The 1929 & 2007 Bear Market Race To The Bottom Week 54 of 149
Mark J. Lundeen
Mark J. Lundeen
Week 54 in the Dow Jones’ Race to the Bottom between 1929 and 2007 bear markets are as follows:
1929 : -36.59% from its all time weekly closing high price of 380.33
2007 : -40.55% from its all time weekly closing high price of 14,093.08
For the third week in a row, the 2007 bear leads the 1929 bear.
I anticipate a bounce sometime soon. But I said that two weeks ago and it hasn’t happed yet. We know that Treasury Secretary Paulson has $700,000,000,000 to spend on managing our “free markets.” On what and how much has he spent so far? I don’t know. If he has devoted most of his resources on the stock market and this is all we get, then 2007 is really going after 1929 for the record. It is likely that the stock market is not priority #1 for the US Treasury.
“Gotta save the banks.”
Former Federal Reserve Chairman Greenspan testified before Congress this week. Under oath he confessed he never knew much of anything about economics or money. As usual, the Congress believed every word Greenspan said.
The table below is not intended to be a prediction on my part. I’m simply supplying the various mile stones the DJIA 2007 bear must pass to exceed past bear markets. Cut it out and keep it as a handy guide for the specific Dow Levels needed for the 2007 to pass the other eight historic -40% bear markets.
Before this is all over I suspect that the 2007 bear market will be moving up from its current #9 position on the table below.
As per the table above, for the 2007 bear to rise up from #9 to the #8 spot, the weekly closing price of the Dow Jones Industrials must fall below 7799.61. If Dow takes out 7799.61, it is only 439.68 point away from becoming #4 on the above list. In the current market, the Dow has had hourly swings as large as that. I think making the #4 spot will prove to be an easy thing for the 2007 DJIA Bear to do.
After that things will start to get harder. Since 1885 the Dow has closed 50% below its previous all time highs only 3 times before and has not done so since 1942. But then maybe be we are due for a -50% bear market as we have not had one since 1942. Until the 2007 bear takes out the -50% lows of 1896 and 1942, one must assume that the current bear market will be a bad bear, but nothing catastrophic.
Note For the Record: Mark Lundeen does not want a devastating bear market in the next two years. However, in full view of Congressional Market Oversight Committees and under the supervision of Government Regulatory Agencies, things were done that I believe will make a historic bear market inevitable. If you have a problem with this bear market, contact Washington, not Mark Lundeen.
Dow Jones -40% Declines From 1885 to 2008 is the article that inspired this race of 1929 & 2007 Bear Markets. You may want to read that article to understand my “BEV Chart” Above.
http://www.gold-eagle.com/editorials_08/lundeen102508.html
Europe on the brink of currency crisis meltdown
The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.
The crisis in Hungary recalls the heady days of the UK’s expulsion from the ERM.
By Ambrose Evans-Pritchard
The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump.
Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.
The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.
They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.
Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.
Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.
Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.
Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.
Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.
Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.
The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns.
The IMF’s experts drafted a report two years ago – Asia 1996 and Eastern Europe 2006 – Déjà vu all over again? – warning that the region exhibited the most dangerous excesses in the world.
Inexplicably, the text was never published, though underground copies circulated. Little was done to cool credit growth, or to halt the fatal reliance on foreign capital. Last week, the silent authors had their moment of vindication as Eastern Europe went haywire.
Hungary stunned the markets by raising rates 3pc to 11.5pc in a last-ditch attempt to defend the forint’s currency peg in the ERM.
It is just blood in the water for hedge funds sharks, eyeing a long line of currency kills. “The economy is not strong enough to take it, so you know it is unsustainable,” said Simon Derrick, currency strategist at the Bank of New York Mellon.
Romania raised its overnight lending to 900pc to stem capital flight, recalling the near-crazed gestures by Scandinavia’s central banks in the final days of the 1992 ERM crisis – political moves that turned the Nordic banking crisis into a disaster.
Russia too is in the eye of the storm, despite its energy wealth – or because of it. The cost of insuring Russian sovereign debt through credit default swaps (CDS) surged to 1,200 basis points last week, higher than Iceland’s debt before Götterdammerung struck Reykjavik.
The markets no longer believe that the spending structure of the Russian state is viable as oil threatens to plunge below $60 a barrel. The foreign debt of the oligarchs ($530bn) has surpassed the country’s foreign reserves. Some $47bn has to be repaid over the next two months.
Traders are paying close attention as contagion moves from the periphery of the eurozone into the core. They are tracking the yield spreads between Italian and German 10-year bonds, the stress barometer of monetary union.
The spreads reached a post-EMU high of 93 last week. Nobody knows where the snapping point is, but anything above 100 would be viewed as a red alarm. The market took careful note on Friday that Portugal’s biggest banks, Millenium, BPI, and Banco Espirito Santo are preparing to take up the state’s emergency credit guarantees.
Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.
“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.
A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.
The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?
Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992.
“This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon.
Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight from Austria – the country, as it happens, that set off the global banking collapse of May 1931 when Credit-Anstalt went down – and from a string of Club Med countries that rely on foreign funding to cover huge current account deficits.
The latest data from the Bank for International Settlements shows that Western European banks hold almost all the exposure to the emerging market bubble, now busting with spectacular effect.
They account for three-quarters of the total $4.7 trillion £2.96 trillion) in cross-border bank loans to Eastern Europe, Latin America and emerging Asia extended during the global credit boom – a sum that vastly exceeds the scale of both the US sub-prime and Alt-A debacles.
Europe has already had its first foretaste of what this may mean. Iceland’s demise has left them nursing likely losses of $74bn (£47bn). The Germans have lost $22bn.
Stephen Jen, currency chief at Morgan Stanley, says the emerging market crash is a vastly underestimated risk. It threatens to become “the second epicentre of the global financial crisis”, this time unfolding in Europe rather than America.
Austria’s bank exposure to emerging markets is equal to 85pc of GDP – with a heavy concentration in Hungary, Ukraine, and Serbia – all now queuing up (with Belarus) for rescue packages from the International Monetary Fund.
Exposure is 50pc of GDP for Switzerland, 25pc for Sweden, 24pc for the UK, and 23pc for Spain. The US figure is just 4pc. America is the staid old lady in this drama.
Amazingly, Spanish banks alone have lent $316bn to Latin America, almost twice the lending by all US banks combined ($172bn) to what was once the US backyard. Hence the growing doubts about the health of Spain’s financial system – already under stress from its own property crash – as Argentina spirals towards another default, and Brazil’s currency, bonds and stocks all go into freefall.
Broadly speaking, the US and Japan sat out the emerging market credit boom. The lending spree has been a European play – often using dollar balance sheets, adding another ugly twist as global “deleveraging” causes the dollar to rocket. Nowhere has this been more extreme than in the ex-Soviet bloc.
The region has borrowed $1.6 trillion in dollars, euros, and Swiss francs. A few dare-devil homeowners in Hungary and Latvia took out mortgages in Japanese yen. They have just suffered a 40pc rise in their debt since July. Nobody warned them what happens when the Japanese carry trade goes into brutal reverse, as it does when the cycle turns.
The IMF’s experts drafted a report two years ago – Asia 1996 and Eastern Europe 2006 – Déjà vu all over again? – warning that the region exhibited the most dangerous excesses in the world.
Inexplicably, the text was never published, though underground copies circulated. Little was done to cool credit growth, or to halt the fatal reliance on foreign capital. Last week, the silent authors had their moment of vindication as Eastern Europe went haywire.
Hungary stunned the markets by raising rates 3pc to 11.5pc in a last-ditch attempt to defend the forint’s currency peg in the ERM.
It is just blood in the water for hedge funds sharks, eyeing a long line of currency kills. “The economy is not strong enough to take it, so you know it is unsustainable,” said Simon Derrick, currency strategist at the Bank of New York Mellon.
Romania raised its overnight lending to 900pc to stem capital flight, recalling the near-crazed gestures by Scandinavia’s central banks in the final days of the 1992 ERM crisis – political moves that turned the Nordic banking crisis into a disaster.
Russia too is in the eye of the storm, despite its energy wealth – or because of it. The cost of insuring Russian sovereign debt through credit default swaps (CDS) surged to 1,200 basis points last week, higher than Iceland’s debt before Götterdammerung struck Reykjavik.
The markets no longer believe that the spending structure of the Russian state is viable as oil threatens to plunge below $60 a barrel. The foreign debt of the oligarchs ($530bn) has surpassed the country’s foreign reserves. Some $47bn has to be repaid over the next two months.
Traders are paying close attention as contagion moves from the periphery of the eurozone into the core. They are tracking the yield spreads between Italian and German 10-year bonds, the stress barometer of monetary union.
The spreads reached a post-EMU high of 93 last week. Nobody knows where the snapping point is, but anything above 100 would be viewed as a red alarm. The market took careful note on Friday that Portugal’s biggest banks, Millenium, BPI, and Banco Espirito Santo are preparing to take up the state’s emergency credit guarantees.
Hans Redeker, currency chief at BNP Paribas, says there is an imminent danger that East Europe’s currency pegs will be smashed unless the EU authorities wake up to the full gravity of the threat, and that in turn will trigger a dangerous crisis for EMU itself.
“The system is paralysed, and it is starting to look like Black Wednesday in 1992. I’m afraid this is going to have a very deflationary effect on the economy of Western Europe. It is almost guaranteed that euroland money supply is about to implode,” he said.
A grain of comfort for British readers: UK banks have almost no exposure to the ex-Communist bloc, except in Poland – one of the less vulnerable states.
