Our economy is in a great deal of trouble. Far more than a problem in financial services, far more than just hype on the evening news, we’re in a LOT of trouble.
Consider a few things:
1. The jobless reports crested today at 542,000 jobs lost/initial unemployment claims filed. This is huge, and indicates that there is severe weakness in all sectors of the economy. This close to the holidays, jobless claims should be declining as the service sector staffs up for the holiday retail season, yet we see the opposite happening.
2. Major companies are getting pummeled, such as GM, Citigroup, and others. A failure of a major Dow component or Fortune 10 has a significant impact on the economy.
3. Mayors Bloomberg and Daley of NYC and Chicago were warned to prepare for thousands of layoffs by the end of the year.
4. We still haven’t unraveled Bear Stearns and Lehman Brothers’ exotic financial instruments. A GMAC failure would be very, very bad.
5. We still haven’t unraveled the massive derivatives market.
There’s a lot of doom and gloom in the media, but not all of it is unwarranted. There really is no bottom in sight.
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