Most Americans still appear to be operating under the delusion that the "recession" will soon pass and that things will get back to "normal" very soon. Unfortunately, that is not anywhere close to the truth. What we are now witnessing are the early stages of the complete and total breakdown of the U.S. economic system. The U.S. government, state governments, local governments, businesses and American consumers have collectively piled up debt that is equivalent to approximately 360 percent of GDP. At no point during the Great Depression (or at any other time during our history) did we ever come close to such a figure? We have piled up the biggest mountain of debt that the world has ever seen, and now that gigantic debt bubble is beginning to pop. As this house of cards comes crashing down, the economic pain is going to become almost unimaginable.
U.S. stocks slid, sending the Standard & Poor’s 500 Index to a 12-year low, as the government cut shareholders’ stake in Citigroup Inc. by 74 percent and the economy shrank at a faster pace than previously estimated.
Citigroup plunged 39 percent after the Treasury agreed to convert as much as $25 billion of preferred shares into common stock in a third rescue attempt. Bank of America Corp. tumbled 26 percent, snapping a four-day rally in an S&P 500 group of banks. Alcoa Inc. and Boeing Co. fell more than 3.8 percent after the Commerce Department said gross domestic product contracted at a 6.2 percent annual pace in the fourth quarter.
“The City story is a nightmare that keeps getting worse, with no end in sight,” said Matthew Kaufler, money manager at Federated Clover Investment Advisors, which oversees $2.1 billion. “The fact that it’s occurring on a day when we’re getting horrible GDP numbers adds some kerosene to the mix.” Read more.....