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shrox
09-29-2008, 06:44 PM
Is this the first day of the New Depression?

Hopper
09-29-2008, 06:46 PM
I hope so ... I've had a hankerin' for some free soup.

praa
09-29-2008, 06:47 PM
at least newtek is not on nasdaq ;)

adamredwoods
09-29-2008, 07:31 PM
No, but our employers are.

virtualcomposer
09-29-2008, 07:38 PM
This is why I teach music lessons to rich people and freelance. If one company goes down the tubes, I'm at least working for 10 more. It seems more stable these days then a day job apparently. And if worse comes to worse, I've watched man vs wild enough to have an understanding in survival along with hands-on training. I've never seen the economy this bad in my life time at least and it frankly makes me extremely scared since nothing is as absolute at it used to be. Nothing was as absolute in the past but it's even worse today.

Stunt Pixels
09-29-2008, 08:06 PM
I really don't see it as a problem. Bit of an enema for US markets. There will be a recovery package made available by the US congress, it's just a question of what and when (my bet is on within the next week). Higher interest rates and inflation for a while.

But I wouldn't be walking under any tall buildings in financial districts for a while...

Titus
09-29-2008, 08:49 PM
It's time to open those cans of soup (http://www.hobosoup.com/Hobo_Soup.html) I have laying in the pantry.

jin choung
09-29-2008, 09:00 PM
let them FAIL. this is what they reap by creating useless financial "products" that have no value and shows merely manipulation and gaming of the system. let them fail.

OR...

if they're too big too fail, they're too big to be free. submit to a regulation regime that makes a colonoscopy feel like a refreshing day at the beach! ... mfers.... wtf, didn't these guys go to ivy leagues schools and crap?! idiots. morons. must be beaten with many blows.

and if we do bail them out, NOT A SINGLE RED CENT to executive compensation! wtf am i hearing all this stuff about LIMITING executive compensation?!?!?!

NO COMPENSATION!

do not pass go! go immediately to gitmo! enjoy the completely legal waterboarding!

we need more of these stupid mofos jumping out of their windows.

jin

Stunt Pixels
09-29-2008, 09:04 PM
if they're too big too fail, they're too big to be free. submit to a regulation regime that makes a colonoscopy feel like a refreshing day at the beach!

Agree totally. The world financial markets are now so interdependent, there needs to be a better regulatory regime. May I suggest Australia's? There is no talk here about real banks going under, and the only "investment" banks having major issues are the ones with heavy US exposure. They should have invested somewhere safer - like Namibia...

george49
09-29-2008, 09:07 PM
According to a radio station out here in Los Angeles, the only stock in the S&P's 500 to post a gain today was Campbell soup! I haven't checked myself so maybe it's true and maybe it ain't. Funny to ponder, though. Well, gotta go an polish some apples.
George of the Marina

Stooch
09-29-2008, 09:49 PM
nice. i have been slowly investing in stocks of campbels. maybe i can sell them now for a profit.

Riff_Masteroff
09-30-2008, 12:04 AM
Unregulated financial institutions created and sold and bid up "packages" that never had any value at all. These "toxic" instruments cannot be unraveled to reveal any underlying particular mortgages or any part or parts of real mortgages. No institution (federal reserve board, SEC, investment banks, banks, etc.) can "understand" exactly what the basis for these securities are.

With a huge wide Chesire cat smile, Wall Street is holding its breath, soon to faint by active design unless "we the people" inoculate ourselves with their disease. IMO we, living and breathing people, are being strong armed to give up our constitution once and forever in exchange for continued employment.

http://en.wikipedia.org/wiki/Tulip_mania

Riff Masteroff

shrox
09-30-2008, 12:13 AM
http://en.wikipedia.org/wiki/Tulip_mania

Riff Masteroff

From the quoted article:
"It is generally considered the first recorded speculative bubble. The term "tulip mania" is often used metaphorically to refer to any large economic bubble."

Sensei
09-30-2008, 12:23 AM
Is this the first day of the New Depression?

There is 43 minutes to opening Polish stock market, and I am selling everything at opening price, and setting up immediate rebuy at -5 or -10% less today.. Will see what happens, but yesterday WIG20 index was -5% down.. I have not remembered when the last time I saw such huge going down in a day..

I cannot believed my own eyes and ears when read that US congress rejected Paulson's plan. Actually still in shock in such stupidity of these people. Americans, write their name and ban in the next election!

Riff_Masteroff
09-30-2008, 12:30 AM
http://en.wikipedia.org/wiki/Cheshire_Cat

Sensei
09-30-2008, 12:33 AM
let them FAIL. this is what they reap by creating useless financial "products" that have no value and shows merely manipulation and gaming of the system. let them fail.


Once again... I must say that...
MODERATOR INTERRUPTS THIS PERSONAL ATTACK to send sensei off to the sad corner. Personal attacks are NOT allowed on our forms.

jameswillmott
09-30-2008, 12:56 AM
Once again... I must say that - you're the most stupid person that I have meet here in NewTek Forums..

