We’re in a death spiral

The Dow is only down ~400 as I write this. The day ain’t over ’til the fat lady rings the bell….

I am unsubscribing, you are over the top. You are making things worse with your death spiral hyperbole.

P.S. You constantly support Obama, who do you think got us here? Jimmy Carter started this whole thing with the Community Reinvestment Act that gave loans to the wrong people, Bill Clinton expanded it and Barack Obama worked with the rest of the Democrats to shoot down John McCain and even (gasp) George Bush’s attempts to fix it in 2003 and 2005.

The current economic storm is daily topic here in Europe also. The small country of Iceland is now going through hell as the foreign debt-driven economy is about to collapse.

Some positive things: price of oil is going down. Also, I see that the pace of global economy is very high – the momentum of the storm will be exhausted soon. Furthermore, there are several important lessons learnt; we become better prepared for the next one.

@brandon, are you, like, 12? Come back when you’ve read more and listened less to the talk radio shows you parrot.

Sorry Robert. Delete this if you want.

I’m sorry, but it’s sensationalist stories like this that get people riled up for nothing. There is more to the economy than the stock market, and what people should really be upset about it the $700 billion (filled with pork as well) was another waste of government money.

I’m digging in with my start up, it’s such a fantastic idea I’m hanging and not letting go. Its a good time to go all in.

The bright news is that in the UK we have the Olympics to look forward to!

The bad news is that the taxpayer is funding that + any credit bail-out.

Robert – inflammatory titles like “we’re in a death spiral” don’t help matters.

People are afraid….no need to throw more gas on the fire.

Its the media which makes it worse. The 24/7 coverage just promotes fear and whilst we have lived beyond our means it’s the media which is spiralling it out of control.

I was told by an experienced person that “the fundamentals of our economy are sound”. OK, bad joke. Seriously, seeking positive news, I’d suggest we remember all the curves are going exponential, ala Kurzweil’s presentation. Therefore, good change may also happen very fast. There are an exponentially growing number of good looking solutions happening, such as the new solar chips capable of 80% conversion, and global accessibility to scientific knowledge, and a biotech revolution, and the plausibility that a new government may actually help make the world a better place. A friend of mine just decided to have a baby. Optimism is a choice.

Robert, the fear in your writings the last couple weeks tells me that you really need to step back and get a grip on yourself.

Yes, bad things are happening, people are losing money, and people will be losing jobs.

Is this the end of the world? No.

I don’t know about you, but I refuse to live in fear. Yes, things are changing, but change brings opportunity.

Look to find and seize these new opportunities!

Hopefully the good news out of all those bad news is that MAYBE we will learn.
Heck, we in the Telecoms/IT industry have been hit badly 8 years ago ONLY. Now it’s the Banking system at large that is collapsing. Pretty much narrow deeps. Time to think again, right ?

Lets step back and look at this from a little distance before going crazy….

The economic gains of the last 5 or so years were based on a bubble. Like the tech bubble before it, this one is bursting and we’re sliding heavily. The difference between the tech bubble and the housing bubble is that this bubble had a lot more individuals buying into it. The tech bubble had the benefit of not really dealing in tangible things like houses.

Remember that the Dow didn’t cross 10k until April of 1999. We spent much of 2002 and 2003 below 10k on the DJIA. We’re not even close to our lowest point of 7527.4 on Oct 3th 2002 (Since crossing 10k).

Did we have some massive recession or depression in 2002? Nope. Were times tough in the job market? Yup. Did we bounce back from it fast? Heck yeah.

People are panicing worse than they should. Sensationalist media, and some incredibly irresponsible money decisions are amplifying to the point where people are thinking it’s the financial End Times. Even with the loss of 30% on the DJIA since October 2007, we still have very low unemployment. GDP still grows. Outside of banks you don’t hear about companies closing their doors left and right. In fact, so far the companies most hurt by this are the ones who were exploiting the bubble the most, who were playing the subprime game.

Everyone repeat after me: It’s. Not. As. Bad. As. It. Looks.

The good news? This is a fantastic time to buy stock. This is “deal of the century” time. All you need is a bit of available money.

