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Rouge DragonBRONZE Member
Insert Champagne Here
13,215 posts
Location: without class distinction, Australia


Posted:
I'm terribly sorry - I don't speak economy.

Words like Dow Jones sound like someone's name, a run on the bank is something that happens in Mary Poppins and shares sound like something you tell a kindergarten child to do...ok, so I do actually understand what shares are, but that's about my limit.

But I realise that it's probably very important for me to know considering people have been throwing around words like great depression.

Could someone help me out please?

i would have changed ***** to phallus, and claire to petey Petey

Rougie: but that's what I'm doing here
Arnwyn: what letting me adjust myself in your room?..don't you dare quote that on HoP...


MalcolmSAPPHIRE Member
HOP admin
1,054 posts
Location: New Zealand


Posted:
I found this a reasonable article on the crisis

From USA today...
See https://www.usatoday.com/money/economy/2007-12-03-debt_N.htm

My thoughts....

USA has borrowed too much money to keep their lifestyle.
An average of $30,000 is owed by every man, women and child in the USA.
Many can not keep borrowing anymore and must live within their income.

USA is a big buyer of goods. If they can not afford new goods then it could mean factories will shut and workers will loose jobs even in other countries.

It will be very tough times I think affecting the whole world.

But if we help each other we can make it through this time in history.

How quickly this will effect other people living in other countries, will depend in your closeness to international trade.
Seeing as most things are imported these days, it may be sooner than later.

May your balls always burn


Mother_Natures_SonSILVER Member
Rampant whirler.
2,418 posts
Location: Geelong, Victoria, Australia!


Posted:
i'm not the greatest at this either...

A recession is a slowdown of economic activity.

I believe it tends to be a cycle... when theres a break in the chain somewhere between consumer and supplier, such as the one that is going to hurt Australia if we're not careful... the national credit card debt... then we have less people spending, as a result, companies make less money, manufacture less product... and then require less people to work for them... this results in those families layed off spending less and the cycle doubles back on itself.

I think thats around the idea... a depression is just a long lasting and severe recession that is not clearly defined.

Someone correct me if I'm wrong.

hug


EeraBRONZE Member
old hand
1,107 posts
Location: In a test pit, Mackay, Australia


Posted:
In a nutshell...

In the good old days, you had to get on your knees, beg and promise your first born to a bank to be considered for a mortgage, you had to have 20% of the house price in cash as a deposit and you'd only be loaned 3 times your annual income (3.5 times for a couple).

These days there's these "low doc" loans. You've seen the adverts on TV which say "Bankrupt, no money, no income, want a loan? Come to us..." That's those guys.

So, low doc loans are for people who cannot prove their credit history, have no savings and get money with virtually no questions asked. They have been given it on the grounds property prices go up so therefore they'll be able to make repayments, that's the assumption.

A Security was created from thes "bad" loans which was sold to investors by the cedit agencies, with the assurance that the CDO will be bought back incremenatlly as the loans are repaid, these investors were insurance companies, councils, international banks etc - they cannot be sold to civilians. Another assumption was that some of the loans would default, but the majority would be paid back.

So, Joe Blogs with his four bedroom double garage media room MacMansion finds he can't pay it back, in the US, unlike the UK and Australia, if you default on a mortgage you lose the house but the banks don't persue you to get the rest of the money back, so there's been a hell of a lot more defaulters than was expected, the Security insurance doesn't cover it, the banks are stuck with a glut of houses, house prices ar falling and it's a vicious circle.

No one in the Western world is safe from this; all banks have bought into the scheme, many regional councils have too. How much you're affected depends on the level of individual investment by the companies invilved in your life, but you don't have any way of knowing which ones they are.

Hopefully this godawful easy credit thing will vanish into the big bin marked "seemed like a good idea at the time" and people will buy what they can afford.

There is a slight possibility that I am not actually right all of the time.


meshunderlayBRONZE Member
Juggler/Spinner
612 posts
Location: Hicksville, New York, USA


Posted:
I'll tell you, I've avoided credit for all things so far.

I feel bad though, that the only reason I owe a bank money is because schools charge an arm and a leg to get in, and for the lower-middle class, like myself, I can't actually afford schooling without a loan.

*shrug* I know I should be worried, maybe, about living in America as the 2nd great depression is in the works, but, I just don't care anymore. If I had the money, I'd think about leaving, I have some friends in Ireland...