Bailing out the 'system' takes away any reason for them not to do the same stupid things again.

hrgiger
09-30-2008, 12:57 AM
Paulson wanted a check for 700 billion with no strings attached. They would have been fools to give it to him on those conditions.

Sensei
09-30-2008, 12:58 AM
Agree totally. The world financial markets are now so interdependent, there needs to be a better regulatory regime.

And what kind of regulation are you wanting to implement?

Problem was not financial products but people who wanted to have house.. Don't you want to have house and living with parents to 40 or 50 years old when you will have enough money for your own place? That'll be soon because US congress didn't want to invest 700 bln usd for TRUST to financial market..

These people took credit but couldn't handle it. One day you have job, another don't and can't pay mortgage payments, so they loss houses. That can happen anyone who is taking credit for 10,20,30 years!! 1.5 million of such people in US, if I recall correctly numbers given in newspapers and they are right..

If these people would be paying monthly what they should, there wouldn't be all this problem!

But people in US want to have everything immediately.. House, car, tv, etc. etc.

There is old investors sentence:


"Financial problems are because people buy things that they don't need, for money they don't have, to impress people they don't like"..

Sensei
09-30-2008, 01:07 AM
Bailing out the 'system' takes away any reason for them not to do the same stupid things again.

It MUST, must be done!!

Otherwise see what happens - stock markets are going faasst down.. Then ask yourself what happens to your money invested directly in stock markets (if you have any), or indirectly through some kind of investment funds, or retire funds.. You must have nothing, to not be affected..

jin choung
09-30-2008, 01:10 AM
Once again... personal attack deleted.

MODERATOR NOTE: personal attacks are not permitted
If someone personally attacks you, the best recourse is to report that post, and move along. Rising to the bait and replying with your own attack just earned you both a 7-day timeout.

Please go sit in the sad corner and ponder the benefits of playing nice with each other.

jpleonard
09-30-2008, 01:12 AM
If the banking institutions, investors, and the people who took out mortgages that they could not afford are stupid enough to do this to themselves, I say let them suffer. I may suffer with them and I can deal with that.

I honestly think that even if Congress approves the bail out that in the long run it won't make much difference. Within a year we will be back in the same situation, different scam, because Wall Street didn't learn their lesson. I sold off all my stocks back in May, and I'm glad I did, wouldn't be worth 40% of what I sold for now.

If people are too stupid to know they can't afford a loan, they shouldn't have gotten one. If they are smart enough to know they can't afford it, let them suffer. As for the people on Wall Street, It's the stock market, it's all about risk, invest ignorantly, take your losses, stay out of my pockets.

Sensei
09-30-2008, 01:21 AM
Paulson wanted a check for 700 billion with no strings attached. They would have been fools to give it to him on those conditions.

Imagine this:
bank A lend money to people who wanted to have house.
bank B lend money to bank A.
bank C lend money to bank B.
bank D lend money to bank C.

Bank A is having problems because people stopped paying.. so it cannot return money to B, which is causing problems of B (which could have good condition otherwise).. And it goes and goes.. With more complex structure than above..

The result is that banks don't lend money neither other banks, business clients and individual clients, "just in case if some of banks who received our money bankrupt".. Business clients don't have money for paying employed persons, and other business clients bills for machines and other stuff needed in their jobs.. and they bankrupt without banks credits too!

Stunt Pixels
09-30-2008, 01:23 AM
If the banking institutions, investors, and the people who took out mortgages that they could not afford are stupid enough to do this to themselves, I say let them suffer. I may suffer with them and I can deal with that.


I think a lot of people haven't thought through the repercussions if the banking system is not stabilized. On a business level, business would lose their overdrafts and lines of credit. This would bring many business to their knees, and involve numerous layoffs and shutdowns. There would be no credit available for expansion or investment. On a more personal level, one of the first things to go in the US would be credit cards - they are relatively high risk credit for the banks. As banks would not be able to borrow from each other, all interest rates would go up, a lot. Home mortgages, car loans, whatever. I really don't think people have thought through the downside.

While I agree 100% that the people who have been pushing out dodgy loans, and those responsible for their supervision, should suffer, and be prosecuted, to let the banking system sieze up would be far worse than just an inconvenience. I'm with Jin, the financial sytem in the US needs proper regulation and supervision. The kids in charge have proved time and again that they aren't going to play with their toys nicely...

jin choung
09-30-2008, 01:25 AM
And what kind of regulation are you wanting to implement?

Problem was not financial products but people who wanted to have house.. Don't you want to have house and living with parents to 40 or 50 years old when you will have enough money for your own place? That'll be soon because US congress didn't want to invest 700 bln usd for TRUST to financial market..

These people took credit but couldn't handle it. One day you have job, another don't and can't pay mortgage payments, so they loss houses. That can happen anyone who is taking credit for 10,20,30 years!! 1.5 million of such people in US, if I recall correctly numbers given in newspapers and they are right..

If these people would be paying monthly what they should, there wouldn't be all this problem!


seriously... take two minutes and do some reading on the internet or better yet, your newspaper. to be this ill informed in this day and age is seriously not only embarrassing but disturbing.

jin

Stunt Pixels
09-30-2008, 01:32 AM
And what kind of regulation are you wanting to implement?


