Economy Crisis

[oldwirehands]

I found this on the Guardian today.

http://www.guardian.co.uk/business/2008/sep/17/recession.labour

Some high-profile liberals' view on the crisis our economy is facing.

[ActionActionFan]

I saw that the article was about people who aren't capitalists and that's when I closed it.

[Jason Tate]

Newsweek’s Richard Wolffe (http://www.msnbc.msn.com/id/3036677/vp/26747306#26747306) gives his analysis of the presidential candidates’ plans to stabilize the shaky economy.

[oldwirehands]

These bailouts need more attention.

[GiggsOho]

These bailouts need more attention.

You mean oversight or media attention?

[splitsecond]

As soon as I saw the phrase "alternative economic models" I closed the page.

[shit stroll]

As soon as I saw the phrase "alternative economic models" I closed the page.
why?

[SoultoSqueeze]

The bubble is finally bursting. It's bad news bears for those of us who are aspiring to become investment bankers. I have a few friends who had just finished up internships at Lehman and such and now are screwed. At the same time, it's history in the making. They'll be talking about this hundreds of years from now.

[crack n toast]

The bubble is finally bursting. It's bad news bears for those of us who are aspiring to become investment bankers. I have a few friends who had just finished up internships at Lehman and such and now are screwed. At the same time, it's history in the making. They'll be talking about this hundreds of years from now.
Agreed, well maybe the next 40 years. =)>

[GiggsOho]

The bubble is finally bursting. It's bad news bears for those of us who are aspiring to become investment bankers. I have a few friends who had just finished up internships at Lehman and such and now are screwed. At the same time, it's history in the making. They'll be talking about this hundreds of years from now.

That's not a good thing.

by the way, its official

WASHINGTON (AP) - Government announces $85 billion emergency loan to American International Group.

The government will receive an 79.9 percent equity stake in AIG, the Fed said.

[oldwirehands]

You mean oversight or media attention?

Media attention. Though I rarely ever watch TV, no one around me really seems to know whats going on.

[Jason Tate]

The bubble is finally bursting. It's bad news bears for those of us who are aspiring to become investment bankers. I have a few friends who had just finished up internships at Lehman and such and now are screwed. At the same time, it's history in the making. They'll be talking about this hundreds of years from now.
One of my close friends is a financial adviser -- his clients are suicidal.

[GiggsOho]

Media attention. Though I rarely ever watch TV, no one around me really seems to know whats going on.

Most websites have it front and center somewhere. CNN doesn't, that's poor.

[shit stroll]

by the end of the night there will be a hundred "this country was founded on freedom and the christianity, socialism = total government control, capitalism ftw," posts in this thread.

[GiggsOho]

It's to the point now where I am thinking about starting to store cash in shoeboxes.

Yeah, I know there is the FDIC.

But then there is this: http://www.wtopnews.com/?nid=111&sid=1479586

The Federal Deposit Insurance Corp. (http://www.wtopnews.com/?nid=733&inform_keyword=Federal+Deposit+Insu rance+Corporation), whose insurance fund has slipped below the minimum target level set by Congress, could be forced to tap tax dollars through a Treasury Department loan if Washington Mutual Inc. (http://www.wtopnews.com/?nid=733&inform_keyword=Washington+Mutual+In c.), the nation's largest thrift, or another struggling rival fails, economists and industry analysts said Tuesday.

[Jason Tate]

It's to the point now where I am thinking about starting to store cash in shoeboxes.

Yeah, I know there is the FDIC.

But then there is this: http://www.wtopnews.com/?nid=111&sid=1479586
And I may be pulling some money out of WaMu now ...

[GuitarR0cker1]

Yeah the economy is definitley not looking good. AIG has a high chance of collapsing on itself which would be horrendous. Thank god gas prices should be down for a while or else we would have more problems but I fully expect them to go up again by next spring.

[SoultoSqueeze]

One of my close friends is a financial adviser -- his clients are suicidal.