Maybe I could just take out a loan to get me there.... =)

MalcolmSAPPHIRE Member
HOP admin
1,054 posts
Location: New Zealand


Posted:
Ah yes "no deposit" "100% mortgage" "Interest free for 2 years" "No payments until 2010" "Why wait when you can have it now" "Buy this house now and get a free Car!" "High return on Investment!"
these are evil hooks to get you trapped or steal your money! frown

There once was a time here in New Zealand when the ONLY "personal loan" you could get was to buy a house. Everything else you had to pay cash. Maybe those times should come back?

May your balls always burn


meshunderlayBRONZE Member
Juggler/Spinner
612 posts
Location: Hicksville, New York, USA


Posted:
I'm pretty sure, but don't quote me here, that I can pin point one of the problems the economy is facing.

See, a while ago, maybe.... 20 years back (I'm running off vague memory here folks) the US Dollar used to be backed by something I like to refer to as gold.

Nowadays, the government has flooded the economy with paper.
The paper has ink on it; pictures, numbers, text.
The money is absolutely valueless.

*shrug*

That's not the whole problem I'm sure, but it can't be a helping factor.

If I'm wrong about this, which I don't doubt in my post-class mind-slowed state, then oops. =)

natasqiaddict
489 posts
Location: Perth


Posted:
I'd say I'm in the same bucket as Rouge Dragon. Never did economics at school, have a few tax returns waiting for me to complete...

So what does this mean for people who have money in the bank, (I'm not old enough to have a mortgage etc yet).

Could my bank go bankrupt? Could all my moneys go bye bye?

How do I find out what my bank does with investing?

EeraBRONZE Member
old hand
1,107 posts
Location: In a test pit, Mackay, Australia


Posted:
That's why Channel 7 employs Kochie; finance in idiot's terms (I'm one of them Tax file returnnn....zzzzz)

As I understand it, your bank does not have your money in paper; it's invested in various schemes, so if your bank goes under it takes your money with it. A mortgage lender is a more attractive proposition for another company to buy out - for every $100,000 you borrow, over the length of your loan term you repay $220,000 (or about 120% plus the initial capital). If a bank loaning normal (not low-doc) loans goes under, it'll get a buyer. Australian banks are set up differently from US ones - their problems stem from investing in US investment schemes and losing a portion of their interest rather than inherently bad loaning practises, don't forget about a month ago investors in ANZ threw a wobbly as it only made 3 billion dollars, not the forcasted 4 billion in the last quarter. Poor little ANZ

There is a slight possibility that I am not actually right all of the time.


MikeGinnyGOLD Member
HOP Mad Doctor
13,923 posts
Location: San Francisco, CA, USA


Posted:
Well I did have the money to go to Australia.

My portfolio is now worth F/A. If I hadn't already paid for my hotels in London, I'd be heading straight back to the U.S. today.

We'll see what happens in the next three weeks. But for now, although I have the tickets bought already (for free on FF miles), my trip to Oz is canceled.

-Mike

Certified Mad Doctor and HoP High Priest of Nutella



A buckuht n a hooze! -Valura


_Clare_BRONZE Member
Still wiggling
5,967 posts
Location: Belfast, Northern Ireland (UK)


Posted:
Hmmm.

If you google The Zeitgeist Movie, it's last section has quite a good explanation of finance, and a possible reason behind all this.

The fact that people borrowed beyond their means, and then 'all of a sudden' there's no money left, forcing a collapse in some big banks (which governments then 'save', at the cost of billions to the ordinary people) - it all seems very convenient to me.

As with previous recessions, a small number of very powerful and influential people will be making an obscene amount of money from this crash.

These things don't just happen... just like the Iraq war wasn't an accident because they thought there was WMD hidden somewhere.

The world governments are completely controlled by their economies (NOT their electorate), as witnessed by the buy-outs of over-stretched banks. (WHY should we have to pay for financiers greed?)

The vote that failed in the US yesterday (when they voted against giving $700bn of taxpayers money to the greedy fatcats who caused alot of this problem in the first place), was a good thing - although it will be voted for eventually, no doubt (after sufficient pressure is applied to those who voted against).

Ladies and gentlemen, we are currently in the middle of a long and drawn out daylight robbery.

Small numbers of people and giant corporations have created economic meltdown, so they can buy more companies for a knockdown price.

When the markets then return to form (as they will), they will make billions - as well as eliminating the competition. (Possibly, with added banking restrictions which will only go towards benefitting them.)

We are slowly but surely being orchestrated towards a one-world economy, with a handful of people deciding how the planet is run.

And it is all unfolding, quite horrifically and legally, in front of us.




