The DOW is down about 600 about 700 about 370 right now. Yahoo Finance has the bad news. UPDATE: what a bumpy ride. At one point it was down 748 on my screen and ended up down “only” (Yahoo Finance’s headline) 370.
Here’s the deal: many of us are afraid. That fear is changing our behavior (I’m hoarding, aren’t you?). That causes the market to go down.
How does the market stop going down? The death spiral will have to hit the bottom of our fears.
Where do you see the market hitting bottom? I think we’ll test 8,000 by end of the year (some people say probably by the end of the week if it keeps going down line this).
As they say, we have only to fear fear itself. Hope you’re doing OK. This is looking like one heck of a nasty storm on the horizon, isn’t it? 2009 is looking like a pretty tough year.
Anyone have any positive news to get us off of our fears?
What’s to be afraid of? During recessions what money you do have goes farther, your taxes get lower (unless Obama is elected), stronger companies are created, kids and adults alike learn invaluable lessons about saving and budgeting, people start looking out more for their neighbors, families and friends become more creative as they can no longer afford to buy gifts or have somebody else intertain them….
In the grand scheme of things, money isn’t as important as we all try to make it out to be. Recessions provide a good, healthy reminder of that.
What’s to be afraid of? During recessions what money you do have goes farther, your taxes get lower (unless Obama is elected), stronger companies are created, kids and adults alike learn invaluable lessons about saving and budgeting, people start looking out more for their neighbors, families and friends become more creative as they can no longer afford to buy gifts or have somebody else intertain them….
In the grand scheme of things, money isn’t as important as we all try to make it out to be. Recessions provide a good, healthy reminder of that.
Robert, if only more people should have listened to Nassim Nicholas Taleb’s(mp3) Long Now Seminar talk.
Robert, if only more people should have listened to Nassim Nicholas Taleb’s(mp3) Long Now Seminar talk.
“Hoarding” isn’t a bad thing. It’s what should have been happening all along.
For years people have been spending more than they are earning. Now suddenly everyone is either building savings either by choice or by force. Regardless it’s a good thing.
Personal savings does help insulate against recessions, which are a normal part of a healthy economy. It pads us for the hard times (that’s why it’s strongly suggested you have some).
What’s the lesson to learn here? Never spend more than you can afford, always put a % of your cash into a place with enough liquidity and stability that you can quickly retrieve it at a moments notice (savings account, money market account, etc.).
Unfortunately everyone is feeling it, even if they weren’t the individuals (and companies) who made these mistakes.
“Hoarding” isn’t a bad thing. It’s what should have been happening all along.
For years people have been spending more than they are earning. Now suddenly everyone is either building savings either by choice or by force. Regardless it’s a good thing.
Personal savings does help insulate against recessions, which are a normal part of a healthy economy. It pads us for the hard times (that’s why it’s strongly suggested you have some).
What’s the lesson to learn here? Never spend more than you can afford, always put a % of your cash into a place with enough liquidity and stability that you can quickly retrieve it at a moments notice (savings account, money market account, etc.).
Unfortunately everyone is feeling it, even if they weren’t the individuals (and companies) who made these mistakes.
We are only in a “death spiral” as long as the media keep telling us we are. The mere reporting of “panic” helps CAUSE panic. Maybe you can use your power/influence to help remind us of the GOOD things going on, as the more we hear about companies creating revenue, opportunities, and jobs, the more confident we will all get.
We are only in a “death spiral” as long as the media keep telling us we are. The mere reporting of “panic” helps CAUSE panic. Maybe you can use your power/influence to help remind us of the GOOD things going on, as the more we hear about companies creating revenue, opportunities, and jobs, the more confident we will all get.
Robert A. is right. It’s called “saving,” not “hoarding.” Nothing wrong with it, good times or bad.
Robert A. is right. It’s called “saving,” not “hoarding.” Nothing wrong with it, good times or bad.
read this: http://tinyurl.com/3g6myl
read this: http://tinyurl.com/3g6myl
In the late 80s the Sovjet Union fell because it completely regulated the economy, resulting in corruption and a black market out of control. No, I’m afraid Ronald Reagan had little to do with it, since the economy started to slow down in the 70s, the downfall was a matter of time. Economies based on extreme principles will not work.
One other extreme principle is complete deregulation because markets will sort themselves out (hint: they won’t). Now here one can claim Ronald Reagan has had a hand in. The S&L crisis was the first fruits of this labor, this one is yet another. But somehow few see it as the failing of a deregulated economy, where banks are allowed to use financial instruments that put layer on layer of leverage products that stand away miles from the real economy, where goods and services are actually produced. Of course we are far away from a barter economy and taking a loan to buy a house or start a business is great, if not necessary. But a loan that is 5 times your annual income for your third car or a bank taking a loan orth many times their assest and buying and reselling mortgages with it, or using it to trade in options and futures (never, ever trade in derivates with money you don’t own), that’s insane.