The market is so turbulent right now, I'd cut my losses and pull out if I had anything invested. It's pretty intriguing though, especially with the government coming in and giving aid.

[Jason Tate]

The market is so turbulent right now, I'd cut my losses and pull out if I had anything invested. It's pretty intriguing though, especially with the government coming in and giving aid.
Uh ... that's horrible advice. The market may take 10-20 years to rebound, but it will. Pulling out now would be awful.

[GiggsOho]

The market is so turbulent right now, I'd cut my losses and pull out if I had anything invested. It's pretty intriguing though, especially with the government coming in and giving aid.


Wouldn't now be the time get in? That's what I keep hearing, even though handing over money right now scares the fuck out of me.

[Jason Tate]

Wouldn't now be the time get in? That's what I keep hearing, even though handing over money right now scares the fuck out of me.
Yes, if you had the money - you could invest very low. Depends how liquid you need the money and when you'd need to use it.

[70x7]

The bubble is finally bursting. It's bad news bears for those of us who are aspiring to become investment bankers. I have a few friends who had just finished up internships at Lehman and such and now are screwed. At the same time, it's history in the making. They'll be talking about this hundreds of years from now.

Good luck with that. I have a bunch of friends at Lehman or were at Lehman, I haven't talked to them since everything has gone down. Luckily most of my friends went into Private Equity or Hedge Funds after their analyst contract expired. I work in s&t and nobody is buying right now. It's been a brutal week on top of a brutal year. I think a lot of kids are going to be bummed out when hiring is finalized. I doubt the BB's are going to be hiring many college kids when they can have their pick of people with experience.

[GiggsOho]

Yes, if you had the money - you could invest very low. Depends how liquid you need the money and when you'd need to use it.

I don't even know where to begin. Individual stocks? Bonds? I don't even know what a bond is. And how much money is enough money?

[GuitarR0cker1]

Uh ... that's horrible advice. The market may take 10-20 years to rebound, but it will. Pulling out now would be awful.
Hell I don't much about the economy but this is very true. During recessions you can make lots of money if you play your cards right.

[Jason Tate]

I don't even know where to begin. Individual stocks? Bonds? I don't even know what a bond is. And how much money is enough money?
Hahaha, depends on you ... and I'm definitely not the one to talk to about it -- I pay someone to do that for me. I stay in funds instead of individual stocks for diversification and because unless I have done a lot of research on the company, I don't like owning a part of it... some of the funds I currently hold that I bought low ... WDVAX (http://finance.google.com/finance?q=MUTF:WDVAX), IRSAX (http://finance.google.com/finance?q=MUTF:IRSAX), IGNAX (http://finance.google.com/finance?q=MUTF:IGNAX).

I don't plan to touch most of my investments for over 10+ years and live very frugally - and most bonds I think the market will outperform over a 10 year timeline. Again, don't take my advice if you're serious, I would bet 70x7 (above) can offer better talk than I ever could.

[GiggsOho]

Hahaha, depends on you ... and I'm definitely not the one to talk to about it -- I pay someone to do that for me. I stay in funds instead of individual stocks for diversification and because unless I have done a lot of research on the company, I don't like owning a part of it... some of the funds I currently hold that I bought low ... WDVAX (http://finance.google.com/finance?q=MUTF:WDVAX), IRSAX (http://finance.google.com/finance?q=MUTF:IRSAX), IGNAX (http://finance.google.com/finance?q=MUTF:IGNAX).

I don't plan to touch most of my investments for over 10+ years and live very frugally - and most bonds I think the market will outperform over a 10 year timeline. Again, don't take my advice if you're serious, I would bet 70x7 (above) can offer better talk than I ever could.

Thanks, I appreciate it. And I'm not serious at all, but it's worth a thought if everyone i hear is like, "if you are going to do it, do it now."

[ActionActionFan]

One of my close friends is a financial adviser -- his clients are suicidal.

My dad manages a hedge fund and he says that all of the investors are going nuts.

