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Breaking: Dow ends with 400-point loss 11/12/08

Dow ends with 400-point loss, pushing the 3-day drop to about 650, on concerns about retail and banking sectors.

http://money.cnn.com/




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Why is the dollar soaring against the euro and other currencies?

Since a few weeks the dollar is actually getting stronger compared to the euro, the pound, and other currencies.
Why is this? You guys talk only about the dollar losing its value. I don't understand.

http://money.cnn.com/2008/11/12/markets/dollar/index.htm

The value of gold is also decreasing since March 2008. Why?

http://www.kitco.com/charts/popup/au1825nyb.html

Is this really a good time to buy gold?

Because the dollar is getting scarce, in my opinon.

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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You have to be totally brainwashed not to notice this, in my opinion.

These guys aren't awake, in my opinion.

government of the people, by the people, for the people
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How can there be a scarcity

How can there be a scarcity of dollars when the Fed has increased the baseline in circulation by over $300 Billion in the last couple months? Am I missing something here? Please explain.

BECAUSE

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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Virtually all money that has been created since the start of the debt based money system came with the obligation to pay back with interest. Therefore, as the economy grew and more money was created, the obligation to pay back got even bigger and the money shortage grew. Now we are at the point that this system no longer works. In other words, the money shortage cannot be solved by creating more money that comes with the obligation to pay back with interest. Therefore, I am convinced that this money shortage will not be solved and we will go though a major deflationary depression.

However, the problem is the shortage of money, but not shortages of commodities or manufactured goods. Aside from the money shortage, the economy is physically capable of producing what we need. Therefore, in a sense, this problem is not real.
Read this. TRUST IN MONEY http://www.dailypaul.com/...

The solution is to install a non-debt based money system.

Just my opinions.

government of the people, by the people, for the people
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When the dollar

is strong, that is the time to buy raw materials.

"Tyrants fear nothing more than insubordination"

"It's just one big club... and WE ain't in it!"

A lot of the dollar strength

A lot of the dollar strength has to do with two things:

1) The dollar is the reserve currency of the world, making it the denominator of most commodity exchange (i.e. oil) and international debts (including anything loaned by the IMF or World Bank). As other economies go sour, governments, companies, and private investors buy up dollars with other currencies so that they have their holdings in the reserve currency so they can buy goods, invest, pay back debt, etc. This increases both the demand for the dollar and the supply of other currencies, doubling the effect of the shift/spread in relative values.

2) As investors lose money in stocks they shift to Treasury bonds, which are very safe and pay a little interest to boot (not enough to beat inflation, but at least you don't lose numerical dollar amounts). Bonds are effectively a contract on debt, subsidizing the US gov's printing and spending. The purchase of bonds, therefore, floats that debt, staving off inflation, and keeps the dollar at a higher value. Again, add this effect to the relative drop in value of other currencies discussed above and you see why the dollar is doing so well.

I'm no economist, and there are a lot of people here who can correct my points and give you a much more detailed explanation, but those two factors certainly play a large part.

As for gold, that one yesterday had me baffled as well. Back at the bailout time gold jumped as the market went south as one would expect, but now it seems to be falling. I think it has to do with a panicky shift to bonds yesterday as the market dropped, and I would expect it to edge back up slightly in the coming days and then go up a little more near the end of the month in anticipation of the futures contracts coming due. As for the decline since March, it probably has a lot to do with the overall health of the economy - back in March everybody was still playing hard and driving up precious metals like everything else, but things have changed and people don't have the expendable playtime investment money they had then and have shifted to safer investments (in terms of volatility, not real value).

The thing to remember about the dollar, though, is that it is at the mercy of investment. If, say, the Chinese dumped their reserves to pay for their stimulus package or OPEC decided it was time to accept only Euros as payment, we'd be screwed as inflation ate away at the purchasing power of every dollar in our pockets. Remember, the dollar has lost 25% of its purchasing value since 2000 - inflation is alive and well; this situation would get much worse if the world decides the US economy isn't strong enough for the dollar to remain the reserve currency.