The threat to Britain lies in emerging Asia, where banks have lent $329bn, almost as much as the Americans and Japanese combined. Whether you realise it or not, your pension fund is sunk in Vietnamese bonds and loans to Indian steel magnates. Didn’t they tell you?
I wonder what ever happened to the idea of abstinence? Then you would not have to notify all your partners about giving them a possible incurable disease.
You've Got Mail! You've Got Herpes!
By Meredith F. Small, LiveScience's Human Nature Columnist
posted: 24 October 2008 10:35
By Meredith F. Small, LiveScience's Human Nature Columnist
posted: 24 October 2008 10:35
Email has enhanced our lives by making communication faster and cheaper, and more available to a wide network of others. Email can also get us into a lot of trouble. Hasn’t everyone blithely sent a personal, intimate email off across cyberspace only to realize it was headed down the electronic superhighway to the wrong person, usually the exact wrong person? Hasn't everyone had some embarrassing email sent to one person who then, without permission, forwarded it to one or more people? An e-postcard program developed by the Internet Sexuality Information Service of Oakland, Calif., has introduced another kind of embarrassing email — notification of exposure to a sexually transmitted disease — that just might be showing up in your email soon, depending where you've been lately. The program, accessed at http://www.inspot.org/gateway.aspx, will allow you, if you have an STD such as syphilis, gonorrhea or Chlamydia, or are HIV positive, to notify by email anyone you have had sex with, that is, if you have their email address. Of course, notifying other partners is nothing new. Making a list of partners and checking it twice and then contacting everyone by phone, letter or in person has been the bastion of the Public Health Service since 1930s. The difference is that a public health official was keeping track, butnow it can be done with less confrontation, as long as you use your computer at home alone. It's no surprise that the public health service has decided to work over the Internet to reach the widest circle of people. They, more than anyone, know the compelling nature of human sexuality because they have to deal with the aftermath. Nineteen million cases of STDs are reported each year and the idea is to treat everyone who has been exposed to stave off their spread. But what these statistics also underscore is how often people have unprotected sex. Faced with the possibility of pregnancy for heterosexual mating, and the possibility of disease, including the deadly HIV virus, for everyone, how can people not use condoms? I suppose we can blame evolution for making the human sex drive so compelling that in the heat of the action we all make stupid mistakes. The drive is there in the first place, or course, so that we are compelled to have sex and pass on genes. But didn’t evolution also bring us big brains and thought processes that are supposed to keep us out of trouble? Apparently not. Since sex education and all the notification on Earth doesn't really stop people from having unprotected sex, maybe the other compelling urge that health officials might consider is the seduction, for some at least, of courting danger. Danger is part of fear, and fear physiologically ramps up all the biological systems, putting the body on high alert. Coupled with the urge for sex, that makes for a dangerous mental and physical cocktail, one that often ends in disaster. But we never stop, and chances are that although an e-card reminder might be a wake-up call for some, for others it might unfortunately be a reminder of the high that comes with sex with the wrong people.
Thousands of protesters attacking UN in east Congo October 27, 2008 - 8:17am
By MICHELLE FAUL Associated Press Writer
GOMA, Congo (AP) - Thousands of protesters attacked the United Nations' eastern Congo headquarters on Monday, expressing anger that a U.N. peacekeeping force has been unable to protect them from a rebel attack that has forced tens of thousands to flee.
Protesters lobbied stones and rocks over the wall surrounding the U.N. offices in the provincial capital of Goma. U.N. spokeswoman Sylvie van den Wildenberg said cars were being damaged and windows were being shattered.
Meanwhile, soldiers fled fighting in what appeared to be a major retreat of government forces being attacked by rebels of renegade Gen. Laurent Nkunda.
Reporters watched the soldiers struggle to make a way through thousands of refugees also fleeing along the main road south from a major army base seized by rebels toward Goma.
Back-to-back wars in Congo spilled into half a dozen neighboring countries and destroyed much of Congo itself by 2002. But fighting has continued in the east, where several militias operate.
By MICHELLE FAUL Associated Press Writer
GOMA, Congo (AP) - Thousands of protesters attacked the United Nations' eastern Congo headquarters on Monday, expressing anger that a U.N. peacekeeping force has been unable to protect them from a rebel attack that has forced tens of thousands to flee.
Protesters lobbied stones and rocks over the wall surrounding the U.N. offices in the provincial capital of Goma. U.N. spokeswoman Sylvie van den Wildenberg said cars were being damaged and windows were being shattered.
Meanwhile, soldiers fled fighting in what appeared to be a major retreat of government forces being attacked by rebels of renegade Gen. Laurent Nkunda.
Reporters watched the soldiers struggle to make a way through thousands of refugees also fleeing along the main road south from a major army base seized by rebels toward Goma.
Back-to-back wars in Congo spilled into half a dozen neighboring countries and destroyed much of Congo itself by 2002. But fighting has continued in the east, where several militias operate.
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