Oops, missed this one. I already answered it though. The regulatory system in Australia seems to be working well. This (http://www.rba.gov.au/FinancialSystemStability/AustralianRegulatoryFramework/apra.html)should give you some oversight. I'm not saying Australia's is the best, just that we have regulations that seem to be working well. It seems like a good starting point.

jin choung
09-30-2008, 01:55 AM
While I agree 100% that the people who have been pushing out dodgy loans, and those responsible for their supervision, should suffer, and be prosecuted, to let the banking system sieze up would be far worse than just an inconvenience.

right...

but they'd have a lot easier time selling this to the american people if the bailout was created with terms that BENEFIT mainstreet and PUNISHES wallstreet.

i can CLEARLY see ways to do that but they ain't biting....

seriously, just make it so that the executives get nothing. NO compensation. they've effectively run their companies into the ground. bad dog! no fing biscuit! hell, fire em!

also, as we've been saying, tie the whole thing up to ruthless regulation. make the bail out a "signing away of their souls". the leash gets short. none of this golden parachute b.s. no more of this ludicrous ceo compensation. all done.

-------------------------------------------------------------------------

but there are those on the right that argue that bailing out the current system just kicks the can down the road.

it's an enabling mechanism that simply holds off the symptoms while the disease of specious economic habits of investment banking are encouraged to rage on.

the argument then would be - like with an alcoholic - let the system hit rock bottom so that real change can take place. unless the illusion is shattered completely, the deluded and addicted will continue to defend it.

as it is, the entire house of cards seems to be built on an unsustainable cycle of over-consumption... from top to bottom.

the economy as it is derives too much of its "health" on people spending more than they can ACTUALLY afford. it might make the economy slower to have consumption actually come down to match TRUE ABILITY to consume but then the value of the economy might actually come to resemble something akin to reality.

(instead of seeming very much like a never ending pyramid scheme which lasts just as long as there's one more sucker to rope into the debt game.)

it actually might have the added benefit of allowing people to see much more clearly the distinctions between rich and poor and serve as an impetus for real political action - instead of one's true poverty being cleverly masked by a mountain of debt and letting politicians smile as they continue to pass law after law increasing that wealth disparity.

jin

blacksmith
09-30-2008, 01:58 AM
US economy doesn't need a complete failure and it will be better for the whole world that this not happen. However, it does need sobering up from drunk state of thinking that it's almighty.

Reducing debts, oil dependence and figuring new ways to source energy would be a way to lift fallen economy.

Bush administration did wrong on number of things, economy being just one of them. I'd think twice before letting them win the next elections.

I'm not american, nor republic or democrat, but when someone fails to deliver it should be changed. It's a simple logic!

calilifestyle
09-30-2008, 02:03 AM
Imagine this:
bank A lend money to people who wanted to have house.
bank B lend money to bank A.
bank C lend money to bank B.
bank D lend money to bank C.

Bank A is having problems because people stopped paying.. so it cannot return money to B, which is causing problems of B (which could have good condition otherwise).. And it goes and goes.. With more complex structure than above..

The result is that banks don't lend money neither other banks, business clients and individual clients, "just in case if some of banks who received our money bankrupt".. Business clients don't have money for paying employed persons, and other business clients bills for machines and other stuff needed in their jobs.. and they bankrupt without banks credits too!


your almost right about bank a to b to c to d but. its more kike this

Bank A gave money IE( car, house, refinance ans so on)But they gave the loan with out checking if they could pay for it or even cheated to get these loans approved.

then bank A sold that bad loan to bank B . and B sold it to C and so on .

But that's not even the whole problem. you have all these people running out the banks. then you have the stock market which is one big gamble.

Sensei
09-30-2008, 02:28 AM
Bank A gave money IE( car, house, refinance ans so on)But they gave the loan with out checking if they could pay for it or even cheated to get these loans approved.

Yeah. But I wouldn't go so far telling that these 1.5 million people are all criminals putting the bite. Such cases should be examined by prosecutor.
One day bank client is at good condition, second day might not. Any security regulation made by government won't help in such case.



But that's not even the whole problem. you have all these people running out the banks. then you have the stock market which is one big gamble.

The main role of stock markets, almost forgotten in these times, is to give money for investment for company which is selling stocks. Also company instead of selling stocks can take loan from bank, using stocks as security. Then if stock markets are going down, bank who gave loan, is making nervous when price of stocks are less worth than loan they gave company.. Asking company for return money might end up in bankrupt. That's why it's so important for government to not let stock market fall!

starbase1
09-30-2008, 03:41 AM
It goes deeper than selling mortgages to people who can't repay, that happens all the time.

The deep problem is that these low quality depts were then shuffled around, juggled, and sold on as high quality debt in vast amounts. And one small regulatory step would be to separate the rating of debt quality from the people who are actually selling it, a clear conflict of interest.