Another piece of good news? Some (most?) people only learn by being seriously disrupted, and I’m expecting a lot of learning is going on right now. The pattern of buying more of everything than you can possibly afford based on the assumption that your earning power will increase “next year” is a self-destructive. Yet a lot of folks have been living this way for years. Buying a $300,000 home with a $200,000 mortgage is reasonable behavior (and yet can still get you in serious trouble). The folks who really need a lesson are the ones buying a $300,000 home with a $400,000 mortgage- how can that be a smart thing to do? And yet it is done.

The one thing that I really wish would change likely never will, and that is the all consuming extreme greed that pervades our society. Healthy growth is 10% per year; cancerous growth is 10% on top of whatever you made last year. 30% this year? Nice, but it better be 35% next year, and your company is a dog if isn’t growing at 43% the year after that. Heck, what is wrong with a healthy profit, damn the annual expectation of endless growth?

Back in ancient times (30 years ago), a firm wouldn’t lay staff off unless they were losing money. Now they lay people off if their profit didn’t grow as much as expected. At every turn, the greed leads to incredibly self-destructive behavior: we are eating our own children here.

perfect reason why you shouldn’t vote democrat this year. the dems have blocked any chance of reform for freddie and fannie over the years.

the dems guarding freddie and fannie coupled with the mandate that banks maintain a portfolio of 50% of subprime loans is at the heart of this mess.

if you don’t believe that, please just shut your computer off and jump out your window.

The markets are going down because they are overvalued.

Grab anything with a straight edge, a ruler, a piece of paper and lay it over the plotted points on the following 3 charts connecting around 1982 to 1994. Notice where the trend line take you for 2008.

http://finance.google.com/finance?client=ig&cid=983582
http://finance.google.com/finance?client=ig&cid=13756934
http://finance.google.com/finance?client=ig&cid=626307

Dow = 7000
Nasdaq = 1200
S&P 500 = 750

If you have spare cash, invest smartly now and wait it out, that’s what Warren Buffet did with some of his billions, it’s smart finance.

Dr Ron Paul said: “We are looking at the movement of America being a democracy toward a socialist society”

The U.S. is not a democracy. It’s a PLUTOCRACY. The measures will not move America toward socialism. These measures are set in motion to protect the wealthy. Simple as that.

If you can still invest, some savvy people are saying, “buy silver.”

(The good news is that most of us cannot afford more debt.)

If someone is naive enough to think the dollar is the most postive thing that is coming from this mess they are sorely mistaken.

Watch when this 700 billion dollar bailout does to our inflation, and the continual destruction of the dollar the government is doing that isn’t even restoring confidence to the markets.

No, the best thing we get about this is cheap markets and lucrative deals

Hi Everyone,

we can be fearful and do nothing or goes berserk. But I want to encourage everyone to keep our heads up and keep on doing great things. For me, I’m steaming ahead with my startup, and I hope everyone is the same. Fear is a bitch, and we need to kick it in the rear. Onward!

Those that should be worried are the ones that need money from their investements NOW. If you weren’t planning to sell before the recent drops then don’t sell now, soley based on the market price of your investements. You only lose money if you sell. If the fundementals for the company have changed then sure you should reevaluate your holdings.

Stop being a fearmonger. It’s not the end of a world, it’s the bottom of a fierce cycle compounded by 24-hour news and an election coming. Everyone notices everything in real time, and the President yelled “fire” in the crowded theatre, which caused the stock market to plunge. The stock market is just the stock market. It’s not the economy, and it’s certainly not the end all and be all of life.

Now if I were told I had a serious illness, I might be fearful. But over MONEY???? Future money? Paper losses?

Get your priorities straight.

My friend in the mortgage biz had to stay at work late tonight because they have so many new loans. certainly the exception. the market is correcting itself, that’s something good. real good.

also, partly socializing the banking system with the 700bill, even though it set a bad precedent, will (theoretically) thwart the full socialization of those tending toward that form of government, if they make it into the white house.