If you have money that doesn't need to be immediately liquid, I would buy a little gold and a lot of silver right now, no matter what the prices do in the short run. In the long run they are profitable investments which have intrinsic value (something that can't be said for stocks or dollar-denominated savings).

You might be interested to

You might be interested to know that the US owes Japan far more than we owe China. China is just this year's scapegoat.

..................
"The main thing that I learned about conspiracy theory is that conspiracy theorists actually believe in a conspiracy because that is more comforting. The truth of the world is that it is chaotic..." —Alan Moore

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I responded to the wrong thread.

Thank you very much. Your

Thank you very much. Your answer is very helpful.

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oops. i'm responding to the wrong thread.

Asian markets plunge

http://money.cnn.com/data/world_markets/

New Hampshire and Ecuador.

meekandmild's picture

When the US goes bankrupt

Will I be a Chinese or a citizen of whomever buys the US at auction?

The US government will

The US government will inflate us out of debt, destroy the dollar in the process and end up with a new currency before there is even any remote possibility of selling the government to the Chinese, etc.

...

meekandmild's picture

I'd like to give the US goverment

the current and incoming to any nations that would accept it, But of course I want to keep our nation.

I don't know the answer...

But THAT"S funnie!=)

This all in preparation

for the coming financial meeting on the 15th?

Perhaps best if we all fasten our seatbelts now.

Australian stockmarket on Thursday November 13, again going down down down. 141 points with another 2 hours of trading to go.

Update: 30 minutes of trading to go in Oz: down 177. Hong Kong and Japan, and rest of world all looking pretty red. http://money.cnn.com/data/world_markets/?

The Dow will make its low tomorrow..

Probably by 10 CST but certainly by noon. My model says 10 a.m.

zaftra..(tomorrow).

One Voice, One Vision, One Love ~ Liberty.
Good Thoughts, Good Words , Good Deeds.
That is the Ron Paul rEVOLution Creed.

One Louv. ;-)..

Are you factoring in the Imf meeting

And the need to instill fear in the public to pass what ever stupid agenda they expect to pass ? Markets may keep droping untill the extortion is complete

Short covering,,,

I believe that to be about exhausted. I know the numbers do not show it . I think lows we will not see untill friday or mon

Run on the shorts ?

9 a.m. to 10 p.m. CST..

Cycles and Technicals Only..

One Voice, One Vision, One Love ~ Liberty.
Good Thoughts, Good Words , Good Deeds.
That is the Ron Paul rEVOLution Creed.

One Louv. ;-)..

WHATEVER HAPPENED TO YOUR 9AM CALL THAT

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
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YOU JUST MADE HERE?
http://www.dailypaul.com/node/70994#comment-776196

government of the people, by the people, for the people
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9:26 to be exact...

But, Lets give it a hour either way..

I'm real interested in the a cycle comming into play at 11:30 tonight CST.

One Voice, One Vision, One Love ~ Liberty.
Good Thoughts, Good Words , Good Deeds.
That is the Ron Paul rEVOLution Creed.

One Louv. ;-)..

Looks like it was about 1:00 PM Eastern time

Off by 3 1/2 hours isn't bad at all. B-)

= = = =
"Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job."

That means: For each job "created or saved" about five were destroyed.

Buying the S&P at 825 and watching it rally 50 points

wasn't bad either :-).. (did take 3 quick hits for 6 points bottom fishing so it was 44 S&P points for the day. 4 turns and 100 Dow points on an intraday hedge.

Actually it was much closer than 3 1/2 hours. I'm on PST and just assume everyone else is as well. Here are the charts I sent out to the media and the few friends I trade for.

http://www.cyclesurfer.com/RonPaulRepublicansOnly.html

I also called Gold ? The decline was a wave 2..Gold won't break its Oct 24th low at least for a few months. You will see this develop over the next week.

Although Gold is going to be in a Bear Market into Oct 2010 a counter trend rally has started.