Regardless of of any 'rescue' plan, the US economy is about to nose dive down the toilet. Expect heavy printing of dollars, and more massive borrowing, if they can persuade communist China to supply (the only country with enough money to make a difference). Expect the dollar to fall a lot further, and a LOT of turbulence in oil markets, (priced in dollars) in the near future. The use of the dollar as a secure haven will pretty much stop, it was already a lot weaker, with very very high cost to the economy in things like invisible exports - the USA will no longer be able to effectively sell bits of paper for a dollar a time abroad. (This is already well advanced, all over the eastern side of Europe and Russia the dollar is no longer the safe haven currency).

This is in no way an internal US matter, and unless there are MAJOR reforms, the rest of the world will simply not touch US financial instruments.

And just as the Saudis became untouchable by owning huge swathes of US business, China will follow.

How much more damage are you guys going to let Bush do to your country?

-EsHrA-
09-30-2008, 04:46 AM
"when you are born in this world you get a free ticket to the freakshow."
"when you are living in america you get a front row seat."

george carlin

Limbus
09-30-2008, 04:55 AM
your almost right about bank a to b to c to d but. its more kike this

Bank A gave money IE( car, house, refinance ans so on)But they gave the loan with out checking if they could pay for it or even cheated to get these loans approved.

then bank A sold that bad loan to bank B . and B sold it to C and so on.

And each bank bundled some loans, split them and sold the parts to different banks. Now it does not take very long and no one knows exactly what he is buying anymore. There is no risk control possible.

cholo
09-30-2008, 09:12 AM
The problem with the stock market is that it expects short term results that have nothing to do with "natural" market growth. Companies are forced to do whatever is in their means to meet expected quarterly results, even if that means the long term business outlook is being damaged in the process.

For example... Company X sells product Y. It has Z percentage market share. Quarterly sales have been somewhat slow, so in an effort to push up their quarterly results they offer discounts and/or incentives to push sales... Numbers go up, stocks rise, everyone is happy, right? The problem is... those discounts and incentives have triggered purchases from prospect clients that were probably in line to buy at some point in the not too distant future anyway. But now that those transactions have been completed, demand for product Y is expected to fall, since those who wanted to purchase product Y have probably done so already, leading to further discounts/incentives to further push sales for the upcoming quarter. Market share appears to have gone up, but it is all an illusion, a disaster waiting to happen.

Stooch
09-30-2008, 10:30 AM
whoever is getting the presidency, is going to step in probably the biggest turd in the history of america. The real concern is long term, so who do you want shoveling this crap up?

mattclary
09-30-2008, 10:35 AM
let them FAIL. this is what they reap by creating useless financial "products" that have no value and shows merely manipulation and gaming of the system. let them fail.

OR...

if they're too big too fail, they're too big to be free. submit to a regulation regime that makes a colonoscopy feel like a refreshing day at the beach! ... mfers.... wtf, didn't these guys go to ivy leagues schools and crap?! idiots. morons. must be beaten with many blows.

and if we do bail them out, NOT A SINGLE RED CENT to executive compensation! wtf am i hearing all this stuff about LIMITING executive compensation?!?!?!

NO COMPENSATION!

do not pass go! go immediately to gitmo! enjoy the completely legal waterboarding!

we need more of these stupid mofos jumping out of their windows.

jin


Word! :bowdown:

Stooch
09-30-2008, 10:37 AM
if the company you run goes bankrupt, so should you. I agree about the golden parachutes, those need to be cut up and recycled so that we can pay for all these mistakes. we also need to sort who to bail and who not to bail. evidence of fiscal responsibility should earn you first dibs on a handout. ahhh... socialism.

mattclary
09-30-2008, 10:40 AM
The toilet can be flushed today, or a decade from now, but it's going to flush.

-EsHrA-
09-30-2008, 11:26 AM
id say flush big time! let them fail and fall flat on their allready flat faces...

but the problem with that is they'd drag us (europe etc.) with them..

mlon

SBowie
09-30-2008, 11:55 AM
Suppose a financial institution was running into serious problems and a second, better-managed firm decided that it could be salvaged. The second firm provides the funds required to put the first onto a solid footing. In this case, the second firm would naturally gain some percentage of ownership of the once troubled firm.

Why is it "an investment" if a commercial institution does it, but "a gift" when the money comes from tax payers?

And - if inept and/or corrupt management led to this situation, how likely is it that there intelligent, capable, honest people were fired (to keep them from blowing the whistle) during the years leading up to this mess. How crazy would it be to find them and put them into the pilot's chairs ... while arranging 'early disembarkation' of the cover-up crew (i.e., throw them out a hatch after shredding their golden parachutes)?

taproot2
09-30-2008, 05:18 PM
If we take a lesson from this, and only one, these are the same clowns that have tried to suggest that Social Security should be handed over to a Den Of Thieves. Give them Social Security and watch it vanish.
This is what happens when thieves play with other peoples money. Current state of financial "trouble" on wall street will not affect the people who caused it. This all started with the Federal Reserve system and will not end till the federal reserve system ends, there is nothing federal about it and there are no reserves.

pauland
09-30-2008, 05:20 PM
It's all very well ranting and raving and (quite incredibly) wishing people were dead, the real tragedy here is that millions of people not directly involved are going to be/already are dragged into the mess. That farmer that had poor crops this year and needs new equipment is going to struggle to get a loan to tide them over until the next year. The families that were getting by (just) with their mortgages are going to have to spend more than they can afford to keep going. The families with mom and dad working in the local factory are going to have to sell their home for less than they paid for it because nobody is buying the cars their factory makes.