(Of course, none of this matters to the poor sods who have lost everything. My Uncle, who is in the advanced stages of MS, has invested all his money in shares. His nestegg (which was to look after my aunt who has cared for him for the past 30 years) has been wiped out. What will she do now?)

Getting to the other side smile


MikeGinnyGOLD Member
HOP Mad Doctor
13,923 posts
Location: San Francisco, CA, USA


Posted:
Clare, yesterday's vote wasn't a good thing.

It's going to wind up costing U.S. taxpayers a lot more now than it would have had it passed. But the people who are going to get stuck with it now are going to be the poor, the people who are going to lose their homes and their cars and their jobs. Meanwhile, the rich are going to get off scot-free, particularly the fat-cat execs who will bail out with their golden parachutes.

Had that vote passed, your uncle's nest egg might still be there. And I might still be going to Australia.

-Mike

Certified Mad Doctor and HoP High Priest of Nutella



A buckuht n a hooze! -Valura


Mr MajestikSILVER Member
coming to a country near you
4,693 posts
Location: home of the tiney toothy bear, Australia


Posted:
oh, sorry to hear that Doc.

personally i never trusted the stockmarket, in my mind its always sounded like gambling.

banks are not much better, but as i dont really have much money to lose i'm not too concerned.

the way i had the situation explained to me was Big Banks started giveing NINJA loans. No income, No job or assets. but BANG, heres a debt you cant really afford to pay, and since housing prices are going down, debts cannot be repaid with the sale of the now repossessed homes.

silly americans. they're meant to be the most powerful nation on earth and they just ran themselves ashore!

"but have you considered there is more to life than your eyelids?"

jointly owned by Fire_Spinning_Angel and Blu_Valley


StoutSILVER Member
Pooh-Bah
1,872 posts
Location: Canada


Posted:
Originally Posted By: Doc Lightning

My portfolio is now worth F/A. If I hadn't already paid for my hotels in London, I'd be heading straight back to the U.S. today.



OY !!!!!!!! Tell me about, m portfolio's tanked the equivalent of a flight to,and a month in Australia so far this month, I just hemorrhaging cash out there into the ether. I met with my financial advisor yesterday over this, and he knows I have a chunk of cash just sitting here doing nothing and he's telling me " smart investors buy low, sell high" and now is the time to buy low. Do I believe him, or just go for a high interest savings account instead ?

Clare...are you aware that Zeitgeist is really just a long drawn out piece of agitprop that's really just an opinion piece presented as fact ? Most of part three comes from Arron Russo's movie From Freedom to Fascism which he made after being busted for tax evasion...2 million bucks worth and he didn't want to pay it. The problem here is most people don't understand fiat monetary systems and , intuitively, the gold standard just seems like a "better" idea. All western governments use this system.

And then there's all those lies about income tax being illegal....not true check it out.

https://www.conspiracyscience.com/article...e_gold_standard

Fire_MooseSILVER Member
Elusive and Bearded
3,597 posts
Location: Scottsdale, AZ, USA


Posted:
Originally Posted By: Mr Majestiksilly americans. they're meant to be the most powerful nation on earth and they just ran themselves ashore!



Ya but whos really silly here? Everyone else wants to be us :-p


(well maybe not now)

O.B.E.S.E.

Owned by Mynci!


_Clare_BRONZE Member
Still wiggling
5,967 posts
Location: Belfast, Northern Ireland (UK)


Posted:
Doc, the 'rescue' package would be fine in the short-term, but in the long-term, it allows these financiers the ability to do it all over again.

People are going to be screwed either way... unfortunately.

As for your shares, and my uncles, both will rise in value again eventually - which is fine if you're young (and you can go to Australia again, even though it's frustrating now), but not so fine if you don't have the years to wait for it to rise.

(And Stout, I realise Zeitgeist is an opinion piece - it would be impossible to give All the facts about religion, 9/11 or financing in three hours - but for the most part, does explain basic finance in quite an easy to understand way - which was the original question.)

Getting to the other side smile


StoutSILVER Member
Pooh-Bah
1,872 posts
Location: Canada


Posted:
Hi Clare...the problem lies in using the word facts and Zeitgeist in the same sentence.

Part 1.....a bunch of crap made up by a pagan British archaeologist in the 1800's. Widely considered a discarded fringe idea by scholastic and amature Egyptologists and promoted by an author going by the nom d'plume of Araycha S ( really Dorothy Murdock ) who just happens to be selling books on the subject.

Part 2....Dylan Avery's Loose change. Originally conceived as a work of fiction, but repackaged as a "documentary" whose "facts" are a cross between outright falsehoods and misdirection.

Part 3...I'd be highly leery about citing any of that as an information source.

