CrAsH

[KKoher]

Wow...I'm super surprised not to see anything on here about Wall Street. So, what do you all thing will be the effect of this on our economy short term and long term. How will it effect your business?

[tazman9r]

I know that the Presidential campaigns are hyping this, and so is the news, but I don't see a story here. 500 points drop out of 11,500, lets do the math here... 4.3% of the total Dow. I remember black Monday in 1987 was nearly 23% of the Dow, not to mention the effects on the rest of the planet. I have yet to hear about how bad things are overseas.

They call this a crash, it's embarrassing. Even after the crash of 1987, recovery occurred pretty quickly. I remember, cause I was actually alive during that time. I was in High School, watching as my step-father's business and my father's practice remained largely unaffected by the happenings in New York. Considering the eventual bottoming out of the market resulting from the onset of the 1929 crash, which took place in 1932 and was a sum total of an 89% loss from its peak during an initial attempt at recovery in 1930 (according to Wikipedia), this was a mere hiccup.

The 500 number is significant to those who make money off of your concern, namely the news media (who rake in the cash from advertisers who by ads in papers and on TV during the news slots they know you'll be watching with relevant excitement), because the crash of '87 was about 500 points. If you don't work for a company that is publicly traded, the chances are you'll be unaffected. This is a bigger deal because it is related to the real estate issue, similar to 1929. That said, we need to look very objectively about what these companies do, who's running them, and who will be negatively impacted by particular courses of action. Fannie Mae, Indy Mac, etc., are not the purveyors of socially acceptable easy-to-get home loans and are not to be insulated for trying to be so. If you doubt that, research who's been running Fannie Mae. If that puts people on the streets, those individuals can be dealt with on a case by case basis, but it's time this country put is "big boy/girl" pants on and realized that it can't have what it wants, even when it's "intentions" are good.

Start bailing out Freddie Mac with Richard Syron's $38 million - BloggingStocks

CEO: Fannie/Freddie Bailout Makes America 'More Communist than China'

[byzantium]

I know that the Presidential campaigns are hyping this, and so is the news, but I don't see a story here. 500 points drop out of 11,500, lets do the math here... 4.3% of the total Dow. I remember black Monday in 1987 was nearly 23% of the Dow, not to mention the effects on the rest of the planet. I have yet to hear about how bad things are overseas.

Well, the Dow is down about 25% from its peak right now. Technically a "market crash", but not nearly as bad as 1929. And that's over a period of a few months. In October 1929, the market had 50% of its value vanish in a few DAYS. The origin of the political phrase "October surprise" is found in this event.

As for the rest of the planet, the Eurozone is struggling under a massive tax burden and huge numbers of people sponging off the system via welfare. In some cases, such as Muslim immigrants, de facto racial discrimination rules the day, and Muslims in Europe can not buy apartments or get jobs, and are herded into filthy, decaying public housing which they cannot escape. That's part of the reason why European Muslims are so much more radical than US Muslims-Muslims in the US are widely hated, but they can usually still get jobs and buy houses, especially in the big cities where most live. Welfare in Europe is designed to be a lifelong profession, while the only people who can still make welfare a way of life in the US are those who have real disabilities.

As for Japan, it never really recovered from the big collapse of the early 90s, and has been in and out of recession for nearly two decades. Japan is much more unequal than it used to be, with Japanese experiencing the vast inequalities of wealth, including homeless people living in train stations vs billionaires, that Americans have long accepted as a fact of life. Japan's culture is built so much on conformity however that great inequality is not something it can handle. China and the petro-oligarchies are what is supporting capitalism right now.

They call this a crash, it's embarrassing. Even after the crash of 1987, recovery occurred pretty quickly. I remember, cause I was actually alive during that time. I was in High School, watching as my step-father's business and my father's practice remained largely unaffected by the happenings in New York. Considering the eventual bottoming out of the market resulting from the onset of the 1929 crash, which took place in 1932 and was a sum total of an 89% loss from its peak during an initial attempt at recovery in 1930 (according to Wikipedia), this was a mere hiccup.