You can talk numbers all you like but this is going to impact ordinary people who have no connection with the banking industry not just bankers.

As for being jubilant about the thought of people (and bankers are people) doing themselves in, that's just plain sick.

Paul

shrox
09-30-2008, 06:13 PM
It's all very well ranting and raving and (quite incredibly) wishing people were dead, the real tragedy here is that millions of people not directly involved are going to be/already are dragged into the mess. That farmer that had poor crops this year and needs new equipment is going to struggle to get a loan to tide them over until the next year. The families that were getting by (just) with their mortgages are going to have to spend more than they can afford to keep going. The families with mom and dad working in the local factory are going to have to sell their home for less than they paid for it because nobody is buying the cars their factory makes.

You can talk numbers all you like but this is going to impact ordinary people who have no connection with the banking industry not just bankers.

As for being jubilant about the thought of people (and bankers are people) doing themselves in, that's just plain sick.


Paul

My thoughts as well.

hijacker
09-30-2008, 11:46 PM
I bet the Russians and the East Germans don't think it's sad at all. After the fall of Communism things went the same way for them - only worse. Seems Capitalism only out lasted Communism by 10 years and now the Capitalist want Socialist style regulations to bail them out.

Another day to be a happy Australian - I'm more worried about reports from the Climate Change Mob saying I should only be allowed to eat meat four times a week and be rationed to 1 litre of milk per week - think about that. Glad I've got my own cow.

Have a nice day

Martyn

pauland
10-01-2008, 02:40 AM
hijacker, it's fortunate that the Australian economy hasn't had the dependencies that other nations have had, but it's a mistake to imagine that Australia is not going to feel some effects of what's going on elsewhere. I understand that there are some Australian banks that have exposure with the sub-prime markets and Australia does trade with the rest of the world - I'm sure that the Australian tourism people are not very happy with the current situation.

I doubt that the Russians and East Germans (they don't actually exist any more, you're a little behind the times) are very happy either. there's a huge amount of trade and investment flowing between the east and west and the Russsian markets have also taken a battering.

It's sad to see someone - anywhere - take comfort from the misfortune of others. The vast majority of people involved with this have nothing to do directly with the sub-prime market.

Don't imagine I have any sympathy with bankers - I don't. It's beyond me how the problem could have grown to such a scale without major fraud.

Paul

starbase1
10-01-2008, 03:34 AM
The system runs on vast amounts of credit - one US expert I saw on television last night put it at 70 trillion in total. It's been rising hard and fast under Bush et al, , and the end result is that it will need repaying.

It's also driven strongly by the need for short term profits - how do the people working in the sector get their binus this month, this year?

Organisations don't want to lend because they understand there is now a huge risk they will not be repaid. Including by the US government itself - its like taking out more credit cards to pay the ones you have.

The normal approach of stimulating an economy in recession by spending is going to be VERY tough to pull off at the same time as taking money out of the economy for liquidity, they are opposing goals. With national credit very hard to get this pretty much reduces the options to a massive printing of dollars. I'd expect the dollar to fall steadily for years.

It also means that financial institutions across the world are VERY seriously over valued, as current values are based on 'assets' that turned out to be pretty much worthless. (And thats another way of viewing how we got here - by selling on sub-prime mortgages, the money men thought they had found a way to sell a dollar for ten... ). 700 billion is a long way short of the degree of overvaluation and won't make a big difference.

I'm still staggered that anyone in the US would consider re-electing the party that presided over this collapse...

mattclary
10-01-2008, 07:15 AM
I bet the Russians and the East Germans don't think it's sad at all. After the fall of Communism things went the same way for them - only worse. Seems Capitalism only out lasted Communism by 10 years and now the Capitalist want Socialist style regulations to bail them out.



No, socialism is what got us in this mess. Had capitalism been followed in the fact that people who couldn't afford mortgages were not required by law to be given mortgages, a lot of this could have been avoided. Add to that the fed kept interest rates artificially low causing a run-up of housing prices... Capitalism was thwarted.

http://mikefarinha.wordpress.com/2008/09/30/blame-the-bubble-on-fdr-jimmy-carter-and-bill-clinton/

mattclary
10-01-2008, 07:18 AM
I'm still staggered that anyone in the US would consider re-electing the party that presided over this collapse...


You are correct. Here is the evidence for the prosecution.

http://mikefarinha.wordpress.com/2008/09/28/some-video-footage-of-the-republicans-and-democrats/

frantbk
10-01-2008, 07:32 AM
The problem with the stock market is that it expects short term results that have nothing to do with "natural" market growth. Companies are forced to do whatever is in their means to meet expected quarterly results, even if that means the long term business outlook is being damaged in the process.

