wheel. For eight years. Agh.

[Unknown User]

Posted: 9/15/08 at 10:45am

Besty my local news this morning totally caged this report as "How will it effect YOU?" and the "Cross-talk" between the anchors consisted of "I've already called MY broker and told them to get me out of any financials!" and "ugh! I can just imagine what this will do to my 401K- I guess I should switch to all cash till this blows over?" GREAT ADVICE!

When of course, the damage has been done and random selling will only make things worse.
Updated On: 9/15/08 at 10:45 AM

[Maraclea2]

Posted: 9/15/08 at 10:46am

In one weekend we went from 5 investment banks to 2.
You can't diminish the astronomical impact this will have as the trickle down effect begins.

Simply unprecedented.

The good news is that at least Morgan and Goldman seem to be sturdy.

I don't think people are going to start withdrawing just yet, these are business banks (for the most part) not consumer banks.
If WaMu goes however, prepare for the worst.

[best12bars]

Posted: 9/15/08 at 10:52am

What about banks like

(gulp)

Wells Fargo

or Internet banks like

(gulp)

ING?

I'm thinking of buying a bigger mattress with an extra zipper on the side.

I can't believe these financial advisors are telling their clients to withdraw their money! They're supposed to know better!! Don't you have to go to school to be a financial advisor? That would trigger a crash.

[Unknown User]

Posted: 9/15/08 at 10:55am

No, these were the blow-dried airhead local anchors.

[best12bars]

Posted: 9/15/08 at 10:56am

Oh, they were doing it on their own!

Stupid anchors.

[Yawper]

Posted: 9/15/08 at 11:05am

"I certainly don't fault Sen. McCain for these problems," Obama said, "but I do fault the economic philosophy he subscribes to."

Because it was Phil Gramm who wrote and pushed through the deregulation legislation. He tacked it onto the budget package passed in 1999 (which Clinton, already on his way out, signed).

[best12bars]

Posted: 9/15/08 at 11:16am

If you think for one minute this was ONE person's doing, even a president, you're mistaken.

I don't blame Bush, Clinton, Greenspan, or any one senator, financial advisor, Republican or Democrat, congressman or bank.

This is a vast group... a generation... of lazy, starry-eyed Americans. An entire mindset of shrewd paper-jugglers, who decided they could all get rich off of nothing at all. Fake money. The puffed-up price of housing and real estate.

Fake "supply and demand." A pyramid scheme.

"Well make you think you're richer than you are, and then devise a financial plan to make you think you can afford to do this, and we all get fake-richer together."

Updated On: 9/15/08 at 11:16 AM

[nygrl23]

Posted: 9/15/08 at 11:31am

Oh, it's never ONE person. It's always an ideology started up by one or two or ten people who prey on the egos of that vast group.

[Maraclea2]

Posted: 9/15/08 at 11:50am

It's greed. Plain and simple. It's a bi-partisan affliction.

I'm sure both sides will spin it to fault the other. But that's just politics.

We have a republican president and a democratic congress. There's enough blame to go around for everyone.

[blueroses]

Posted: 9/15/08 at 11:54am

Relax. It's not real. Remember, Hillary is manufacturing all of this to f-ck with us.

[best12bars]

Posted: 9/15/08 at 11:55am

I just hope they don't waste everyone's time pointing fingers, and they actually start talking about the next steps needed to pull out of this.


Oh, who am I kidding?

They don't have answers, so they're just going to finger-point.

I can't wait to turn the TV off.


EDIT: OMG, blueroses, when did you turn into Pam Grier?! Love the foxy new av.

Updated On: 9/15/08 at 11:55 AM

[The Ghost of Kringas]

Posted: 9/15/08 at 12:10pm

ARE housing prices still too high, though? I thought they'd been driven well below value because of the mess of the economy. I'm not saying that flipping didn't artificially inflate the market, but I don't see how much lower prices can go.

As for pulling your money out, I don't know what I'd do if I actually had money. After September 11, people were told to hold tight, and most people I know who didn't liquidate things lost a lot more money than those who did.

[nygrl23]

Posted: 9/15/08 at 12:13pm

Demand is down in most housing markets and rental demand is up, so rents are increasing everywhere.

[best12bars]

Posted: 9/15/08 at 12:22pm

Yes, Ghost, housing prices are still way too high. The simple math of "average income vs. average housing" is still not adding up. The other shoe needs to drop.

They can go a lot lower. Back down to where they SHOULD be.

The only people saying they're down far enough today are the ones still deeply in denial about how out-of-control things are.

Oh, wait... that's almost everyone then.

Find the average salary for any given area. Multiply by 3. That's how much the average house should go for in that area. If it's more than that, the average buyer can't afford it, without taking one of those "phony money" fake-loans that can't be paid off.

There's no real market then. Just the fake one. The pyramid scheme... which would start all over again.

Over the next year, if my non-professional guesstimation is correct... you'll hear the sound of that other shoe dropping.

And it won't be pretty.