Zeitgeist's main goal is to piss you off, to make you think that pretty much everything you know or think to be true is, in fact, a lie and they present it to you in an easy to digest fashion that's pretty much easy to relate to for those too lazy to run down the "facts" as presented by the movie.

So, yes, you may get some ideas about how finance works from the movie, but it'll be so clouded with inaccuracies that you won't learn much of anything.

That USA Today article that Malcolm linked to upthread gives a better understanding of "what's really going on" than Zeitgeiest does. We have to look at questions like....What started the whole sub prime mortgage crisis in the first place...and...Just when did the American economy start heading south ( ie when did the US dollar start falling in relation to the Euro ? )

FireTomStargazer
6,650 posts

Posted:
Errm - just on a short note (only 8 hrs to my next Thai Boxing training and this morning was already driving me to my very limits).

Gold as a security for money has been as artificial as it is today. When Gold prices changed, so changed the value of money - it just has proven to be impractical (especially since you can't eat Gold)... precious metal (or natural resources such as oil) is not what we want our economies to be based upon (alone)...

Your money in the bank is safe, even if the bank goes bankrupt - as long as you not got it in, say the Colombian Bank of Medellin. Actually every penny is backed up. There must be a far bigger crash than the current to repeat a "black Friday" scenario.

You got your money invested in stocks? Keep them. You got it invested and urgently need the cash? You've been gambling and it might serve you right (+ 1000 experience points). You got cash sitting somewhere? Maybe it's a good time to invest - but know that you should not invest anything that you NEED for living. If anything, this should teach you something. If you're still out for gambling - up to you. How often have the markets crashed (and you still failed to set and adjust your "stop loss limit") - they always came back.

700 billion missing in the (US) market... not quite peanuts. But where did the people go with this money? It didn't just evaporate into thin air. It's just that ANOTHER (US) bubble has burst...

(see guys this is ONE of the few reasons, why I'm SOOO tired of this US-navety... it's unfortunately the US who smear the rest of the world their poo into the face - now the US taxpayer has to pay the bill? Rightly so, maybe you're up to finally learn a lesson: blind obedience and faith in your superiors take you (and the rest of the world) to the verge of chaos and poverty, whilst a few can never loose the game)

Unfortunately it won't just be the US taxpayer...

Those who got the money (namely other banks, financial institutions and big time investors) already shifted their funds to government bonds and in a few days/ weeks they will go back into the market and buy for cheap, because the average taxpayer sold out.

Learn it guys - as a small time investor you can't really win the game. You always get fed the crumbs. You want to invest money on the stock market - and make reasonable profit? It's a job of 20hrs a day - at least... so you better have someone do it for you who knows the game inside out - and others who put their money up with you (= managed funds).

Stock market IS gambling. It's a bet. "I bet, your company will have success and make xxx amount of profit within the next year, therefore I buy a share of your company (and provide you with yyy cash)".... "oops, you will only make xx amount of profit - damn, I try to sell my share as long as it's still worth yy.9y"

As YOU are THE LAST to hear about a problem (political conflict, natural disaster, the CEO got an affair with the controller's wife) - before YOU got to get on the phone and tell your broker to sell off and WAY before he placed that order on the market - the value plunged.

Now we're facing a situation where some brokers borrow shares (from banks) sell them (for 100) and bet that they will loose value, so they can buy the same shares back (for 80) and return them - 20 is profit. If you ask me why anyone would lend out their shares for this - I'm currently asking myself the same question and for the time being this sort of trade is suspended and under review.

I for my part think it's bad for the market that these 700.000.000.000 $ are not going to be poured - I believe that the US taxpayer should actually finally and ultimately pay for the misconduct and arrogance they have sanctioned so many years - but at the same time (as Clare has correctly said it): it will only feed and comfort the fatcats to proceed with business as usual. In the end it will cost the taxpayer more than 700.000.000.000 in lost revenue and jobs and such - but it's a necessary correction.

If it doesn't hurt (really bad) they won't learn - and with "they" I mean that average fool who thought that he'll be able to exploit the banks by taking on crazy loans.

You want to thank someone for this crisis? Thank your neighbor who took more loan than he could repay (and sort of knew it, just has been hoping it would hit YOU instead). Thank anyone who took a loan, instead of paying it straight away.

GUYS - if loans would not be a business, banks would not give it. You're far better off to wait, till you got the cash together, than to draw against the tomorrow.

Errm - once I met an ex-broker in Bangkok. He was about age 28 (and retired after a heart attack) - I asked him to give me a hint, where to put my cash: "You got money to invest?" "Yes" "I got one advice for you: Invest it in your own business."

