Nightmare on Wall Street: Shocking, But Not Surprising

Nightmare on Wall Street

7 Might 2010. By David Caploe Expert degree, Chief Political Economist, EconomyWatch.com.

It’s right now approaching 8 am within Singapore, and, as is my unfortunate wont, I still haven’t been to rest, although the writing is usually over by this time 😉 .

7 May 2010. Through David Caploe PhD, Chief Political Economist, EconomyWatch.com.

It’s now approaching Eight am in Singapore, and, as is my unfortunate wont, I still haven’t been to sleep, although the composing is usually over by this time 😉 .

But yesterday’s events on Wall Road – a more than 3% downturn in all the major New York indices – obviously impose their very own dynamic and logic.

Given the situation, though, we’re going to make an effort to bare this one – relatively 😉 – short and sweet, at least for us.

First of all, at the moment, no one has the slightest concept of what happened,

as this news article from the New York Times, and this from the Deal Book blog, help to make abundantly clear.

And it’s probably most likely we won’t have any idea "what happened" for a while – if ever.

So while the numerous investigations – and their associated cover-ups – go on,

let’s not make-believe that any of the "causes" pointed in order to explain why the Dow bottomed badly at 2:46 g.m., Thursday, May 6.

EXCEPT …

for the fact that – no matter where you appear, with, as always, at least so far 😉 , the exception associated with China –

THERE ARE MAJOR STRUCTURAL PROBLEMS THROUGHOUT THE ENTIRE "ADVANCED" Globe, ie, the US / Europe / Japan,

none of which show the slightest sign of getting better within the foreseeable future,

whose different dimensions we have consistently explored in both the "Featured Analysis" and "In the News" columns for the past several months.

Until now, a few have tried to argue the actual US economy is improving, directed to both the stock market "rally"

and what we should have constantly referred to – and totally believe are — doctored numbers coming from various branches of the American government.

But after what happened yesterday in New York, as well as, as I’m watching Bloomberg –

CNBC being too unreliable under any conditions, given the centrality to its weltanshauung of my personal college, er, bud Jim Cramer 😉 –

cover the opening of Oriental markets, which have already exceeded the 3% drop on Wall Street,

the stock market "rally" argument is going to be awfully hard to take significantly,

even for those who have so clearly wished it to be true.

And with the certain drop in value of at least two major companies involved in the Gulf essential oil debacle – BP and Halliburton –

there’s good reason to believe the corporate "numbers" are likely to get even worse quickly.

And – within the admittedly unlikely event the actual financial "reform" actually DOES anything, particularly about derivatives, existing or otherwise [sorry, St. Warren ;-)] –

we may also expect the completely bubbled Or inflated / whatever you want to call it 😉 financial field to also suffer a severe, and well-deserved, collapse.

Which, of course, brings us to the sad spectacle of the Obama administration,

a group that, so far at least, has done little in order to inspire confidence in anyone except its most "tunnel-visioned" supporters,

and much to alienate its base, while utterly neglecting to convince its opponents, who, indeed, become bolder each day.

So there’s no reason for anyone to think the US situation is going to improve any time soon,

especially as long as the "rating agencies" retain their strange control of the US and global economic climate.

And the situation is hardly better within Europe,

where the British election offers produced a so-called "hung parliament,"

which seems most likely to result in a few variation of a weak group Conservative government, or some coalition of either the Tories OR Work with the Liberal Democrats –

one advantage of which would be an apparently much-needed modification of Britain’s "first beyond the post" electoral system and the establishment of the more "proportional representation" situation.

Whatever the "final" outcome, it seems one barely well-positioned to take decisive, let alone successful, action to deal with the UK’s OWN impending sovereign debt disaster.

Which, of course, brings us to the STILL-unresolved Greek sovereign debt situation,

NO proposed solution to which appears to either fix Greece’s ever-unravelling political economic mess,

AND, even worse, just seems to be encouraging the deadly mixture of speculators and rating companies making their methodical 03 across Ireland and the Membership Med countries,

ALL of which encounter real threats to their OWN "credit ratings," and, hence, the necessity of austerity finances of the same magnitude that the Greeks apparently confront.

Even the so-called "strong" European financial systems – basically only Indonesia – are hardly paragons associated with strength,

so anyone who expects improvement in Europe – especially with the impending "deflation" deadlock across the continent – is kidding on their own.

And let’s not even pretend there’s any good news coming from Japan,

where we’ve now had two "Lost Decades" since the collapse of THEIR real estate market within 1989.

To top it all off, I just heard Jim Rogers give a, literally, "breathless" telephone interview with Bloomberg,

where he sounded downright frightened, even though he said at this point, what went down is a "correction," and not a full-fledged "panic",

which, however, was exactly how HE sounded, even as he or she claimed he was "alright," since he’d been selling short for the last couple of months.

Given all of this, we STILL have no idea in the event that May 6 – 2 days before the birthday of oh my gosh friend Bridget 😉 –

will end up being appreciated, as Franklin Roosevelt so memorably put it, "as a day that will live in infamy", a minimum of in financial history,

but we should don’t have any illusions that, even if the markets do, in some manner, recover,

THE REAL ECONOMIC SITUATION THE WORLD CONFRONTS REMAINS, at best, DEEPLY UNCERTAIN, and, from worst, DOWNRIGHT DANGEROUS.

David Caploe PhD

Chief Political Economist

EconomyWatch.com

President Or acalaha.com