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Did You Ever Think A Financial Crisis Would Feel Like This?

Vadim Pokhlebkin — Fri, 29 Aug 2008 11:00:00 ET

Pictures and video footage I've seen from the Great Depression almost always shows unmistakable signs of a real economic tragedy: people lined up on the street, waiting for help; homeless sleeping on a park bench; families living in tents; and everywhere – misery, desolation and despair. Looking around now, I see none of those things. If anything, I see the opposite...

U.S. Financial Crisis: NOT A "Shock" To Our System

Nico Isaac — Wed, 27 Aug 2008 05:45:00 ET

Think the U.S. economy has gone to the dogs? You may be more right than you thought. A Wednesday, August 27 L.A. Times article explains why consumer confidence is sinking to a 40-year low, via a science experiment involving -- well -- two obedient canines. Here’s the gist:

Mr. Hull's Giant

Bill Fox, Senior Bonds Analyst — Fri, 22 Aug 2008 06:45:00 ET

In the summer of 1868, Mr. George Hull of Binghamton, New York, decided to pull off a hoax. He had a gypsum block carved into the shape of a giant dead man, buried at a farm near Cardiff, New York -- and then later, he had it dug up. Thousands of people flocked to pay and see "Mr. Hull’s giant." And here we are, 140 years later...

Scary Thought: A Bear Market That Lasts Forever?

Vadim Pokhlebkin — Wed, 20 Aug 2008 08:45:00 ET

By claiming that there is a "negative loop between the financial system and the broader economy," the International Monetary Fund is essentially saying that we will be stuck in this bear market forever – literally. Think about it...

U.S. Economy's Mascot: Grizzly Bear

Nico Isaac — Fri, 08 Aug 2008 04:45:00 ET

08.08.08: The long-awaited Summer FINANCIAL Olympic Games has begun. Hosted by the August 2008 Elliott Wave Financial Forecast, this event showcases the world’s leading economic athletes as they compete in the race toward opportunity. Here are just a few of the event’s most show-stopping details:

Why “Conquer The Crash” Is More Relevant Today Than Ever Before

Nico Isaac — Thu, 07 Aug 2008 04:15:00 ET

Suppose that all the conventional financial wisdom you've ever heard was written onto a large chalkboard -- and then someone gave you an eraser, a box of chalk, and the knowledge of how financial markets really work. That may be the kind of vision you'd have after reading Bob Prechter’s best selling book “Conquer The Crash.”

U.S. Bond Market: The Look Of Fear... and Failure

Nico Isaac — Tue, 05 Aug 2008 03:45:00 ET

Anxiety is to a rising market what a flaming torch is to a hot-air balloon. And, as one of the most reliable measures of collective investor emotion, the record widening of the Junk-to-Treasury Yield Spread over the last year shows exactly why the finanical sector has gone "Pop!"

The Mortgage and Credit Crisis in the United States

Alan Hall — Mon, 04 Aug 2008 04:00:00 ET

Many people think the Fed has “saved” Fannie and Freddie, and the FDIC will “save” all depositors from the effects of the mortgage and credit crisis in the United States. Most people hope the crisis is just another temporary interruption in the “normal” bull market, and a return to the status quo is just around the corner.

The Biggest Financial Shoe Drops: Consumer Spending

Nico Isaac — Fri, 01 Aug 2008 04:45:00 ET

Given the amount of economic turmoil the U.S. faces today, the government will adopt a "Saving Private Ryan" policy regarding consumer spending: Keep Alive and Well at All Costs. Problem is, their rescue schemes have come too late...

Do Home Prices Look INFLATIONARY To You?

Nico Isaac — Wed, 30 Jul 2008 05:30:00 ET

The only way that today’s home prices could possibly look “inflationary” is if you’re standing on your head. Which begs the question: If the most dependable hedge against inflation -- namely real estate -- is crashing like the approval ratings of the U.S. Congress, then where does main street get off saying “Inflation” is the bane of our economy’s existence?

