Korean Job Discussion Forums

[Underwaterbob]

Sorry, this is completely off-topic but I'm mesmerized by mises avatar. Did Fox News seriously run that?

[OneWayTraffic]

[mises]

From the mouth of the horse, or more specifically, from San Francisco Fed President Janet Yellen:

[jim_we]

It's barely started! And going to get BAD!

[OneWayTraffic]

Lehmann brothers is in dire straits right now.

[OneWayTraffic]

And there she goes. This will take far longer than 6 months to shake out.

[Gatsby]

[OneWayTraffic]

Gatsby: Anything useful to add? Some market commentary perhaps?

I think that this will blow over. But it will take a year for most people to fully track the damage and then a few years recovering. But like the busts of 2000,1987, 1974 and so on; there will be permanent effects.

If nothing else we will see laws enacted outlawing this kind of foolishness. Not that that will stop a new generation of people from inventing a totally new kind of foolishness.

[Pluto]

Before anything gets better the real estate market is going to have to find a bottom; everything seems to be tied to real estate. Once prices are low enough, investors will rush to buy these properties at fire sale prices and seek more credit. This will, hopefully, lead to a credit expansion as real estate assets begin appreciating again. How long this will take is anyone's guess, but it seems like it's going to be at least a long while.

The FOMC is also planning another rate cut later this month. I've got no idea why the Fed thinks we can just print our way out of this mess. This is a credit/market problem and not a monetary/liquidity problem.

[OneWayTraffic]

And another 80 Billion down the drain. At least the government gets a majority stake in a very good and solid company. (Except for that whole debt insurance thing-AIG is well respected and most of its divisions are sound.)

Next?

[bacasper]

Nobel Prize Winning Economist: Crisis As Bad As Great Depression Or Worse

Former chief economist for the world bank says �you have to be in fantasy land to say that everything is fine�

Steve Watson
Infowars.net
Wednesday, Sept 17, 2008

Two time Nobel-prize winner and former chief economist of the World Bank, Joseph Stiglitz has warned that the current financial crisis will continue for at least another eighteen months and in many ways represents a worse situation than the one faced by Americans during the great depression of the 1930s.

�You can paper things over for a while but eventually you have to face reality.� Stiglitz told the nationally syndicated Alex Jones show yesterday.

�This is clearly the most serious problem since the great depression and in some ways worse in terms of the financial institutions.� Stiglitz commented, referring to the fact that lenders are unwilling to take risks to finance each other because they no longer have complete access to their own undertakings let alone those of other institutions.

�The reason, in part, is that while some of the same problems that occurred during the great depression and have occurred since, such as excessive leverage, pyramid schemes, bubbles, have happened before, the so called innovation of Wall Street, the financial innovations, that were supposed to manage risk, created a kind of non transparency that is now so great that no one knows exactly the magnitude of the risk they face.�

�It is particularly bad because our financial institutions are based on trust, you put the money in the bank and you trust that you can get your money out, so trust is absolutely essential for the functioning of our financial markets and the functioning of our economy.� he continued.

�The problem is that much of the news on what is going on in the financial markets comes from those who are making money out of the financial markets. So if you were one of the people involved with Lehman Brothers or AIG, you�re going to be talking up the economy. The head of Lehman Brothers was quoted last April as saying we have turned the corner, the economy is on the uptick. And the same thing goes for the president and the secretary of treasury.�

�The fact is that they are involved in salesmanship.�

Describing the current situation as a �top down crisis�, Stiglitz also cited the $3 trillion cost of the Iraq war as a key factor in the economic downturn, saying it has increased the budget deficit and consumed resources that would otherwise promote growth.

�This is the first war in American history that has been totally financed on the credit card� For the last five years as the war has gone on we have been a debt economy. It is the first war since the revolutionary war that we have had to turn to foreigners to finance, 40% of our national debt is now being financed by foreigners� Even as we went into the war we had a big deficit, and yet the president called for tax cuts for upper middle class Americans.� he said.

�And there is another level of trust, those in other countries have to have trust that the American economy is working well, they have to trust that when the president says everything is going well, it is. This administration has really burned that trust, the president said there is no problem, there�s just a few too many houses been built. Well if that is the level of analysis the Untied States is giving about the nature of its economic problems, no wonder everybody around the world is losing confidence. �

Stiglitz is no stranger to positioning himself in opposition to the establishment on the economic front. In October 2001 he caused controversy when he exposed rampant corruption within the IMF and blew the whistle on their nefarious methods of inducing countries to fall under their debt before stripping them of sovereignty and hollowing out their economies.

�It is clear that the Bush administration is not responding to these problems, partly because the problems are of their own making.� Stiglitz asserted.

Over the next twelve months, Stiglitz predicts that house prices will continue to fall, more mortgages will go into foreclosure and more financial firms will be put into crisis.

�I am particularly worried about what I call the �real economy�. Basically when the financial system starts getting weak, it is not in a position to provide credit, to provide loans, to provide mortgages and that means in turn that housing prices are going to fall further, businesses are going to contract, unemployment is going to grow and it is a downward vicious cycle� I don�t want to be obsessively pessimistic but you have to be in fantasy land to say that everything is fine, and even to say that we have turned the corner. We�re still in the downward phase of this economic cycle. We should not anticipate emerging from this for a year and a half or longer.�

In a long term prediction 22 months ago, Stiglitz told listeners of the Alex Jones show that he believed a global economic crash would occur within 2 years. With major financial institutions now folding every week, others touting mergers just to stay afloat and stocks continually plummeting on a daily basis it seems that prediction is coming to pass.

Stiglitz stressed that in order to emerge from the crisis, the economy needs a stimulus, that really works, consisting of increased aid for local government, stronger unemployment insurance and more investment in infrastructure.

�I would take advantage of this particular time in order to stimulate our economy in ways that provide the basis of our longer term economic growth. If our economy is growing then we will be better able to manage some of this financial turmoil.� he concluded.

video at link

[mises]

[bacasper]

[RJjr]

I'm wondering how much longer it will be before commercial real estate becomes a major, major issue.

I was at a strip mall today, one that used to be totally full of businesses. The Wal*Mart on the very left and the grocery store on the very right are still there. Of the 18 or so stores in between, all of the ones on the Wal*Mart side of the strip mall had businesses, while all of the ones closer to the grocery store were closed down and empty with "For Lease" signs on the doors.

In an indoor mall near here, the biggest anchor store in the mall went bankrupt. The fourth biggest store in the mall is gone and the space is empty. In the past two or three weeks a mattress store and a video game store went out of business and it's empty where the stores used to be.

In a large two-story mall nearby, stores are closing. And in the past, the mall was 100% full of places to buy things. Now, a police station, a drivers license renewal office, and a big mall security center are at some of the prime locations in the mall. An army recruitment office is at the indoor mall I mentioned earlier and might also be at this large mall too.

And, of course, banks are failing. With crime on the increase, hopefully I can buy a closed bank office cheaply, so I can start a small business and have a vault in which to put my merchandise before I go home.

[mises]