PDA

View Full Version : The Falling American Economy



herman2
09-29-2008, 02:46 PM
The American Economy is causing people to go crazy. The Bail out did not pass. Now What?. What does this mean for us? What will the Impact be to Canada and other countries. Will the Stock Market Crash?

I think the Bail out of $700 Billion will eventually be passed but I wonder what effect it will really have. I think Canada and other countries will feel a pinch too. I don’t know why America owes billions to China. These are crazy times . What a hell of a job for any new American President to be heading into. I don't know much about stocks but I doubt it will be anything like the Depression. I hope the American Economy improves Fast.

aly j
09-29-2008, 10:11 PM
What the most powerful nation in the world is in trouble,yes i knew.
Well what goes around comes around,may be this may cause america to loss its power.
Australia of cause be effected cause were always jumping up there arse.

herman2
09-30-2008, 07:37 AM
Toronto Star Newspaper:
"A stunning rejection of a $700 billion financial bailout package by the U.S. House of Representatives yesterday sparked a historic North American stock market selloff, and left the United States in a crisis with no end in sight.

During an emotional afternoon in which the House dissolved into partisan finger-pointing, the bill was defeated 228-205 and, even before the voting was complete, the Dow Jones index began a freefall that ended with a loss of 777 points and $1.2 trillion in market value."

Have we seen the end of this?...Has the WAAR in Iraq caused or escalated this problem, or has war production helped?..I don't know. I wish I knew. The moon is falling, so said Chicken Little

mike M.
09-30-2008, 07:44 PM
The market goes up and down and when its down..I'm just buying more stocks..next time it goes up..I make my money...BUT This is what happens when you give home loans to people based on their skin color, regardless weather they have a good credit score or their ability to pay the loan back, no down payment to buy a home..NO PROBLEM...bad credit score..NO PROBLEM..if the interest rate changes, you wont be able to make your payment..NO PROBLEM...Don't earn enough to buy a home..NO PROBLEM..

Both republicans and democrats are to blame, and it all started with Clinton. This is an article that is dated 1999..

"September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants."

I HOPE SOMEONE GOES TO JAIL FOR THIS SCAM

aly j
09-30-2008, 08:26 PM
The market goes up and down and when its down..I'm just buying more stocks..next time it goes up..I make my money...BUT This is what happens when you give home loans to people based on their skin color, regardless weather they have a good credit score or their ability to pay the loan back, no down payment to buy a home..NO PROBLEM...bad credit score..NO PROBLEM..if the interest rate changes, you wont be able to make your payment..NO PROBLEM...Don't earn enough to buy a home..NO PROBLEM..

Both republicans and democrats are to blame, and it all started with Clinton. This is an article that is dated 1999..

"September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants."

I HOPE SOMEONE GOES TO JAIL FOR THIS SCAM

Yes how about the American Government-not the normal Americans.
Meaning going too jail.

Nickdfresh
09-30-2008, 08:54 PM
The market goes up and down and when its down..I'm just buying more stocks..next time it goes up..I make my money...BUT This is what happens when you give home loans to people based on their skin color, regardless weather they have a good credit score or their ability to pay the loan back, no down payment to buy a home..NO PROBLEM...bad credit score..NO PROBLEM..if the interest rate changes, you wont be able to make your payment..NO PROBLEM...Don't earn enough to buy a home..NO PROBLEM..

Both republicans and democrats are to blame, and it all started with Clinton. This is an article that is dated 1999..

"September 30, 1999

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES

I....

I HOPE SOMEONE GOES TO JAIL FOR THIS SCAM

Um, it largely started with Reagan (in the US) and massive deregulation. It's not just about high risk loans (which most lenders welcome because of the lucrative, high interest rates). It's a global credit crisis...

32Bravo
10-01-2008, 05:46 AM
Following the problems in the sub-prime lending market in America and the run on Northern Rock in the UK, uncertainty has now hit Japan.

In the last 7 days Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches.

Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived.

While Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a hit, but they remain in the black.

Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.

herman2
10-03-2008, 12:05 PM
Will the American economy be as SLOW to recover as the speed on this website?...I could walk faster, I swear.
Anyways,now it's a trillion dollars to patch up the economy. Before it was 750 Billion. Just like the Iraq war, the number escalates and escaltes....by the time the new president is sworn in, it will be 2 trillion dollars.

Adrian Wainer
10-03-2008, 12:40 PM
What the most powerful nation in the world is in trouble,yes i knew.
Well what goes around comes around,may be this may cause america to loss its power.
Australia of cause be effected cause were always jumping up there arse.

please don't bring your personal sexual activities in to this thread!

only joking and lest you get the wrong idea, I said it to you because I think you have a good sense of humor, and will enjoy it as a joke!

Best and Warm Regards
Adrian Wainer

Nickdfresh
10-03-2008, 12:49 PM
Good news for all of us?

House approves financial bailout bill
White House promises quick enactment for massive Wall Street rescue
BREAKING NEWS
By Alex Johnson
Reporter
MSNBC
updated 1:31 p.m. ET, Fri., Oct. 3, 2008

The House passed a $700 billion bailout of the financial services industry Friday, reversing itself after members who voted to kill the measure earlier in the week came around to a Senate version that offered more protection for individual investors and small businesses.

Stocks were up sharply in anticipation that the measure could help thaw frozen credit markets.

After a week of reversals and intense lobbying, the measure ended up passing comfortably by a vote of 263-171. After seeing the bill go down to defeat Monday, House Speaker Nancy Pelosi, D-Calif., had said she would not let it come up for a vote Friday unless it was clear that it would pass.

White House spokesman Tony Fratto said President Bush would “like to sign it as quickly as possible — as soon as they get it to us.” House staffers said it would be sent to the White House as early as Friday afternoon for Bush’s signature.

Under the plan, the Treasury Department would be authorized to spend as much as $700 billion to buy bad mortgage-related securities, which have slowed and, in some cases, dried up the flow of credit.

The Senate dramatically changed the measure Wednesday, adding an additional $110 billion in additional tax breaks, incentives and other measures, including an expansion of coverage of individual bank deposits by the Federal Deposit Insurance Corp.

Leaders sought 12 new votes
The calculus for Pelosi and other House leaders was whether the additions would lure enough support to overcome new objections from conservative members to the added costs.