For example... Company X sells product Y. It has Z percentage market share. Quarterly sales have been somewhat slow, so in an effort to push up their quarterly results they offer discounts and/or incentives to push sales... Numbers go up, stocks rise, everyone is happy, right? The problem is... those discounts and incentives have triggered purchases from prospect clients that were probably in line to buy at some point in the not too distant future anyway. But now that those transactions have been completed, demand for product Y is expected to fall, since those who wanted to purchase product Y have probably done so already, leading to further discounts/incentives to further push sales for the upcoming quarter. Market share appears to have gone up, but it is all an illusion, a disaster waiting to happen.


Bill Gates once said that he never had to look at his competitor's product, instead he watched the stock market to see if the did short term stock pumping. If the competitor did short term stock pump they weren't a threat to him, and he knew in time he would own their product line.

virtualcomposer
10-01-2008, 07:34 AM
What ever the case, they will have to do something to whatever the answer is. There's 300 million lives being affected by this not counting our credibility around the world which affects trade, prices, and allies. I'm no politician nor do I understand everything about the economy but I sure as heck don't want to pick up the bill as a tax payer for some money grubbing companies who failed because of their greed. How about a $3000 stimulus check??? :D That would make me feel better and I could get that second monitor for my studio. :thumbsup:

frantbk
10-01-2008, 07:39 AM
The normal approach of stimulating an economy in recession by spending is going to be VERY tough to pull off at the same time as taking money out of the economy for liquidity, they are opposing goals. With national credit very hard to get this pretty much reduces the options to a massive printing of dollars. I'd expect the dollar to fall steadily for years.


Are you talking about the exchange rate? In the first quarter of this year the exchange rate was 1.96. Currently the exchange rate is 1.7664 with the UK. The dollar isn't losing value it has gained value over the last year.

virtualcomposer
10-01-2008, 07:47 AM
Are you talking about the exchange rate? In the first quarter of this year the exchange rate was 1.96. Currently the exchange rate is 1.7664 with the UK. The dollar isn't losing value it has gained value over the last year.[/QUOTE]

So why am I hearing the value of the dollar continuing to go down? Is most of this issue media and then people do like they did with gas and run to the pump at the same time making the gas crisis look worse? People getting rid of their stocks since they anticipated a failed market but since everyone pulled out it made it worse? Stuff like that?

starbase1
10-01-2008, 08:01 AM
Are you talking about the exchange rate? In the first quarter of this year the exchange rate was 1.96. Currently the exchange rate is 1.7664 with the UK. The dollar isn't losing value it has gained value over the last year

So why am I hearing the value of the dollar continuing to go down? Is most of this issue media and then people do like they did with gas and run to the pump at the same time making the gas crisis look worse? People getting rid of their stocks since they anticipated a failed market but since everyone pulled out it made it worse? Stuff like that?

I'm talking about the future exchange rate - and the pound is probably a poor comparison as the the two economies are relatively strongly coupled. Both dollar and pound were falling aginst the Euro, and even the likes of the Moldovan Leu come to that... And the far east is where the money is so that's a better comparison still.

starbase1
10-01-2008, 08:05 AM
Also worth noting that before things hit the fan in the last week there was serious talk of the US government losing it's triple A rating.

Winston Churchill said that a democracy gets the government it deserves, but I have a higher opinion of the USA than that.

manholoz
10-01-2008, 08:11 AM
Life will go on. We used to have this sort of thing each time we changed presidents. Painful, and if you were greedy you got your savings wiped out. But well, they say that what doesn't kill you makes you stronger.
That said, it is certainly enraging that some people who will suffer that had nothing to do with all the banking mess. They should discount pay from bankers to pay for mortages on the verge of defaults.

mattclary
10-01-2008, 09:03 AM
Good article


http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview


Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

pauland
10-01-2008, 09:58 AM
One of the pundits on the morning news here in the UK was forecasting 2M unemployed in the UK by late 2008 / early 2009.. :-(

3dworks
10-01-2008, 10:35 AM
And each bank bundled some loans, split them and sold the parts to different banks. Now it does not take very long and no one knows exactly what he is buying anymore. There is no risk control possible.

it was (and still is) a sort of very sophisticated and completely uncontrolled risk distribution system where the real risk at the end of the process is not perceivable anymore - and it's driving forces are probably more understandable to las vegas casino habitué's than based on solid financial theories...

markus

Stunt Pixels
10-01-2008, 02:44 PM
Had capitalism been followed in the fact that people who couldn't afford mortgages were not required by law to be given mortgages, a lot of this could have been avoided.

I've heard this said a couple of times. It sounds like an ignorant redneck rumor to me. If I'm wrong, can you please point me to any documentation regarding the law you're talking about?

pauland
10-02-2008, 01:20 AM
Good article


http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

Interesting article certainly. It concentrates on the life of a company and almost suggests that bankrupt companies have no victims besides the people who got the company in the mess in the first place.