The 500 number is significant to those who make money off of your concern, namely the news media (who rake in the cash from advertisers who by ads in papers and on TV during the news slots they know you'll be watching with relevant excitement), because the crash of '87 was about 500 points. If you don't work for a company that is publicly traded, the chances are you'll be unaffected. This is a bigger deal because it is related to the real estate issue, similar to 1929. That said, we need to look very objectively about what these companies do, who's running them, and who will be negatively impacted by particular courses of action. Fannie Mae, Indy Mac, etc., are not the purveyors of socially acceptable easy-to-get home loans and are not to be insulated for trying to be so. If you doubt that, research who's been running Fannie Mae. If that puts people on the streets, those individuals can be dealt with on a case by case basis, but it's time this country put is "big boy/girl" pants on and realized that it can't have what it wants, even when it's "intentions" are good.

Start bailing out Freddie Mac with Richard Syron's $38 million - BloggingStocks

CEO: Fannie/Freddie Bailout Makes America 'More Communist than China'

I think the greatest danger is that banks will simply stop lending unless they have the nanny state backing them up. I don't think that privatizing profit while socializing risk is wise, but we've been headed there for 25 years, and the banks and brokerage firms will now push for a formal transition to a world where we take the risk and they get the profit. Yes, it's fascism, and yes, it's (eventually) a prescription for massive social unrest as wealth disparity would eventually threaten to rip apart the social fabric, but all they want is guaranteed profit with no risk.

This sounds awfully like the idiotic get rich quick schemes that blaze their way through the working class every so often, and in the last 10 years a number of gurus have sold millions of books on the idea that the average Joe can get guaranteed profits without risk. Maybe it's the working class ethos of the modern wealthy that leaves them open to trying this-most of the super rich today clawed their way up from humble beginnings, and model themselves after Donald Trump, who has always been a working class hero. I think that on a macro level it would be devastating, and most of the fortunes so created would simply be handed back to the market over the long term.

The outsize spending of the top people, which as of 2006 was growing at double their income growth, is a prescription for disaster as most of them are taking on too much debt to stay afloat for very much longer. In pop culture terms, Warren Buffett is the angel on your left shoulder telling you to be reasonable with your money and not to blow it, and Trump is the little devil on the other shoulder who says to enjoy yourself because you only live once. In American pop culture, the poor sap sells his soul to the devil only to discover too late that Old Scratch has screwed him. Well, we have legions who have sold their souls, and now it's collection time.

IMO the real people hurting right now are the hedge funders, the guys who took outsize risks with these bizarre securities, and are now paying. A lot of those guys will end up living in subway stations. The rich people who had more money than sense will lose big too. They've already sold their businesses for more money than they could ever spend, and "invested" it with the hedge fund titans, who then bought these weird securities with it. A lot of the former CEOs are in their 60s and can't make another fortune. They will likely spend their golden years living on Social Security, or what's left of it after inflation and federal debt service gets its share. Recently it's been the fashion to celebrate the new American millionaire, in books such as Robert Frank's Richistan and the CNBC special Untold Wealth that aired in June. I think the party's over.

[1entrepreneur]

This economic crisis has lead me to a profound thought:

Human beings have created financial structures so complicated and monstrous that it has gotten beyond control.

Derivatives, options, creative accounting, shares, futures, hedging, subprime mortgages....the sum of all these financial instruments is a monster, propelled by greed.

Economics needs to be simplified. The riskiest(craziest) instruments needs to be removed from the economy, and reality. There should be a standardization of ecomomic principles and instruments worldwide. And CEO's should not be paid hundreds of millions of dollars if their companies make multi-billion dollar losses. Everything is so f***ed up.

OK, time for bed!

[BusinessAdviser]

The market and economy, both of the U.S. and the world, are cyclical. Throughout history, there have been booms and busts, but the overall trend continues to move upward, as innovation and the population continue. I see no reason to worry.

[tazman9r]

I find it interesting that we lost another 449 points today, yet there is not the level of "freaking out" that there was yesterday. There are no calls for investigation, no demands that these institutions be reorganized, only those blaming Bush and calling for more regulation and over site, which will accomplish little, if anything.