“House and Senate leaders promised the bill wouldn’t be a Christmas tree of add-ons, and in a matter of days it’s gone from a Charlie Brown Christmas tree to Rockefeller Center,” said Rep. Steve LaTourette, R-Ohio, who led efforts to strip out what he called “egregious” tax breaks. “It’s Christmas in October.”

But Majority Leader Steny Hoyer, D-Md., said compromise was needed. He said that while he strongly opposed the Senate’s decision to pay for many of the tax breaks with debt, he could not forget everyday Americans at home who were struggling.

“For their sake, we must act,” Hoyer said in a floor speech shortly before the vote.

Only 12 more votes were needed; in the end, the measure picked up an extra 55.

Pelosi said the difference was lawmakers’ work to shift the focus from the bailout of financial companies to the boost it would give homeowners, small businesses and individual investors.

“All the attention was on Wall Street, and we wanted to turn that attention,” she said after the vote.

Financial institutions were “recently left unregulated and undisciplined and unsupervised, and they created chaos,” Pelosi said. “That was then. This is now. We’re about the future.”

Bad news spurs urgency
Pressure on holdouts grew Friday after the Labor Department said the economy lost 159,000 jobs in September, the most in more than five years, a worrisome sign that the economy is hurtling toward a deep recession.

That came on top of Thursday’s Commerce Department report that factory orders in August plunged by 4 percent.

Bush lobbied aggressively for passage of the bill, which Fratto, his spokesman, said was not necessarily intended to boost the economy. "It’s to avoid a crisis," he said.

The two major party presidential candidates, Sen. Barack Obama, D-Ill., and Sen. John McCain, R-Ariz., also supported the bill and worked to ensure its passage.

The vote was House leaders’ second stab at the legislation after the Senate jumped the line and passed its revised version Wednesday.

“The Senate may have taken us hostage,” said Rep. Barney Frank, D-Mass., chairman of the Banking Committee. “They may have us at arrow-point, and we may have to vote for this even with their obnoxious provisions.”

Some of those provisions were not so obnoxious to business owners like Carl Adams, a real estate agent in Paducah, Ky. Preserving banks’ ability to fuel the economy is crucial, he said, but to do that, the banks have to stay healthy.

“If the banks’ money dries up — in other words, they can’t afford to lend us money for our clients — then you're going to see everything snowball from there,” he said.

Tom Costello, Mike Viqueira and John Yang of NBC News and the following NBC affiliates contributed to this report: KSBH of Kansas City, Mo.; WBIR of Knoxville, Tenn.; WKYC of Cleveland; WOAI of San Antonio, Texas; and WPSD of Paducah, Ky.

MSNBC (http://www.msnbc.msn.com/id/26987291/)

Adrian Wainer
10-03-2008, 12:52 PM
I don’t know why America owes billions to China.

Quite simple really, most people in China don't have very much money at all so they can't buy stuff, whilst they have been making lots of stuff and selling it to America. Also what has not helped either is that the big issue with Iraq was not defeating Saddam Hussein's military but how Iraq was going to be transitioned to a more peaceable and civilized society after the defeat of Saddam Hussein's military and in that task the Bush administration failed miserably and thus spent much more money than they would otherwise have needed to and got a much worse result than they could have achieved.

Best and Warm Regards
Adrian Wainer

herman2
10-03-2008, 01:00 PM
Adrian, Excuse my ignorance on economics, but if USA owes China 350 Billion Dollars as I read today, then why doesn't China DEMAND it gets their money? Why does it owe China Money in the first place? China has a lot of people and I am sure the Government could use that money to help its people, build roads, better medicare, better everything, so why doesn't China tell Bush to give it their money?..Why?...your answer didn't click with me...What am I missing. ?????

Adrian Wainer
10-03-2008, 03:02 PM
Adrian, Excuse my ignorance on economics, but if USA owes China 350 Billion Dollars as I read today, then why doesn't China DEMAND it gets their money? Why does it owe China Money in the first place? China has a lot of people and I am sure the Government could use that money to help its people, build roads, better medicare, better everything, so why doesn't China tell Bush to give it their money?..Why?...your answer didn't click with me...What am I missing. ?????

Well if they demanded immediate repayment, [ which they may or may not have the contractural right to do ], well even if they had the contractural right to do it and did it, their own economy would collapse because they would have no market to sell their products to. Also you are supposing that wealthy and politically connected Chinese, would care about the situation of Chinese workers. Also whilst many chinese who work in factories today often have a very difficult situation as compared to the likes of unionized American and European Workers, even if they have enough money for their basic needs plus a little extra for a luxury like a television set or a 50cc moped this is big progress for them from the era of Mao's so called cultural revolution in which millions of Chinese died in a famine largely artificaly created by the lunacies of Mao and the Chinese Communist Party.

Best and Warm regards
Adrian Wainer

herman2
10-03-2008, 03:28 PM
Thank You for that response. America should do more to give back the money it owes to China. That way, the Chinese can move to Toronto and buy up our expensive houses like the way they already are doing!...The chinese in my town have LOTS of Money and they rule the Markham area like you wouldn't beleive. They are a very strong presence North of Toronto and they all say they get their money from business back in Hong Kong. Starnge how the Chinese over here are the wealthiest and drive the best cars and their women are so hot looking, yet in China their poor sorta ...strange in deed.....Long Live China!

aly j
10-03-2008, 06:57 PM
please don't bring your personal sexual activities in to this thread!

only joking and lest you get the wrong idea, I said it to you because I think you have a good sense of humor, and will enjoy it as a joke!

Best and Warm Regards
Adrian Wainer

Ha ha ha ha ha:D. I wish i was more Sexual, but im actually shy. Cheers

herman2
10-06-2008, 02:22 PM
From today's Toronto Star Newspaper..more proof that we are going to hit a Great Depression!!
Oct 06, 2008 02:10 PM
Comments on this story (1)
David Friend
THE CANADIAN PRESS
Economists from Canada’s Big Five banks say they expect little or no growth in the near future and they warned today that the domestic economy’s current gloom will likely deepen into something worse than a recession.
The word “recession” wouldn’t describe the deep structural problems affecting everything from the U.S. housing sector to the Canadian oil industry, said Bank of Nova Scotia chief economist Warren Jestin.