One Voice, One Vision, One Love ~ Liberty.
Good Thoughts, Good Words , Good Deeds.
That is the Ron Paul rEVOLution Creed.

One Louv. ;-)..

MUCH closer.

Actually it was much closer than 3 1/2 hours.

PST is 3 hrs behind EST, so your original post caught it within a minute and your estimate within under a half hour. Sweet. (Though not as sweet as in-and-out with a 44 point bump. B-) )

I'd think gold would turn around if/when any of the sovereign funds (or other giant holders) start cashing in. This would trigger a fight over the remaining value in the currency, which would take the form of a race to cash in before the competition. With several big players, some of which would love to see the US brought to its knees even if it hurts them too, I have a hard time believing this will hold off for a year. (And it's the sort of external event that wouldn't necessarily be predicted by models that look forward from historical price trends - more like an earthquake than normal market behavior.)

Do you think that this is an unreasonable expectation?

(I ask because I was thinking that gold is likely to be near enough its low that this might be the time to be picking some up in expectation of major-to-hyper inflation some time in the next couple years. I've had several big market shifts that I expected in this fashion that I missed trading on because they happened sooner than I thought they would)

= = = =
"Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job."

That means: For each job "created or saved" about five were destroyed.

DEFLATION

"Only a virtuous people are capable of freedom. As nations become corrupt and vicious, they have more need of masters." Benjamin Franklin
---

government of the people, by the people, for the people
---

YES buy NOW

To get ahead of the Hyperinflation coming down the pike.

Ok, I'm a little confused on

Ok, I'm a little confused on how most of this works. You say buy now.. you mean stocks?
I keep hearing about this hyper-inflation that is going to happen. Does that always happen after a deflation? How do you know?

My husband has been buying some stocks a little here and there. Is it all going to skyrocket back up after this huge downfall?

Buy low, sell high. When

Buy low, sell high. When prices are very low it is often a great buying opportunity for those who are able to do so.

About hyper-inflation, that is not a 100% certainty but many people and analysts believe that is what we are headed towards.

The "deflation" that we have been witnessing this year is not monetary deflation but rather asset deflation. The money supply has actually been increasing. Much of the stock price drops have been due to the unraveling of leveraged investments. The bad economic conditions are also moving investors away from the weaker non-proven companies.

The federal government, as well as state and local governments, desperately need money to pay the bills. The options are to either tax more, borrow or the federal government can print the money. Taxing will wreak havoc on the economy even further. Borrowing is difficult because the US government is not as credit worthy as it once was, which our lenders are learning. Printing the money will inflate our economy. The inflation, or hyperinflation, will be disguised as a great rally in the stock markets - but you'll know for sure when things like bread, milk, eggs and other products are several times more expensive than currently.

There has also been some talk in Congress about virtually confiscating retirement accounts and converting them (selling off their stock holdings) to 30 year government bonds with the accounts being managed by the social security administration. If the government does this it will not only be a great affront to our Liberty but it will also be a huge loan to the government which will not cause inflation (but it will cause a very big decline in the stock markets). My guess is that this is not likely, but who knows what will happen when we have a Congress that does not care about what the people really want (99% against the bailouts, 73% against the war, etc, etc - Congress doesn't care what we want).

If you're going to be in stocks you should probably be in those that are profitable, with good dividends and which have a relatively low PE ratio (in my opinion). If you don't mind some risk, there are companies out there that could return a HUGE multiple on your money in short time - but it is risky.

...

Takings clause.

There has also been some talk in Congress about virtually confiscating retirement accounts and converting them (selling off their stock holdings) to 30 year government bonds with the accounts being managed by the social security administration.

I think that's a trial balloon, issued mainly so when they do whatever merely horrible thing they finally decide on the sheep will cheer that it wasn't as bad as they were expecting.

I can think of nothing they could do that would be a clearer violation of the "takings" clause of the fifth amendment. And while IANAL I suspect the courts would agree.

= = = =
"Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job."

That means: For each job "created or saved" about five were destroyed.