The only market in New York City still functioning is the farmers’ market in Union Square — at least it’d better be when I stop by later this morning to buy something from Apple Mary.
Wall Street? Don’t even go there. Yesterday was its worst day since 1987 or 1937 or 1934, or 1642, depending on which panic-stricken “expert” you listen to.
Things continue to be “unprecedented” — a word that, as I’ve noted, pops up everywhere but unfortunately is not overused. What could be scarier than that? The Wall Street Journal trumpets one of its excellent stories this morning this way:
U.S. officials are discussing temporarily backing all U.S. bank deposits if economic conditions continue to worsen, a move that would mark another unprecedented step.
Depression? How about psychosis? Everywhere but in China, which stands to take over the world economy a lot sooner than expected. Only there are government officials able to step back and watch while Wall Street burns down and the fire spreads elsewhere. See McClatchy’s ‘China sits out global crisis, focusing on own growth.’
Here? Nothing but panic in the financial markets, and the shit’s already rolling downhill. Return to America’s best newspaper chain and see McClatchy’s Kevin G. Hall: ‘American heartland is suffering from Wall Street’s woes.’
As for people who have to wear ties every day, the Washington Post‘s “Fears of Recession Deepen Rout: Stock Decline Sweeps Through All U.S. Sectors and Pummels Asian Markets,” is stuffed full of paragraphs like this one:
Don’t go farther south into lower Manhattan than the Village Pet Store and Charcoal Grill in the Village, where you can see the mysterious artist Banksy‘s exhibit of robotic pet hot dogs.
Read the N.Y. Times piece “Where Fish Sticks Swim Free and Chicken Nuggets Self-Dip,” if you want, but stop by for what might be the most pertinent image: a robot rhesus monkey sitting with headphones on, mesmerized by a TV screen. He’s supposed to be watching porn, but he’s probably watching the BBC.
Perhaps the person who has the best perspective on the situation is Seth Glickenhaus, who was around during the Great Depression’s inception. At 94, he’s still picking stocks for his investment firm.
Exactly two years ago today, Barron‘s Sandra Ward extracted this overall analysis — mostly accurate — from Glickenhaus (read it at seekingalpha.com):
OK, so companies aren’t better managed and they aren’t adjusting faster. But Glickenhaus makes you think: You want to end the war in Iraq? Maybe we’ll be too broke and will have to bring our troops home. Maybe when they get back here, they’ll have to defend D.C. against a new Bonus Army. Maybe they’ll want to stay over there rather than return to the U.S. only to find their families sitting on the curb after losing their homes. No, they’ll surely want to get out of Iraq, even if it means they’ll have to go on guard duty at banks here.
Only slightly less fearful than Iraq is the global panic, because there aren’t any more poorhouses for us to go to. Go back to yesterday’s news and read “Fear Trumps Greed as Market Woes Paralyze Economies,” in which Bloomberg’s Matthew Benjamin and Michael McKee deftly parse the psychology of the horrorshow “feedback loop” (as the BBC and others call it):
Investors are in the grip of a panic that psychologists and historians say isn’t necessarily rational and may intensify. They aren’t buying stocks, and more importantly, suddenly afraid they won’t be repaid, they aren’t making loans by buying bonds. Banks have also tightened credit.
“People are driven by images of the best and worst that can happen,” says George Loewenstein, a professor of psychology and economics at Carnegie Mellon University in Pittsburgh. “The image of the worst is much more vivid in their minds right now.” . . .
Normally, a little fear is a good thing, economists say. For decades after the 1930s, memories of the Great Depression tempered optimism and kept asset bubbles from growing too large.
Today’s fears, however, have reached an intensity that magnifies every additional piece of information and creates a vicious circle, according to Hersh Shefrin, professor of behavioral finance at Santa Clara University in California.
There’s plenty more in this adroit story:
Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, sees a parallel to 1932, with credit markets bad and the stock market falling just ahead of the presidential election that put Franklin D. Roosevelt in the White House.
“But I’m not sure anyone is FDR this time,” says Geisst, author of Wall Street: a History, who puts the possibility of another Great Depression at 50 percent. “I don’t think either candidate has a clue what they’re dealing with here. This is more than a political problem that’s going to blow over.”
So who should take a stab at trying to be the new FDR? Loudmouth stock expert Jim Cramer, as glib in print as he is on TV, opts for Barack Obama over John McCain. In his recent New York piece “Wall Street, Fall 2009,” Cramer writes:
What will New York look like a year from now? The answer: bad and probably worse, and perhaps downright catastrophic. Three degrees of awful.
The first step was passing the bank-bailout legislation. Now that it’s done — and if it didn’t get done we would have been looking at a guaranteed economic collapse — the critical issue will be presidential leadership.
And while any president will be an improvement over the current one, there is a growing belief on Wall Street that Barack Obama has the capacity to lead us out of this wilderness while John McCain does not.
I’ll go a step further: Obama is a recession. McCain is a depression.
That may well be, but America is a depression, not a recession.
Before the newspaper industry tanks and while I still have my computer, I’ve typed these headlines . . .
NO PARTICULAR ORDER:
OpenSecrets.org: ‘Wall Street’s Favorite Candidates’
Wall Street Journal: ‘Futures Head Toward Sharp Losses’
N.Y. Daily News: ‘With stock market falling, advice on what to do about 401(k)’
Wall Street Journal: ‘U.S. Weighs Backing Bank Debt’
Wall Street Journal: ‘At Morgan Stanley, Outlook Darkens; Stock Tumbles 26 Percent’
CNN: ‘Smoke detected at Japanese nuclear plant’
Wall Street Journal: ‘Finland’s Martti Ahtisaari Wins Nobel Peace Prize’
N.Y. Post: ‘PRAYING FOR ALMIGHTY $$’
Guardian (U.K.): ‘Markets crash: How panic spread around the globe’
Wall Street Journal: ‘Economists Expect Crisis to Deepen’
Guardian (U.K.): ‘Huge bonuses for City high flyers will be hard to rein in’
CongressDaily: ‘Senator urges suspension of Iraq publicity contracts’
Wall Street Journal: ‘McCain Campaign Is at Odds Over Negative Attacks’ Scope’
Wall Street Journal: ‘AIG Increases Borrowings While Racing to Sell Assets’
China Digital Times: ‘China Says it Won’t Torture Guantanamo Detainees’
Detroit News: ‘College students face barriers to voting’
N.Y. Times: ‘States’ Actions to Block Voters Appear Illegal’
N.Y. Post: ‘BAGHDAD GOES BOOM – IN STOX’
This article from the Village Voice Archive was posted on October 10, 2008