“You have to invent a new word to describe what we’re in now,” he said after the banks presented their perspectives at the Economic Club today.

“It’s being driven through the financial markets into the real economy. All of those things suggest that it’s entirely different than what you might expect from a typical recession.”

In their most recent economics forecast, Scotiabank economists predict recessions for both the U.S. and Canada, economic slides that will require central bankers in both countries to cut interest rates by at least a full percentage point.

All agree that a slide in commodity prices bodes ill for the Canadian economy, which is heavily dependent on the production and export of oil and gas, metals and minerals.

mike M.
10-06-2008, 03:03 PM
From today's Toronto Star Newspaper..more proof that we are going to hit a Great Depression!!



On the bright side..maybe this means the price of WWII militaria is going to come down. have you priced an ORIGINAL German Paratrooper or SS helmet lately?

herman2
10-06-2008, 03:31 PM
New look on the American Dollar!!
\2860

herman2
10-09-2008, 09:13 AM
Iceland has gone bankrupt!....California is going bankrupt!...The world is going bankrupt!


From Bllomberg.com.
Oct. 9 (Bloomberg) -- Trading in the Icelandic krona came to a halt after the government seized control of Kaupthing Bank hf, the nation's biggest lender, as the financial crisis deepens.
There haven't been any so-called krona spot trades today, or transactions in which currency must be exchanged immediately, according to Stockholm-based Nordea Bank AB and TD Securities Ltd. in London. The last spot trade was at 340 krona per euro, Nordea said. Regulators earlier this week took over Iceland's second- and third-largest lenders, Glitnir Bank hf and Landsbanki Islands hf, which acted as krona clearing houses.
``Effectively the krona can't be traded at the moment because there are no more banks to clear the trade,'' said Mick Ankjaer, a foreign-exchange dealer in Copenhagen at Nordea, Scandinavia's biggest lender.
The bid/ask spread for the krona against the euro, or the price at which traders are willing to buy or sell, was 225 per euro to 400 per euro as of 11:52 a.m. in Reykjavik, according to Antje Praefcke, a currency analyst in Frankfurt at Commerzbank AG, Germany's second-largest lender.
The krona plummeted to 350 per euro this week in trading between banks outside of Iceland, Praefcke said. Icelandic banks may still be trading with each other, she said.
``Foreign banks have cut credit lines with Icelandic banks so they can't settle trades,'' Praefcke said.
The Reykjavik-based central bank, Sedlabanki, yesterday abandoned a peg to the euro after just a day when it became unable to defend the rate of 131 krona per euro. Fitch Ratings yesterday downgraded Iceland's foreign and local-currency debt ratings to BBB- and A-, respectively.
No Confidence
``Nobody wants to hold the currency unless they have to,'' said Beat Siegenthaler, the London-based chief strategist for emerging markets at TD Securities Ltd. ``Something has to be done to restore a minimum level of confidence in the currency.''
Iceland will start talks with Russia on Oct. 14 to secure a loan of as much as 4 billion euros ($5.48 billion), Prime Minister Geir Haarde said yesterday. The government hasn't asked the International Monetary Fund for a standby loan or an economic program, he said.

herman2
10-10-2008, 02:50 PM
The loonie has now fallen by more than a quarter since hitting an all-time peak of 110.3 cents US last November after a rapid three-month rise. Canada’s dollar was last below 83 cents U.S., on Feb. 21, 2003.

Why is My Dollar losing ground?...because we spend all our money feeding and clothing the cave dwellers in Afghanistan!

herman2
10-10-2008, 03:30 PM
Since everyone is minding his money, I thought it would be
appropriate to inform you all of some new stock market
lingo. Just so you're not left in the dark.

CEO- Chief Embezzlement Officer

CFO- Corporate Fraud Officer

Bull Market- A random market movement causing an
investor to mistake himself for a financial genius.

Bear Market- A 6 to 18 month period when the kids get no
allowance, the wife gets no jewelry and the husband gets
no sex.

Value investing- The art of buying low and selling lower.

P/E Ratio- The percentage of investors wetting their pants
as the market keeps crashing.

Broker- What my broker has made me.

Standard & Poor- Your life in a nutshell.

Stock analyst- Idiot who just downgraded your stock.

Stock split- When you ex-wife and her lawyer split your
assets equally between themselves.

Market Correction- The day after you buy stocks.

Cash flow- The movement your money makes as it
disappears down the toilet.

Yahoo- What you yell after selling it to some poor sucker
for $240 per share.

Windows- What you jump out of when you're the sucker
who bought Yahoo at $240 per share.

Institutional investor- Past year investor who's now
locked up in a nuthouse.

Profit- An archaic word no longer in use

Nickdfresh
10-10-2008, 05:52 PM
I hope the bottom fell out today, and things begin to stabilize...

aly j
10-10-2008, 09:07 PM
Iceland has gone bankrupt!....California is going bankrupt!...The world is going bankrupt!


From Bllomberg.com.
Oct. 9 (Bloomberg) -- Trading in the Icelandic krona came to a halt after the government seized control of Kaupthing Bank hf, the nation's biggest lender, as the financial crisis deepens.
There haven't been any so-called krona spot trades today, or transactions in which currency must be exchanged immediately, according to Stockholm-based Nordea Bank AB and TD Securities Ltd. in London. The last spot trade was at 340 krona per euro, Nordea said. Regulators earlier this week took over Iceland's second- and third-largest lenders, Glitnir Bank hf and Landsbanki Islands hf, which acted as krona clearing houses.
``Effectively the krona can't be traded at the moment because there are no more banks to clear the trade,'' said Mick Ankjaer, a foreign-exchange dealer in Copenhagen at Nordea, Scandinavia's biggest lender.
The bid/ask spread for the krona against the euro, or the price at which traders are willing to buy or sell, was 225 per euro to 400 per euro as of 11:52 a.m. in Reykjavik, according to Antje Praefcke, a currency analyst in Frankfurt at Commerzbank AG, Germany's second-largest lender.
The krona plummeted to 350 per euro this week in trading between banks outside of Iceland, Praefcke said. Icelandic banks may still be trading with each other, she said.
``Foreign banks have cut credit lines with Icelandic banks so they can't settle trades,'' Praefcke said.
The Reykjavik-based central bank, Sedlabanki, yesterday abandoned a peg to the euro after just a day when it became unable to defend the rate of 131 krona per euro. Fitch Ratings yesterday downgraded Iceland's foreign and local-currency debt ratings to BBB- and A-, respectively.
No Confidence
``Nobody wants to hold the currency unless they have to,'' said Beat Siegenthaler, the London-based chief strategist for emerging markets at TD Securities Ltd. ``Something has to be done to restore a minimum level of confidence in the currency.''
Iceland will start talks with Russia on Oct. 14 to secure a loan of as much as 4 billion euros ($5.48 billion), Prime Minister Geir Haarde said yesterday. The government hasn't asked the International Monetary Fund for a standby loan or an economic program, he said.

