Lunatic.
Nut-case.
Tin-foil-hat.
Realist.
Seriously though, this number shocks me. I never, ever thought I'd see it. And after 6,594 could come 6,000. Then 5,000. Then 4,000. Then 3,000. Then 2,000. Then 1,0000. Then zero. Absolute zero. All companies on earth worthless. No profits. No value. No stock market. No shareholders. The entire wealth of the world washed away.
We're not far away from that now.
This is shocking. But it's real.
500 years from now they'll look at this chart and wonder - what the f*ck happened there?
And they'll wonder why Angelo Mozilo was never arrested.
Posts
57 comments:
Keith
You DID tell us.
Todd
Guys here is an update on my life situation. As many of you know, I have skipped 13 straight payments with Chase (they hold my mortgage) and then in January, we gave them $9000 to make it up and to show them we were sincere that we want to work with them. I stringed them along so damn far I wanted to make sure they keep on going along.
Well today, they sent out a letter and legal documents via Fed Ex and told me that they will present me with a loan modification before April 1st and I have to accept it. If not, then they will file a notice of default and then in a few months I will be out of my townhouse.
Oh well, I am prepared for whatever the future holds for me. It was great while this scam lasted but I guess the end is near. I will wait for whatever their loan modification proposal is. If it's decent, I may accept it, make a few payments, and then it's back to not paying for a couple of months. LOL, LOL, LOL.
I would'nt be surprised.
I would have said , I know , what would you say if i told you 4500
This pup's going to 2500...
The real question is - what the f*ck is happening HERE:
Bird Flu Contamination of Vaccine
How the hell did this happen? Answer: it was no accident.
Oh well, I am prepared for whatever the future holds for me. It was great while this scam lasted but I guess the end is near. I will wait for whatever their loan modification proposal is. If it's decent, I may accept it, make a few payments, and then it's back to not paying for a couple of months. LOL, LOL, LOL.
Enjoy it while you can you pathetic leech. It will just make it that much sweeter when we see your ass out on the street.
If you look at the 30 year Dow chart, the market would be around 6000 without all the phoney debt fueled 'growth'.
Do we fall below that because of all the nonsense? Maybe.
But really, look at the chart and calculate where we should actually be and 6600 is not as scary. 14000 or even 10000 should never have been anyway.
Karl Denninger is in a cheery mood today.
http://market-ticker.denninger.net/archives/852-Whats-Dead-Short-Answer-All-Of-It.html
WTF is "The Black Retard" waiting for?
If coastal OC prices came down 80% would you feel euphoria?
nsfw
http://www.youtube.com/watch?v=4pXfHLUlZf4
From the March 5, 2009 Daily Journal, California's largest legal newspaper:
"Ex Loan Execs Likely to Face SEC Charges
Former Countrywide Financial Corp. CEO Angelo Mozilo and possibly other high-ranking former executives with the mortgage giant likely will face civil fraud charges from the Securities and Exchange Commission, according to attorneys familiar with the case."
Enjoy the townhouse pondscum. I am sure it feels great to be part of the problem.
I think we are going down. How far? As far as we can drag down the rest of the world. Pick a number (for the Dow) - 2500? 1500? I am not sure. I have always considered stocks to be another form of gambling versus an investment, so I place lots of small bets very carefully.
I think that WW3 will solve all of our unemployment problems.
50-75% of the current Dow stocks will file for bankruptcy protection/federal assistance before the end of this year.
The Dow is toast.
The CONfidence game is over.
Keith relax. Things overshoot on the upside, now they will undershoot on the downside, its the boom and bust cycle. Stay defensive, dont try to pick the bottom. Nothing is going to zero thou.
In January 2008 I made a prediction the Dow would be at 8000 or below by the December 2008. As we got closer to the end of the year, I told folks we'd be going to 6000. Having seen how the market lost 95% of its value during the Great Depression over a period of three years, I expect that anything can happen now. It all hinges on what America's prospects are for the future. And this is why I'm rather pessimistic -- I don't see what can pull us out this time. I think Asia will be leading going forward, so even when the world does come out of this we won't be the same in terms of the stock market...it will follow Asia.
p.s., Nick, you'll get yours someday...real good. You are a first class loser and one of the Americans i have come to hate.
ONE WORD:
PAIN!
Zero?? Only if we are living in caves with a population less than say, 5 million world wide.
We could be nearing the bottom at 6500
Yeah I thought 6500 was the bottom according to the charts.
I call bottom!
