[DEBATE] : Dow Plunges More Than 300 Points on Grim Outlook + Fed Chief Backs Quick Action to Aid Economy

[Yoshie Furuhashi]

On Jan 17, 2008 8:42 PM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Jan 17, 2008, at 7:10 PM, Yoshie Furuhashi wrote:
>
> > Yes, the trouble of US economy is worse than some, like Doug Henwood,
> > initially argued.
>
> No one, not even you, really knows what awaits the U.S. economy.

In this particular case, though, it feels like a chronicle of a bust
precisely foretold, for everyone, from Marxists to economists to the
MSM, knew the timing and volume of waves of mortgage interest rate
resets, the degrees of American indebtedness, etc.: "Deutsche Bank
analysis shows only about $80 billion, or 1 percent of mortgage debt
this year will switch to adjustable rate based largely on prevailing
interest rates; some $300 billion of mortgage debt will be similarly
adjusted in 2006; portion will soar in 2007, with $1 trillion of
nation's mortgage debt -- or about 12 percent of it -- switching to
adjustable payments" (David Leonhardt and Motoko Rich, "The
Trillion-Dollar Bet: Homeowners Take Risks in a Bid for Lower Mortgage
Payments,"
<http://query.nytimes.com/gst/abstract.html?res=F30E13FE3C5F0C758DDDAF0894DD404482&incamp=archive:search>,
16 Jun. 2005, p. C1).  I remember posting this article to LBO-talk
when it came out:
<http://mailman.lbo-talk.org/2005/2005-June/013686.html>.

> It's
> funny how people think the stock market is a brilliant prognosticator
> when it's down 300 points

Are investors just greedy, or is the proposed stimulus plan -- its
size, its kind, its timing, etc. -- really not up to the task, and
they are right to be alarmed?  I think the latter.

<http://www.nytimes.com/aponline/business/AP-Wall-Street.html>
January 18, 2008
Stocks Fall After Bush Announces Plan
By THE ASSOCIATED PRESS

Filed at 3:14 p.m. ET

NEW YORK (AP) -- Wall Street extended its decline Friday as skittish
investors unable to hold on to much optimism about the economy drew
little comfort from President Bush's stimulus plan.

Investors pulled back from a big early advance, with the major indexes
trading mixed as Bush began to speak. By the time the president
finished announcing a plan for about $145 billion worth of tax relief,
the indexes were well into negative territory.

''It's disappointed in the size of the economic growth package. Wall
Street's showing its displeasure,'' said Kim Caughey, equity research
analyst at Fort Pitt Capital Group in Pittsburgh. ''Honestly, I think
the institutional investors understand the limits to the government's
ability to enact economic change.''


-- 
Yoshie
<http://montages.blogspot.com/>