U.S. Banks Refuse A Lending Hand

Nico Isaac — Mon, 28 Jul 2008 06:30:00 ET

In times of panic, a drowning man will often pull his rescuer down under water with him. So it goes, one of the most dangerous threats to a Lifeguard’s safety is the very person they are trying to save. Sometimes… the choice must be made to let go. For the U.S. financial sector, that time is now...

U.S. Banks Get Pummeled: Is Your Money Safe?

Nico Isaac — Fri, 18 Jul 2008 04:45:00 ET

Lehman Brothers on the skids, Washington Mutual shares plunge to a 17-year low, Citigroup and Merrill Lynch join the red-flag finanical parade, AND -- the third largest bank failure in U.S. history takes place with the shut down of Indymac Bancorp. Before the U.S. banking sector went to hell in a handbasket, we saw the "warning signs" of decline...

The Financial Frankenstein is On The Loose

Robert Folsom — Fri, 11 Jul 2008 06:00:00 ET

The politicians and policy pooh-bahs who say Fan/Fred is "too big to fail" are actually acknowledging that The Monster has failed ALREADY. I could write a lot of words about how corrupt these two institutions have been over the past decade...Years and years of corrupt behavior produced layer and layer of congressional and regulatory "oversight." Yet today, The Monster mocks its creator more loudly than ever.

Could The U.S. Lose Its AAA Status?

Nico Isaac — Fri, 11 Jul 2008 05:45:00 ET

On Friday, July 11, the pandemonium surrounding Fannie Mae and Freddie Mac’s fall from financial grace prompted some panic-stricken citizens to ask the most dreaded of all questions: If the U.S. government is forced to bailout the flailing mortgage giants, will the leader of the free world lose its coveted AAA status?

Credit Crisis: The “Naked” Truth

Nico Isaac — Thu, 03 Jul 2008 10:15:00 ET

In the words of renowned financier Warren Buffett: “Only when the tide goes out do you discover who’s been swimming naked.” The tide of the U.S. credit industry is out. And everyday, more and more titans of finance are found standing in the shallow water without swimming trunks...

Is This Any Way To Run A Stock Market?

Peter Kendall — Fri, 27 Jun 2008 05:00:00 ET

It's only after GM loses 70% of its market value that it's finally voted downgraded. Why does the market lag so far behind such results? Elliott Wave International has some ideas.

Free Week Is Over, BUT... The Opportunities Have Just Begun

Nico Isaac — Wed, 25 Jun 2008 12:30:00 ET

On Wednesday, June 25, Elliott Wave International completed its annual Financial Forecast FreeWeek event.

Thousands of people from all over the world took advantage of instant, no-cost access to the uniquely rich insights and lessons that come with our subscriber-only services. Here are just some of those FreeWeek highlights: The Fed, the Dow, Gold, Oil, and the Credit Crisis...

Will the Fed Increase Interest Rates? Does It Even Matter?

Euan Wilson — Mon, 23 Jun 2008 04:30:00 ET

People are anxious about Ben Bernanke & Co. right now, as the ritual fixation intensifies regarding this week's Fed meeting: "Will the Fed increase interest rates? Will it decrease them? Or will it do nothing at all?!" A better question might be: Should we even care?

Mortgage Fraud: The Mighty Have Fallen

Nico Isaac — Fri, 20 Jun 2008 04:00:00 ET

On Thursday, June 19, the U.S. Justice Department announced the results of phase ONE of “Operation Malicious Mortgage”-- a nationally coordinated crackdown against conspiracy, corruption, and fraud in the country’s leading mortgage companies...

Massacre At The Top: Lehman's Not The First, Last, Or Even The Worst

Euan Wilson — Tue, 17 Jun 2008 10:45:00 ET

The heroes of the boom times have seen some troubled months. A full year after they first told us "the worst of the credit crisis is over," we're reading monthly (sometimes weekly) news about big-name CEOs (et al) getting the axe. If anything this trend is picking up steam, hardly a "worst is over" scenario. But who's really to blame?