170 billion wasted on AIG, a stupid insurance company, while our manufacturing gets scuttled. Idiots. Let it crash. Board up the hotels and the hospitals. Close the restaurants. Survival of the fittest.
I thought 7,000 by June of 09. So, this is a surprise. Now the same market timers I follow see nothing but downward momentum, so who the crap knows how low the DOW will go. Maybe we will see a DOW:gold go 1:1.
Personally, it was an easy call to exit the market. I wish I could say the same for going back in.
"you should be buying things, and accept that they're over-valued, but accept that they're going to keep going higher. I know that sounds irresponsible, but that's how you make the money"
- Jim Carmer, financial genius
I bought the Alaska Phone Co. after hours today because of good earning and a 13% dividend (they say safe)and I bought more Merck today at a 6.5% dividend (they seem to think it is safe)
I am always working two years ahead - yes, the market may go to 3000, but me thinks there are now some once in a lifetime bargains out there - you just have to wade through the 10-K to look for mine-fields in their balance sheets. . .
I also like oil stocks - oil seems to have found a bottom, and since it is traded in dollars, when the dollar tanks (and it will) oil will be back to $150 again.
If they do not throw these clowns in jail, I have a feeling that history will some day read that a lot of these people were found with their skulls smashed in.
Actually, I cannot believe that it is not already history.
For those who have had the opportunity to travel overseas in recent weeks/months, we are still the greatest and blessed country on earth. Give it a while guys, and water will find it's level. We all were uncomfortable when things were dizzy and we need to realize that what goes down, comes up.
I feel for the innocent taxpayers and agree there will be change in the system, sooner or later.
I'm with Nick,
Why should I pay my mortgage
I want 13 months worth of Bailouts on my mortgage payments.
Screw the banks, Barney Frank and the rest of the crooks.
I'm not yet underwater but, the amount of foreclosures in the area may put me in that position and then now more payments
Nick,
You are screwing up your credit report. 7 years bad credit. With the fear the banks are in giving out loans if you have one late pay on it your screwed. You might be getting away with a free place to live for 13 to 16 months, but they will come after you. They will sick a collection agency after you, they will destroy your credit. If you lose your job and you start looking for a new job, we will check your credit report. If its bad you will not get the job. Keep going on with the LOL however, in life there is no free ride. Good Luck, I hope you make it.
Always follow the smart money. When the smart money gets back into the stock market, it will stabilize. Imagine the DOW at 25 (yes, 25 - as an example). Let's say you were smart enough to go to cash some time ago. Now you have $500,000 in the bank (or the mattress) so you buy big time! Other smart buyers jump in too. Pretty soon, the market has turned around and the smart money gets richer again. The smart money got out of housing 2005 or before. Smart money got out of gold in 1980(a bit before the peak). Smart money was out of stocks before 2007. Always follow the smart money. The trick is knowing where it is!!!
Asshole wrote "If it's decent, I may accept it, make a few payments, and then it's back to not paying for a couple of months. LOL, LOL, LOL."
Hey,jerk hope we get you on mortgage fraud someday !! if that is the case!!!
sorry i just had to come back and see the unbelievable posts you keep putting up of course you didnt realize this because your head was up your palin this was predicted this was written all over obamas record all over his associations all over his campaigning he is a socialist pure and simple and he will take this country to her knees before he is stopped but now you are shocked i said liberalism is a failure wherever it is tried i said look at any city dominated by liberals and you will see destruction of families and communities and now we will see destruction of a country literally but enough of my crap its all bushs fault and those republicans but obama has a democrat problem because more of his party are second guessing him and many who voted for him are not signing onto this so keep up the standard line i didnt see this bull and the sitcom is really on and he will be a one term president unless he resigns before 2012
Could happen
Keith... great blog.
Thanks for continuing on after you closed housing panic. I truly enjoyed reading that.
I am not surprised that we are in the 6's. What I don't understand is why we are not focusing on fundamentals of the corporations. Granted that some of the speculative crap companies out there deserve what is happening, however, there are still many solid ones. I remember my dear late father doing quarterly analysis thru Value Line (profits and earnings, future projections). I sometimes feel that Wall Street has become a casino chip table.
I do believe that the stock price many times does not reflect the true worth of a company...as you can tell I do not work on Wall Street. just a conservative investor....IMHO
Two years ago just by using the avaliable data (profit margins, dividents and debt) I had said that the real value of the Dow Jones was 4500 and of S&P was around 500. I was the laughing stock of friends and readers.