Actually Herman2, not all countries are going bankrupt, Australia should scrape out alive, by what our p/m told the public. Australia is still going quite well and were still a rich country, Touch wood. Truce

Rising Sun*
10-11-2008, 03:18 AM
I hope the bottom fell out today, and things begin to stabilize...

Hope all you like, but I don't think we've hit the bottom yet.

This is a slow motion train wreck that's been going on for a year, and it's probably got a way to go yet. It's hard to stop mob panic.

herman2
10-14-2008, 12:02 PM
Actually Herman2, not all countries are going bankrupt, Australia should scrape out alive, by what our p/m told the public. Australia is still going quite well and were still a rich country, Touch wood. Truce

Hey Aly J......
I read this article in your News Weekly from Austrailia of few yrs ago...I quote........
When the then Prime Minister Paul Keating warned 18 years ago that Australia faced becoming a "banana republic", he could well have used the experience of Spain to illustrate his warning.

In 1986 Australia's foreign debt was around $78 billion, now it is $403 billion.
In his historic treatise, The Wealth and Poverty of Nations, David Landers expressed his concern at the growing foreign debt of today's United States - Australia's is proportionately worse - and warned that, ultimately, its fate could be similar to that of 16th-century Spain.

aly j
10-14-2008, 06:23 PM
Hey Aly J......
I read this article in your News Weekly from Austrailia of few yrs ago...I quote........
When the then Prime Minister Paul Keating warned 18 years ago that Australia faced becoming a "banana republic", he could well have used the experience of Spain to illustrate his warning.

In 1986 Australia's foreign debt was around $78 billion, now it is $403 billion.
In his historic treatise, The Wealth and Poverty of Nations, David Landers expressed his concern at the growing foreign debt of today's United States - Australia's is proportionately worse - and warned that, ultimately, its fate could be similar to that of 16th-century Spain.
Hey Herman, Likley back in those days you were right, but right now where not doing to badly for ourselfs........... Cheers

Nickdfresh
10-24-2008, 12:35 PM
The fu^%$#@*ing Dow JIA is down again, after a period of modest rebound! Euro and Asian stocks are in the pisser, and it's all gloom where I am...

When will the roller coaster selling and buy backs end on Wall Street?

32Bravo
10-24-2008, 12:55 PM
The fu^%$#@*ing Dow JIA is down again, after a period of modest rebound! Euro and Asian stocks are in the pisser, and it's all gloom where I am...

When will the roller coaster selling and buy backs end on Wall Street?

Cheer up, marra, it's only money. :cool:

tankgeezer
10-24-2008, 01:37 PM
About the U.S. owing China Billions, I think most folks here would like them to come over, and take back all of their stuff thats cluttering up our stores. That should even the score...:)
As for the markets, there will be alot of high/low going on for a bit, everyone buys in low,, and sells when it rebounds to make some quick dosh. It'll sort itself out shortly. Things may well be as good as ever in a couple months.:Note To America: Quit buying so much stuff from China!!:evil:

Nickdfresh
10-24-2008, 01:46 PM
Cheer up, marra, it's only money. :cool:

http://www.youtube.com/watch?v=Xl6NfQyNLto

herman2
10-24-2008, 03:40 PM
My Dollar sank to 79 cents!..BooHoo Hoo.....there use to be a day only 6 mths ago that the USA Greenback was lower than the Canadian dollar. ..I use to walk with Pride in Buffalo laying my high paying Dollar on the table for Buffalo wings and fee rich....now I can hardly afford the gas to go to the States and if I do, I'm getting 20% less!!!..It's not fair I tell you!

George Eller
10-25-2008, 01:34 AM
-

Oddly enough gas prices have fallen dramatically. Here in Jacksonville, Florida gasoline is as low as $2.50 a gallon.

Mind you it was over $4.00 a gallon for a brief period in early September after hurricane Ike hit the Texas coast. It had been in the $3.50+ range for quite some time.

-

BriteLite
10-25-2008, 03:51 AM
Gas prices in Atlanta are under $2.50/gallon. I paid $2.49 today. OPEC is lowering production to compensate. Man the world economy is fkin insane!

Say what one will, the fall of the US economy can be traced to greed and stupidity. In testimony on Friday Greenspan admitted he(and other experts) expected market to "police" itself. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,".http://www.nytimes.com/2008/10/24/business/economy/24panel.html?ex=1240459200&en=3fafc8aefc36a9b7&ei=5087&excamp=GGBUgreenspantestimony&WT.srch=1&WT.mc_ev=click&WT.mc_id=BI-S-E-GG-NA-S-greenspan_testimony

In Beijing others proclaim " Asian, European leaders say rules guiding the global economy should be rewritten" http://biz.yahoo.com/ap/081025/as_asia_europe.html

Wow I am floored by the timing of these statements.:shock:

Lemme get this straight. The leading economist in the US(before this affair) expected de-regulation would promote growth in financial markets and oh by the way regulation would not be necessary due to the inherent "self-correcting" factor.

I think he really believed his assumptions. I will never understand how and why he came to those conclusions.