"Someone I was close to" was working in the IPO department of a bank and I got some insights. What she was telling me exceeded my darkest imaginings in a banks practices. On 9/11 (after not having followed that brokers advice) I watched the second plane crash and it became obvious that it has indeed been a terrorist attack... in the period that I've been able to finally contact my bank and tell them to sell off, I lost about .... let's put it this way: You'd be happily selling your house to me for the equivalent.

USA: That (repeatedly silly) claim, that "everybody wants to be like (the) us" is not as much a reflection on your greatness, but of the foolishness that prevails in the rest of the world... wink

Forgive my rambling, 7 hrs to go till boxing.... please sprinkle some wink and hug - a great deal of compassion for Mike and the advice to see a stock market investment as a LONG term investment (10 - 15 years+) - finally get it in your head that stock markets around the globe is like Las Vegas: the bank always wins (most)...

Namaste-ji

the best smiles are the ones you lead to wink


FireTomStargazer
6,650 posts

Posted:
Stout - the currency exchange rates have nothing to do with it. Actually a weaker Dollar meant that USAmerican goods were available for cheap(er) and therefore accelerated their desolate economy. Please bear in mind that it seems to have been the US republican government who (again) tries to leave the greatest chaos and opposition behind, so a Democrat can fix it, only for the US to vote for another larda55 to ruin it again.

I have not seen Zeitgeist, but from what I understand Clare to have posted (might be wrong tho') it actually DOES reflect much of the mechanisms of how the rich get richer and the poor get poorer... reckon who benefits from low real estate prices? Ultimately real estate prices WILL rise - only that now nobody has the cash to buy (except for those who pulled their bucks in time = big (insurance/ financial) corporations).

This is NOT a CT - not even a conspiracy. This is how it works. The only reason for people like "you" to view it as a conspiracy, is that you got to pay the bill and the Dollar is magically floating away, instead of in. If you happen to raise your focal point from that bill, you may notice this


Non-Https Image Link


The past has proven the public to respond far better to the carrot than the stick... much like the proverbial frog in the pot of water - "sim on low heat"

And basically my 'knowledge' of economy is rather superficial - please ignore what I have garbled above - I actually should be sleeping by now.
EDITED_BY: FireTom (1222801172)

the best smiles are the ones you lead to wink


StoutSILVER Member
Pooh-Bah
1,872 posts
Location: Canada


Posted:
Tom...the exchange rates were a sure sign that the US economy was in trouble with the dollar starting it's downward slide in 2003, just after the Iraq invasion.

Which is where the money is going...yes there's a real conspiracy.

You're right about comparing the stock market to going to Vegas, and also with the idea that if you want to do the market as a career it's a full time job. A friend of mine was a stockbroker, and her boss retired with 30+ years of experience and decided to spend his retirement as a "day trader". With all his know how, he claims his yearly take averaged out to about 30 grand....

I've got money in managed funds, low risk, and I'm actually scared to check the balance today...I just don't want to know right now. I know eventually it'll recover....eventually, but how much will be left ?

The fact that my money would be backed up in a savings account is of little solace to me now...I decided to take the risk and up until last year, I'd been making an acceptable rate of return. I'm not going to chicken out now, I could see myself benefiting from lower real estate prices should I decide to move to a place where I could actually afford real estate.

Speaking of...I guess it all depends on who you define as "the poor" The street I live on is "middle class" and you can't buy in here for less than a million dollars....seriously.

Meaning all those average working class people who bought in here 20 odd years ago are now sitting on a huge swack o' cash should they decide to liquidate and move to a more affordable community, the closest being about an hour away.

FireTomStargazer
6,650 posts

Posted:
Really I should go to bed - going over my two last posts again, I sound like a bloody "know it all smart a55" and that's one of the reasons, why I occasionally and rightfully get spanked and/ or ignored - I just might create exactly that reaction in people, which (in turn) might even make them turn away when they read my name under a thread or post in SD.

Sorry guys, need to take a short brake - thanks for keeping up with me, tho'

hug

Besides: my "knowledge" upon really any kind of subject is superficial - I really am no expert in anything, but sounding smart.

the best smiles are the ones you lead to wink


MikeGinnyGOLD Member
HOP Mad Doctor
13,923 posts
Location: San Francisco, CA, USA


Posted:
FireTom,

The bitch is that I've never taken out a single penny of loan in my life. In fact, I am planning on taking my first ever loan to buy a car when I get back. Assuming I still can. My credit is first-rate (having no debt), but I don't know if anyone is loaning anymore.

