Economy in meltdown?
- Thread starter Lucky_UK
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ali777
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I am actually looking forward to the future :woot: The house prices were becoming extortionately overpriced. Now I can look forward to buying my own place in the next few years.
Airlines have been going bust in the past as well. The difference is that this time they are not "national" airlines that constantly get bailed out by governments (read as the tax payer). I think this a natural process where the weaker companies go out of business. I was watching BBC news today and (I can't remember his name) one of the travel reports for the BBC was saying that this is not necessarily bad for the consumer. The elimination of weaker companies ensures a system where the stronger companies survive and the consumer doesn't get stranded in weird places.
I think A Darling was right, it will get much worse before it gets better. The worst thing about the credit crunch is the job losses. Negative growth of 1-2% is not the end of the world, but once a job has been lost, life becomes hard.
Airlines have been going bust in the past as well. The difference is that this time they are not "national" airlines that constantly get bailed out by governments (read as the tax payer). I think this a natural process where the weaker companies go out of business. I was watching BBC news today and (I can't remember his name) one of the travel reports for the BBC was saying that this is not necessarily bad for the consumer. The elimination of weaker companies ensures a system where the stronger companies survive and the consumer doesn't get stranded in weird places.
I think A Darling was right, it will get much worse before it gets better. The worst thing about the credit crunch is the job losses. Negative growth of 1-2% is not the end of the world, but once a job has been lost, life becomes hard.
The Gardener
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I've already made my views on this well known, the conclusion being that you can pretty much remove the question mark from the title of this thread.
I've warned you guys before and I'll warn you again.
Even if you think I'm a raving lunatic and believe that the economy is just in a rough patch and will quickly recover, at the VERY least, heed this one bit of advice. Keep some extra cash on hand, at least enough to get you through about two weeks or so of transactions. Maintain this cash balance, so as you use cash, restock it from the ATM.
In other words, prepare for a scenario where electronic debit and credit card acceptance is turned off. Why? Because when you swipe your credit card, you are, in effect, making a promise that your bank will pay the vendor's bank a certain amount of computer screen money. When banks are in a mode where they don't trust other banks, and are competing with them for actual cash, this system will go down for periods of time when there is extreme turmoil.
As for the ATMs... as more bad news comes, and there is more bad news to come, people are going to panic and irrationally make a run on banks to try to get their money out. In the process of being chicken littles, they are going to remove cash from ATM machines at a rate faster than the normal replenishment cycle is accustomed to. Its just human nature, they'll hear a story on the news and then they go crazy and overdo the reaction. To avoid this inconvenience, and to stay a step ahead of human nature, I highly suggest that you all keep about 2-3 weeks of cash on hand. I'm not suggesting withdrawing everything or anything crazy like that. Just about 2-3 weeks worth... which I think is just plain common sense.
Personally I've got a LOT more cash out than that and have made a few other preparations... but that's because I sense a level of risk here significantly higher than the mainstream media are suggesting.
I've warned you guys before and I'll warn you again.
Even if you think I'm a raving lunatic and believe that the economy is just in a rough patch and will quickly recover, at the VERY least, heed this one bit of advice. Keep some extra cash on hand, at least enough to get you through about two weeks or so of transactions. Maintain this cash balance, so as you use cash, restock it from the ATM.
In other words, prepare for a scenario where electronic debit and credit card acceptance is turned off. Why? Because when you swipe your credit card, you are, in effect, making a promise that your bank will pay the vendor's bank a certain amount of computer screen money. When banks are in a mode where they don't trust other banks, and are competing with them for actual cash, this system will go down for periods of time when there is extreme turmoil.
As for the ATMs... as more bad news comes, and there is more bad news to come, people are going to panic and irrationally make a run on banks to try to get their money out. In the process of being chicken littles, they are going to remove cash from ATM machines at a rate faster than the normal replenishment cycle is accustomed to. Its just human nature, they'll hear a story on the news and then they go crazy and overdo the reaction. To avoid this inconvenience, and to stay a step ahead of human nature, I highly suggest that you all keep about 2-3 weeks of cash on hand. I'm not suggesting withdrawing everything or anything crazy like that. Just about 2-3 weeks worth... which I think is just plain common sense.
Personally I've got a LOT more cash out than that and have made a few other preparations... but that's because I sense a level of risk here significantly higher than the mainstream media are suggesting.
The Gardener
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I haven't made multiple predictions, I made just one... last July, back when the DJIA was at 15,000.
The DJIA approaching 10,000 today.
That would be 30% of all DJIA market capitalization wiped out since then.
This is all I'm going to say.... last post for me on this thread. But, if there is anything I highly suggest you do, keep some cash on hand. That's all.
The DJIA approaching 10,000 today.
That would be 30% of all DJIA market capitalization wiped out since then.
This is all I'm going to say.... last post for me on this thread. But, if there is anything I highly suggest you do, keep some cash on hand. That's all.
The Gardener
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Crisis averted. Phew!
Everyone can go about their normal business again. Get back into the stock market again. Move along... nothing more to see here.
We've put the crisis on Uncle Sam's VISA card. We won't need to deal with it for another few years or so... so that gives us a little bit of a window to make money on Wall Street in the meantime!
Everyone can go about their normal business again. Get back into the stock market again. Move along... nothing more to see here.
