{"id":196899,"date":"2008-03-16T21:43:00","date_gmt":"2008-03-17T02:43:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/16\/the-end-is-nigh-one-of-my-predictions-has-come-true\/"},"modified":"2008-03-16T21:43:00","modified_gmt":"2008-03-17T02:43:00","slug":"the-end-is-nigh-one-of-my-predictions-has-come-true","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/03\/16\/the-end-is-nigh-one-of-my-predictions-has-come-true\/","title":{"rendered":"The End is Nigh, One of My Predictions Has Come True"},"content":{"rendered":"

Yep, it’s the end of the world<\/a>, I got a prediction right. On August 2, 2007, I predicted<\/a> that, “Bear Stearns will cease to exist. It will either be forced to liquidate, or it will be bought out in a fire sale”.<\/p>\n

I never<\/span> get my predictions right. I look at my predictions on the HD-DVD\/Blu-Ray fight.<\/p>\n

So, after the Fed lends Bear Stearns $200 billion<\/span>, JP Morgan buys Bear for 236 million<\/span><\/a>, and they look to be ditching off the risk on the Federal Reserve:<\/p>\n

<\/blockquote>\n

Shareholders of New York-based Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14, the two companies said in a statement today. The U.S. Federal Reserve will provide financing for the transaction, including support for as much as $30 billion of Bear Stearns’s “less-liquid assets.”<\/p><\/blockquote>\n

Normally, when I say the end is nigh, I’m joking. I’m not joking now<\/span>, and it has nothing<\/span> to do with whether or not I got a prediction right.<\/p>\n

It has to do with the fact that in Asia, where it’s Monday already, markets imploded<\/a>. The Nikkei the Hang Seng have so far fallen by more than 4%, and the Korea Composite Stock Price Index by more more than 3%.<\/p>\n

What’s more, on this<\/span> side of the international dateline, the Fed cut the discount rate by 25 basis points, from 3.5% to 3.25%:<\/p>\n

The central bank approved a cut in its lending rate to financial institutions to 3.25% from 3.50%, effective immediately, and created another lending facility for big investment banks to secure short-term loans. The new lending facility will be available to big Wall Street firms on Monday.<\/p><\/blockquote>\n

That was done on Sunday<\/span>. When the last time that you’ve heard of the Fed doing anything<\/span> on a weekend, much less a Sunday<\/span>.<\/p>\n

People are now talking about this in terms of being 1929 bad, not 1970s bad:<\/p>\n

Wall Street fears for next Great Depression<\/span><\/span><\/a>
….<\/p>\n

One UK economist warned that the world is now close to a 1930s-like Great Depression, while New York traders said they had never experienced such fear. The Fed’s emergency funding procedure was first used in the Depression<\/span> and has rarely been used since.<\/p>\n

….<\/p>\n

In the UK, Michael Taylor, a senior market strategist at Lombard, the economics consultancy, said on Friday night: “We have all been talking about a 1970s-style crisis but as each day goes by this looks more like the 1930s. No one has any clue as to where this is going to end; it’s a self-feeding disaster.” Mr Taylor, who had been relatively optimistic, has turned bearish: “It really does look as though the UK is now heading for a recession. The credit-crunch means that even if the Bank of England cuts rates again, the banks are in such a bad way they are unlikely to pass cuts on.”<\/p><\/blockquote>\n

I think that they are very nearly right on this, at least for the US.<\/p>\n

Unlike during the great depression, the US is no longer an exporter of oil, nor does it have the most vibrant and advanced manufacturing base in the world.<\/p>\n

It may be bad world wide, but it’s going to be hideous here.<\/p>\n","protected":false},"excerpt":{"rendered":"

Yep, it’s the end of the world, I got a prediction right. On August 2, 2007, I predicted that, “Bear Stearns will cease to exist. It will either be forced to liquidate, or it will be bought out in a fire sale”. I never get my predictions right. I look at my predictions on the …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1261,973,1004,985],"tags":[],"class_list":["post-196899","post","type-post","status-publish","format-standard","hentry","category-bubble","category-economy","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196899"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196899"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196899\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196899"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196899"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196899"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}