bank rates

Current State of the Markets

Bankaholic reader Wendell posted a link to this article, which is a realistic, accurate, no-nonsense summary of the current state of the economy. This is MUST read. Here’s a snippet:

I will say it again: the last time we saw these economic indicators was 1977-1979. Do you remember 1979-1981? Let me remind you: falling dollar (this is the one to watch), 13% inflation rate, 13% unemployment rate, 21% Prime, 18% money market funds, 17% mortgages, $850 gold, $50 silver (remember the Hunt brothers trying to corner the silver market?), skyrocketing deficits, skyrocketing oil and food prices, money supply growing far faster than the economy, plummeting stock market, plummeting real estate, zero building, “stagflation,” and on and on.

Click here to read the full article.

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Comments (43)
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43 Existing Comments
  1. Love said:
    on October 1st at 04:03 am

    I just read the whole article and I’m really scared about the whole financial situation. I’m slowly trying to understand this whole mess that we are in right now. I strongly believe that the government was not telling us everything we needed to know about the state of the economy and politics has everything to do with it – now look what happened – I and a million other citizens don’t even know or understand whether we should support a bailout or not. The article really opened my eyes a little wider to the whole crisis – looks like doom to me…

  2. Drew said:
    on October 1st at 08:54 pm

    I hope the days of getting 10%-15% CD rates come back.

  3. Johns Wu said:
    on October 1st at 10:00 pm

    I hope so too

  4. Mojave Jack said:
    on October 1st at 11:45 pm

    Oh course, don’t expect those 10%+ CDs until mortgage rates go to 18-20%. Given the current state of the real estate market I wouldn’t hold my breadth.

  5. Young said:
    on October 2nd at 12:02 pm

    I hope the days of getting 10%-15% CD rates come back, me too.

  6. Zircon-212 said:
    on October 2nd at 12:56 pm

    Nice scaremongering article! Interest rates are low, the dollar is rising and even with the panic on Monday gold could not make new highs on the year. Let me guess …you are trying to hawk silver coins or some other scam product to the public you are trying to frighten. I love you doomsday guys that pontificate about how bad it is but seem to rely on the ostrich trade of head in the sand as a solution to the problems.

  7. Johns Wu said:
    on October 2nd at 01:02 pm

    Fed wants interest rates at 2.00, but LIBOR rates (what REALLY matters) are near 4.00. Why do you think CD rates and MMA rates are so high right now?

    Dollar is rising only b/c Europe screwed up even worse than America. I am bullish on the Yen.

    As for gold…. I’m not sure about that.

  8. Bob said:
    on October 2nd at 02:19 pm

    Four more years of the delusional right? Can 45 million Americans be wrong? What has happened to the country? Ungovernable, hopelessly corrupt, brainwashed and bankrupt. To paraphrase a joke: watching American politics is like watching them re-arange the deck chairs on the Titanic.

  9. stubsy said:
    on October 2nd at 02:44 pm

    I would’nt say Europe was screwed up even worse than America. In Europe we still have a housing shortage.

  10. Johns Wu said:
    on October 2nd at 02:52 pm

    Wow, all currency pairs with the USD are in freefall today except the Yen which is up 0.5%

  11. zircon-212 said:
    on October 2nd at 06:18 pm

    The JPY is a just a vehicle for the carry trade these days. Stocks go down and take USD/JPY down with it on risk aversion and liquidation of carry trades. Opposite scenario when equities go up. USDJPY does not have a mind of its own at the moment and is hopelessly stuck either side of 105.00

  12. R. Patel said:
    on October 2nd at 11:30 pm

    If the rates of 10-15% for CD’s come back, that will be phenomenal!

  13. Jake said:
    on October 3rd at 12:30 am

    10-15% CD rates doesn’t sound phenomenal to me at all – the day you make 15% from a CD is the day our currency is officially worthless.

  14. Dajavou said:
    on October 3rd at 01:06 am

    Thing is if 10%-15% CD rates come back then that means we will be having 10% – 15% inflation. Currently we have 5% CDs with about 5% inflation. Problem is with 10/15% CDs all prices are going up at the rate of 10/15%.

  15. Larry said:
    on October 3rd at 01:25 am

    I stopped reading this after he claims Unemployment reached 13% and then I looked at how long his article is. Unemployment never reached 8% during those years.

  16. Skeptic said:
    on October 3rd at 02:08 am

    Zircon-212 is right. The dollar is in an upswing now and oil prices are falling because of it. Gold prices, while they’ve been up significantly over the last 18 months, have leveled and fallen from their high. Now is not a good time to invest in gold but it’s a great time to invest in the market. Buy while it’s still cheap.