It is unfair to blame a single person for the state of affairs. He certainly is partly at fault. There are plenty of others who bear responsibility. The true culprit is the US congress IMO. The politicians fail the test of honesty and integrity along with the apparent inability to balance a checkbook or comprehend a balance sheet. Simple economics. Bah

Drake
10-25-2008, 05:49 AM
A total collapse crash had already been programmed since 1971 with the final dissolution of any physical standard. I don't know if this is it yet, but it smells like it. Our money system is based on exponentially growing debt (seriously, how stupid is that, I am always stunned that the people who actually work in that system seem to believe this can go on indefinatly because it worked a couple of decades). It is bound to fail big time in the end. Complete failure of the money system is already bad if it only happens locally (like our hyperinflation), but since we now essentially live in one world this final reset will be more ugly than anything we have ever experienced.

The chinese sure know how to curse. May you live in interesting times.

Rising Sun*
10-25-2008, 06:37 AM
Say what one will, the fall of the US economy can be traced to greed and stupidity. In testimony on Friday Greenspan admitted he(and other experts) expected market to "police" itself. “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,".http://www.nytimes.com/2008/10/24/business/economy/24panel.html?ex=1240459200&en=3fafc8aefc36a9b7&ei=5087&excamp=GGBUgreenspantestimony&WT.srch=1&WT.mc_ev=click&WT.mc_id=BI-S-E-GG-NA-S-greenspan_testimony

In Beijing others proclaim " Asian, European leaders say rules guiding the global economy should be rewritten" http://biz.yahoo.com/ap/081025/as_asia_europe.html

Wow I am floored by the timing of these statements.:shock:

Lemme get this straight. The leading economist in the US(before this affair) expected de-regulation would promote growth in financial markets and oh by the way regulation would not be necessary due to the inherent "self-correcting" factor.

I think he really believed his assumptions. I will never understand how and why he came to those conclusions.

It is unfair to blame a single person for the state of affairs. He certainly is partly at fault. There are plenty of others who bear responsibility. The true culprit is the US congress IMO. The politicians fail the test of honesty and integrity along with the apparent inability to balance a checkbook or comprehend a balance sheet. Simple economics. Bah

Greenspan's position seemed to be that he expected that a sense of institutional self-preservation would ensure that CEOs would be prudent to ensure that their corporations survived, rather than exploiting the corporations to profit themselves.

What he failed to see, which suggests that like any economic or other zealot he must have been blind to human nature and corporate behaviour, was that CEOs have been rorting their corporations for the past few decades to generate short-term appearances of profit by any means possible to ensure that they got their performance bonuses and increased the stock value so they could exercise their stock options.

I agree that no individual can be blamed for the current problems, but the class of individuals who should be blamed most are the rapacious CEOs and senior managers of corporations all over the world whose greed is most responsible for the mess. They are the modern robber barons but, unlike the nineteenth / early twentieth century robber barons the modern lot don't put their own capital on the line and they can't lose, so they lack the restraint that is involved in using one's own money. If stocks go down they don't exercise their options and if they go up they do, but meanwhile they're paid silly amounts every day they're in office.

In the early 1980s I was in a senior position in a major Australian capital institution. Our CEO was an old school man who drove his own modest company car when CEOs of comparable and lesser companies were starting to use company funded chauffeur driven limos. Our CEO always stressed the point that the corporation was, effectively, the trustee of the shareholders' funds and he judged every decision against what was genuinely in the best interest of the shareholders, which included looking at long term growth rather than current year manipulation of figures to impress the market and give himself a bigger bonus while buggering the long term future of the company. After he retired the next CEO was less concerned with that approach, and the next couple of CEOs got well into the short term aims. A major company which had been around for over a century got taken over a few years later by a foreign corporation, and what's left of it has never been half as good since as it was under the old school CEO.

tankgeezer
10-25-2008, 07:26 AM
Behold! the Anti-Christ draws nye.

Rising Sun*
10-25-2008, 07:52 AM
Behold! the Anti-Christ draws nye.

Nah!

We're only talking about Mammon here, not denial of Christ etc.

The problem with Mammon is greed, not money.

While it's usually wrongly quoted as "money is the root of all evil", it's the love of money (above faith in context) that is the problem:


For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.
Timothy 6:10

The biblical parallel right now, if there is one, is Jesus throwing the money changers and sacrificial animal sellers out of the temple to cleanse it of "a den of robbers". Sounds about right to me at present.

mike M.
10-25-2008, 09:47 AM
This thread title should be changed to the falling World economy..I've been told that if people left their money in the bank during the great depression of the 30's in the end they would have made 5%. I sure would love to see some of these CEO's spend a little time in the gray bar hotel...

Rising Sun*
10-25-2008, 10:03 AM
I've been told that if people left their money in the bank during the great depression of the 30's in the end they would have made 5%.

Perhaps, but if they had enough money to snap up the bargains which cashed up people had then, they'd have been grinning by 1939, laughing happily during the war, and pissing themselves laughing by 1955 with vast growth in their wealth.

Drake
10-25-2008, 11:51 AM
Perhaps, but if they had enough money to snap up the bargains which cashed up people had then, they'd have been grinning by 1939, laughing happily during the war, and pissing themselves laughing by 1955 with vast growth in their wealth.

Only this time there won't be such a rebound. The people in 1929 ff were in a vastly better position than what we are in.

Rising Sun*
10-26-2008, 04:47 AM
Only this time there won't be such a rebound. The people in 1929 ff were in a vastly better position than what we are in.

But governments then worsened things by doing the exact opposite of what they're doing today.

It remains to be seen whether the current interventions will balance the different circumstances today.

BriteLite
10-26-2008, 06:03 AM
Greenspan's position seemed to be that he expected that a sense of institutional self-preservation would ensure that CEOs would be prudent to ensure that their corporations survived, rather than exploiting the corporations to profit themselves.

What he failed to see, which suggests that like any economic or other zealot he must have been blind to human nature and corporate behaviour, was that CEOs have been rorting their corporations for the past few decades to generate short-term appearances of profit by any means possible to ensure that they got their performance bonuses and increased the stock value so they could exercise their stock options.

I agree that no individual can be blamed for the current problems, but the class of individuals who should be blamed most are the rapacious CEOs and senior managers of corporations all over the world whose greed is most responsible for the mess. They are the modern robber barons but, unlike the nineteenth / early twentieth century robber barons the modern lot don't put their own capital on the line and they can't lose, so they lack the restraint that is involved in using one's own money. If stocks go down they don't exercise their options and if they go up they do, but meanwhile they're paid silly amounts every day they're in office.

