WILL THE LATEST ROUND OF ECONOMIC CHAOS IMPACT YOU?

[chromium]

Guys, he was with Lehman Brothers. (Land on your feet, George!)

Guess George wont be buying the Patek from me

 

I don't get the Patek phenomenon. You can get a lot more Rolex for the dough from what I've seen.

 

dude...Patek is king ... a Rolex is a tad vulgar

[chromium]

Even though we're not feeling the crunch that much in Europe as you guys are over there, it is on everyone's radar.

 

I haven't been affected but I am getting a lot more careful, even worried. Food prices have gone up about 15% which is outrageous as our prices have been on almost the same level for the past decade.

 

But I am starting to worry a bit more, plans were to buy a new SUV and have a 3 week family holiday in Asia + make a shorter trip to the US all in 2009..now I'm thinking maybe I should reconsider.

 

I also found out that I probably won't be able to retire at 57 will have to continue working till I reach 58. But that's not a big deal as I was planning to carry on till I reached 60 to take advantage of the "golden pension deal" (78% of your last paycheck each month)

 

But on the other hand, gas just went down 38 cents per gallon today

[goldust40]

 

But on the other hand, gas just went down 38 cents per gallon today

 

That's remarkable. Have to say, if the Euro continues to get much stronger against sterling we may have to make it our currency.

[chromium]

 

But on the other hand, gas just went down 38 cents per gallon today

 

That's remarkable. Have to say, if the Euro continues to get much stronger against sterling we may have to make it our currency.

 

Cheap CCEs

[KingOfRulers]

King I agree with you but the current situation seems to be a lot scarier than recent crisis in the last 20-25 years. If Greenspan says this is the worse he has ever seen it in his lifetime then I think we are for a couple very tough years.

 

Well, I think that in situations like this, the situation you are currently in will appear to be the worst. Memories tend to fade, so the situation of the past will often appear less significant as time goes on. Not only that, but the living population has not experienced most of our countries history obviously, so the only way for the population to be aware that this situation is not uncommon would be to research it. I'm not saying it isn't rough, but it has a tendency to happen from time to time. I think the media is trying (and successfully) to scare people. I'm not discounting Greenspan either. He is a well knowledged invididual to say the least!

 

For once, I actually think the media is trying to be somewhat level-headed about the news. When the federal government (with a Re publican president) loans a private insurance company $85 billion to prevent its failure, things are bad. When the Russian stock market has to halt trading and the Russian government has to bail out the three main Russian banks, things are bad. (Russia owns quite a bit of our debt.) The head of the IMF is saying that the worst is still ahead of us, and a lot of economists are agreeing with him. What is even scarier is that there aren't that many knowledgeable people who are disagreeing with him. This is not to say that the doomsayers are 100% correct, but there isn't a clear road out of this hole for at least a couple of years.

 

The president doesn't have much to do with it. I'm not sure, but as far as I am aware it requires a vote from the Federal Reserve Board. This provision of bailing a company like this wasn't a product of the President Bush. It was first put into play in the 1930s as part of the Federal Reserve Act.

 

The president doesn't have much to do with it? Who do you think appointed the Secretary of the Treasury or the Chairman of the Federal Reserve Bank? Do you honestly think any of this would have happened without George W. Bush's ok?

 

I am not saying the decision was good, bad, or otherwise. This isn't a political point (i.e., re publicans are bad/de mocrats are good) that I'm making. My point is that you are simply incorrect if you actually believe what you wrote.

 

It doesn't matter if you or I think Bush did or did not have a say in the decision. That is nothing but opinionated speculation. Officially and legally speaking, he was not the true decision maker.

[1koko]

Guys, he was with Lehman Brothers. (Land on your feet, George!)

Guess George wont be buying the Patek from me

 

I don't get the Patek phenomenon. You can get a lot more Rolex for the dough from what I've seen.

 

dude...Patek is king ... a Rolex is a tad vulgar

 

I own a Panerai and a Breitling.

 

 

[joe_collector]

[The Question?]

 

 

Business/Economics 101

 

 

never get emotional about money...it clouds judgement!

[ft88]

No, have been heavy gold for a long while now and will remain until inflation has a bubble, which is only a matter of time.

 

There are quite a few moving parts but the bottom line is there are bad loans that have been levereged with the backing of the Fed. As this gets washed through in the short term there will be a deleveraging. This will result in falling prices and as we've seen in housing this causes a cycle downward just as leverage lead to rising prices leading to ever higher prices as seen from 2002-2006 in housing.

 

This will be mis-interpereted as "deflation" and the Fed headed by Ben Barnanke will print money. He believes that the problem and cause of the Great Depression was a lack of money ie liquidity. That's what he wrote his doctorate on anyway.

 

Printing money = inflation = Gold and other metals will go up.