  17. nicolas said:
    on October 3rd at 03:04 am

    Skeptic is right, the only thing clear here is about buying, if you have cash to buy, do it. Nobody have the perfect answer but I think we will have stocks rising in a few months and a more stable market after 4 or 5 months. Yesterday I bought some latin america funds and I hope to get a great return at the end of december, the market cant get lower(:S).

  18. Hedge Fund Manager said:
    on October 3rd at 03:13 am

    ooh i dont know about that nicholas, from a momentum standpoint, the equities are looking VERY weak right now. rule of thumb #1, NEVER TRY TO CALL THE BOTTOM

  19. Eric said:
    on October 3rd at 03:28 am

    Oil down $5 today – that is good news and bad. If the US economy does slide into the state where 10-15% CDs are common place (actually, I never had much better than 11%), then oil will fall quite a bit more. So, will we follow BRIC into the twilight which is negative growth? Or will we get Congress to vote the right way on Friday so we can have a relaxing weekend?

  20. AverageJoe said:
    on October 3rd at 06:04 pm

    The Congress has just thrown $700 billion into a black hole.
    God bless America!

  21. Samantha said:
    on October 3rd at 10:43 pm

    The US economy will only be down another 18 months and then there will be solid growth. The economy today is too global to be held down too long, there will not be a repeat of 1977-1979.

  22. Larry said:
    on October 4th at 01:11 am

    Sounds like Wu is full of shit. He says unemployment rate went to 13% in 1977-1981. Bullshit. Also, look at his post regarding LaJolla Bank-pure b.s.

  23. flyfishetc said:
    on October 4th at 10:01 am

    Writing from the UK, we are all in unchartered waters.

    The 1920s is not a good comparison to make. Some deep questions need to be asked and answered about what life is for. There are limits to growth, but we don’t factor these into the way we all behave. The short term nature of the markets cannot address these issues. I don’t think the fundamental nature of the problems we face are being addressed in your race for the White House.
    Very best regards

  24. Aaron Cook said:
    on October 5th at 11:39 am

    As the saying goes, “Cash is trash.” With the Fed printing money out of thin air, like it’s going out of style, the dollar will continue to lose value. It’s lost like what, 90% of its value since the creation of the Federal Reserve in 1913, with 37% of that happening in just the last 7 years (just going on memory here).

    The Fed creates these bubbles, and they always burst, leaving taxpayers to bail out investors who were misled by foolish government interference in the market. It’s a vicious cycle that needs to end.

  25. 411 Realty,Inc said:
    on October 5th at 04:28 pm

    Great info!!!

  26. serious stuff said:
    on October 5th at 11:55 pm

    Lets try counting our blessings:
    We are all in the fortunate situation of being able to control our individual circumstances – pull up your pants and appreciate all you have!!!!!

  27. CVOS the man said:
    on October 6th at 01:21 am

    Gold did spike to $850 in January 1980. Will it spike again?

    http://66.38.218.33/LFgif/au1980.gif

  28. AverageJoe said:
    on October 6th at 04:09 am

    I have transfered all my money out of the US stock market, but I still have money market funds and bond funds in my 401k.
    How about you guys?

  29. Zio Romolo said:
    on October 6th at 10:34 am

    Is now established that the banking crisis is affect the European banking system. But how it will be out of European banks? The BCE is not a FED, its powers are much more limited ….. and so! 🙁

  30. Baby said:
    on October 6th at 10:45 am

    Unless we all turn Buddhist greed will ensure that this cycle happens over and over again, it’s just life I’m afraid.

  31. BeKind said:
    on October 6th at 01:08 pm

    I read the article. JPM won’t need to be bailed out. They have acquired hard assets: real estate/branches. JP, the man himself is laughing in his grave.

  32. Hank Brock said:
    on October 6th at 04:08 pm

    Larry– Wrong! Unemployment was at 13%, not 8%. Go check. Anyone remember Reagan’s “Misery Index” in his campaign against Jimmy Carter? Inflation rate + Unemployment rate = 26%. Lot’s of the comments above refer to 3-4 day swings in the dollar, etc. This isn’t about 3-4 days moves, it’s about mega-trends. This is why we have investment advisors and politicos “rearranging chairs on the titanic” mentality. Try reading the whole article– JPM won’t need to be bailed out? Because they’re so big? Because they’re the largest shareholder in the Fed? Maybe not, but JPM’s credit strength rating has fallen, same as Fannie and Freddie did. Why do people put their trust in institutions, instead of timeless principles? Some things are just as sure as the sun rising in the morning.