The Risks Of Running With The Herd

Euan Wilson — Mon, 16 Jun 2008 09:45:00 ET

Trading volume has never been higher. Ever. As for economic growth and household finances, a few figures can tell most of the story: Household liquidity stands at negative 20%; the personal savings rate is below one percent; and household debt as a percentage of personal income is approaching 120%. Total debt (economy-wide) is some 350% of GDP.

So why would a growing number of investors place ever-larger bets on an increasingly under-performing economy?

Credit Crisis: Wasn't "Over" Then, Ain't "Over" Now

Robert Folsom — Fri, 06 Jun 2008 05:45:00 ET

Let's broaden the time horizon from the past two days to nearly a year ago -- specifically July 13, 2007, when a Bloomberg News story declared, "Lehman, Bank of America and Barclays Say the [Credit] Rout is Over." Yes, dear reader, not one but THREE of the world's largest investment banks told the world that the credit crisis was "over," when in fact it had barely begun.

Fear Factor: Off The Charts

Nico Isaac — Fri, 06 Jun 2008 03:45:00 ET

When it comes to the world of finance, FEAR is to a rising market what a hot flame is to an air-filled balloon. The challenge comes in knowing beforehand when things are about to go “POP!” In our experience, one of the most reliable measures of collective investor emotion is the Junk-to-Treasury Yield Spread, or difference between low grade and high-grade debt.

Credit Crisis: Is The Worst Really Over?

Nico Isaac — Fri, 30 May 2008 03:45:00 ET

The bleak, nail-biting drama known as “The Tempest… In the U.S. Credit Market” has played out as one terrible scene after another: The once formidable Titans of Finance fell from an over-leveraged grace, triggering $300 billion in write downs, massive layoffs, losses, government bailouts, record-high foreclosures, and pretty much every economic setback around.

10 More Years of Higher Food Prices, or Deflation Instead?

Susan C. Walker — Thu, 29 May 2008 05:30:00 ET

A report by two international organizations says that food prices should remain high for the next 10 years. But in EWI's contrarian view, the louder the hue and cry about food and energy prices, the more reason to believe that the trend will end and become deflationary instead.

Credit Crisis: Nearing The End?

Nico Isaac — Mon, 19 May 2008 05:45:00 ET

No Recession? How About, "No Supporting Evidence"...?

Robert Folsom — Thu, 15 May 2008 05:15:00 ET

Over the past week or so, some prominent columnists and news analysts have suggested that it's premature to declare that the U.S. economy is in recession. I found these stories somewhat remarkable -- not because they appear to be contrarian, but instead because "news" can still appear in print based upon a premise that has absolutely no supporting evidence....

Part II: "Transparent Markets"?

Robert Folsom — Wed, 30 Apr 2008 05:00:00 ET

I'll be the first to acknowledge that hindsight is 20/20 -- there's not much rocket science in figuring out why something blew up after it explodes. At the same time, it is fair to point out that any rational assessment of risk -- whether it's risks to competitiveness, or systemic risks to the financial structure itself -- must begin with probabilities. I say this because it is hard to imagine a scenario whereby the broken tort system or excessive regulation would cause a behemoth like Bear Stearns to implode in a matter of days. On the other hand, it is easy to imagine the rapid demise of any financial institution, if its depositors suddenly lose confidence in the quality of that institution's capital reserves....

"The Most Transparent Capital Markets in the World"?

Robert Folsom — Tue, 29 Apr 2008 05:30:00 ET

Was Treasury Secretary Henry Paulson correct in saying, "Our capital markets are the deepest, most efficient, and most transparent in the world." (emphasis added)....?