We've put the crisis on Uncle Sam's VISA card. We won't need to deal with it for another few years or so... so that gives us a little bit of a window to make money on Wall Street in the meantime!
ali777
Senior Member
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The Gardener said:
I'm actually annoyed at this situation. Don't get me wrong, I am not pro-crisis and I don't want anyone to lose money, but those dickheads that created the problem in the first place will get even richer...
The rich get richer, the poor pay taxes to cover up the rich man's fu*k ups.
This is the same as the Asian crisis. The West avoided the crisis by increasing borrowings which ultimately lead to the black hole. Now, they are creating even a bigger black hole, which will eventually lead to a repeat of what we are going through now. I think this could turn out to be a missed opportunity that was needed to correct the market forces.
This ain't over, it's just been put off a few years.
badasshairday III
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Gardener, your idea to be prepared with cash wasn't so far fetched. If we had a true free market in which the government did not stick their long arms into private business....... we would of been screwed. But everything would be corrected afterward in a true free market. This is just buying time and causing more inflation.
The Gardener
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It wasn't far fetched at all. On Wednesday the Treasury had to backstop money market fund redemptions. You know what would have come next.... so I'd still keep that cash handy. Things are looking better from a systemic perspective, but the underlying problem still exists.badasshairday III said:
Maybe shorter than that if the market for US T-bills chokes on all the added debt.ali777 said:
This, in effect, IS the Asian crisis... its just crawled out from under the rug we swept it under and showed up in the US mortgage market.ali777 said:
Starseed
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I don't know whether to post a serious post or not, as I'm secure financially anyway ....( bar invasion from outer space ).
But the bankers started this with their snake-oil sub-prime POS products, sold to gullible trailer-trash et. al. with nice fat commissions on each sale.
Fast forward and the chickens are coming home to roost. Freddie Mae and Fanny Mac are in deep do-doo as a result of the above, so the Fed steps in to stem the bloodletting and effectively nationalises them, rewarding all the "short sellers".
Emboldened, the short-sellers ( quick bucks for me boys, and f*ck you if you're a poor stupid average Joe investor ) target Lehman Brothers, and sure enough, just like the sub-prime bankers, they walk away to their Florida golf-courses pocketing 8-figure sums.
So Lehman Brothers go down, as the Fed has to draw the line somewhere, otherwise every irresponsible banker will nevertheless sail on with his ill-gotten gains, buoyed up by taxpayer money.
Now the short sellers realise that HBOS ( Halifax, Bank Of Scotland ) may be weak, so like hyenas, they circle and pounce.
Another victim! And masses of profits for a small, anonymous and unaccountable few.
The Doomsday Machine rolls on! With the Short Sellers oiling the wheels.
In London, the regulators ban Short Selling on financial companies until further notice. ( good move, but will it stop the machine?........)
What a ride. I'm glad only 2% of my net wealth is in stocks, and that I'm debt-free & mortgage free.
Who can blame the short-sellers anyway? They're at least honest, more than can be said for the sub-prime mortgage broker/ banker scumbags. If I had the nous and the motivation, I'd probably short-sell myself. As it is I'm too chicken and/or too lazy.
But the bankers started this with their snake-oil sub-prime POS products, sold to gullible trailer-trash et. al. with nice fat commissions on each sale.
Fast forward and the chickens are coming home to roost. Freddie Mae and Fanny Mac are in deep do-doo as a result of the above, so the Fed steps in to stem the bloodletting and effectively nationalises them, rewarding all the "short sellers".
Emboldened, the short-sellers ( quick bucks for me boys, and f*ck you if you're a poor stupid average Joe investor ) target Lehman Brothers, and sure enough, just like the sub-prime bankers, they walk away to their Florida golf-courses pocketing 8-figure sums.
So Lehman Brothers go down, as the Fed has to draw the line somewhere, otherwise every irresponsible banker will nevertheless sail on with his ill-gotten gains, buoyed up by taxpayer money.
Now the short sellers realise that HBOS ( Halifax, Bank Of Scotland ) may be weak, so like hyenas, they circle and pounce.
Another victim! And masses of profits for a small, anonymous and unaccountable few.
The Doomsday Machine rolls on! With the Short Sellers oiling the wheels.
In London, the regulators ban Short Selling on financial companies until further notice. ( good move, but will it stop the machine?........)
What a ride. I'm glad only 2% of my net wealth is in stocks, and that I'm debt-free & mortgage free.
Who can blame the short-sellers anyway? They're at least honest, more than can be said for the sub-prime mortgage broker/ banker scumbags. If I had the nous and the motivation, I'd probably short-sell myself. As it is I'm too chicken and/or too lazy.
ali777
Senior Member
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I was told a story that I think is rather interesting. I presume my friend heard it on the news or something... Anyway here it goes...
A guy has been offered a job by Lehman Brothers, and he was about to travel to London to take his new position. He goes to his local airport only to find out that XL is gone bust and he can't travel. Then he gets a ticket for the Eurostar but due to the fire they had in the tunnel, the train was stopped as well...
Somehow he gets to London and goes to his new office and starts working. An hour into his new job, Lehman Brothers goes bust....
I think fate was telling this guy not to bother travelling to London at all.
A guy has been offered a job by Lehman Brothers, and he was about to travel to London to take his new position. He goes to his local airport only to find out that XL is gone bust and he can't travel. Then he gets a ticket for the Eurostar but due to the fire they had in the tunnel, the train was stopped as well...
Somehow he gets to London and goes to his new office and starts working. An hour into his new job, Lehman Brothers goes bust....
I think fate was telling this guy not to bother travelling to London at all.
poor guy.