[Jason Tate]

Thanks, I appreciate it. And I'm not serious at all, but it's worth a thought if everyone i hear is like, "if you are going to do it, do it now."
Everything I've ever read indicates that kind of thing ... over time, the market is always a good investment. Even if you invested on the day before the worst "investment" days in history - over time, you will come out ahead.

[Jason Tate]

My dad manages a hedge fund and he says that all of the investors are going nuts.
Heh. Yeah, if you were banking on retiring within the next 2-3 years - you're probably pissed right now.

[ActionActionFan]

Heh. Yeah, if you were banking on retiring within the next 2-3 years - you're probably pissed right now.

His company hasn't been hit too hard because it deals with foreign markets along with the US markets. And even though foreign markets haven't been doing great, they haven't been in freefall like the US market.

Also, people need to realize that this is a great time to invest instead of pulling out. If you want to be less risky you can wait to see what happens to AIG and Washington mutual but after those two are dealt with the market is bound to go back up.

[70x7]

Hahaha, depends on you ... and I'm definitely not the one to talk to about it -- I pay someone to do that for me. I stay in funds instead of individual stocks for diversification and because unless I have done a lot of research on the company, I don't like owning a part of it... some of the funds I currently hold that I bought low ... WDVAX (http://finance.google.com/finance?q=MUTF:WDVAX), IRSAX (http://finance.google.com/finance?q=MUTF:IRSAX), IGNAX (http://finance.google.com/finance?q=MUTF:IGNAX).

I don't plan to touch most of my investments for over 10+ years and live very frugally - and most bonds I think the market will outperform over a 10 year timeline. Again, don't take my advice if you're serious, I would bet 70x7 (above) can offer better talk than I ever could.

Right now is just a game of patience. Somebody on TV said this is the kind of market that can make billionaires. True, but it also can make you go broke much easier. Oil looked like an awesome way to make a killing 6 weeks ago, but it's down $50-60 since then, even with two major hurricanes in the gulf. Just like technology, big banks and real estate in the past. Nothing make a ton of sense right now.

Jason, do any of your funds have Fanny or Freddie exposure? I don't deal with mutual funds or bonds, but I've heard stories about lots of people and funds getting killed because they didn't know they had exposure.

We've heard some horror stories out of Lehman today about how a bunch of guys there had stock and defered payment plans with the company in their retirement plans or with other arrangements. They couldn't touch the stock for a while, and now they've lost everything. If you had 10,000 shares of Lehman earlier this year you would have had almost a million dollars there. Today you would have about $200 with that same 10,000 shares. It's fucking scary

[70x7]

His company hasn't been hit too hard because it deals with foreign markets along with the US markets. And even though foreign markets haven't been doing great, they haven't been in freefall like the US market.

Also, people need to realize that this is a great time to invest instead of pulling out. If you want to be less risky you can wait to see what happens to AIG and Washington mutual but after those two are dealt with the market is bound to go back up.

This is absolutely a buyers market. If you make the right investments in the market and in real estate, you could be a rich man in 10-20 years. If I didn't have a baby on the way I'd put a lot of money in some bank stocks right now.

I hope your dad doesn't have a bunch of exposure in China or Russia. Russia's market basically crashed today.

[GiggsOho]

This is absolutely a buyers market. If you make the right investments in the market and in real estate, you could be a rich man in 10-20 years. If I didn't have a baby on the way I'd put a lot of money in some bank stocks right now.

I hope your dad doesn't have a bunch of exposure in China or Russia. Russia's market basically crashed today.


17.45% drop in their market?!?!?! Jesus, even I know that's a bloodbath.

[SoultoSqueeze]

Uh ... that's horrible advice. The market may take 10-20 years to rebound, but it will. Pulling out now would be awful.

I don't know if I'd want to put my money in a stock that may take 10-20 years to rebound. You could buy low, true, but the way all these companies are just getting shit on, I'd wait for at least 6 months.