[CHABSENTIA]

The Senate Banking committee would not grant stricter regulations on the Bank for the last two years. They encouraged the Ninja loans which are "No Income." No Jobs, No assets. I saw a woman on T.V the other night . She was whining because she had signed an Agreement for 6% Interest which went up to almost 11% and she was losing her home. She didn't understand that the Variable Rate Mortgage she signed was steadily going up one it kicked in because Bernake was raising the Rates 15 consecutive times and choking off Credit.I bought my House in December of 1979. I initially had to pay 10 3/4 percent and that was a deal because under Carter the rates eventually went to 18%. I had to put a minimum down of 15% and my payments could not be more than 25% of my Income.It is true that Bush appointed the Treasury Secretary. The Sub Prime Mess was well underway at this time so this is trivial. It started with Greenspan who had Interest Rates down to about1% and excessive Credit. Clinton Administration relaxed the Mortgage Laws further. Then we had the Exotic Financing and the Ninja Loans on Housing. Bernake then raised Interest Rate 15 consecutive times without a rest to see how the Economy absorbed it effectively cutting off Credit and hurting those that took out these ridiculous Variable Rate Mortgages. Then you had the people who were using the Equity on thier Homes as Revolving Credit for Loans that they didn't need. As the People before them had to sell therr Homes at lower values and were being Foreclosed at lower values then the people that took out Loans based on their Equity found that their payments were a larger part of their Equity because their Homes were now worth less.

 

In short. the Housing Crisis is a result of Ignorant people that were allowed by greedy lenders to buy Homes in an Unregulated atmosphere. Another Problem is Cox who is head of the SEC. .Cox was appointed by Bush and should have warned of the catastrophe ahead for Mortgage related Stocks and better Oversight.The problem here is that the stage had already been set and only a little damage would have been averted.

[joe_collector]

In short. the Housing Crisis is a result of Ignorant people that were allowed by greedy lenders to buy Homes in an Unregulated atmosphere.

 

I can remember going to the bank to get a pre-approved mortgage for the proposed new house, and after we totaled our incomes, assets, current house equity, investments, cash, etc. they gave us some godawful amount that we could spend on a house - I won't even repeat the number, but let's say the bank told me I could live next to Jack Nicholson.

 

If you actually fell for this BS, you were toast, as there was no way the numbers really added up, and it was just "mortgage math" that guaranteed foreclosure.

[thehumantorch]

The Senate Banking committee would not grant stricter regulations on the Bank for the last two years. They encouraged the Ninja loans which are "No Income." No Jobs, No assets. I saw a woman on T.V the other night . She was whining because she had signed an Agreement for 6% Interest which went up to almost 11% and she was losing her home. She didn't understand that the Variable Rate Mortgage she signed was steadily going up one it kicked in because Bernake was raising the Rates 15 consecutive times and choking off Credit.I bought my House in December of 1979. I initially had to pay 10 3/4 percent and that was a deal because under Carter the rates eventually went to 18%. I had to put a minimum down of 15% and my payments could not be more than 25% of my Income.It is true that Bush appointed the Treasury Secretary. The Sub Prime Mess was well underway at this time so this is trivial. It started with Greenspan who had Interest Rates down to about1% and excessive Credit. Clinton Administration relaxed the Mortgage Laws further. Then we had the Exotic Financing and the Ninja Loans on Housing. Bernake then raised Interest Rate 15 consecutive times without a rest to see how the Economy absorbed it effectively cutting off Credit and hurting those that took out these ridiculous Variable Rate Mortgages. Then you had the people who were using the Equity on thier Homes as Revolving Credit for Loans that they didn't need. As the People before them had to sell therr Homes at lower values and were being Foreclosed at lower values then the people that took out Loans based on their Equity found that their payments were a larger part of their Equity because their Homes were now worth less.

 

In short. the Housing Crisis is a result of Ignorant people that were allowed by greedy lenders to buy Homes in an Unregulated atmosphere. Another Problem is Cox who is head of the SEC. .Cox was appointed by Bush and should have warned of the catastrophe ahead for Mortgage related Stocks and better Oversight.The problem here is that the stage had already been set and only a little damage would have been averted.

 

I'm sure the lenders made healthy fees lending out all that crazy money while passing the risk up the food chain. The borrowers were greedy, why should they miss a chance to buy property and get rich, and borrowed far more than they could afford. The government wanted to keep the economy rolling so they happily allowed easier lending rules.

 

There is a reason why lending rules were created in the first place. They were ignored and the present mess is the result.

[KingOfRulers]

I don't know why so many people blame the government. This seems like common sense to me. It baffles me how the government and/or lenders have been portrayed as being at fault here.

 

If you are only making $12,000 per year, don't take out a $750,000 home loan to get a 7 bedroom 5 bath mansion. It is not the government's responsibility to look over the shoulder of everyone. It is the responsiblity of the people to make sensible decisions. If they were in fear of being duped than they should have had their attorney present during the time when the loan was being written up. It is sad that many people are in financial turmoil, but people in this country need to learn to be more fiscally responsible regarding their own situation.

[360degrees]

I don't know why so many people blame the government. This seems like common sense to me. It baffles me how the government and/or lenders have been portrayed as being at fault here.