But if you did what was supposedly the wise thing to do and invested your money in stocks, guess what you just got? You got a very hot, spikey pole up the arse. And not in the good way, either. wink

I will not be investing my money in American markets very much anymore. I will be investing in European markets as much as possible as they seem far more stable than the U.S. market ever has a hope of being again. I am more interested in watching my investment steadily grow than taking bets on when the next hill and trough will be on the roller coaster that is the NYSE.

I've never been interested in getting rich. I just don't want to be poor.

-Mike

Certified Mad Doctor and HoP High Priest of Nutella



A buckuht n a hooze! -Valura


Rouge DragonBRONZE Member
Insert Champagne Here
13,215 posts
Location: without class distinction, Australia


Posted:
Ok now i'm more confused...if doc has no debt, how is he unable to come to Aus? cos then surely he still has his money and some bank didn't just blow it? frown

i would have changed ***** to phallus, and claire to petey Petey

Rougie: but that's what I'm doing here
Arnwyn: what letting me adjust myself in your room?..don't you dare quote that on HoP...


SethisBRONZE Member
Pooh-Bah
1,762 posts
Location: York University, United Kingdom


Posted:
Originally Posted By: Doc LightningFireTom,
I will be investing in European markets as much as possible as they seem far more stable than the U.S. market ever has a hope of being again.

And because all of Europe's business' have American and other Foreign Investors, our economy will follow yours right into the trash can; if that's how it turns out.

1 of our main building societies, Halifax, was bought out the other day by Lloyds. There's talk that another two banks are going to be bailed out/bought off/merged by the government, all as a direct result of the US housing crisis.

This isn't meant to sound like a post blaming America, I'm just pissed off that the economy of our country is not under our direct control (not that it ever has been, but only recently has it really become a major issue).

After much consideration, I find that the view is worth the asphyxiation.
--------------------------------------------------------------------------------------
I may disagree with what you have to say, but I will defend to the death your right to say it.


hamamelisBRONZE Member
nut.
756 posts
Location: Bouncing off the walls., England (UK)


Posted:
I don't think we can wholly blame the US for the UK economy going a bit nuts- the silly loans (driven in part by unrealistic house prices getting so far away from anyone's reasonable buying ability making high % loans necessary to buy one) have been a major issue here too..

THE MEEK WILL INHERIT THE EARTH!


If that's okay with you?


SethisBRONZE Member
Pooh-Bah
1,762 posts
Location: York University, United Kingdom


Posted:
Yeah, Like I said, I'm not wholly blaming America or any other foreign investors group, but y'know, maybe we could have coped with the housing market issues in the UK if that was the only problem facing us, but when you combine it with half our banks having investors from another country whose economy is ALSO going down the tubes, and suddenly it's:

1. Out of our control

and

2. Too many problems / Too large a problem for our economy to cope with.

So no, our economic problems aren't caused by Foreign Investors, but it doesn't help much, either.

After much consideration, I find that the view is worth the asphyxiation.
--------------------------------------------------------------------------------------
I may disagree with what you have to say, but I will defend to the death your right to say it.


FireTomStargazer
6,650 posts

Posted:
One of the issues is that the NYSE (New York Stock Exchange) is playing such a dominant role in the worlds stock exchange system, that by the time it catches a cold, the whole world coughes with it.

This might become a thing of the past (just as Mr. Ahmadinejad has recently predicted it and) - as the US Dollar is already in the dusk of loosing its relevance as being the worlds reference currency.

Doc - no ways I was trying to indicate that it's been *you*, *we* have to thank. Please be assured that I have nothing but compassion for your current situation (BTDT myself).

The EU is - and that should act as a possible explanation - the largest combined Western market:

pop. 499,021,851 (US 305,293,000)
GDP $14.712 trillion (US $13.543 trillion)

(Stout: I remember the time when the Euro was going down (shortly after getting introduced) and then came back and surpassed the Dollar. The head of the European Central Bank (the European Fed.) has been very concerned about this, measures were taken to curb this development, but without success. As a matter of fact, banks worldwide were trying to buy more $ but it didn't stop this development.)

I'm not a friend of collective blame, yet that average US citizen has to ask himself: why are we currently held responsible for so many problems in the world? One answer is: your political and economical system. Now, what more is left of a country? The answer to that one is: the people.

Originally Posted By: Spiegel (the German "Time"-equivalent)
George W. Bush has grown old, erratic and rosy in the eight years of his presidency. Little remains of his combativeness or his enthusiasm for physical fitness. On this sunny Tuesday morning in New York, even his hair seemed messy and unkempt, his blue suit a little baggy around the shoulders, as Bush stepped onto the stage, for the eighth time, at the United Nations General Assembly.