[I stole this more or less from an English comedian] If, in the UK, I go to Ladbrokes and want to place a bet worth my annual income on the price of oil going up 15% in 3 months, they’ll say ‘go home, son, you’re drunk’. Banks will not only take thes bets, they will place them themselves, several times a day. With a straight face. It’s legal too. Go figure.
Why should I still take the captains of the financial industry (or any industry, remember Enron?) seriously when they prove time and time again they either don’t have a clue or see no problem in gambling with other peoples money (and why should they? they get a severance bonus the size of a small countries’ GDP and the state will hand them a blank corporate wellfare check for the bank itself)?
The economy cannot be influenced let alone be controlled. So don’t do your best to make it worse. Just make sure you build reserves in case of a storm.
And anyone who thinks that keep spending will avert recession: you are as naive as they were in the Sovjet Union. Everything will work in a growing economy. The cardhouses of completely regulated and completely unregulated economies will fall over the first slight bump. There is a middle way. CEOs and governments: redeem yourself be finding it. Now.
In the late 80s the Sovjet Union fell because it completely regulated the economy, resulting in corruption and a black market out of control. No, I’m afraid Ronald Reagan had little to do with it, since the economy started to slow down in the 70s, the downfall was a matter of time. Economies based on extreme principles will not work.
One other extreme principle is complete deregulation because markets will sort themselves out (hint: they won’t). Now here one can claim Ronald Reagan has had a hand in. The S&L crisis was the first fruits of this labor, this one is yet another. But somehow few see it as the failing of a deregulated economy, where banks are allowed to use financial instruments that put layer on layer of leverage products that stand away miles from the real economy, where goods and services are actually produced. Of course we are far away from a barter economy and taking a loan to buy a house or start a business is great, if not necessary. But a loan that is 5 times your annual income for your third car or a bank taking a loan orth many times their assest and buying and reselling mortgages with it, or using it to trade in options and futures (never, ever trade in derivates with money you don’t own), that’s insane.
[I stole this more or less from an English comedian] If, in the UK, I go to Ladbrokes and want to place a bet worth my annual income on the price of oil going up 15% in 3 months, they’ll say ‘go home, son, you’re drunk’. Banks will not only take thes bets, they will place them themselves, several times a day. With a straight face. It’s legal too. Go figure.
Why should I still take the captains of the financial industry (or any industry, remember Enron?) seriously when they prove time and time again they either don’t have a clue or see no problem in gambling with other peoples money (and why should they? they get a severance bonus the size of a small countries’ GDP and the state will hand them a blank corporate wellfare check for the bank itself)?
The economy cannot be influenced let alone be controlled. So don’t do your best to make it worse. Just make sure you build reserves in case of a storm.
And anyone who thinks that keep spending will avert recession: you are as naive as they were in the Sovjet Union. Everything will work in a growing economy. The cardhouses of completely regulated and completely unregulated economies will fall over the first slight bump. There is a middle way. CEOs and governments: redeem yourself be finding it. Now.
I want to affirm the comments made by a few people above – the economy is largely based on models that are divorced from every day life. In short, it is largely a construct of our beliefs about it – whether it is growing or shrinking is also affected in such a way. The more we contribute to the challenges we are facing with inflammatory and sensationalist titles such as this, the worse it is going to be for everyone.
I dont mean to ignore the reality, I just mean dont exacerbate it. The great depression, and from what I understand the failure of WaMu was in some measure a result of a ‘run on the banks’ – what does this mean really? it means that people freaked out and thought they needed to horde cash in their matresses. By reducing the amount of cash the banks had on hand, it changed their leverage – how much they had outstanding in loans against the deposits. So when the deposits dropped below a certain point, it required them to file bankruptcy even though they weren’t ‘out of cash’ per se.
The point is, what it is, is up to us. Real leadership in a time like this requires calm, rational thought.
I want to affirm the comments made by a few people above – the economy is largely based on models that are divorced from every day life. In short, it is largely a construct of our beliefs about it – whether it is growing or shrinking is also affected in such a way. The more we contribute to the challenges we are facing with inflammatory and sensationalist titles such as this, the worse it is going to be for everyone.
I dont mean to ignore the reality, I just mean dont exacerbate it. The great depression, and from what I understand the failure of WaMu was in some measure a result of a ‘run on the banks’ – what does this mean really? it means that people freaked out and thought they needed to horde cash in their matresses. By reducing the amount of cash the banks had on hand, it changed their leverage – how much they had outstanding in loans against the deposits. So when the deposits dropped below a certain point, it required them to file bankruptcy even though they weren’t ‘out of cash’ per se.