I will admit that the stock market will have more than my passive attention if we lose another 500 to 1000 points over the next couple of days, but I am not all that worried. Today's activity, according to the news, is largely due to the announcement that AIG was being bailed out. This was in reaction to the "private profit on public risk" that byzantium was referring to that is now being brewed by the federal government.

When you research and understand who is and has been running Fannie Mae and Freddie Mac, and the directives they have been under from administrations past, it's tough not to see where this debacle really comes from. Just ask the two highest recipients of campaign contributions.

[Hooman]

The market and economy, both of the U.S. and the world, are cyclical. Throughout history, there have been booms and busts, but the overall trend continues to move upward, as innovation and the population continue. I see no reason to worry.

Upward in comparison to the downward trend of the value of the dollar. It's a fact that the Dow Jones average only seems like an upward trend if you don't take into consideration the falling value of the US dollar. In comparison to the value of the dollar, I don't see much reason to be optimistic. Especially with all these government bailouts, it's really not helping.

[tazman9r]

Well, interestingly enough, with the bailout proposed of AIG we rebounded in the market almost completely.

Big Surprise.

Now the Bush Administration and Congress are going to propose an additional $700 Billion to bail out even more companies, and not surprisingly house Democrats (according to an article from the Associated Press posted at Yahoo) "are pressing to require that the plan help more strapped borrowers stay in their homes and to condition the bailout on new limits on executive compensation."

Full Article Here -
Bush team, Congress negotiate $700B bailout - Yahoo! News

So I guess its official. I could understand the first couple of bailouts, these companies provide the money that smaller companies underwrite loans on their behalf. I could understand Fannie Mac and Freddie Mac, after all, we can't let our country run lending institutions fail, then 345 (354 some number like that) members of congress would not get their campaign coffers stuffed, and political appointees would not have a place to go to "earn" (ha ha ha, earn, that's a good one) their retirement.

Now we are apparently talking about bailing out everyone, officially. This was a rather frightening platitude when it was just politicians trying to bribe their constituents for their votes, but I never thought there was any REAL seriousness to it. Apparently there is.

I would not be surprised to hear this coming from Biden or Obama, it would be right up their alley to go for this anyway. I would not be all that surprised that it come from McCain, he tends to do the thing I expect his political "rivals" would do (with the exception of the selection of Sara Palin). And considering that Palin, while stopping the "bridge to no-where" project, did accept the money for use in other areas of the state, so I can't say there is a remaining bright light on anyone's ticket right now with regards to this. I guess we'll see how things shake out over the next couple of days.

I hate to even have this thought, because I believe that whatever the original intentions incredible good has come from our being involved in Iraq, and I would never say or do anything to belittle those brave souls who have sacrificed some and/or all in this, but I'll tell you what, if this is what "compassionate conservatism" means, I don't think we could have survived 8 years of it without being "distracted by Iraq", not that that stopped the Bush administration from giving people nearly everything they wanted over the past 8 years.

While they are dolling out the bailouts, I should write my congressman and see if they will extend this bailout to me. I only started making enough money to start paying my education loans like a year ago (I graduated in 1998). I graduated at a time that was the highest heyday in aviation's history, but because of September 11th I've had a pretty tough time of getting into professional aviation. This is kinda like getting into a loan and having the ARM adjust so high you couldn't pay it, right. I mean, I was only making $7 an hour right out of college fueling airplanes and trying to break into aviation, and when I did get into Flight Instruction, I only made $12 per flight hour. That's way less than a waitress, heck, I probably still make less than a waitress, depending on what restaurant we're talking about.

Yeah, I should be relieved of my fiscal responsibilities, cause it's expensive and tough to pay, and now my credit is totally shot and I can't get a new car that I like, and I should get it because I am a good person and I mean well.

And pigs will fly out of my...

[canadascoffee]

losing 20% over an extended period isn't a crash - it's called a bear market.

elementary, my dear watson...