He talked about terrorism and terrorist regimes, and about governments that allegedly support terror. He failed to notice that the delegates sitting in front of and below him were shaking their heads, smiling and whispering, or if he did notice, he was no longer capable of reacting. The US president gave a speech similar to the ones he gave in 2004 and 2007, mentioning the word "terror" 32 times in 22 minutes. At the 63rd General Assembly of the United Nations, George W. Bush was the only one still talking about terror and not about the topic that currently has the rest of the world's attention.

"Absurd, absurd, absurd," said one German diplomat. A French woman called him "yesterday's man" over coffee on the East River. There is another way to put it, too: Bush was a laughing stock in the gray corridors of the UN.

The average US citizen has been living in a dream for the past 30 years and now it's wake up call. Or as the Spiegel put it:

The end of Arrogance

To those who currently got caught up with their stocks: Hold on to your hats and just go outside, spinning. It'll settle down. Try to make the best of it and learn a lesson.

the best smiles are the ones you lead to wink


PeleBRONZE Member
the henna lady
6,193 posts
Location: WNY, USA


Posted:
Okay....
Wow. Get comfy. wink
This actually isn't *just* about people borrowing too much. Not normal every day people. It saddens me that that is what is being portrayed so often.

Here's what happened, keeping in mind, it's been building for some time.

Banks, lending houses and mortage brokers decided to loan out money to people with almost no money down. Not only does this happen but people are approved for loans they really couldn't afford, and the banks knew this. Personally: they approved us for a home loan that would have taken all of our pay just to go towards that, not even concidering bills or food, if we hadn't been smart and turned them down.
Loan agents literally convince people they can afford these loans, or in some cases double loans (two loans with two seperate banks), even when they can't.
These came with a variable interest. That means that while your first bank holds the mortgage it's one rate, *but* as your loan gets sold from one lending structure to another (which happens *really* frequently), the interest rates are allowed to change at that point. They always went up. Waaaaaaaay up.
This left people with interest rates they couldn't afford, leaving them completely unable to make the payments on the principle balance.

The loans became "toxic". The large firms that purchased them took a beating when people couldn't pay.

Now, keep in mind, this wasn't just joe schmoe home owners.
This is also businesses and subsidiaries.

We've been in economic distress for years. Lay-offs and unemployments have been at highs for years.
People simply can't pay but were told to keep spending, and honestly, there are alot of people who never learned to budget or do finances. It wasn't something taught commonly in our schools until recently.

So, the major finance/lending/mortgage firms started to struggle.
They have been being sold, filing bankruptsy, getting bailed out by other larger corporations. This drove their stocks down.

Because these were money holders, people freaked out. People started withdrawing money from banks, which drove stocks down more and set off frenzies on Wall Street.

We were also hit, in several states, with businesses, especially contractors, borrowing against a potential supply. They built up homes and spaces but soon supply exceeded demand and prices started going down. This resulted in all the people who bought houses they couldn't afford now couldn't afford to sell them. The value of their homes became less than what they owed so they are trapped.

Many retirees have their money in 401k's which is a retirement fund that you pay into, but the money is of course tied up in financial instutions and very often is stock market based. I know some people who lost $30,000 with the Monday crash.

Personally ("we"-referring to my household), not every american is so stupid, and in fact many are not.
We have stocks, but out income is not wrapped in stocks, so what we do is ride it out. The stocks get put into steadfast companies (Coca-cola, Proctor and Gamble, pharmacuticals,etc.) that are concidered "staples" and won't really be effected so much.
They will depreciate but not as much as others.

We have low interest, fixed rate loan on our house, and not alot of loans for anything else. Our loans also fit within our budget.

All (U.S.) banks are insured for up to $100,000. As long as a person has under that, then their money is completely safe.

Here's where it gets painful.

A bailout *is* needed.
As much as I want to say "Let the greedy &*%$3@ flop." They can't.
As much as I want to say "Let the morons who borrowed too much and can't pay it back eat it." Well, I can say that. I don't want my taxes bailing their greedy butts out.
I don't mind if things go back to needing a 20% downpayment for a home, car, business loan. I think it *should* go back to that, but this also effects students and their loans. If the bailout does not happen it will be near impossible for kids to get student loans for university. Very obviously this would be devastating.