In the early 1980s I was in a senior position in a major Australian capital institution. Our CEO was an old school man who drove his own modest company car when CEOs of comparable and lesser companies were starting to use company funded chauffeur driven limos. Our CEO always stressed the point that the corporation was, effectively, the trustee of the shareholders' funds and he judged every decision against what was genuinely in the best interest of the shareholders, which included looking at long term growth rather than current year manipulation of figures to impress the market and give himself a bigger bonus while buggering the long term future of the company. After he retired the next CEO was less concerned with that approach, and the next couple of CEOs got well into the short term aims. A major company which had been around for over a century got taken over a few years later by a foreign corporation, and what's left of it has never been half as good since as it was under the old school CEO.

The ceo types get their share of blame also. I was in mid level management in the 90's. Our ceo though in his late 60's was anything but old school. He drove 3 company cars(cheapest was a Cadillac), was famous for spotting new young female secretaries and started every meeting with "We are not making any money" translated to mean " Where is my bonus?". He surrounded himself with yes men and by 2002 the company was in bankrupty.

Is it fair to say that this story and others similar to it are one of the problems in American business? I think so. All too often upper management treats investor funds like a virtual free bufett arranged for them to further personal portfolios. Yes they are a huge part of the problem.

The politicians get my "finger" award. Elected officials allowed the "fat cats" to take the American economy where it is today. This is a crime in itself. Retirement funds alone have lost 2 Trillion dollars recently. I don't know that anyone could factually calculate total losses from this recent implosion.

My point being the elected political arm is entrusted with the well being of the constituency. This trust has been violated and rather than ensuring this didn't happen the politicians have become part of the issue.

"Criminal" to my thinking.

Rising Sun*
10-26-2008, 06:14 AM
My point being the elected political arm is entrusted with the well being of the constituency. This trust has been violated and rather than ensuring this didn't happen the politicians have become part of the issue.

It was bound to happen as the politicians are dependent upon business for donations for their election campaigns and, in various other ways such as avoiding negative publicity from media moguls or getting positive support in business circles, are subject to influence and or control (often willingly) from business.

And that's a problem in just about every Western nation, not just America.

The other problem is that all the corporate crooks are part of the same scam. The superannuation (pension in US) fund managers who hold the bulk of votes in major corporations aren't going to do the right thing and vote down excessive board, CEO, and management team salaries and benefits because their own salaries and benefits are linked to them in the same market. They'd be nuts to put a stop on their own 'market' incomes.

Meanwhile the small shareholders who often by total number but not toal number of voting shares outnumber the superannuation funds and other professional investors get screwed royally.

BriteLite
10-26-2008, 06:16 AM
A total collapse crash had already been programmed since 1971 with the final dissolution of any physical standard. I don't know if this is it yet, but it smells like it. Our money system is based on exponentially growing debt (seriously, how stupid is that, I am always stunned that the people who actually work in that system seem to believe this can go on indefinatly because it worked a couple of decades). It is bound to fail big time in the end. Complete failure of the money system is already bad if it only happens locally (like our hyperinflation), but since we now essentially live in one world this final reset will be more ugly than anything we have ever experienced.

The chinese sure know how to curse. May you live in interesting times.

Good points Drake. No gold standard=everything is paper backed. If problems are encountered we can print more money. Geesh

The US has been setting a fine example for others to follow. A country can spend more than it has funds to back up. We are not required to achieve budget numbers. We can spend as much as we want. Perfect. No down side.

The world problem is as you described. Like it or not the world economy is tied together now. If one fails we all fail.

Hmm I suppose this is not just a US problem.

Rising Sun*
10-26-2008, 06:46 AM
My Dollar sank to 79 cents!..BooHoo Hoo.....there use to be a day only 6 mths ago that the USA Greenback was lower than the Canadian dollar. ..I use to walk with Pride in Buffalo laying my high paying Dollar on the table for Buffalo wings and fee rich....now I can hardly afford the gas to go to the States and if I do, I'm getting 20% less!!!..It's not fair I tell you!

Lucky you!

Our dollar was around 98c to the USD a few months back and it's gone as low as about 65c lately, and it costs us a lot more to get to Buffalo than you. :D

herman2
12-05-2008, 07:40 AM
I went to the bank yesterday to exchange my dollar for American money as I am going on a trip (it's in january and i will be away for a mth). I know I will be missed and i apologize to my fans for being away, but )...anyways my question is that the bank gave me a 5 note with the number 5 being in color!. I think it is counterfeit, as American money has no color. The bank stated it is not. If there are any Americans who could tell me about this, I would be gratefull. I thought American money isn't suppose to have color?? OH, and if your ever exchanging money on Toronto, I tell you it's impossible to get one dollar bills. The most I could get was 3. I went to 3 different banks and they all told me they have no one dollar bills. So how the hell am I suppose to tip anyone as Canadian money has no one or two dollar bills. the only paper bill is a 5 and I'm not ready to tip a 5 note. Oh brother...anyways about the colored 5 American note--is it fishy or real?..anyone???

mike M.
12-05-2008, 11:43 AM
No worrys..Its real.

herman2
12-05-2008, 02:12 PM
thanks Mike!:army:

Rising Sun*
12-06-2008, 05:08 AM
No worrys..Its real.

This is going to deprive Americans of yet another area of superiority to the rest of the world.

Americans have always been able to insult Australians by pointing out that Americans don't need their currency in different sizes and colours to work out the different denominations, but it looks like that advantage is about to disappear. :D

navyson
12-06-2008, 07:17 AM
I actually don't mind a little color on our paper money. I do think it's silly to have one of the denominations numbers being extraordinarily large and in the $5 bills case it's colored purple. Makes it look like toy money.

