February 11th, 2009

Stabilities of a New Kind:
- Worst decade ever for stocks
- Geithner Plan is more of same

Posted in Goodbye to All That, Money by ed

Ed Note:  First posted Feb 7.  Bumped up to follow up (see comments below) and for some tunes.

There’s a warning sign on the road ahead …

1. This report by Floyd Norris that the S&P 500 has just completed its worst ten years ever brings to mind this observation by Walter Benjamin from 1928 and the dissolving Weimar Republic.


Stable conditions need by no means be
pleasant conditions …


Click on pics to enlarge


2.  The much ballyhooed bank plan, rumored to be announced this coming Monday at noon, is now (friday evening) being leaked to the press and looks a disorganized mess, the product more than anything of an inability to agree on big moves.

Headed by Geithner, who has been there all along, this looks nothing like Change We Need.

Indeed, it seems the bulk of the second half of the TARP $700 billion will be — like the first — given to the banks with few strings. Will not be using the cash to buy the wounded assets or banks holding them; rather, will be “encouraging” private sector investors to do so.

I.e., Geithner has run thru the same cycle that Paulson did, bumping into the same obstacles, and backing down.  The banks have said get lost, and the new administration seems to lack the will to enforce whatever other ideas may lay between the president’s or Geithner’s ears.

Brings (again) to mind Walter Benjamin:

“Again and again it has been shown that society’s attachment to its familiar and long since forfeited life is so rigid as to nullify the genuinely human application of intellect and forethought — even in dire peril.”

It’s astounding how poorly prepared the new prez seems to have been on inauguration day, given the Change anthem of his campaign.

There’s colors on the street
Red, white and blue
People shuffling their feet
People sleeping in their shoes
But there’s a warning sign on the road ahead
There’s a lot of people saying we’d be better off dead

The stock market had rallied this week on the hope of a decisive bank plan. I would now look for a turnaround, back down to test the lows of November. Those soft areas have been tested before, and such things tend to weaken with each probe. Perhaps, finally discouraged re Change, this time they will give way.

If so, look out below: Dow 4000. Keep on rockin’ in the Free World.

There must be some way out of here …

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  1. ed says:

    Important story in the Times reporting that Geithner nixed Obama’s team point by point on the bank plan to be announced tomorrow — producing something more like Paulson than Change We Need.

    A fortiori:  Obama made a big structural failure appointing Geithner.  We might as well have had a McCain victory in November.   Obama was elected with a mandate to turn things around.  Instead we’re getting More of the Same.

    February 9th, 2009 at 11:45 pm

  2. ed says:

    I was persuaded of Bill Seidman’s “bridge bank” temporary nationalization plan for the big banks in january, while living in a place with a television.

    February 13th, 2009 at 3:43 pm

  3. ed says:

    Standard & Poors today reports that — for the first time ever — the S&P 500 companies will have reported a cumulative loss for the quarter ended in December.

    The group’s profits had been declining for five striaght quarters. This sixth quarter of decline took them into the red (i.e, from declining profit to loss).

    And the coming (current) seventh quarter of consecutive decline will also be a record, eclipsing a stretch from the Truman years.

    February 13th, 2009 at 3:47 pm

  4. ed says:

    Also today, two more banks fail and are taken over by the FDIC. One in Nebraska, one in Florida.

    Ten banks have now gone under since January first. And 35 since the crisis erupted in July 2007.

    Ie the trend would seem to be accelerating.

    February 13th, 2009 at 6:40 pm

  5. ed says:

    Paul Krugman reports on gov’t report reporting US households profit & loss statements so far this decade are flat.

    February 16th, 2009 at 4:51 pm

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