Now, taking into account the downturn, the near collapse of consumption etc etc, the real value of Dow Jones is around 2800 and of S&P around 300. Wait and see....If you have 1$ in the stock market cash it in NOW. You've been warned
Monkeys! I said it before and I'll say it again: YOU AIN'T SEEN NOTHING YET.
Oh C'mon,
Zero ????
With the Messiah on your side ???
Stop freaking yourself out, isn't it the hope and change you voted for ?
LOL
'Czech newspapers are questioning if the shocking discovery of vaccines contaminated with the deadly avian flu virus which were distributed to 18 countries by the American company Baxter were part of a conspiracy to provoke a pandemic.'
Ok, now what's this sh*t and how is Bernanke involved?
The crazy thing is people I told 8 years ago that the DOW was going to 5 k now believe me but say it’s too late to sell. So now I have to revise my prediction to 3.75k. We will bottom right before we turn into a mad max movie, if we don’t then it no longer matters.
Yes, but around 2012 when Boomers would start to retire and need the money. Looks like the big boys cleaned them out before that time, because they knew Obama's agenda. The stock market era is over with Obama for he is a Socialist, not a free market capitalist. The Reagan era ended when Boomers elected Obama. Remember that Obama would have been elected even if you left out all non Boomer votes. Obama will now work on health care, asap. The market should bottom around where it was in 1994, which is around the end of the last recession and beginning of a new bull market. But, mark this: No new Bull Market is coming around this time as Boomers are broke, Xers do not have the money to prop up the stock market, and Yers are too young. Most Xers do not trust the stock market anyway, so you will have to wait till the yers prime earning years. By then, it will be too late for Boomers. If you want to know the future, just look at these Demographics. Demographics dictate destiny. The generation that was given everything just gambled it away, only they do not know it yet.
I've joked to some of my friends that I recommend buying stock when the Dow hits zero. I'm pretty sure there will be some upside after that.
What would I have said?
It can go lower.
4th inning.
Here's an experiment I did a few months ago, just for fun. You can try it yourselves:
I walked with a couple of friends into a Wal-Mart-like store. We looked for a bin that was deserted by shoppers. I asked my two friends to join me and pretend to be highly interested in what was in there (an assortment of out-of-fashion socks for men). We started rummaging feverishly through the bin like it was of some great value to us. Minutes later, an entire crowd of shoppers joined us, and the bin was nearly emptied in less than half an hour! That was for me the perfect demonstration of herd mentality.
Our economy is based on that same principle. People are now running away from the bins. They won't come back until the panic subsides. I believe the panic is only at its initial stage and we still have a long, long, loooong way to go before the sheeple come back to the bins. IN OTHER WORDS, WE AIN'T SEEN NOTHIN YET.
I don't understand why some people find it hard to believe that it's going to get worse, before it gets worse.
At (or near) the bottom, an ounce of gold will buy a share of the Dow. It's been there before, it will be there again. Will it happen with the Dow and gold at 4000? At 1000? I'm betting on 3000, but will sell whenever the two meet.
I told my family this last summer, they laughed. Now they cry and say I'm all puffed up with myself. This poo aint over till every sucker out there is broke and back in the work force.
MORONS!
nah, I expected it to get to 6,000 based on how big the Clinton/Greenspan bubble got.
the bubble has to undershoot because the multiplier effect causes froth at on the way up that has to disappear on the way done-- so it's painful.
This guy has been right on...truly amazing
Thursday, March 5. 2009
Posted by Karl Denninger in
What's Dead (Short Answer: All Of It)
Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)
All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.
All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can't earn anything off investments, and if you have a claim in process at the time it happens, it won't get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high - I rate this risk in excess of 90%.
The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they're doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.
Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to....
Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.
Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more. Count on this happening - it is essentially a certainty.
Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to....
The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.
Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.
The good news is that this process will clear The Bezzle out of the system.
The bad news is that you won't have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.
It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played - that of truth-finder, no matter how destructive that process is.
Only immediate action from Washington DC, taking the market's place, can stop this, and as I get ready to hit "send" I see the market rolling over again, now down more than 3% and flashing "crash imminent" warnings. You may be reading this too late for it to matter.
We would have said what Dave Ramsey said about Peter Schiff: You are an idiot!
Keith,
Chris@HousingFEAR here...
Could you let me toot my own horn and prove that I predicted this would happen on an article I wrote on Novemeber 12th
http://housingfear.blogspot.com/2008/11/my-stunning-prediction-for-dow.html
Yep, read it right here.