Panzerknacker
12-07-2008, 08:11 AM
Some years ago with 5 dollars you can had a very decent meal around here, today with the same bill you cant have anything "decent".

navyson
12-07-2008, 08:12 AM
Some years ago with 5 dollars you can had a very decent meal around here, today with the same bill you cant have anything "decent".
Same here, now you can barely get crappy McDonalds type fastfood for that.:(

flamethrowerguy
12-07-2008, 08:27 AM
Sounds familiar, for 5 Euro I get about the same amount of goods as for 5 Deutschmarks 7-8 years ago (exchange rate has been about 1 Euro = 1.95 Deutschmarks).

tankgeezer
12-08-2008, 03:37 PM
American currency in different colors will make it more difficult to err in making payment, Though its really designed to foil counterfeiting. It would be good to have different sizes so that blind folks can more easily use it, and make bleaching $1 notes to reprint as $100 notes more tricky. (no one really checks the security strips)
If you have a note, and are not sure if its real, look in the white areas of the "paper" its cloth really, linen and cotton. In the white areas, you will on a true note, find red, and blue fibers mixed into the others. these are called "Hairmarks" so the note is Red,White&blue. These cant be duplicated by copiers etc, so thats a good quick check to use.

herman2
12-09-2008, 09:35 AM
I ll never understand why the Americans still have the One Dollar bill. When I went to Germany over 25 yrs ago, they had the 5 Mark coin already. Canada discontinued the 1 and 2 dollar note several yrs ago. Although there hasn't been a 2 note in the States for over 20 yrs I believe, I am curious why USA with such a big population doesn't use the coin method instead of 1 notes?. I heard they tried it with the Susan B Anthony coin many yrs ago but then that never was a hit. Personally I like 1 and 2 notes. they make easier tips for the strippers, as putting coins in their G-strings is cumbersone and a five note is a bit much:)

mike M.
12-09-2008, 10:11 AM
I ll never understand why the Americans still have the One Dollar bill.

Personally I like 1 and 2 notes. they make easier tips for the strippers, as putting coins in their G-strings is cumbersone and a five note is a bit much:)



Doesn't that answer your own question??

tankgeezer
12-09-2008, 01:20 PM
One could always write a check on a beer coaster, cocktail napkin,(or piece of bacon if in Canada.) this is perfectly legal, at least in the U.S. No cheating and using disappearing ink now.

Drake
12-09-2008, 03:24 PM
Or you could do it like the Casinos, just introduce the paper equivalent to chips. In the normal environment I think coins are more practical than small value dollar notes, and if it's just because they're way more robust.

tankgeezer
12-10-2008, 09:50 AM
The trouble with the few types of dollar coins tried by the U.S. mint is that they are all about the same size as a quarter dollar coin, though thicker. This lead to problems when people would mistakenly put them into vending machines which are not set up to handle them, resulting in a jammed machine, and loss of a dollar to the consumer. Also, many businesses would not accept them as their registers had no place for them to go. They were very unpopular, and most ended up in storage at the mints. These coins were sometimes given as change by post office clerks just to force them into circulation. Eventually,I imagine they will take root, but dont hold your breath.

Panzerknacker
12-10-2008, 05:05 PM
Personally I like 1 and 2 notes. they make easier tips for the strippers, as putting coins in their G-strings is cumbersone and a five note is a bit much


:mrgreen:.... good one.

tankgeezer
12-10-2008, 05:27 PM
One gets out, what one puts in. (so a fiver is not so bad an idea after all now is it..)

Panzerknacker
12-10-2008, 05:29 PM
Definately, with the inflation today you wont impress the girls with ones and twos :rolleyes:

Nickdfresh
01-22-2009, 03:12 PM
Is this another Great Depression?
Many differences between now and 1930s but some similarities, too
By John W. Schoen
Senior producer
updated 2:14 p.m. ET, Thurs., Jan. 22, 2009

By every measure — lost jobs, plunging stock prices, scarce credit and a profound loss of confidence in the banking system — the economy is in awful shape.

The nation's 11th recession of the postwar era began in December 2007 and easily could become the longest since the Great Depression, although most forecasters expect a weak recovery to begin in the second half of this year.

But what are the odds that we’re in the early stages of what will eventually become a depression rather than just a recession?

The answer starts with definitions. While the term "depression" is reserved for the most extreme economic collapses, there is no technical definition, say economists.

“The difference between a recession and depression is primarily a matter of degree,” said Victor Zarnowitz, a University of Chicago economist and a member of the business cycle dating committee at the National Bureau of Economic Research. “A depression is much more severe and usually longer than a recession.”

With no set milestones, the term doesn’t really apply until after it’s clear a downturn is one of the worst in history.

As bad as things are today, conditions are nowhere near as bad as they were during the Great Depression. At least not yet.

The differences are stark. From 1929 and 1933, inflation-adjusted gross domestic product plunged 27 percent, some 10 times worse than any recession since. Today, even the worst forecasts don’t expect GDP to shrink by more than a few percent this year before recovering in 2010.

Unemployment in the 1930s peaked at 25 percent in 1933; most forecasters don't expect unemployment this time around to rise much above 10 percent, compared with the current 7.2 percent.

Other comparisons don’t measure up either. Since the current crisis began unfolding, the number of banks that have failed or been forced to find merger partners can be measured in the dozens; in the 1930s, roughly a third of all banks failed. Even last year's sickening 38 percent drop in stock prices was fairly tame compared to the 90 percent drop during the Great Depression.

“There is no comparison — an order of magnitude difference in what we're seeing — in the slowdown and the financial stress we're seeing in this economy and what happened in the 1930s,” Federal Reserve Chairman Ben Bernanke, a scholar of the Great Depression, said last month in a speech in Austin, Texas. “So let's put that out of our minds.”

That’s easier said than done. For one thing, until the data begin to show signs of improvement, there’s no way to know how long it will take for this economy to hit bottom. During the Great Depression, the steepest drop in output and employment occurred in the fourth year of the downturn.

“They didn’t know it was the Great Depression in the first year,” said Neil Soss, chief economist at Credit Suisse. “It’s sort of like sort of reading 2008 day-by-day in the newspapers. Why didn’t we know this was about to happen? The reason is you’re living in the fog of unfolding events.”

Those unfolding events are certainly cause for concern, especially given the similarities between today’s headlines and the 1930s. The Great Depression followed a major expansion of consumer credit and home buying; the unwinding of that boom sent consumer spending plummeting. After a period of rapidly rising stock prices, the crash of 1929 destroyed billions of dollars of wealth; stock prices didn’t recover for decades.

Deflation — a persistent drop in prices that prompts consumers and businesses to delay spending and investing — took hold in the 1930s; today, a collapse in housing and energy prices could spark another deflationary cycle.

