Caption reads: With this hand, I push my predecessor off the stage.
Subprime to Deflation: tag, you’re it. Subprime will go down as the “Word of 2008″ and trust me, “Deflation will be the word of 2009″. First some background:
Although the risk is still considered relatively small, concern about deflation is one reason stocks have been hammered this week, sending the broad Standard & Poor’s 500 to its lowest close since 1997 Thursday. The rapid slowdown in the economy, coupled with the collapse of housing and financial markets, has increased the threat of a broad, sustained drop in prices.
While deflation might sound welcome, in fact it can be devastating to borrowers, banks and businesses. The Great Depression in the 1930s was accompanied by deflation of 10 percent per year, reflecting the widespread lack of demand. Falling prices in the 1890s made it impossible for farmers to keep up with mortgage payments, as Fed Chairman Ben Bernanke noted in a 2002 speech on the topic.
As prices fall, consumers and businesses become less willing to spend and invest, worsening the economic downturn, as happened in Japan’s “lost decade” of the 1990s.
Yippie. No wonder President Elect Obama is set to announce his economic team on Monday… anything to get the douche bags running the show out of sight, out of mind, will be a Godsend. The problem is that we have a President in office who was absent for most of this tenure, and the one President won’t be sworn in for another 50 days:
President Bush has been noticeably absent from the machinations aimed at righting the nation’s financial course. Analysts and key players differ over whether President-elect Barack Obama should get his economic team in place and take charge, or sit back and await his turn at the helm.
“Somebody has to speak up soon,” said CNN senior political analyst David Gergen, explaining that he understands why Americans are growing anxious and yearning for direction and leadership.
“I think … sort of the bottom feels like it is falling out for many people,” said Gergen, who has advised four presidents. “They sense there’s a total lack of leadership in Washington, that the White House is silent, the treasury secretary has been battered, the Federal Reserve can’t speak up. These automakers come up to Capitol Hill and fail. And the president-elect is silent in Chicago.”
Read more. Wow, the Republicans just might get their wish: a socialist in the White House. Be careful what you wish for…
Between now and January 2009 though, we just might see Citigroup join AIG and Fannie/Freddie in the government’s hands. Alley Insider’s ClusterStock has some frightening reads:
- Citigroup F****d: Bear Stearns, Lehman Redux?
- Citigroup F****d: Merger with Goldman Sachs or Morgan Stanley?
- Citigroup F****d: Weekend Rescue
- Citigroup F****d: Why are you laughing, creditors? You’re f****d, too.
Hmm… deflation, heh? Maybe this is why Citigroup is falling… people know it will be cheaper tomorrow than it is today. Recall Citigroup was at $5, then $4… soon $3, maybe $1 soon?
You know the saying: “the bigger they are, the harder they fall”.
Citigroup was the world’s most valuable bank, this week it became the fifth, probably even lower right now.
In finance and banking, it has everything to do with confidence and right now, there seems to be absolutely no confidence in Citigroup. It does not help that American Management is corrupt, morally bankrupt and getting its due. Had America dared “share the spoils” there would be buyers out there, but a few have reaped the rewards at the cost of the many, and this is the result of all of that greed and excess. Said the poorman to the rich: “Payback is a bitch, bitches”.
Digg this Blog
Share on Facebook
WatchMojo on Twitter
WatchMojo on YouTube
Add to Favorites
WatchMojo Newsletter