In terms of the crisis and a sudden reduction of economic activity, the people paying for the banking failure are the workers for those companies going bankrupt or working at reduced capacity(I don't just mean banks), investors (most people think rich bankers at this point, but the reality is that those rich bankers were gambling with the investments of ordinary people investing for retirement or to balance their home loans).

The current bailout plan is unpopular because one way or another it's going to be paid for by the people who weren't directly involved in creating the crisis. It seems attractive to skip the bailout because of that, but unfortunately, those same people who would/will fund the bailout will pay anyway as the economy grinds to a halt and they lose the value of their assets and see their working income threatened.

This isn't going to be nice, whatever happens.

Intuition
10-02-2008, 01:39 AM
I've heard this said a couple of times. It sounds like an ignorant redneck rumor to me. If I'm wrong, can you please point me to any documentation regarding the law you're talking about?

Its called the Community Reinvestment Act.

Wiki it. Surely you've seen the You Tube video? The legislation forced banks to make loans they normally woudn't have for the sake of low income housing.

Stunt Pixels
10-02-2008, 02:37 AM
Its called the Community Reinvestment Act.

Wiki it. Surely you've seen the You Tube video? The legislation forced banks to make loans they normally woudn't have for the sake of low income housing.

Sounds like a dubious scheme to me at first, superficial, glance. But from what I can see initially it has minimal relevance to the current sub-prime situation, and seems to be being used as a convenient scape goat.

To post a direct quote off the Wikipedia page you directed me to:

In congressional testimony in 2008, University of Michigan law professor Michael S. Barr stated that a Federal Reserve survey showed that affected institutions considered CRA loans profitable and not overly risky. Referring to CRA and abuses in the subprime market, Michael Barr stated that in his judgment "the worst and most widespread abuses occurred in the institutions with the least federal oversight". [22] A 1997 research paper by economists at the Federal Reserve also found that "[CRA] lenders active in lower-income neighborhoods and with lower-income borrowers appear to be as profitable as other mortgage-oriented commercial banks".[23]

That Federal Reserve survey is long. I'll work my through it out of curiosity though.

glebe digital
10-02-2008, 02:43 AM
I'm with Jin, let the morons fail.........

How the money markets work:
http://www.youtube.com/watch?v=SwRFoxgEcHc&feature=related
:)

frantbk
10-02-2008, 09:44 AM
Are you talking about the exchange rate? In the first quarter of this year the exchange rate was 1.96. Currently the exchange rate is 1.7664 with the UK. The dollar isn't losing value it has gained value over the last year.

So why am I hearing the value of the dollar continuing to go down? Is most of this issue media and then people do like they did with gas and run to the pump at the same time making the gas crisis look worse? People getting rid of their stocks since they anticipated a failed market but since everyone pulled out it made it worse? Stuff like that?[/QUOTE]

Aaaah, the value of the U.S. dollar is rising, not falling. At 1.96 it takes 1.96 U.S. dollars to buy 1 GBP. Therefore, at 1.7664 it take 1.76 U.S. dollars to buy 1 GBP. :bangwall:

starbase1
10-02-2008, 10:40 AM
So why am I hearing the value of the dollar continuing to go down? Is most of this issue media and then people do like they did with gas and run to the pump at the same time making the gas crisis look worse? People getting rid of their stocks since they anticipated a failed market but since everyone pulled out it made it worse? Stuff like that?

Aaaah, the value of the U.S. dollar is rising, not falling. At 1.96 it takes 1.96 U.S. dollars to buy 1 GBP. Therefore, at 1.7664 it take 1.76 U.S. dollars to buy 1 GBP. :bangwall:[/QUOTE]

The value against the pound is not an issue, as I said the two economies are relatively strongly coupled via the finance industry (where my day job is), and the pound is also falling in value.

The key rates for the US are from the countries that lend it money.

frantbk
10-03-2008, 06:34 AM
Aaaah, the value of the U.S. dollar is rising, not falling. At 1.96 it takes 1.96 U.S. dollars to buy 1 GBP. Therefore, at 1.7664 it take 1.76 U.S. dollars to buy 1 GBP. :bangwall:

The value against the pound is not an issue, as I said the two economies are relatively strongly coupled via the finance industry (where my day job is), and the pound is also falling in value.

The key rates for the US are from the countries that lend it money.[/QUOTE]

The value of the pound is an issue. It looks, to me, that your government is giving up you spending power so the British rich can move their money out of the U.S. without a loss. The question you should be asking is in what country will that money be moved to within the next year or two. That will effect your economy.

virtualcomposer
10-11-2008, 02:53 AM
Maybe it would be good for the "almighty" media to start encouraging people about the economy so that everyone doesn't think that a depression is immanent that way people would keep their stocks in the market and spend more. Gas rates are already beginning to go down which will hopefully help people to spend money back into the economy.

starbase1
10-11-2008, 10:05 AM
Maybe it would be good for the "almighty" media to start encouraging people about the economy so that everyone doesn't think that a depression is immanent that way people would keep their stocks in the market and spend more. Gas rates are already beginning to go down which will hopefully help people to spend money back into the economy.

