CHESSNOID

I blogged about the global recession a while back. Below are all my posts as the signs became more apparent. At that time, many other bloggers were already writing about how bad the economic crisis would become here in America that it would become a depression. When I read those blogs, I took it with a grain of salt because we were so far away from showing those type of symptoms back then. I could see some possible inflation and possible recession. As the current white house, congress, federal reserve, and treasury made poor decisions based on panic, they actually made everything worse than it had to be.

Back in October 2007 I wrote:

Will the US recession begin a Global recession?

When the federal reserve adjusted the rates to help cope with our internal economic problems caused by our housing crisis, they inadvertently set off in motion a domino effect of other country’s currencies. We have good economic relationships with these countries right now, but as their economies are affected by the U.S.’s actions, they may not be able to help support our deficit spending. If the US federal reserve actually cuts the rates again, then other countries will not have incentive to keep buying dollars because they would be losing money in the transaction. According to CNNMoney:

Weakness in the dollar means prices of imported goods, particularly oil, will go up, raising the risk of inflation. American consumers will be paying more soon, with the looming threat of paying even more later on.

“The inflation risk from higher import prices will be the dominant initial effect,” said

Howard Chernick, an economics professor at Hunter College in New York. “The most immediate effect is imports denominated in dollars — mainly oil. We already saw a spike in oil prices. So a bit down the line, that’s 10 to 15 cents more per gallon of gas at the pump.” A weaker dollar can help narrow the U.S. trade deficit by making America’s exports more affordable abroad.Yet it could also make funding those imbalances more difficult. The U.S. has to attract billions of dollars a day from foreign investors, and a weakening currency makes dollar-based assets less attractive because of the consequences it can have on their long-term value

In December 2007, I wrote:

Housing bust + credit crunch + war costs = Global recession

Usually at about this time we head off into the infamous January effect where the stock market goes up from investors and institutions selling stocks to make their returns look good, lock in profits, and get rid of bad stock holdings for tax purposes. Also, since this is an election year, we really should have a strong start as all the candidates promise new programs and reforms to take our country financially in the right direction.

I think one of the problems that our economy is experiencing is due to the fallout of the War in Iraq. Not too many people have mentioned it in fear of being labeled as being unpatriotic, but it is obvious the War in Iraq is hurting our economy. This is actually a greater problem than our sub prime debacle. This useless war is sucking up all our resources and diverting into the hands of the War Profiteers. Whenever I hear the president ask for more funding I become disgusted because I know the money is not going to our troops. They are going to defense contractors stealing tax money with overcharging of goods and services. I have written about this and many movies have already been made addressing these issues. Do you see the connection of all the money leaving our country and the state of our economy? If you don’t, read this old post: Opportunity Cost of the War

Is it possible for our country to financially recover while we are wasting away our resources? This administration has wasted away our wealth in record time and have indebted future generations not yet even born.

On January 21, 2008, the world stock markets were actually taking a beating dropping big losing percentages. I really believed that is when it began and I posted this: Global Recession has begun

The next day, the federal reserve reacted in panic mode and started making the wrong decisions. They started doing emergency rate cuts. Instead of showing strength they showed weakness, and basically increased the speed and the severity of this unofficial recession.

On February 26, 2008, the results of those earlier decisions to me were clear and appeared as Global Stagflation: recession plus inflation simultaneously everywhere.

Tonight, watching the news about Fannie Mae and Freddie Mac plummeting into a stock market free fall reminded me of one of those bloggers who called it early. Dr HB actually has a whole series on this severe economic meltdown and how this compares to the Great Depression.

To watch this bad news hit main street media in its current situation show how severe this recession really is. Most consumers don’t really understand how this will affect them. I believe the financial markets are watching to see what the feds next move will be. I always assumed that the government would not be allowed to have these institutes fail or grow bankrupt because they are embedded as the backbone in the housing market. I hope I am right.

The stock market took a tumble and is reaching psychological numbers that represent floors (11,000 DOW, 2200 Nasdaq, 1200 S&P) that haven’t been touched in a long time. We have passed the 20% bear market levels from our Ocotober 2007 highs and now going further down. I think when we close below these levels, we will go down faster to the next technical levels. Market psychology will bring this stock market down when confidence runs away from this market. I am personally all in cash right now and have been out of the stock market because of the volatility. Prior to becoming liquid last year, I was dollar cost averaging for the past 7-8 years 100% invested in all stock funds. I believe the trend is still pointing down and maybe gaining momentum to go down much further.