Credit Derivatives and the Great Avalanche

Robert Folsom — Mon, 28 Apr 2008 05:45:00 ET

Yes, her fans may be heartbroken... and yes, the story may be trivial. But this only means that "trivial" on a large enough scale somehow still amounts to "news." The formula obviously does not apply to non-trivial heartbreak on a grand scale, because nowhere in today's news did a headline appear to declare, "Another 7,000 Home Foreclosure Notices Filed" (the running daily average for such filings). Put another way, some 259,000 home foreclosure notices have been filed in the five weeks since Bear Stearns blew up.

Wealth Disparity: The Coming Political Storm?

Robert Folsom — Fri, 25 Apr 2008 05:30:00 ET

If you're wondering what the "politics of anger" on a national level really sounds like, perhaps now you have a better idea. Politicians in our day won't have to invent the language of anger and virtriol -- the precedent is on the record. And the just-published May issue of The Elliott Wave Financial Forecast explains why likewise is indeed what we should expect in the near future...

Credit Crisis: Before & After

Nico Isaac — Fri, 18 Apr 2008 04:15:00 ET

According to a recent review in the New York Times, “Two Angry Books” have just published, to gauge the enormous toll the credit crisis is having on the U.S. economy. Quick synopsis: the American public is mad as hell and they’re not gonna fake it anymore.

U.S. Treasury Notes, Trends and Subprime Mortgages

Robert Folsom — Thu, 17 Apr 2008 04:30:00 ET

Today, after eight months and six reductions by the central bank, the fed funds rate is 2.25%. Three percent (or 300 basis points) in eight months' time is a large and rapid drop indeed. And, given all the media attention to this rate cut campaign, one would expect other rates to follow the almighty Fed's lead. Except that, if one did expect this, one would be sorely mistaken....

Retail Bankruptcies Bring Sharper Image to Weak Consumer Spending

Susan C. Walker — Wed, 16 Apr 2008 05:15:00 ET

As big retail chains, like the Sharper Image, succumb to too much debt and too few sales, they shine a light on the larger problem in the U.S. economy. If consumers aren't spending as much on gadgets furniture, and clothes, will the economy fall into a deeper recession?

What Does Debt "Buy" For the U.S. Economy?

Robert Folsom — Tue, 15 Apr 2008 04:45:00 ET

Over the years I've had to unlearn most of what I was taught in Economics 101, and I suspect that today's students continue to have their hats stuffed with the same rubbish. Apart from the little chart that showed how the price of widgets is a function of the supply/demand curve, the only other useful idea I took away from econ 101 was the law of diminishing returns. Perhaps you remember it too....

These Four Words Separate Financial Fact From Fiction

Robert Folsom — Fri, 11 Apr 2008 05:00:00 ET

Bob Prechter explained what the four words meant in his March 2007 issue of the Elliott Wave Theorist. It's been barely a year, but it may seem longer ago if I point out that the media then was full of headlines about "The Goldilocks Economy," meaning not too hot or cold but just right. Look it up. They never saw the debacle coming because they believed things were about as good as it gets. For anyone in that mindset, the suggestion that "Credit is not money" is no more intelligible than a radio frequency from outer space....

The Generals Survey their Battlefields: Iraq and the U.S. Economy

Susan C. Walker — Tue, 08 Apr 2008 05:15:00 ET

General David Petraeus and Fed Chairman Ben Bernanke are both dealing with Gordian knot problems -- one on the war front and the other on the economic front, And George Soros has some of his own thoughts on the subject of the financial system turned into Godzilla.

When Psychology Changes, News Changes

Robert Folsom — Fri, 04 Apr 2008 05:45:00 ET

When collective psychology changes, coverage of the news changes with it.

I realize how that statement can be understood in at least two ways, so let's get specific. Am I talking about "changes" in

a) how news will be covered, or

b) the version of news that has been covered already?

Headed For Recession: Are We or Aren't We?