The point is, what it is, is up to us. Real leadership in a time like this requires calm, rational thought.
Check out this entry by the FDIC:
http://www.fdic.gov/bank/analytical/fyi/2006/032306fyi.html
Included is this fun summary of our economy: “The Banking Industry Appears Well Positioned for the Next Recession…”
Date? March 2006 – two years and the world is a whole different place…
Check out this entry by the FDIC:
http://www.fdic.gov/bank/analytical/fyi/2006/032306fyi.html
Included is this fun summary of our economy: “The Banking Industry Appears Well Positioned for the Next Recession…”
Date? March 2006 – two years and the world is a whole different place…
The dirty little secrete is that the bad mortgages are not the main problem. They were the spark that lit the pile of gasoline soaked straw. Gathering the straw and soaking was pure human greed. Wall Street has been involved in the biggest Ponzi scheme in the history of mankind, then they blame the poor. The real problem had to do with
Credit default swap
markets.
As I have written in my own blog, this is simply the Biblical truth found in 1 Tim 6:10 Love of money has caused this death spiral
The dirty little secrete is that the bad mortgages are not the main problem. They were the spark that lit the pile of gasoline soaked straw. Gathering the straw and soaking was pure human greed. Wall Street has been involved in the biggest Ponzi scheme in the history of mankind, then they blame the poor. The real problem had to do with
Credit default swap
markets.
As I have written in my own blog, this is simply the Biblical truth found in 1 Tim 6:10 Love of money has caused this death spiral
[...] Scoble and I had a bit of a debate on FriendFeed last night on the topic of the “death spiral” he recently blogged about. In a nutshell (paraphrasing), Robert felt he was expressing the truth (death spiral) and I felt [...]
[...] the sky falling? The main stream press and my favorite blogs have come to the same apparent conclusion; The sky is falling. But I agree with Mark Dykeman. Now [...]
“Lucky I’m isolated at college. Hopefully the economy will have recovered by the time I graduate.”
You’re kidding..
I’m in college too and I feel the crunch myself..
Maybe I should quit reading the WSJ for awhile?
“Lucky I’m isolated at college. Hopefully the economy will have recovered by the time I graduate.”
You’re kidding..
I’m in college too and I feel the crunch myself..
Maybe I should quit reading the WSJ for awhile?
People panicking is causing these loses which is causing panic… There is a LOT of money to be made through all this nonsense. Just be careful what you invest in.
People panicking is causing these loses which is causing panic… There is a LOT of money to be made through all this nonsense. Just be careful what you invest in.
NEITHER PARTY DESERVES ANY “REWARDS”
Both political parties led us down this road. Bill Clinton signed a major deregulation bill. Congressional Democrats encouraged (and allowed) Freddie Mac and Fannie Ma to write un-capitalized loans. The Republicans dropped nearly all regulation for large corporations, and allowed the resulting good and bad paper to be re-packaged together and resold.
Corporation execs garnered enormous, bloated salaries while their companies languished. The Repubs encouraged this, as well as permitting corporation execs to over-value their companies to encourage investment, even though their profit margins were inadequate to support that.
What a MESS.
This is going to be painful. Two weeks ago, I thought it might take a month or so for the bottom to occur. I was WRONG!
The market could easily go to less than 4,000 in the coming weeks.
If you’re over 55, GET OUT of the market.
It’s all a matter of age. You may not have too much longer to protect your 401K. It could take easily another 10 years to wind down from the effects of the worst possible market calamity since 1929.
I am sorry to hear myself say this.
But it is reality.
sanjosemike
NEITHER PARTY DESERVES ANY “REWARDS”
Both political parties led us down this road. Bill Clinton signed a major deregulation bill. Congressional Democrats encouraged (and allowed) Freddie Mac and Fannie Ma to write un-capitalized loans. The Republicans dropped nearly all regulation for large corporations, and allowed the resulting good and bad paper to be re-packaged together and resold.
Corporation execs garnered enormous, bloated salaries while their companies languished. The Repubs encouraged this, as well as permitting corporation execs to over-value their companies to encourage investment, even though their profit margins were inadequate to support that.
What a MESS.
This is going to be painful. Two weeks ago, I thought it might take a month or so for the bottom to occur. I was WRONG!
The market could easily go to less than 4,000 in the coming weeks.
If you’re over 55, GET OUT of the market.
It’s all a matter of age. You may not have too much longer to protect your 401K. It could take easily another 10 years to wind down from the effects of the worst possible market calamity since 1929.
I am sorry to hear myself say this.
But it is reality.
sanjosemike