Welcome to the Global Recession…

…please leave your bullshit 401k account at the door. Our government has immediate need of your retirement assets. Chop, chop.

In case you’ve been away, vacationing in Carhenge, Nebraska, you should know that we are in a global recession now.

There are 60 stock indices worldwide, that are tracked by Reuters.

55 of the 60 are down over 20%.

30 of the 60 are down over 30%.

If you believe that markets are discounting tools, the global recession is now a foregone conclusion, no?

You’re welcome. Have a nice day.

Let me get this straight. There was this promiscuous orgy of borrowing and leverage where people got drunker than Irish sailors at a free Chinese whorehouse. The real estate and debt bubble has burst, banks all over the world are in trouble and now things are going back to normal because the market will be going up soon. It just can’t keep going down, right?

Sorry, but that dog won’t hunt.

More banks are going to fail. We just don’t know how many more. Thus far, only 13 banks and S&Ls have failed this year, through September. Back in the heady days of the S&L crisis, there were over 800 financial institutions that failed and it cost taxpaxers over $350 billion. Granted, there are fewer banks now, and they are bigger, but we just don’t know the extent of how many more can and will fail before all this is all over.

As of the June 30 report, 117 banks and S&Ls were on the FDIC’s problem list. That’s only a fraction of the over 8,500 banks and S&Ls covered by FDIC.  However, it’s interesting to note that on that same report, two banks weren’t included among the 117.

WaMu and Wachovia.

We are probably on the verge of something major, courtesy of the Fed and ECB. Not just a rate cut.

For the Fed to wait to act until its next meeting at the end of the month, is unconscionable.

They are now forced to inflate the economies of the world.

So, I guess we can stop freaking out. We are saved!

Capitalism is not dead yet (just really, really sick and maimed).

Costanza developing…….

Don’t let anyone fool you. Capitalism is dead now. Socialism, here we come.

There are events in history that are game changers, that shape the future. This whole fiasco/contagion/disaster is one of them. People just don’t have the stomach for this capitalist shit anymore.

Whether or not you like Dick Fuld, or the fact that he made over $400 million in three years from a company he ran into the ground, if you’re a capitalist, you just have to just shrug your shoulders and say, “that’s capitalism”.

All these bullshit Senators asking him if it was “fair” that he made all that money is totally inappropriate and bullshit. Yeah, keep promoting that class warfare shit.

Guess what? Life isn’t fair asshats. Get over it. The guy made his millions. That’s capitalism.

However, we are now on the road to socialism, if you care to ask. It’s pretty evident in the voices of our elected officials. And the people now want more regulation and much, much more of it a la socialism. It’s just not fair that people like Dick Fuld make that kind of money, right? Get ready for a whole new global system of government and regulation. It’s been coming for a long time. 

Yes, gone are the days…….

Looking for a long idea? No?  OK….Call me crazy, but I’ll give you one anyway.

Look no further than The Fly’s favorite “stay up at night” beverage produced by Hansen Natural Corporation [[HANS]] .

Bought Hansen Natural Corporation [[HANS]] , @ $27.66 (12:41 ET). Keep a tight stop @ $26.

Back on September 19, Comissar Hank’s Treasury announced that they are planning to provide as much as $50 billion from the Exchange Stabilization Fund to insure money market holdings against a collapse in the markets. (By the way, there are trillions of dollars in money market funds, and that number is growing). By doing so, the government acknowledged how important money market funds are, and also how dire the circumstances are with the commercial paper markets.

Under the program, Treasury will insure (aka “bailout”) the holdings of any publicly offered money market fund, retail and institutional, that pays a fee to participate in the program. Many fund companies have been in the process of determining whether or not to participate.

It is my understanding that the balances held in funds that choose to participate in the program would be covered up to the amount invested in the funds as of the end of business on September 19, 2008. That’s right. Any money you added to that bullshit money market fund after that date won’t be insured. Sorry to be a killjoy.

Finally, how might the money markets foreshadow the stock market?

The following chart shows the Discount Rate Spread (Source: Federal Reserve). Notice how the spread has rocketed almost off the charts to over 400 basis points now. A widening spread is a good indicator that the stock market is still looking for a bottom. There is a very serious “flight to quality” going on here. So much so, that the spread is wider than that of a drunk Russian hooker’s.

Notice the “spike” in the spread in Q4 of 2001 to about 110 basis points. At the time, the S&P was at 1,057 on 10/09/01. The S&P finally made a bottom at 777 a year later on 10/09/2002, a 26.49% drop in 12 months.