Nico Isaac — Fri, 04 Apr 2008 04:30:00 ET

From the “Today Show” to the “Tonight Show,” the Situation Room to the locker room, and the cocktail party to the carpool lane, one issue has taken center stage: U.S. recession -- Are we OR Aren’t we there yet?

What REALLY Changed Their Tune

Robert Folsom — Wed, 02 Apr 2008 05:00:00 ET

We all know that, for at least six months, most of the monthly economic data has pointed to a slowdown (or worse). Consumer expectations slipped to the lowest number (47.9) since 1973; February durable goods orders (-13%) showed the largest one-month decline on record; several real estate and housing measures have the worst readings in the entire post WWII era. Yet none of the above was enough to convince the majority of establishment economists to publicly acknowledge the obvious -- namely that the U.S. economy is in recession. That acknowledgement came only after an especially crucial change appeared in payroll growth....

Squeezing Stomachs and Financial Markets Down to Size

Susan C. Walker — Mon, 31 Mar 2008 05:00:00 ET

Today, Treasury Secretary Henry Paulson threw out his first pitch for a major overhaul of the way the U.S. financial system is regulated. – to an equal mix of cheers and boos. But the really big story and marketing pitch of the day belongs to the purveyors of something called gastric banding, which helps overweight people lose excess weight via elective surgery. It's the medical equivalent of the squeeze that the financial markets are experiencing right now, thanks to the credit crunch.

On Shoes Dropping, and Other Things to Wait For

Robert Folsom — Fri, 28 Mar 2008 05:30:00 ET

"Waiting for the other shoe to drop" basically means that you expect a final bad thing to happen that you can't control, in relation to previous other bad things that you couldn't control. The thing is, one piece of footwear after another has thudded to the floor since at least August of last year. A lot of people have been deprived of any financial piece and quiet, and in fact a growing number are now suffering deprivations of a more serious kind....

Irrational Behavior, In Theory and Practice

Robert Folsom — Wed, 26 Mar 2008 05:15:00 ET

Alas, research that involves volunteers in a lab setting is still just "theory" that fails to record and verify the actual "practice" of predictably irrational behavior. In fact, it's not clear to me why researchers would even bother with lab studies -- there's no shortage of conspicuous irrationality in the real world of finance and consumption. The history of stock markets amounts in large part to how investors buy the highs and sell the lows. For more than a year, the news headlines have been full of problems that started when lenders did dumb lending to borrowers who did dumb borrowing.

How To Cope with Economic Times That Try the Soul

Susan C. Walker — Tue, 25 Mar 2008 06:00:00 ET

These are the times that try men's souls, wrote Thomas Paine in 1776, referring to the North American colonists' revolt from British rule. And now, referring to the U.S. economy, we can equally say that these are the economic times that try the national soul. Whereas last year and in years earlier, we here at Elliott Wave International warned about the tough times to come in the economy, today's news stories are full of woe.

The "Club" That Can't Grasp the Credit Crisis

Robert Folsom — Wed, 19 Mar 2008 05:15:00 ET

The decoupling began with their lack of experience and ignorance of history. What I mean is that the Great Depression of the 1930s was part of the living collective memories of two full generations of Americans. But that's completely gone now. The lessons of that time are beyond the reach of a generation that doesn't read history, if it reads at all. So, everyone's risk valuation has been shaped entirely by economic prosperity and not at all by financial failure. The possibility of a system-wide crisis didn't fit any of the models. It's similar to the probability theory that skeptical scientists cited when they denied the existence of "rogue waves." Only recently did years of research and countless satellite photographs "scientifically" confirm what mariners had known for centuries -- that rogue waves are real indeed. And when you mix the alchemy of securitization with people who are decoupled from history, the decoupling has a domino effect.

Credit Crunch? What About the "Trust" Crunch?

