Bill Sykes' - In Retrospect
X.
(February 2008)
Bill Sykes
looks back in retrospect at material which has been published
in previous editions of "View from America",
in an attempt to determine whether the subject matter
written then is still applicable in today’s world.
Some of this article has been extracted from
"Bill Sykes—In Retrospect", Introduction
to Article #8.
Article #10E. The American Economy
melt-down:
A different but equally important subject: The
financial state of the Union.
In the past week or so, on the 22nd of August
of 2007 we saw a landslide decline in the American
stock market where the Dow Jones Industrial Average,
(DJIA), slid from a figure of above 14,000 to a new figure
below 13,000. (Note: six months or so prior to
this date the DJIA had been approaching 15,000).
This decline sent investors running, (no, stampeding),
to the banks and brokerage companies to cash in whatever
monetary financial investments they held.
This precipitous decline of around 10%
(?) in the value of the stocks and shares, named by the
financial wizards as a "normal correction" later
became a "financial
disaster" for the many investors who sold off
their current holdings. Apparently this precipitous
decline in the value of stock market holdings was initiated
by a fall in housing prices in the United States which
had peaked several months previously, and the decline
was in some way due to the inability of many people who
had purchased property with very little collateral and
low to zero initial down payments, and who were only
paying off the interest on their mortgage loans without
gaining any equity, being unable to come up with their
large monthly mortgage payments.
Note: Since then,
the Dow Jones Industrial Average has slid further down
the slippery slope to a current number, as of
Friday the 18th of January 2008, of around 12,000.
So are we in a recession, well much against
the Bush Administrations denials I personally believe
that for all intents and purposes, if we are not
in a recession we are pretty damned close?
On Monday the 21st of January 2008,
the American Stock Market was closed due to a public
holiday, and the world markets from China/Japan to India/Europe
and many countries in between saw a financial melt down
with some of their biggest losses ever suffered on their
stock markets
The American Stock Market opened today, Tuesday
the 22nd of January 2008, down 460 points,
one of the largest decline in many years, and after
the Federal Reserve made a hasty Prime Rate cut of
3/4 of a point, (the rate that the Federal bank charges
for loans to banks), to three and a half percent, the
market has recovered somewhat and currently as I write
this article the Dow Jones Industrial Average
loss has declined to a figure of around 82 points down,
bringing the overall figure to just slightly over 12,000,
The 52 week range for the DOW Jones Industrial Average:
14,280/11,509, a drop of 2,771 points. (19.40%).
I really don’t know how many of
you the readers really understand how the financial shenanigans
that we are currently witnessing will affect the worldwide
stock exchanges, but my current estimation assumes that
the world markets will
be seriously affected and the end result could be a prolonged
downside trend.
A previous prediction, that I made a few years ago, based
upon the market at that time, suggested that the Dow
Jones Industrial Average should really be valued around
the 10,000 point mark, so if my predictions were correct,
then we still have further declines ahead of us.
Back to Introduction to Article #8.
Many of these people, mostly of the younger generation, who took out substantial
mortgage loans from banks and mortgage brokers to purchase houses, were unable
to make their monthly mortgage payments due in many cases to several increases
in mortgage interest rates.
Subsequently the banks and mortgage brokers foreclosed on the properties making
many of these unfortunate individuals virtually homeless.
The inability of many of America’s new homeowners to make their monthly
mortgage payments, which were named sub-prime loans, (which can be freely interpreted
as low to zero down payment loans), apparently started the stock market landslide
decline which had many investors running for the exits.
Apparently many overseas investment banks, and property
mortgage brokers, had been participants in the American
housing market boom and they too were badly affected
financially when the United States Stock Markets went
into a steep decline and the sell off spread to the overseas
equity markets which also saw precipitous declines.
Adjustment of the United States Debt from August 22nd 2007 to Sunday
27th of January 2008.
I must remind you the reader that President Bush continues
to declare that the American economy is strong and resilient,
even though in recent days he has tuned down this rhetoric
somewhat and now acknowledges that we have a financial
problem and he and his close financial associates are
trying to come up with a plan to solve the problem, even
though he has never acknowledged that we the United States
are the largest financial debtor nation in the world.
As of the 22nd of August 2007, the outstanding
public debt of the United States was $8,977,768,969,162.
So - if we estimate the population of United States to
be 303,799,215, then each and every citizen’s share
of the national debt is $29,651.
Note: The new figures
as of Sunday
27th of January 2008. The outstanding public debt
of the United States has risen to
$9,199,961,717,016.
With an estimated population of the United States of
304,197,327 each individual citizen’s share of
the debt is now $30,242. This is an increase in the National
Debt of $1.4B per day since September 29th, 2006.
Frightening isn’t it?
As this is an open forum everyone has the right to express
their own opinions, good, bad, or indifferent, and readers
are encouraged to state those opinions by contacting me
at the e-mail address provided below.
Disclaimer.
Some of the information gathered for this news letter
has been gleaned from American and International media
sources, (including the Internet), and as such is quoted
as accurately as possible. I try to obtain confirmation
from several outlets, so the text is a mixture of composite
news items and personal comments and therefore the
reader must make his/her own judgement as to the reliability
and degree of accuracy of the subjects discussed.
We
welcome feedback about any of the contents of these articles.
Please send all correspondence to bill_sykes@huddersfield1.co.uk
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