If you have been managing your finances responsibly and avoided the allure of non-traditional mortgages and buy-now-pay-later consumerism, and have no immediate plans to retire, there is no reason to panic. But there is plenty of reason to be cautious and pro-active with what’s left of your money. Cutting-back on discretionary spending is a natural and prudent reaction to this environment, particularly if you work in a market segment that is experiencing or will be affected by the fall-out of the real-estate and credit market downturns. As I work for a company that’s been drastically affected by the current crisis, I can tell you that planning for a 25% decrease in salary is something that realistically needs to be considered. At the very least you should not plan on any big salary adjustments or bonuses for the near term.

I think the stock market still has a ways to go before there’s a sustained reversal, (I’ve been predicting low 8,000’s for a while now), so you need to look at your holdings and sell off those that are still at-risk. I think the credit crisis isn’t over yet, and won’t be until the major consumer credit companies get beaten-up. That will surely be the next wave as people already overextended run out of available credit to off-set their expenses, and start defaulting on balances as they divert available cash to essentials. Companies big into consumer debt will take losses as they write-down balances, increase interest rates to cover risk, and then write down more balances. This will spill over into consumer product sales as credit for new flat-screen TV’s and iPods disappears. Coal might be a popular and even sensible Christmas gift this year!

So, government-insured 3.5-4.5% CD’s and high-yield savings accounts are looking like safe harbor right now; particularly compared to the 30% hit the stock market has collectively lost over the past 12 months. Individual corporate bonds might generate better yields, if you are confident in the company’s ability to pay off. The return on federal stuff isn’t worth the effort, and I think muni’s are going to be a problem in 12 to 18 months as tax revenues drop to reflect what’s happening with real-estate markets.

I think it will be a cold winter, quite literally, for many people. But I also think the bottom of the real-estate market is in sight, and by late next summer prices should stabilize. As real estate stabilizes, so should the credit and stock markets. Residential rental properties look like a good investment if they can be purchased at good prices. A big factor in how long this might go on is the severity of the upcoming winter and price of oil, natural gas and coal. Energy commodity markets will play a big part in this equation, as they have over the past 3 or 4 years in driving oil over $50, then $75, then $100 a barrel. Personally, I think some government limits on speculation are going to be needed to keep prices under control.

The people I feel the sorriest for are those who were due to retire in the next 5 or 10 years. I was on track to semi-retire in 10 years. But now my portfolio has taken a huge hit, my company pension is uncertain, and Social Security isn’t looking too good with all this bail-out money being passed-around. Fortunately, at 48 I still have time to build it back up, and maybe with prudent investment and rebounding markets, I can rebuild my losses and still retire as planned. Or maybe I have to buckle-down and save even harder to retire in 20 years.

With any luck, some good will come out of all this. I believe in free markets and capitalism, but I think that there does need to be better control and accountability in the banking, investment and financial services industries. Looking back through history, we see time and time again that these industries have failed to exercise restraint and have resulted in many of our financial crises. We need to do a better job of encouraging long-term growth versus short-term profits. We need to develop and implement long-term strategies for reducing the cost of energy: more oil drilling, more nuclear power, more biomass power, more wind power, more solar power, more electric cars, higher taxes on inefficient cars, lower taxes on diesel cars and fuel; leave nothing off the table. And we need to find some plan for rewarding corporate execs for meeting these long-term goals, rather than focusing on bumping short-term gains and salaries, (I advocate paying execs in stock rather than dollars, negotiated once a year and requiring 50% to be held for at least 24 months).

And consumers need to learn to shun the plastic economy. People should not be buying groceries or paying for Happy Meals™ or Grande Cappuccinos with credit cards. No more 30 years of $10-per-month payments at 24% interest for a new HDTV. Take $80 or $100 out of the bank on Monday, fill your car with gas, (saving 10-12¢/gal versus credit), and live the rest of the week on what’s left.

But most of all, we need to learn to resist the Madison Avenue, and even government campaigns to believe we can spend our way out of financial turmoil and charge our way to nirvana. Gluttony, not frugality, is the sin.

BTW, I am not an economics or financial expert, nor do I play one on TV. I’ve just got some common sense and street smarts, and my predictions haven’t been off-base for a long time. Your mileage my vary considerably!