Robert Folsom — Mon, 17 Mar 2008 05:45:00 ET

Every new revelation in the subprime debacle has turned out to be far worse than initially reported. That much is obvious to anyone who has followed the thing closely. But that's not to say that what happened with Bear Stearns over the past week fits the "worse than it looks" pattern. No indeed. In fact, the disintegration of Bear Stearns has moved the subprime debacle from "worse than it looks" to the level where "we cannot trust anything that the corporations, media, and government are saying about the crisis." Yes, that may seem like an extreme remark. But read these comments. Then let's consider if my conclusion seems "extreme"...

A Non-Guarantee Put to the Test (part 2)

Robert Folsom — Fri, 14 Mar 2008 05:15:00 ET

Credit of a veeerrryyy different kind was the real reason for the unprecedented levels of homeownership. This different kind of credit took those levels where they'd never been before by making "homeowners" of folks who'd never owned homes before. Which is to say, folks who were often unable to qualify for a conventional loan. Fan and Fred wasn't motivated to bother with those types, given how easy their lives were via the benefit of Brother Government's wink & nod -- you know, the non-guarantee guarantee implicitly behind all "government sponsored entities," even when they act like hedge funds. So, Fan and Fred's competitors found a competitive edge of their own -- and it was called "Subprime." That's when you make loans without worrying about whether the borrower can pay back the money. You simply sell it on the secondary mortgage market....

A Non-Guarantee Put to the Test (part 1)

Robert Folsom — Thu, 13 Mar 2008 02:30:00 ET

Once upon a time, the U.S. government created the secondary mortgage market. (During FDR's New Deal, if you're dying to know). With help from the agency known as Fannie Mae, this government creation grew tall and strong. What's more, the government held a virtual monopoly over its creation for several decades -- and after all, the market was its creation....

Blackstone And The Great Buyout Bust

Nico Isaac — Thu, 13 Mar 2008 10:45:00 ET

Another day, another titan of the financial industry gets a first-hand idea of what it feels like to go bungee jumping off a cliff… without a bungee cord. Enter: Blackstone Group's fourth-quarter earnings plunge and I.P.O. sell-off. Yet, while the private equity sector's fall from grace is a shock to the better part of Wall Street -- the reversal of fortune is an outcome we saw coming from miles away...

The Fed's "Influence" is "Nonexistent"

Robert Folsom — Wed, 12 Mar 2008 05:15:00 ET

Amidst all the happy words and noises that followed yesterday's story that "Fed Offers $200 Billion Lifeline for Spurned Debt," most news accounts either failed to include or buried the truly relevant details. Looked at closely, the Fed's "Offer" of a "Lifeline" comes attached with the kind of terms you'd expect from a benevolent loan shark.

The Fed Can't Stop Deflation

Nico Isaac — Mon, 10 Mar 2008 03:35:48 ET

Whether it's minutes from the most recent Federal Open Market Committee, excerpts from the latest beige book reading, or some suggestive cough or sneeze in between -- the mainstream media answers the call of the Fed’s voice like a cat to an electric can opener. History shows, however, that all the Fed has to say -- and do -- comes AFTER the biggest moves in U.S. economy have already taken place.

There's More Than One Monetary Policy "Villain"

Robert Folsom — Thu, 06 Mar 2008 06:00:00 ET

The Economist magazine published a favorable review today of a book about the housing market crisis, and one comment from the review kind of jumped off the page: "The story has no single villain, but Alan Greenspan comes close. Under him, the Federal Reserve fuelled the housing boom by sharply cutting the cost of short-term money." So, from "Maestro" to "Villain" -- how's that for a reversal of fortune?

Super Bowl to Super Tuesday to Super Economic Letdown

Susan C. Walker — Thu, 06 Mar 2008 04:30:00 ET

The Super Tuesday primaries are history, and we still don't know who will be the Democratic and Republican nominees for the U.S. presidency this year. It's a situation similar to not yet knowing whether the U.S. economy has already slipped into a recession.

Was the "Verdict In" On A Recession Three Years Ago?