It will also make it difficult for businesses to get loans. That could effect not only their productivity but also it trickles down. They may not be able to pay debts they accrued to their suppliers(for example: to farmers for food manufacturers), and may have to lay people off. In turn, their suppliers will suffer in a similar manner. Lay-offs result in less spending, which then circles back to hurting the businesses.
This will also serve to drive up prices, which will obviously hurt everyone.

It becomes a domino effect, and the bail out is needed to stop that.

The reason it is getting voted down is that there is no accountability in the current proposal. If they bail out these institutions by purchasing the toxic holdings (which is what happened to end the Great Depression), what is going to stop it from happening again?
The last time the federal gov't adopted a Laissez-Faire policy, the Republicans pushed for deregulation and they got it.
This policy pretty much kept the fed gov out of any control with these institutions (except Fannie Mae and Freddie Mac lenders, which were formed by Congress but not governed over by them).
The higher ups in these companies made everything cushy for themselves, when they should never have offered loans to people they *knew* could not afford them.

The current bill has no proposed method of keeping these people in check.
Sure good ol' G-Dubyah has said he will put together a committee but we all know his committees move very slow once they perceive the immediate crisis to be over. The policy will be passed and nothing further will be done. We've seen it with FEMA, with the war, with so much.
Even with the bailout, it won't be alright for some time to come.

The proposal *does* include a limited pay for the CEO's and higher ups of these firms, along with no golden parachute (a term used to refer to asking for a payment to cover CEO pay "just in case" the plan fails. These idiots were asking for $3 million each!). That denial is good.

G-Dub's big thing is he keeps blaming people for not paying back loans, and yes, it is absolutely an issue. However, the banks should *never* have approved them to start out with.

G-Dub also keeps pushing because he wants to "Restore the faith of Americans in the financial institutions."
It's not so easy and it isn't going to happen as swiftly as they seem to be making out. It will not be instantaneous. We've spoken with our advisor who told us that we are looking at 2012 for things to be back to "normal", if that. This society has changed and we are more intelligent than to buy his bs, I hope. Just because he says it's okay doesn't mean I feel it will be, or more importantly, the guy who handles my stock portfolio.

Senate is holding out to find out what policing policies will be put into place to make sure this doesn't happen again. I am thrilled for that.

In the end, the $700 billion is literally an estimate. They have no hard evidence that is what it would take to bail them out. Instead of aiming low and adding in when needed, they are over estimating and it will cost every single man, woman and child here approximately $2.5K each in taxes to bail these idiots out and protect ourselves from another depression.
$2.5k that we simply don't have.

That's the long of it.
I bet you are regretting asking now aren't ya Rougie? wink

Pele
Higher, higher burning fire...making music like a choir
"Oooh look! A pub!" -exclaimed after recovering from a stupid fall
"And for the decadence of art, nothing beats a roaring fire." -TMK


EeraBRONZE Member
old hand
1,107 posts
Location: In a test pit, Mackay, Australia


Posted:
Ultimately we can put it in perspective by looking at 1987 and the various dips before then. Long term, both stock and property goes up; nowhere in the western world will you find a house cheaper today than in 1960.

I'm buying shares in a frenzy right now, then I'm locking them away and looking at them again in 7 years or so, what happens short term is of no interest to me. remember the old adage; buy when others are scared and sell when they're greedy. If you have some disposable cash it's a fantastic time to invest. Every cloud has a Base Metal lining

There is a slight possibility that I am not actually right all of the time.


MikeGinnyGOLD Member
HOP Mad Doctor
13,923 posts
Location: San Francisco, CA, USA


Posted:
Originally Posted By: Sethis[quote=Doc Lightning]FireTom,
And because all of Europe's business' have American and other Foreign Investors, our economy will follow yours right into the trash can; if that's how it turns out.


Perhaps not for so long once people stop doing business with America, which is the inevitable outcome of this mess. Also, if there's another US crash, that will give me a few hours' leeway to take action in Europe.

The other thing is how devalued the Dollar has become. In 2003, the Euro traded at about 0.78 on the Dollar. Today it trades at about 1.50.

That means that if I had bought Euros with US$10,000 in 2003 and stuffed them in my mattress, I'd have US$20,000 today. I don't see the Euro dropping back below US$1.00 any time in the forseeable future.
EDITED_BY: Doc Lightning (1222846814)
EDIT_REASON: additional information

-Mike

Certified Mad Doctor and HoP High Priest of Nutella



A buckuht n a hooze! -Valura


87wt2gxq7veteran
1,502 posts
Location: Birmingham


Posted:
Here's a handy 4-minute video summary of the crisis. Basically what Pele said but in a bit less detail, and with more hats.

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