There are absolutely no strong fundamentals for this stock market today, regardless of what Bush, Paulson and Bernanke say, for it is an artificially propped up stock market ~ based on wishful thinking and Paulson's Plunge Protection billions from the treasury whose aim is to create the facade or perception of financial stability when none exists.
Bernard Wiener said it perfectly in his Crisis Papers ~ " I think key officials inside the Administration knew that the financial system was swirling inside the economic toilet bowl and would eventuate in a massive meltdown; after all, there were numerous economists, inside and outside the government, who more than a year ago were warning about the housing bubble getting ready to burst, with disastrous impact on the availability of credit ..... But, in this scenario, the CheneyBush higher-ups believed that, with luck, denial and a helluva lot of deficit financing, they could delay the inevitable collapse until after the election.... The catastrophe would then happen on Obama's watch, making sure to cripple all his "liberal" plans and programs. Fixated on solving the economic crisis and unable to fulfill much of what he promised (and probably having to raise taxes for many), Obama and his Democratic majority in Congress would become highly unpopular and the Republicans would be poised for victory in the 2010 congressional elections and might well be able to take back the White House in 2012." www.crisispapers.org
The economy collapsed a little ahead of schedule for the Republicans but the strategy remains the same ~ don't let the stock market fully collapse until after January 20th and most certainly do not let the public fully know the extent of the economic damage until Obama is officially in office.
Robert Reich, who should have been selected Secretary of the Treasury, is correct in calling this the great crash of 2008 ~ "If this isn't a Great Crash I don't know how to define one. Stocks were down another 7 percent today. Since the peak of last year, major stock indexes have dropped 47 percent. We're in range of the Great Crash of 1929. Why is the Great Crash of 2008 happening? First, because investors are beginning to understand the enormity of the bubble economy that began to form in the late 1990s when all constraints were lifted on borrowing in order to buy everything that was assumed to be increasing in value -- starting with houses and including securities and shares of stock themselves."
Reich correctly identifies the major problems ~ So-called "margin requirements," first instituted in the wake of the Great Crash of 1929, were all but abandoned, as big banks and hedge funds found ways around them...Even more important, investors are starting to fathom the emptiness of American consumers' wallets. Retail sales last Friday and Saturday - the first days of the Christmas buying season - were disappointing. Had retailers not discounted to the point of taking losses, sales would have been abysmal. In other words, consumers have gone on strike." http://www.truthout.org/120208C
Yes, consumers have gone on strike because their credit cards are tapped out, they are deeply in debt, they're jobs are in jeopardy and they are increasingly just trying to survive. For example ~ The percentage of people who are two months behind on their mortgages shot up 4% in the third quarter from the same period last year, according to credit reporting agency TransUnion LLC.
Obama must tell the American people the full extent of what we are facing economically before January 20th ~ or this crash and resultant depression will be his, not Bush's, and he will suffer the consequences in 2010.
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