 

If you are only making $12,000 per year, don't take out a $750,000 home loan to get a 7 bedroom 5 bath mansion. It is not the government's responsibility to look over the shoulder of everyone. It is the responsiblity of the people to make sensible decisions. If they were in fear of being duped than they should have had their attorney present during the time when the loan was being written up. It is sad that many people are in financial turmoil, but people in this country need to learn to be more fiscally responsible regarding their own situation.

 

It's everyone's fault.... The dumb people, greedy lenders, and the GOV't for not enforcing lending rules. It comes full circle.... Anyways I hope you guys pull through the hardtimes.... Unless the Army starts kicking people out i'll have a steady income and somewhere to lay my head at.

[joe_collector]

If you are only making $12,000 per year, don't take out a $750,000 home loan to get a 7 bedroom 5 bath mansion.

 

And you're fine with a bank or mortgage company qualifying a person with a $12K income for a $750K house?

 

It's a two-way street; sure the people shouldn't have taken the loan, but the bank shouldn't have offered it in the first place.

[october]

I don't know why so many people blame the government. This seems like common sense to me. It baffles me how the government and/or lenders have been portrayed as being at fault here.

 

If you are only making $12,000 per year, don't take out a $750,000 home loan to get a 7 bedroom 5 bath mansion. It is not the government's responsibility to look over the shoulder of everyone. It is the responsiblity of the people to make sensible decisions. If they were in fear of being duped than they should have had their attorney present during the time when the loan was being written up. It is sad that many people are in financial turmoil, but people in this country need to learn to be more fiscally responsible regarding their own situation.

 

This is a gross oversimplification of the situation. People are blaming Wall Street and various lenders not because they should have been more responsible when lending cheap credit (though they should have), but because of how they represented the mortgage backed securities formed through these loans. The risk formulas on those things were so obtuse that they basically became imaginary. So much for having the same credit worthiness as T-bills.

 

Not to mention the fact that i-banks and traders are now cannibilizing their own financial system through naked short selling. There is a reason the SEC is scrambling to put more protections in place as we type...

 

The blame for this current meltdown extends well beyond some janitor taking out a 750k mortgage.

[FFB]

Do you honestly think any of this would have happened without George W. Bush's ok?

 

 

I dont think you meant this as its written. W may have "okayed" it, but only after others made the decision.

 

I'm not suggesting that he is the economic mastermind behind the current strategy. I am not even sure he could balance his own checkbook. But to say that the Treasury and Federal Reserve Bank are working independently of him or that he has little to do with it is just flat out wrong. If he wanted to say no, he could and would. He has shown a willingness to buck his advisors' recommendations when he felt differently, even when operating from a position of less knowledge than the advisors had.

 

Anyway, I don't want to turn this into a political discussion. My point was simply that this economic situation is not being blown out of proportion by the media. If anything, they are keeping something of a lid on how bad it might get.

[ft88]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

[Lego]

No, have been heavy gold for a long while now and will remain until inflation has a bubble, which is only a matter of time.

 

There are quite a few moving parts but the bottom line is there are bad loans that have been levereged with the backing of the Fed which is backed by nothing at all. As this gets washed through in the short term there will be a deleveraging. This will result in falling prices and as we've seen in housing this causes a cycle downward just as leverage lead to rising prices leading to ever higher prices as seen from 2002-2006 in housing.

 

This will be mis-interpereted as "deflation" and the Fed headed by Ben Barnanke will print money. He believes that the problem and cause of the Great Depression was a lack of money ie liquidity. That's what he wrote his doctorate on anyway.

 

Printing money = inflation = Gold and other metals will go up.

 

Fixed?

[Vtcomics]

To blame short sellers on this whole shebang (and by proxy the SEC for not limiting short sellers) is intellectually dishonest.

 

The flip side of this is to blame long buyers for propping up the market for far too long. Should long buyers be blamed everytime the market goes up? And if you bring up the idea that the shorts need to actually have the shares to borrow, then you get into semantics a bit because eventually they do have to pony up the shares and they are risking a short squeeze. Plus you can always sell a call or buy a put which is basically a naked short or sorts anyway.

 

It's sad that even the big boys and CNBC squawkers are complaining about it, as it's such a canard.

 

Ed,

While I certainly do not blame short selling on the entire mess, to not think that it has had devastating effects to the current crisis would be a bit naive. Banning naked short selling should have been enforced years ago. One has to understand that the current power (as compared to 15+ years ago) of the investment masses to literally "move" a stock or sector has radically changed. Watching the carrion eaters jumping from BSC to FRE to LEH to AIG and now to GS has been downright disgusting. Not that most of these firms didn't deserve their fates, but some could have been saved if they had had time to unload some of their assets. Time that the short sellers took out from underneath them. This kind of destruction is anti-American, and needed to be reined in. Again, I'm not against short selling, but unchecked in the greedy hands of the folks that rule Wall St it can lead to ruins. And we all know how many morals the gang on the street have.... They'd whore out their own mother for a buck.