Moved everything to cash.
Thank you very much.
Watch it everyday and don't give a sh*t. Let it roll.
Keith:
I have been a HPer since Dec. 07. I read your blog since then atleast 2 times a day. I am not surprised since you had forewarned. I am laughing all the way to my Bank with my Gold Fund and Bond Funds. (8% in Equities). The motivation for such low allocation to Equities was due to HP (the best financial adviser/planner in the blogosphere). Keep up the good work. Waiting for Dow 6000, will then decide if I should jump back.
The sooner the DJIA hits zero, the better. America is being looted by the ultra-rich and their paid-for government (that includes BHO). The only hope to end the looting is for the economy to crash with such velocity and ferocity that the government falls. Whatever replaces it in the short term is likely to be even worse, but at least it will break the grip the ultra-rich, and there is a chance for a better future one day.
More than just a few people caught this. Here's one blog that predicted it last November, during the "sucker's rally":
http://voting4me.com/?p=33
He hasn't updated in a couple months that I'm aware of. But it's still some good reading.
"Yep, read it right here.
Moved everything to cash."
what happens if the FDIC doesn't cover it?
interest on CD's is going down; dividends are going down; stocks are going down; home prices are going down; labor rates are going down; everything is going down.
maybe the messiah will save us! maybe he won't.
IN GOD WE TRUST!
Keith,
If you had made that call, I would have called you an optimist (if that was your bottom call that is). As it happened, you said last May that you thought it was time to put your toe into stock market waters again, and I wrote that you were way off base.
Housing bacame at least 100% overvalued. It is going to overshoot it's real value on the way down also. And the real value is now lower than what it was. Consider the same thing to be happening to the stock market. If 15000 was 100% overvalued, then reasonable value was then around 7500. But if we overshoot on the way down to 50% of that then we will see 3250. Only real value will have dropped to 5000 by then so 50% overshoot to the downside gets 2500. That matches going back to the 1981 lows adjusted for inflation. Why 1981? Bubbles bursting tend to take out all of the credit based rise, and credit fueled the market from that time (actually some graphs indicate it started in 1978, which would be associated with even lower numbers).
These numbers may not happen but there looks to be a very good chance they will. Not trading advice, just saying.
"Anonymous said...
We would have said what Dave Ramsey said about Peter Schiff: You are an idiot!
March 6, 2009 4:33 AM"
Ramsey, another asshole who should be forced to wear a big red nose and floppy clown feet. Just a dispicable bum. Please don't use his name in the same sentence with Schiff.
Remember, once a drunk always a drunk. Think George Bush when you think Dave Ramsey.
You're Welcome.
From 3-2-09
http://theautomaticearth.blogspot.com/2009/03/march-2-2009-we-aint-done-yet.html
In short, if the S&P fell straight to the high-end of its previous trough range (8X PE, or 460), it would fall another 35% from today's level (700). If the S&P fell straight to the low-end of its previous trough range (5X PE, or 300), it would fall another 55+% from today's level. Here's hoping we don't set a new low on the downside.
----------------
S&P 300 here we come!
Go read the whole thing, its good.
GT Charlie
Me and my friend (both in the IT industry) have been watching this market as well as peak oil for over a decade (started in 95 actually). We knew back in 98 that the market was going to crash when the dot-com bubble was still roaring. Thinking back, I remember how the URLs for websites (eg www.microsoft.com) were changing hands for hundreds of thousands of dollars, and some startup was making a method by which different URLs could be dynamically created so that companies would not need to purchase these names. I believe the startup recieved over 100 million in venture capital for what was essentially sveral thousand lines of code created by a student over a 6 month period in his spare time. Utterly ridiculous!
Seeing the froth... we KNEW the dot com was going to collapse... eventually
After 2000 when things were finally starting to correct, we still didn't understand what was going on since the PE ratios for most companies was in the 30 to 1 range and some were even as hih as 50 to 1. In all crashes prior, the ratio would usually drop to between 8 to 1 but could be as high as 12 to 1.
So from this assessment, we surmised that the bubble wasn't finished. We had no idea about what Greenspam was doing but it became evident with the housing bubble afterwards. Once I realized the housing bubble was happeneing, I started doing a search and found the housing panic blog. Much of the posters seemed to confirm our own speculation of the market.
Before the housing bubble however, there was still something wrong with the data. We couldn't understand how the ratios could be kept so high. It's like watch a circus clown throw a plate into the air... and then it just hangs there, while you wait for it to crash. You know it's a trick, but you can't see the strings.