Robert Folsom — Mon, 03 Mar 2008 06:00:00 ET

That was back when the weekly news magazines ran cover stories with headlines with titles like "Home $weet Home." (Time magazine, June 2005.) Once again, the just-published March 2008 The Elliott Wave Financial Forecast offers subscribers analysis and forecasts that could soon prove to be "tomorrow's news today" -- such as the bond auction on February 21, when 395 out of 641 publicly offered bonds "failed" due to insufficient bidding. That's nearly "10 times the number of failures recorded in the entire 23-year life of auction rate bonds."

Rating Services: Safety In Letters?

Nico Isaac — Mon, 03 Mar 2008 05:15:00 ET

According to Wall Street, well-established rating services are to corporations what Roger Ebert is to cinema. Two thumbs up or AAA -- it's all the same. Or is it? Time and again, the hired prognosticators do not "see" the real value of a company until its completely obvious to everyone else. By then, it's too late...

Why Deflation Will Carry the Day for the U.S. Economy

Susan C. Walker — Mon, 03 Mar 2008 12:30:00 ET

Businesses seem to be caught between the Scylla and Charybdis of rising costs and thriftier consumers. We call it by its real name here: DEFLATION.

Growing Trend in "Bank Failure" Stories?

Robert Folsom — Thu, 28 Feb 2008 06:00:00 ET

It's safe to assume that the "experts" really don't see this news as bad enough for me to jump out a window. So, when they say "don't panic," they probably mean something along the lines of: "Don't remove your money from the bank... or, for that matter, from the stock market either"....

No Country For Old Mania

Nico Isaac — Tue, 26 Feb 2008 04:15:00 ET

The hunt for the guilty parties responsible for the housing and credit blood bath has begun as the world's largest economy has become No Country For Old bull market mania. Truth be told, the subprime mortgage industry was a marked man the moment it went mainstream, a fate our March 2005 Elliott Wave Financial Foreacst saw coming from miles away...

Buffett and Paulson Ride to the Rescue?

Susan C. Walker — Sun, 24 Feb 2008 01:30:00 ET

One interesting history lesson we have tried to pass on is that government intervention tends to wane in bull markets and grow in bear markets. So what do we make of the U.S. government's effort to try to save defaulting homeowners from foreclosure, along with the $150 billion stimulus plan?

How Low Can Wal-Mart's "Lower Prices" Go?

Susan C. Walker — Tue, 05 Feb 2008 11:15:00 ET

Some analysts point out that during recessions, people often trade down from the stores they normally shop at. By that token, as Target loses sales, Wal-Mart and wholesalers like Costco gain sales.But the question may become, where will cash-strapped consumers go to buy their goods when they can't even afford Wal-Mart's usual low prices?

Faith in a False Economic Deity

Robert Folsom — Wed, 23 Jan 2008 12:35:20 ET

The Federal Reserve's intense rate-cutting campaign began on August 17 of last year, and it announced the latest one of five rate reductions just yesterday. This campaign has so far produced two unmistakable effects, to wit: 1) An equally intense level of folly among most pundits and economists, and, 2) Declines in the major indexes which, depending on the dates, range from 10% (when the rate cuts began) to 16% (from the October highs). Yes, I'm arguing cause and effect -- if the usual suspects can do it, so can I....

Plans to "Do Something" In a Big Way...

Robert Folsom — Fri, 18 Jan 2008 12:40:26 ET

How serious has the subprime crisis become? Serious enough for politicians to announce their plans to "do something" in a big way....

Tomorrow's News Today, A Year Ago

Robert Folsom — Mon, 14 Jan 2008 12:51:24 ET

Maybe it's because people are harder to impress than they used to be. MP3 players smaller than a wallet can hold 20,000 songs. A few hundred bucks will get you a subwoofer with enough rumble to set off your next-door neighbor's car alarm. And after all, everybody knows that a billion dollars (etc.) just ain't what it used to be. On the other hand, it's equally possible that our esteemed representatives in Washington would rather say that that government spending is about "33% of GDP," instead of telling constituents that they will spend something like $2,662 billion (that's $2,662,000,000,000) in FY2008....