[aminorthreat55]

I don't even know where to begin. Individual stocks? Bonds? I don't even know what a bond is. And how much money is enough money?
Any money that you can do without really. The time value of money thing works wonders because every dollar counts. You don't really want bonds (most bonds are low-risk and therefore low-return). Stocks and stock-based funds are the way to go. The whole buy low-sell high strategy is centered on stocks and the financial instruments that are composed of a variety of stocks. Most bonds are relatively stable and give you a lower return.
Everything I've ever read indicates that kind of thing ... over time, the market is always a good investment. Even if you invested on the day before the worst "investment" days in history - over time, you will come out ahead.
This is relatively accurate. The key is always how much time you are willing to sit, and for anyone under thirty, you've got plenty of time.

[asmolitor]

It's to the point now where I am thinking about starting to store cash in shoeboxes.

Yeah, I know there is the FDIC.

But then there is this: http://www.wtopnews.com/?nid=111&sid=1479586

WaMu won't fail. they released quarterly numbers 6 weeks early to stop speculation of their demise - which showed even amidst massive writedowns they still have enough capital to weather the storm. not only that, but given their large client/customer base, they'd be bought up in an instant if things took a turn for the drastically worse. lehman failed without a purchase or gov't bailout because they had nothing attractive to a potential suitor, just massive debts from failed speculation bets - WaMu has a huge customer base from personal banking, let alone financial services. i'm a little angry that i didn't pick up some WaMu at $1.50/share today - although they are definitely a part of the "meltdown," they're not nearly in the same boat as others. and if anything, they're a great takeover candidate as opposed to the other outcome - letting it fail, letting the FDIC fund run out, and creating a potential bank run.

The market is so turbulent right now, I'd cut my losses and pull out if I had anything invested. It's pretty intriguing though, especially with the government coming in and giving aid.

awful. never cut extreme losses - not only do you lose the potential for a rebound, you go into cash which is ruled by inflation that cuts into your investments rather than building upon them. always see it through if you've missed the opportunity to cash out at a legitimate loss level. plus, there's a lot of surprises in this market (i was blindsided by the merrill lynch purchase) - including the previous bear stearns failure, where the stock went down to $2 and many people sold out, before takeover rumors sent it upwards of $10-12. of course, it was still a large loss for most investors, but seeing things through can never hurt, since in that scenario (and all others) a stock's price can only reach $0. if it's at $2, you don't have a lot to lose if you've had it fall down that far already.

if you're inclined to risk/reward payoffs, i'd actually be buying right now - and along the way to the bottom, whenever it hits. since there's no way to predict a bottom, i'd take a look at the market as a whole and with a little faith, realize the dow couldn't logically fall below 8000 in a worst-case scenario. given that, individual stock prices have a little less than a 20% loss cushion in that scenario - with an unlimited upside once this mess gets sorted out. no one ever made money selling low and buying high.

Yes, if you had the money - you could invest very low. Depends how liquid you need the money and when you'd need to use it.

bingo bango. since my time horizon is when i have gray hairs, i have quite a financial erection with the inherent possibilites of this market.

Thanks, I appreciate it. And I'm not serious at all, but it's worth a thought if everyone i hear is like, "if you are going to do it, do it now."

compound interest / TVM. plus, you're 24 - you can afford to be fairly risky since you have a working life to make back any losses. and if your risks pan out, by the time you need to access those funds you'll be glad you did it when you did, rather than at 30, 35, 40, etc.

Right now is just a game of patience. Somebody on TV said this is the kind of market that can make billionaires. True, but it also can make you go broke much easier. Oil looked like an awesome way to make a killing 6 weeks ago, but it's down $50-60 since then, even with two major hurricanes in the gulf.

there's probably a fair amount of people with oil put options that are still making a killing. it goes either way. then again, you probably know that.

[oldwirehands]

d73KlhUq1W8

I understand a lot of people don't like Ron Paul here but I think what he has to say about the recent economic events is pretty dead on.

[wrppdarndyrfngr]

FYI : TWO ECONOMISTS FROM UNIVERSOTY OF CHICAGO EXPLAIN WHAT THE HELL JUST HAPPENED
(http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/)
great blog from the writer of Freakonomics