It wasn't until he got a job at Morgan Stanley that we put all the pieces together.
The sytem at MS is so complex that it borders on the insane. They literally had hundreds of machines in a single database. They couldn't wait for information to go through the TCP/IP stack, so data was pumped directly from the wire into a program which would process the data into the database so that trades could be made.
Literally, this means that they made a system which could make up it's mind on trading stocks in about 35 milliseconds. The TCP/IP stack would have added another 100 milliseconds. This roughly translates to an extra $10 million in trades.
The point I wanted to make is that all of those 'human' traders you see on the trade floor don't really mean anything. Most companies not only trade by computer, but in fact the decisions made to buy and sell are determined by the computer as well. Human thought mostly doesn't enter into the equation, unless it is meant to put in simple rules to the overiding program. (eg sell when stocks are at 8000, buy when stocks are at 7000).
This is why when you look at the dow over the last year, you will see that there are specific plateaus at 10000, 9000, 8000, 7000.
In other words, the prices in the market are not determined because of human intervention or need, but because of the thousands of computers out there making trades based on simple logic rules which need to be satisfied.
Think of it as millions of chess games being played out there, where most of the time it's computer vs computer and a few computer vs human. There is very little chance of there being a human vs human game out there. Statistically possible, yes, but also statistically irrelevant when you realize that computers control the system based on rules defined by people who never gave those rules much thought.
Although the rules may be simple, there are probably thousands of them... which makes it a very complex system and humans are unable to predict the outcome. This should scare you as it means we have created a system to monitor and trade our wealth... a system which we do not fully understand, but controls our future. (Me and my friend had quite a few pitchers of beer when we realized this of course.)
Ultimately... this provided our 'Deus Ex Machina' and an explanation for what strings were keeping the market up in the air. It also led to a deeper understanding of how the market worked.
Most people on this blog and elsewhere are running around with their heads cut off... buy gold, buy guns, buy food, buy bonds, buy stocks, move to the country, etc. etc. etc. This is from a fundamentally flawed assumption that the market has anything to do with human needs any more. It is not so much rigged as it is that the computer systems are trying to fulfil their logic requirements (ie their ultimate goal is to minimize loss and maximize cash gain). What we are looking at is essentially the computer playing a wargame and driving all asset prices to 0 so that it can ultimately win the game.
Think of it as the old movie 'Wargames', but you're using the stock market rather than nuclear missles.
How do we stop this... simple, turn off the computers - all transactions need a human signature.
Or
Change the logic rules in the computers so that the destruction of human jobs has an associated cost. (This ones tougher as some companies might not want to do this leading to an uneven playing field.)
Now... predicitions...
We have been fairly close for the last 10 years, and by this summer (June, July, August), my friend predicted in January the DOW would be in the 6's (6000-6999) while I predicted it would be in the 4's (4000-4999).
We've already surpassed my friend's pessimism.
Surprisingly... the expectation is that the DOW will soon rise. Since it is an index where companies need to keep their stocks above $10, there should be 6 companies delisted (should have happened 3 months ago).
So, after the DOW, delists the offending companies and adds a few more which are still selling at $50 a share, expect the DOW to jump.
Mr.X
Keith relax. Things overshoot on the upside, now they will undershoot on the downside, its the boom and bust cycle. Stay defensive, dont try to pick the bottom. Nothing is going to zero thou.
I agree with Wall Street Veteran. There are many companies sitting on giant piles of cash waiting to buy back their own stock at a very cheap price. Some will go bust and go out of business but some companies are positioning themselves to buy back stock at very attractive prices. Watch the insider trading - those are the fellows who will "tip their hand".
Smug Bastard
I've been dreaming since age of 3, in 1947, that there were lines of people, some dressed in those nice grey silk stockbroker suits, hoping for food. Outside in the cold. I've dreamed of Communism falling followed by Capitalism followed by something greener and equitable. I've dreamed of the stock market reaching great heights (compared to fall of 1954 when it had just regained heights of 1929) and crashing and never recovering. So I'd have said, it has a lot further to fall. And it has. For all intents and purposes,
think WIPEOUT.Sorry.Never opted for 401 K's for that reason. Nor believed in money managers. Why the heck would I want some whippersnapper, 30 some years younger than me, running around telling me what was best for my hard earned money. How could they know what I know? Idiots. Sorry, that's what we've come to.
Grandma PKK
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