Japanese stock market just opened...

[thewiseguy]

Yikes...

Dropped more than 3 percent in 2 minutes...

The global economy is tanking. Some want to think this all has to do with the teabagers.

[MidwestTransplant]

1. It probably didn't drop 3%, it probably opened down 3%

[thewiseguy]

3. No it did drop another 150 points after openning---Now it is down 4% and dropping like a rock

[BillyJack]

2. Teabaggers aren't that powerful.....just stop with that meme.

There is something much greater happening worldwide. Pay attention.

[Skidmore]

4. Perhaps not all but the extremely wealthy and their politicians have used

teabaggers to force their agenda on this nation in particular by sheer intimidation.

[kenny blankenship]

5. Export nations depend on their best customers recovering to full health

Japan has a lot of problems right now (radiation, plate tectonics threatening to deposit them on bottom of the Pacific), and they absolutely need the US to get well soon.

When they get the news that our recovery isn't going to happen, they can't help but find it very discouraging.

[sendero]

6. What's really happening

.... is that there never was a recovery and now that the Fed has stopped pumping money into the economy with both hands things are returning to normal, i.e. dismal.

It won't be long now before all of the central banks begin their version of "quantitative easing" in one last-ditch effort to avoid what is absolutely inevitable, the recognition of default by entities that can never, ever, ever pay off the huge debts that they are carrying.

There won't BE a recovery until the bad debt is written off. And it eventually will, the can kicking has already lost most of its effectiveness and everyone knows it.

[dissidentboomer]

8. Please expound upon this can kicking and the bad debt. Whose debt is it? Please.....

[nadinbrzezinski]

10. Sovereign debt, aka nation state debt

and the last time we were in this shit... a lot of it was written off. (Bretton Woods)

[dissidentboomer]

11. Who should pay for this "debt"? Please....

[nadinbrzezinski]

12. The last time, during WW II, technically, it was wiped from the board

nobody paid.

A few out side economists are starting to talk about this as well... Rubini has mentioned that this is quite the instability

OF course the argument from the extreme right is... SEE IT'S THE SOCIALISM... no, quite a bit is coming from 2008...

IMO, while TARP was needed (as well as parallel matters all across western Europe) the second part, rein in the banks and do true stim packets and NOT cut taxes was not done.

Here a little more on this

http://www.huffingtonpost.com/2010/01/14/nouriel-roubini-arpitha-b_n_423116.html

And a basic econ on this matter from a textbook

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.67.2380&rep=rep1&type=pdf

[dissidentboomer]

14. How about the wars? Did they contribute? The tax cuts - Who did they benefit?

[sendero]

18. I'm not particularly..

... talking about the US re sovereign debt. Since we have the privilege of being the world's reserve currency, we really can't actually default.

Now, some consider printing money to pay debts as the same thing, but it's not really. Close, but not really.

The debt I am referring to is everywhere. The big banks in this country and many in Europe are insolvent at this very moment. In the US, the only thing that would return the banks to solvency is for real estate to recover and inflate, and that is simply not going to happen although the Fed gave it a serious college try.

Greece, Italy, Spain, Ireland and Portugal are all potential sovereign defaults. The big banks of Europe and to a lesser extent US banks hold this debt. If it actually defaults, they will take a "haircut" on their holdings of 30-50%. These banks are the walking wounded already, it will not be nice when it happens and many people I trust believe it is all but inevitable.

Real estate cannot recover because Americans are also deep in debt and when people can't spend money prices cannot rise. Additionally, demographics are solidly against increasing demand for real estate - as people retire and become empty nesters they need less house not more.

So there you have it - the trifecta of debt - consumers, bankers and countries. Never in history has a situation like this been finessed out of.

[nadinbrzezinski]

Why the last time around.. one third was wiped out

and it was one of the causes of WW II.. not one that is usually covered.

[dissidentboomer]

25. Uh huh. Ok. Thanks. As a non-banker, a person who has never defaulted or missed a payment, middle

class or upper middle class person who is not a politician, appointed bureaucrat, or military man, and did not benefit from any government loans - college or otherwise, I'm wondering whether I'm responsible for any of this. It seems to me that the wealthy, the bankers, politicians, the Department of Defense, and some who over spent and borrowed beyond their means are mostly responsible. Am I wrong?

[nadinbrzezinski]

27. It's not jsut the US. Actually, as bad as it sounds here,

we are golden. Greece, Italy and Spain might bring the eurozone down...

In the end... a lot of this debt will have to be wiped out. Which means all those subprime loans will have to go.

Lessons learned we need Glass Steagal back... for the same reason we had it originally here... (and the equivalents abroad)

We go through this craziness every so often. At this point nationalizing and reforming the financial sector is not crazy, or socialist or anything like that. And in a way we all pay... with a depression.

[sendero]

29. You're not.

.... but since the transfer of bankster debts to the Fed has already happened you are on the hook whether you like it or not.

If most Americans had a clue just how royally the banksters and the government has fucked everyone, they'd be mad. But in this country only bloody wankers understand things like economics.

[dissidentboomer]

30. Ah hah! I'd like a pound of wealthy banker flesh, PLEASE!!!!!

:evilgrin:

[sendero]

37. You and me both....

... our entire economic system has evolved into one whose sole purpose is to enable the rich to strip the assets of the poor and middle classes. It can't last forever and it is bound to end badly with some who thought they were invulnerable finding their heads on pikes.