That's not the problem, if it was just a confidence matter than the banks would be getting taken over left right and centre.

The fundamental issue is that the banks and other financial institutions are seriously overvalued, due to the shenanigans with toxic debt. So they are worth very little, so they can't loan, so their share proce falls until it reflects their actual value.

And in the meantime they have no money to loan people, and their assessment if each other is so bad that the banks won't lend to each other, even overnight, because THEY don't believe for sure they will be there in a couple of days.

Sensei
10-11-2008, 02:04 PM
Well, most people in the stock market for the long haul - i.e. the retired, etc. - most likely have not removed themselves from the stock market. To do so would cut their own throats. Most programs tell people to not panic and keep their investments the way they are. The stocks will rise again - it's just a matter of how soon.

As a stock market investor I am telling you - such behaving is the worst possible thing.. "buy and forget" is advertised by brokers and financial advisor but they don't do it by themselves!!

Real active investor should sell stocks as soon as there is sign of crisis, and rebuy at lower price (I am doing it the same day they're sold, usually even couple times per day - last Friday in Wall Street was the great place for day-trader as indexes were like sinusoid). If price will go back to original you will be very much on plus, otherwise just on zero.

Here is simulation:
Imagine you have 100k usd, bought 1000 stocks for 100 usd each. After buying them you should set up "stop loss" at -5% (95 usd). If market is going down reaching 95 usd for each stock, they're automatically sold by system. You have 95k usd back (actually decreased by little provision to broker's house, in mine case it's 0.25% which gives 94,762.5 usd back). Then you set up rebuy at -10% of original price, at 90 usd per stock. Because you have more money, you're buying more stocks = 1050 stocks 90 usd each. If stock market will go back to original 100 usd per unit, you have in pocket 105,000 instead of just 100,000.. The bigger drop in price the more you earned (instead of just get back your's).

I have even written my own little tool for calculation how much you earn by buy & sell options (and selling it to Polish investors):
http://www.trueart.pl/Products/Applications/DayTraderCalc/Graphics/DayTraderCalc_1.png

shrox
10-11-2008, 03:15 PM
I have lost my job.

Sensei
10-11-2008, 03:35 PM
Buffett is complete different scale.. ;) You can't sell billion dollar stocks without crashing their price.. ;)

shrox
10-11-2008, 03:50 PM
A few years ago, I was married, owned a home and had a great job, now I am divorced, unemployed and 2 weeks away from being homeless. All kinds of things, good and bad run through my mind. Being Christian or not has nothing to do with being hungry and scared. The future just seems cold.

jin choung
10-11-2008, 05:22 PM
sorry to hear it shrox. but don't let the big global news scare ya. like stats, what is true for the average doesn't necessarily indicate anything about the individual. you found the job you just lost, i'm sure you'll find another.

make sure you sign up for unemployment if you qualify.

go for walks with your cute doggie. cuddle with your kittie.

stiff upper lip and all that british stuff.

good luck.

jin

shrox
10-11-2008, 05:28 PM
Kind makes our thread comments seem pointless. If I had a girl I liked I'd send her my ear...then go paint the night sky in colors no one can see.

Hopper
10-11-2008, 05:28 PM
I am also sorry to hear that shrox. It happened to me in 2002. The tech boom finally came to an end and I was laid off and out for 11 months. I burned through every penny I had and ran up my credit cards to hell.

It all worked itself out and I'm better off now than I ever was.

Hang in there man. It WILL get better.

shrox
10-11-2008, 05:35 PM
Thanks everybody. I trusted someone very close to me, and now they have absconded with what would tide me over for a while. (I am not getting married again...)

jin choung
10-11-2008, 05:42 PM
re: previous topic

"dollar cost averaging" + automatic buy schedule + index funds + time will serve most people just fine. especially considering most people are not interested in money as such. the stock market peaks and troughs but it TRENDS UPWARDS. that means if the economy continues to trend upward, so will you. you will only go broke if the economy goes broke. and at that, point the only thing that will matter is how much ammo you've been stocking up for your shotgun.

and for most, the price involved in ignorance (transaction fees, taxes, etc) will eat up away profits. and trying to time the market is as risky a game as you can play with your future.

90s day traders paid the price. home speculators are paying it now.

get rich quick schemes are like the lottery. "it could happen".... wouldn't want to bet my future on it. slow and steady very often does indeed win the race.

it's hard to become a millionaire quick. it's not that hard over the long haul.

jin

jin choung
10-11-2008, 07:28 PM
hey shrox,

in case you need a cheering up: http://www.despair.com/viewall.html

these never ever fail to make me smile and even laugh out loud. just have to remember to look at em when i need em.

jin

MooseDog
10-12-2008, 06:53 AM
A few years ago, I was married, owned a home and had a great job, now I am divorced, unemployed and 2 weeks away from being homeless. All kinds of things, good and bad run through my mind. Being Christian or not has nothing to do with being hungry and scared. The future just seems cold.

i was/am in exactly the same boat. the stress can seem overwhelming, and definitely bends your perspective. whatever happens, don't give up and don't give up on yourself.