Where is the US economy headed?

Thursday, June 26, 2008
Dow Jones Lingering Around 5 Year Trend Line
Over on his site, Stewie has a great 5 year chart of the Dow Jones up. As he illustrates, we're right on the cusp of breaking convincingly through a major long-term trendline. Stochastics and various other signals are pointing to oversold so we should see some sort of a bounce here. But, still, scary stuff. I'll let the chart do the rest of the talking:

Ah, the Madoff thing. I would hate to be an SEC official once Congress gets back in session and opens hearings on this. I heard today that warning flags went up more than a decade ago about him (including a story in Barron's) but no one bothered to look at his operation. You are absolutely correct that the U.S. is losing the confidence of overseas investors. We are looking like a 3rd world country where corruption is rampant.

An economist's guess is liable to be as good as anybody else's.
Will Rogers

Trade Barriers Toughen With Global Slump
Despite Free-Market Pledge, Many Nations Adopt Restrictive Policies

By Anthony Faiola and Glenn Kessler
Washington Post Staff Writers
Monday, December 22, 2008; Page A01

Only a few weeks after world leaders vowed at a Washington summit to reject trade protectionism and adhere to free-market principles as they combat the global financial crisis, a host of nations are already breaking that promise.

Moving to shield battered domestic manufacturers from foreign imports, Indonesia is slapping restrictions on at least 500 products this month, demanding special licenses and new fees on imports. Russia is hiking tariffs on imported cars, poultry and pork. France is launching a state fund to protect French companies from foreign takeovers. Officials in Argentina and Brazil are seeking to raise tariffs on products from imported wine and textiles to leather goods and peaches, according to the World Trade Organization.

The list of countries making access to their markets harder potentially includes the United States, where critics are calling the White House's $17.4 billion bailout of the U.S. auto industry an unfair government subsidy that would put foreign competitors at a disadvantage.

We are looking like a 3rd world country where corruption is rampant.

Tried to cheat me out of sales tax, which wouldn't have gone down well at all with our controller.

No, that all came After Crisis, a black-is-white, up-is-down world that everyone is still trying to figure out. And that includes the people on Wall Street, at Treasury, at the Fed, at the SEC and so on and so on.

What do we call the New Economy? Semi-nationalization? Crypto-capitalism? Laissez-faire socialism? Sweden?

Whatever it is, it sure came fast. This metamorphosis began with what seemed like isolated crises that could be contained. Bear Stearns. Countrywide. Fannie and Freddie. But each time we were told the disease was being treated, it leapt to another firm, then another, then another. Dosing individual patients with similar symptoms was no longer an option. This was a pandemic, and the government mounted a Manhattan Project-like effort -- over the span of days -- to find a cure.


It came up with a $700 billion plan to buy "toxic assets," one of several terms most Americans had never heard before than have since entered the lexicon, including "credit-default swap," "mortgage-backed security," "LIBOR" and "tranche."

Then Americans heard a different term: "bait and switch," as Rep. Ginny Brown-Waite (R-Fla.) put it in a House hearing. No sooner was Paulson's plan to buy toxic assets approved, than the Treasury secretary said, naw, we're not going to buy toxic assets. We're going to buy actual stakes in banks. Thus began the nationalization of the U.S. economy.