  33. Johns Wu said:
    on October 6th at 04:29 pm

    Well said, Hank!

  34. Larry said:
    on October 6th at 06:30 pm

    Hank: On FactCheck.org they said the misery rate reached 20.6 under Carter-not 26%. I remember inflation running up to 12% -so, add that to 8% unemployment.

  35. RV Bov said:
    on October 7th at 10:19 pm

    Looks like we are all going to be holding our breath for a while. I especially feel for the people wanting to retire now but have no chance. Getting close to my retirement I been feeling very down. I just wish we saw more up lifting on the news sites.

    Good luck everyone!

  36. Daniel said:
    on October 7th at 11:41 pm

    These are tough times to come indeed. It’s very hard around my area to get a job with everyone being laid off.

    My father lost his job, and he can’t even get another security officer job even though he has years of experience in the field.

  37. BeKind said:
    on October 9th at 12:39 pm

    Hank, I said real estate and I forgot to use the word probably. I don’t put all my trust in institutions, I put it all in con artists 😉 JPM’s tower in Houston had nearly 500 windows blown out during the hurricane. Perhaps symbolic; we can see what’s going on now, so to speak. I would love the cycle to be broken and maybe that’s what is going on here. No doom and gloom, the dog is shaking off the fleas. But will people learn and integrity rise?

  38. José said:
    on October 10th at 06:50 pm

    Hi,

    As always will be the same to pay the price.
    For most top rich people more zillion less zillion is about the same.
    What is necessary for people to remember is that all this situation was caused (in my opinion) by the banks and they should be the ones to pay the price.
    They can complain about financial dificulties, but what about the huge profits that they gathered throughout the years ?
    Greed was the moblie of all this and instead of hedging properly, the so called managers only think about profits leverage, forgeting that for them to win, others have to lose. But the others also like to win.
    But all this money is virtual and the worst thing in my opinion are not the stock markets and the oil price which has finally came down.
    What is bad is that economies are based on services and huge profits are in the hands of a few. Lets not forget that the biggest economies were built upon industry, construction, agriculture and automotive.
    What we have now is a giant with clay feet.
    And a final word must go for the eventual and quite probable (namely with biodiesel) rise of cereals’ price. And poor of those who depend mostly on cereals to survive.

    Kind regards,

    José

  39. Daniel said:
    on October 13th at 08:30 am

    The U.S. financial situation IS really scary! And as far as you saying “Europe is ever more screwed”… well, read a newspaper some time..

    The ONLY reason Europe has financial woes right now (and small ones compared) is because of the U.S. and your damned derivate muppets! Well be fine, the U.S. wont.

    Give me a call when the dollar is 20% of the Euro. Have fun!

  40. J Downs said:
    on October 21st at 08:14 pm

    There is a lot of talk lately about how we are headed towards another Depression. Below are some key differences to share with you.
    • In the the Great Depression 1300 Banks failed – only 13 banks have been taken over by the FDIC this year.
    • Unemployment was 24% back then and is currently around 6%.
    • From mid 1929 to 1932 the Dow dropped 90% – lately is been down roughly 30%
    • In 1933 when FDR took over 44% of mortgages were in default. In the 2nd quarter this year only 6% of all mortgages were delinquent.
    Heads up people:)

  41. Live Well Simply said:
    on December 9th at 04:39 am

    There is a lot of talk lately about how we are headed towards another Depression. Below are some key differences to share with you.
    • In the the Great Depression 1300 Banks failed – only 13 banks have been taken over by the FDIC this year.
    • Unemployment was 24% back then and is currently around 6%.
    • From mid 1929 to 1932 the Dow dropped 90% – lately is been down roughly 30%
    • In 1933 when FDR took over 44% of mortgages were in default. In the 2nd quarter this year only 6% of all mortgages were delinquent.
    Heads up people:)

  42. Live Well Simply said:
    on December 9th at 04:40 am

    The U.S. financial situation IS really scary! And as far as you saying “Europe is ever more screwed”… well, read a newspaper some time..

    The ONLY reason Europe has financial woes right now (and small ones compared) is because of the U.S. and your damned derivate muppets! Well be fine, the U.S. wont.

    Give me a call when the dollar is 20% of the Euro. Have fun!

  43. Lie We Simple said:
    on December 9th at 04:41 am

    Hank: On FactCheck.org they said the misery rate reached 20.6 under Carter-not 26%. I remember inflation running up to 12% -so, add that to 8% unemployment.