Why Bother With Delayed Gratification?

Robert Folsom — Mon, 07 Jan 2008 12:53:13 ET

The savings rate has fallen below zero (again), but that's not the problem. Instead, it's that people still seem to think that they can save money the easy way -- namely by watching their assets appreciate. The bad old way was to save from one's income, which demands delayed gratification. But who wants to be bothered with that?...

You're a Sly One, Mr. Greenspan

Susan C. Walker — Wed, 12 Dec 2007 05:30:00 ET

Here's a tribute to the Grinch Who Stole the Economy, Alan Greenspan, who wrote about the credit crunch in a commentary piece today: "The crisis was thus an accident waiting to happen."

Walmart Capitulates -- The Rich Win

Alan Hall — Tue, 27 Nov 2007 11:25:00 ET

Stock markets closed lower today, Wednesday, October 3, 2007

How to be a Financial Journalist

Alan Hall — Mon, 01 Oct 2007 11:05:00 ET

The scene: A busy financial newsroom. A cigar-chomping editor gives a junior financial reporter the lay of the land. "If the stock market rallies on good news, or falls on bad news, you got an easy story, kid. But if the market rallies on bad news or falls on good news, then that's a tough job. On days like that, you earn your money -- you gotta get creative." That was the way financial journalism used to be. Here's an example:

Inflation to the Left of Me, Deflation to the Right -- And Stuck in the Middle Is YOU

Alan Hall — Thu, 27 Sep 2007 09:40:00 ET

In 1974, Stealers Wheel recorded the memorable bubblegum song "Stuck in the Middle With You." In 1992, Quentin Tarentino used the song during the famous "ear scene" in his first feature film, "Reservoir Dogs." You might ask: "What's this got to do with monetary valuation?" Well, just lend me your ear for a moment…

Are Banks Worried About You?

Alan Hall — Mon, 13 Aug 2007 02:45:00 ET

Stock markets closed lower today, Monday, August 13, 2007

How to Dodge the Credit Collapse

Alan Hall — Mon, 06 Aug 2007 11:20:00 ET

Things are getting wild out there. The S&P 500 had its biggest one-day drop in 6 months on Friday (August 3), the same day Bear Stearns CFO said the "bond turmoil is worse than the Internet bubble." Cramer threw a tantrum on CNBC. Industries, funds, markets and individuals are hemorrhaging money. A million homeowners will enter foreclosure this year. You're probably wondering what will happen next.

Saturday Night in Boomtown

Alan Hall — Mon, 30 Jul 2007 01:50:00 ET

Global investors woke today with the bruises and blinding headaches of binge-drinkers after last week's wild-west bar-fight. In the heat of the action, the bartender left the saloon, and withered LBO prospects hid behind the piano and watched sullen credit markets shoot up the liquidity cabinet. The sheriff made himself scarce, and the undertaker, who has seen it all before, waited patiently at home. Another Saturday night in Boomtown.

Deflation is a Process, Not an Event

Alan Hall — Tue, 17 Oct 2006 12:50:00 ET

People tend to associate predictions with events, not processes. Because our culture-at-large encourages brief attention spans, it's confusing to be carried along in a long, unfolding process. If it happens slowly, it is much easier to deny. That is, unless you have lost your job, or house, or both.

Is War Good for the Economy?

Alan Hall — Wed, 11 Oct 2006 11:00:00 ET

The "Little Orphan Annie" comic strip character Daddy Warbucks is still a multi-millionaire, and he recently spoke before Congress in a new incarnation -- young, buzz-cut and handsome. Like death, taxes and the weather, war profiteers are perennial, and little is done about them. And it's useless to pass judgment on war itself; it's such a fixture of human history that some see it as a kind of progress. So, let's assess the popular notion that war is good for the economy.