350 Is The Upper Limit "If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on earth is adapted... CO2 will need to be reduced from its current 385 ppm to at most 350 ppm." Jim Hansen, NASA
Russia has suspended stock markets indefinitely because the situation there is just too volatile.
The Japanese market posted its greatest one-day loss since their 1987 market crash. By the end of trading on Friday there, they had lost 24% of the market this week. That’s twice the rate of fall they had in 1987.
Australian shares closed down more than 8%, setting a record there. They are calling it ‘Black Friday’.
The Hang Seng index in Hong Kong dropped to a 3 year low.
In the Phillipines, the loss was similar to Australia, down a bit more than 8%.
Indonesia postponed plans to reopen their markets on Friday after suspending them for 2 days earlier in the week.
The Dow Jones Index closed Thursday down more than 20% already for the week.
No Trust Among Thieves
Panic is what it is. Folks around the world have simply lost confidence in their corporate and government leaders. There is no trust amongst the thieves, anymore. A year ago the DJIA was above 14000, today it starts out about 40% below that peak. Nobody really knows who is solvent and who’s about to go under.
Bankers especially don’t trust each other. The interest they charge each other for extremely short term loans was at an all time high on Thursday. This just shows how deeply the panic has permeated businesses worldwide. The BBC reports:
“We’re way beyond fundamentals,” said Chris Orndorff, head of equity strategy at Payden & Rygel, in Los Angeles.
“This is just pure panic, that’s all it is.”
It’s unlikely that the Dow Jones will fare much better today than it did yesterday. Until the banks start making loans again at an affordable rate, it’s doubtful there will be any recovery. And the chances of that happening soon are not good. The AP reports:
The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed even after a string of interest rate cuts by central banks in the U.S., Europe and Asia this week in an attempt to resuscitate lending.
“There’s no bottom to the stock markets now,” said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. “There’s no clue when it will stop.”
Oil prices plummeted to a one-year low below US$83 a barrel in Asia.
Yes, Virginia, There Is A Bottom
There is a bottom somewhere, but this isn’t it. I can’t pretend to know what the markets will do today in the US, but I can say with a fair degree of certainty that the trend is down in the short term, maybe even the medium term.
There’s a planned sale of some Lehman Brothers’ assets scheduled for today. If things go well there, maybe some cash will get freed up. Maybe some folks won’t be as scared. Maybe they’ll start buying again…
Or maybe not. A good sale of bad assets probably wouldn’t be seen as a positive sign, and might even spark another late afternoon stampede for the door. It’s times like this I like to remember Jon’s Last Rule Of Markets.
LYRICS:
I used to think that Freddie Mac was a pimp,
but now my mutual fund is the one walking with a limp
And Fannie Mae, you almost failed me, boo
–But the faithful feds, they bailed you.
Poor Lehman Brothers….yall got the shaft (shaft!)
The government said, good luck with that (shaft!)
And AIG, old Uncle Sam he loaned you
85 Billion, but now he owns you.
Some cry out, Weve become a socialist state!
While others say, We need to regulate.
Should I vote McCain or pull the lever for O-bama?
Im thinkin either way, Ill be movin back in with momma.
(but the cookins good—and I think she’ll drive me to work)
You see, I dont have much job security
Im an internet comedian…Im not sure thats even technically a job. I dont think it is.
I cant put my finger on it; but you know things have gone wrong
when I cant even afford to finish this…
There will be new jobs. And if I don’t miss, my guess is there will be lots of them. And I think the folks who get those jobs are lucky people, because I think those jobs will be fun.
The universe seems to constantly carry on a sublime balancing act. But since what it’s balancing is life, a force that never sits still, it has to constantly shift its center, its fulcrum, to correct for the movements life creates.
This constant movement of the center makes things seem very unstable sometimes, but it’s good to remember that it’s a natural thing.
Think of a pendulum. It will swing exactly as far to one side as the other if no other force is acting on it.
Using The Force
This mess will all balance out. Soon we will all be talking about the next global crisis, which is the real one… the climate crisis.
Everyone knows that the best way to fight the climate crisis is to eliminate our production of greenhouse gases. It will be exactly that which will propel the next financial boom around the world.
Green technology investment has not slowed during this financial crisis and in fact is expected to grow 20% next year. It will emerge as one of the leading industries of our future.
Even China, the nation everybody points to as the biggest problem (after US), seems to be re-thinking its stance on coal as an energy source. As reported by ClimateProgress and ChinaDaily China has halted all but two of its Coal-to-Liquids projects.
In a notice posted on its website on September 4, the National Development and Reform Commission (NDRC) said that, apart from two projects operated by the Shenhua Group, none could go ahead before receiving official approval, because CTL is “a technology-, talent- and capital-intensive project at an experimental stage with high business risks.”
All those people and all of us as well are still going to need that energy. And we will get it. We just won’t be getting it from the places we have been for the past couple of centuries.
The New Normal
It’s obvious that things are going to change a bit. But things will also stay the same. We’ll have some really rough times for awhile, and then things will get slightly better – you’ll feel normal again. And then a bit better yet until pretty soon, you’re bored on your drive to work.
But even that will be a little different. Here’s what Ian Kennedy(everwas.com), who leaves Yahoo this week for a new job at Nokia, says about the future of your ride to work.
Imagine this use case. Your phone knows your alarm goes off at 6am every morning, that you drive the San Mateo bridge every weekday on your way to work at around 7:30am. It’s entirely possible for your phone to automatically check traffic conditions before you leave sometime after you awake and let you know that there is heavier than normal traffic and suggest an alternate route and read it out to you in a phone call, while you drive. If you’ve got your calendar in there, there is no reason that your phone can’t offer to call ahead and let the people in your first meeting know that you’re running late. All the pieces are in place to make this happen, automatically, right on your device. That’s the kind of service that will enhance your life, that’s the kind of service suite I’m excited to build.
.
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I am Jon, and I think that’s something to look forward to.
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