Stuart Hoffman, chief economist of PNC: ““We’ve had this ‘What me worry?’ mentality. And this is a little bit of a wake-up call.”

James Trippon, editor of the China Stock Digest:

Many Americans know China as the manufacturing colossus that turns out cheap electronic and consumer products. Very few people realize that China has grown into one of the World’s largest economies.

A severe recession in China could spell economic disaster for the American economy and American investors; it may even decide the next presidential election.

James says that China’s low labor and manufacturing costs have propped up the American economy for years. A disruption to China capital markets could create a disaster for China’s economy. That in turn would affect cost of consumer products in the US, and the value of the dollar

GLOBAL EONOMIC SHOCK AS MARKETS FALL
OIL DEAL IN IRAQ MAY LEAD TO US STAYING
MURDOCH UNDER INVESTIGATION IN UK

As readers know I have become very concerned with the stability of our economic system and the way so much of our business press seems to feel the need to bolster consumer confidence by only stressing the upbeat news. As a small and ineffectual corrective, I have been including items about debt and economic inequality almost every day. The other day I quoted from a website with the upbeat quotes of the “experts” right before the crash of ’29 proved them all out of touch. Recall that after the first shock in ‘29, there was a quick recovery and everyone said “nothing to worry about.” Black Friday followed!

Remember the law of gravity–what goes up must come down:

Kiyosaki: All booms eventually go bust.
http://finance.yahoo.com/expert/article/richricher/24515

I also made a film IN DEBT WE TRUST that is subtitled, “America Before the Bubble Bursts.” (indebtwetrust.com) That bubble did a little bursting yesterday as a major stock plunge hit Wall Street. And its reverberations were felt in Asia by the time the sun rose in the East.

Here are some of last night’s reports:

CBS MARKET WATCH FOCUSED ON THE CHINESE ROLE
Shanghaied again: Losses continue for Asian markets that triggered global sell-off

Stock plunge that started Tuesday in China, rippled around the world, comes back to Asia, where Shanghai, Japan, other major markets continue downward slide in Wednesday trading.

WHAT’S NEXT: More losses likely in short term. If long-term bond yields remain low and economic growth holds steady, bloodletting will likely be brief, investment strategists and traders are saying.

BBC: Steep dip as Asian markets open
Asian markets slide following the dip in global stocks on fears about China, with the Nikkei losing 3.8%.

CNN: The Dow sees its biggest one-day drop in 3 years, ending about 400 points lower after plummeting more than 500 points earlier in the day.

Dow dives deep on Shanghai index plunge
http://e.ccialerts.com/a/tBF5Jm1AO9jmfAdb01pAoX4bhTS/in10

But then–sound the bugle right before the opening bell–the air fills with predictions of a likely rebound. This was CNN this morning:

U.S. stocks were poised for a big rebound at today’s open, after yesterday’s huge selloff that included the Dow industrials’ biggest one-day drop since 2001. “After the violence of yesterday’s sell-off, it would be typical for us to rebound today,” said Art Hogan, chief market analyst at Jefferies & Co. “I think if we do get a bounce, I wouldn’t be surprised.”

And yet, there are deeper problems in our debt driven economy. Alan Greenspan yesterday warned of a “recession.” The New York Times reports:

“It was sort of one of those days where somebody snaps their fingers, and the market’s hypnotic trance is over,” said Stuart Hoffman, chief economist of PNC Financial.

In China, where the stock market had been soaring, the government had warned banks about improper loans to finance stock speculation.

In America, the selling seemed to add to worries that a decline in the housing market, and problems in particular with loans to risky borrowers, could spill over. And a report yesterday indicating that orders for durable goods — items like washing machines and computers — were surprisingly weak in January revived doubts about the strength of the American economy.”

BBC summed up whats happening worldwide:

The UK’s FTSE 100 index fell by 1% in morning trading. That took declines in the past two sessions to 3.2% and knocked £52bn off its total value.

France’s Cac 40 index dropped by 1% and Germany’s Dax lost 1.1%. Earlier, markets in Asia, Australia and India had all suffered substantial losses.

Investors are questioning the outlook for economic and earnings growth.

FROM ECONOMIC CRISIS, WE MOVE TO THE NON-STOP WAR

NYT: The Taliban claimed responsibility for the suicide attack outside a U.S. base, but the claim could not be verified.

AP: BAGHDAD, Iraq - U.S.-led strike forces seized suspected Shiite death squad bosses Tuesday in raids that tested the fragile bonds between the government and a powerful militia faction allowing the Baghdad security crackdown to move ahead. The sweeps through the Sadr City slum were part of highly sensitive forays into areas loyal to radical cleric Muqtada al-Sadr, who has ridiculed the 2-week-old campaign for failing to halt bombings by suspected Sunni insurgents against Shiite civilians.

WILL WE EVER LEAVE IRAQ?

Congressional Democrats rule out Iraq war fund cut

David Podvin on the “EXIT STRATEGY”

When George W. Bush signed Executive Order 13303 that effectively transferred Iraqi oil into American custody it constituted history’s greatest acquisition of wealth. Iraq contains proven oil reserves of 115 billion barrels, and geological surveys indicate that a similar amount of unconfirmed petroleum deposits exist. At current prices, the oil that lies beneath the Iraqi sand is worth approximately fourteen trillion dollars.

If America were to leave Iraq it would constitute history’s greatest forfeiture of wealth, so America will not leave. Although the Democrats are saying the United States must withdraw sooner and the Republicans are saying the United States must withdraw later, it is performance art worthy of Oscar consideration. The American military isn’t going anywhere. Not sooner. Not later. Not ever. America’s exit strategy is to stay, which explains why hugely expensive military bases are being constructed throughout Iraq. The world’s only superpower did not build its financial juggernaut by being the type of impetuous nation that repudiates fourteen trillion dollars.

egy/#more-2776> .)

MORE ON THE OIL DEAL; Antonia Juhasz and Raed Jarrar, Foreign Policy In Focus:
http://ga3.org/ct/51NLpbK1HmlS/

David Ray Griffin: Neocon Imperialism, 9/11, and the Attacks on Afghanistan and Iraq

My purpose in publishing this essay is to introduce a perspective, relevant to the debates about the wars in Iraq and Afghanistan and the impeachment of President Bush and Vice President Cheney, that thus far has not been part of the public discussion.

http://www.informationclearinghouse.info/article17194.htm

Robert Jensen, TomPaine.com: The Bipartisan Empire

http://ga3.org/ct/vdNLpbK1Hmlq/

IRAELI’S READY FOR WAR—BUT AGAINST WHOM?

Uri Avnery writes in part:

” “We are ready for the next war,” a reserve soldier in the Israel Defense Forces told a TV reporter this week, on the scene of a brigade-size maneuver on the Golan Heights.

What war? Against whom? About what? This was not stated, and not even asked. The soldier saw it as self-evident that war will break out soon, and it seems that he did not particularly care against whom.

Politicians are used to expressing themselves more cautiously, in words like “If, God forbid, a war should break out” But in Israeli public discourse, the next war is seen as a natural phenomenon, like tomorrow’s sunrise. Of course, war will break out. The only question is against whom

Cuba’s Castro says he is recovering, feels stronger
http://www.alertnet.org/thenews/newsdesk/N27428997.htm

BBC posted an “edited for brevity” transcript of Fidel-Chavez phone conversation. A quick, fun read

http://news.bbc.co.uk/2/hi/americas/6403683.stm