[dissidentboomer]

39. I'm afraid so and they have convinced many otherwise bright people

that we can no longer afford to be a first world nation. WHAT THE fuck? That the people are somehow responsible because we DARED to educate our kids, go to doctors, own a home, and have a little steak, wine, pot, and sex once in a while! HOW DARE WE! That's for rich people! Shut up, peasant!

[nadinbrzezinski]

33. Fellow wanker...

:hi:

[nadinbrzezinski]

21. The wars have contributed, and quite a bit mind you

but quite a bit of the debt that was piled on was from 2008 on... and this is the screaming secret about it.





Realize to get out of a recession, you need to spend your way out of it. It is a weird thing, but that should be a SHORT TERM debt...

[dissidentboomer]

26. golly gosh! LOOK at that RED under the steady hand of Yalie bush, Jr.!

:rofl: ;)

[nadinbrzezinski]

32. And notice that last year it was already going down

not that this will matter with the kids down the hall. Why this WE NEED TO &((%()^ DEFICIT... is dumb. The austerity... watch, it will go up

[dissidentboomer]

35. That's my call, too. Sound and fury signifying

nothing.

[girl gone mad]

16. These were private debts.

They were made sovereign to a large degree in the bailouts, when the government transferred toxic garbage onto the public's balance sheet.

[dissidentboomer]

28. Oh my! Really?

:rofl: I'm sorry. I know you're right and I know these things. Just bored this evening.

[girl gone mad]

13. Correct. Years of hideous economic policy..

will now come back to bite us in the ass.

The banks should have been nationalized (pre-privatized if that makes it more palatable) and bondholders should have been forced to take haircuts.

That didn't happen. Quantitative easing was always destined to be an exercise in futility. One way or another, the malinvestments will come home to roost.

The only way out of this for the average person is for the government to finally reign in the financial sector and put more money into the real economy. The former is not going to happen as long as bank lobbyists and neoliberals control our government, the latter won't happen as long as corporate lobbyists, neoliberals, teabaggers and morons control our government.

[Imajika]

7. Baggers didn't cause this sell off...

Oh sure, they make things worse by preventing any chance of stimulating demand in the US, but there is far more going on. Today's sell off was far more about Europe. Too many nations with debt they have no ability to pay down let alone off. The debt contagion has spread to Italy.

[DCBob]

15. I think both had an effect.

bad news in both EU and US is a bad combination.

[Imajika]

20. Italy and Spain are falling off a cliff...

There is a really good diary on Kos discussing this.

http://www.dailykos.com/story/2011/08/04/1003080/-No-more-tomorrows-for-the-Euro

The Eurozone is in deep trouble. The market was mostly responding to what's going on in Europe - contagion is spreading.

But yeah, the baggers preventing any new stimulus hurts, but the markets factored that in from the moment they were elected in 2010.

[DevonRex]

31. Yes. And the ECB has blinders on and hasn't helped.

Germany bailed Greece out but can't bail everyone out. Then Japan manipulated the yen and here we are.

[sendero]

22. I agree sorta..

... the fact is that the world's economic situation has been precarious since 2008. All of the money-pumping by various central banks, mostly the fed, kept this ridiculous stock market party going.

There is no fundamental reason for stocks to have risen the last 3 years and they are about to give back their gains.

Any little trigger could have started the downturn, in this case is was mostly the Fed's ending of QE2 without announcing the start of a QE3. The debt ceiling debacle didn't help, but I don't believe it caused anything.

[kenny blankenship]

24. Maybe the debt ceiling debacle could be thought of as the end of the music

in a game of musical chairs. It's a signal to sit out. Only there aren't enough chairs, and the rush of insiders and wiseguys to sell first and sell quick to get out starts the general panic.

[sendero]

38. All crashes..

...are basically a "run for the exits". The whole thing really is "greed and fear" and once the fear sets in it is very hard to predict or control.

For 3 years the stock markets of the US have been riding a wave of prosperity not mirrored by the population at large. Companies can increase profits by trimming workforces but at some point all of the trimming that can be done is done - and if customers are financially pinched and cannot buy stuff eventually profits are squeezed.

Companies like everything in the capitalist system depend on GROWTH. Nobody makes bank selling the same amount they did last year. But that is what is happening now, the consumer is still very weak and the only sales gains possible are with very popular products or overseas.

I've been expecting this selloff for over a year now. Whether or not it continues depends on the actions of the Fed. If they start up QE3 soon, it will stabilize the stock markets but at the expense of the commodities markets and inflation. The Fed is really quite fucked now because they are backed into a corner, they are screwed if they "QE" and they are screwed if they don't. Or should I say "we" are screwed either way :)

[Imajika]

40. I agree with much of what you say...

I'd point out that one reason our market rose so much over the last couple years was simply that it was safer than the European markets which were subject to shocks from the sovereign debt crisis.

[nadinbrzezinski]

9. down over four percent

this will be a ride... not a nice ride, just a ride.

[Liberal_in_LA]

17. But the Japanese market follows the US. Maybe US will rebound tomorrow

[YellowRubberDuckie]

19. They are going to have to shut it down.

[nadinbrzezinski]

23. Do they have trading breaks? I know we do

that looks ugly

[nadinbrzezinski]

34. trait times open... same way

[rug]

36. Here's a link.

http://e.nikkei.com/e/fr/marketlive.aspx

10:21 - Asian Shares Tumble, Euro Hit Hard On Global Recession Worries

[lonestarnot]

41. Thanks rug.