CHESSNOID

The global stock markets took a beating today after what they saw happened on US stock markets. My guess is the US stock markets will sell off as we keep visiting this recession scenario that the federal government keeps denying exist.

FTSE

-87.10

-1.49%

5,766.40

DAX

-92.40

-1.38%

6,591.31

Nikkei

-432.62

-3.27%

12,782.80

HANG SENG

-760.15

-3.26%

22,582.58

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By afternoon, Japan’s Nikkei 225 index had fallen 3.2 percent to 12,785, while Hong Hong’s Hang Seng index was down 2.9 percent at 22,678.16.

Markets in Australia, India, China and South Korea also dropped sharply.

Worries about further fallout from the U.S. credit crisis grew Thursday after the Mortgage Bankers Association said the proportion of all mortgages nationwide that fell into foreclosure jumped to a record 0.83 percent in the final quarter of 2007.

Separately, the Federal Reserve reported that Americans’ home debt exceeded their equity for the first time since the central bank began tracking the figures in 1945. Homeowners’ percentage of equity fell to 47.9 percent in the fourth quarter.
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All this is from the housing bubble that has become the housing bust. The economic news coming out now is a look back at what we saw unfolding into skyrocketing foreclosures today. The numbers themselves are incredible and even somewhat unbelievable. What is harder to accept is that the worse is yet to come. This would be based on mortgage resets of sub prime loans. As housing inventory rises, more people are putting off buying because they don’t want to take on mortgage debt and become upside down in a home. It’s already tough doing that with a car purchase. Being upside down in a home is something everyone wants to avoid now, so sales will probably continue to slow every quarter until the economy recovers from this recession.

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Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report’s quarterly, 36-year history.

Another 381,000 households, or 0.83% of borrowers, saw the foreclosure process started during the quarter, which was also a record.

Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.

“Boy, that was ugly,” said Jared Bernstein, an Economic Policy Institute economist of the data.”It’s another reminder that anyone who thought we had hit bottom was wrong. This was a huge bubble, and when a bubble of this magnitude breaks, it creates a huge mess,” he said.” It could take a lot longer for the correction to work through the system.”
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I think the reason why global markets are being more affected than usual is because we keep lowering our interest rate artiificially. We are on the brink of a stagflation because the federal reserve is being politically motivated instead of being fiscally responsible. The dollar is at an all time low against many world currencies and we are actually helping to drive the price of crude oil up because of our domestic issues. The foreclosures will not stop because rates are being cut. That is what the federal reserve will probably do again very soon. It is at 3% and they are running out of room to cut it. The markets are betting another 3/4 or 1 per cent interest rate cut. This usually will boost the stock market for a bit, but then the market reverts back to its downward trend. Credit is suppose to become easier when they cut rates, but it is definitely getting tighter because banks are losing so much money from mortgage defaults. This is turn is forcing them to basically just approve people with perfect credit or making 20% or more down payments, or both. Everyone else is getting turned down because they do not want to take on anymore losses in the future.

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The dollar fell to a record low against the euro on speculation the U.S. jobless rate rose to a two-year high and as traders increased bets the Federal Reserve will lower interest rates by 75 basis points.

The dollar index, which compares the currency to those of six trading partners, also dropped to an all-time low as Fed Bank of St. Louis President William Poole said the pain of mortgage-market losses is “not over yet.” The dollar headed for a fourth weekly decline against the euro, the longest losing streak since Nov. 9, and a third week of losses against the yen.

“The dollar’s weakness is extraordinary,” Stephen Jen, head of currency research in London at Morgan Stanley, , the second-largest U.S. securities firm, wrote in a research note. “The recent sell-off in the dollar is both definitive and justified by economic and policy changes.” The dollar fell to $1.5430 per euro, the lowest since the common European currency’s debut in 1999, before trading at $1.5425 at 6:58 a.m. in London. It dropped to 102.44 yen, the lowest since Jan. 28, 2005, from 102.67
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I guess tomorrow we will see if investors go bargain hunting and boost the stock markets up or if they decide the stress and nervousness isn’t worth it and sell to either cut their losses or lock in their gains. Those weekends are long if you have money in the stock market.