The current downturn, like the depression of the 1930s, follows a period of rising income inequality as wealth became concentrated in the hands of relatively few people. Much of that wealth was created by an explosion in credit.

During the 1920s boom that preceded the Great Depression, investors relied heavily on borrowed money to buy stocks; today, the financial markets are unwinding losses from a huge buildup of investments based on mortgages that turned out to be worthless. The downturn early in the 1930s accelerated as the banking system collapsed; despite massive government investments, today's banking system is still badly damaged. And much the way global trade flows are slowing today, the 1930s downturn was intensified by a sharp pullback in trade.

Beneath those broad similarities, though, there are some significant differences between now and the 1930s. Most bank deposits today are insured, preventing panicked depositors from cleaning out their savings and hoarding cash under their mattresses. Two-income families have somewhat softened the blow of rising unemployment. Social Security and Medicare help offset the threat of widespread financial destitution among the elderly that accompanied the Great Depression.

Perhaps most importantly, the modern Fed has responded aggressively to the current crisis as the “lender of last resort.” Economists generally agree that the 1930s Fed, along with the central banks of major U.S. trading partners, made a bad economy worse by adhering too long to a rigid gold standard, which kept the supply of money tight when those bankers should have been working to make loans easier to get.

Still, some economists believe that we may be at greater risk for another depression today than at any time since the last one ended more than 60 years ago. The period since then has come to be described by some as the Great Moderation — a period when economic contractions were shorter and milder than at any time in history. The notion that business cycles have been tamed is backed by the statistics. Between 1945 and 2001, the average recession lasted just 10 months; between 1854 and 1945, recessions lasted 21 months on average.

The 1930s collapse — which was actually two back-to-back recessions — was not the first American depression. Back-to-back recessions in the 1870s (one of which, at more than five years, is still the longest continuous contraction on record) were described as a Great Depression in the years that followed. Economists have a tougher time comparing the depth and severity of earlier economic contractions because they have less data to work with.
...

Some economists speculate that with more accurate and timely economic data, central bankers have been able to better manage inflation and interest rates, letting them head off recessions before they get started and curtail them once they do. Others suggest that the dramatic expansion of service industries in the modern economy, together with better inventory controls by manufacturers and retailers, have helped minimize the big inventory buildups that triggered past recessions.

Soss believes the huge expansion of credit throughout the period since the 1930s played a big part in the Great Moderation by smoothing ups and downs in consumer spending.

“You don’t have to wait until after you’ve got a job, and after you’ve got a paycheck, and after you’ve got some savings in order to buy a TV or a car or a house or whatever,” he said. “So you get a smoother flow of saving through the cycle; you get less volatility in economic activity, and your recessions, when they come, are rare and brief and mild.”

The length and severity of the current downturn may be dampened by the government’s massive efforts to fight it, from the $700 billion banking industry bailout to the proposed $825 billion stimulus spending package. But Soss and other economists caution that government intervention — as it was in the 1930s — is a double-edged sword.

“The government experimented so much (in the 1930s) that business sector uncertainty was elevated,” he said. “And that actually inhibited the economy, and I think we have experienced some of that last year.”

That may be one reason banks have been hoarding cash from the bailout, especially if they’re not sure which banks the government will decide are worth saving and which ones it will let fail. The plunge in bank stocks this week has been blamed, in part, on investor uncertainty about whether the government's next move to fix the banking system could involve some form of nationalization that could wipe out private investors' holdings.

More troubling, perhaps, is this recession’s stubborn resistance to the Fed’s multipronged efforts to get the economy moving again. The Fed has let a key short-term interest rate fall to near zero and pumped more than $1 trillion of fresh cash into the global economy through an alphabet soup of programs. But economists say those moves could take six months or longer to have their full impact.

There are signs the government's massive efforts are having an effect. Though banks are still posting huge losses and have slowed lending to a trickle, the broader credit markets are beginning to show signs of thawing. The volume of company-issued debt, for example, recently has begun rising, and the higher interest rates investors had been demanding at the height of the fall panic have begun to ease.

But after flooding the economy with cash, the Fed will face an ever tougher dilemma: How will it drain all that money out of the system before it sparks a new round of inflation, without cutting short any nascent recovery?

“It’s risky, because it’s definitely very inflationary at the end,” said Zarnowitz. “The recent deflation will be replaced by large inflation because there is a tremendous increase in money and credit that is being enacted. So yes, it’s worrisome, but we can’t avoid it. Because without it, we would have a large and continuing recession.”

© 2009 msnbc.com

Link (http://www.msnbc.msn.com/id/28698830/page/2/)

Drake
01-22-2009, 04:21 PM
In the future Great Depression will be called a euphemism for the things unwinding now.

Nickdfresh
01-23-2009, 07:54 AM
In the future Great Depression will be called a euphemism for the things unwinding now.

I think in the end, years from now, they will acknowledge that this was in fact a depression; but not a "Great" one as there have been probably half a dozen of them in American history. I think people tend to forget that the pre-WWII one was apocalyptic, but there are depressions to a lessor extent that are severe, longer lasting recessions that change the economic landscape for years to come...

Rising Sun*
01-23-2009, 08:08 AM
Definately, with the inflation today you wont impress the girls with ones and twos :rolleyes:

Perhaps, but tankgeezer said "One gets out, what one puts in.".

That may not impress the girls, but it works for me with girls. :D

Drake
01-23-2009, 11:52 AM
I think in the end, years from now, they will acknowledge that this was in fact a depression; but not a "Great" one as there have been probably half a dozen of them in American history. I think people tend to forget that the pre-WWII one was apocalyptic, but there are depressions to a lessor extent that are severe, longer lasting recessions that change the economic landscape for years to come...

This isn't just a normal "recession/depression" like the ones we had before on our everexpanding way up. It coincides with the overall economic peak of our entire civilization for probably a very long time. It's all downhill from here on for at least 2-3 decades. Every economic recovery will immediatly hit the receding limit of available natural ressources (most prominently oil) and this framework will make it fiendishly difficult to make the necessary adjustments to the way our society works. The paradigm of growth for example, which is an absolute necessity for a debt based and thus our current banking/monetary system, is done, over, finito.