Yea or Nay?
I think that Wall Street is taking a breather and trying hard to find anything positive, but I have the sense it ain't over yet.
George Saros estimated worldwide losses will eventually top $1 trillion.
Thoughts? Opinions? Rants?
I'm not usually a glass half empty kinda girl--but I think it is far from over. The subprime mess in the USA is a pebble thrown into the pond of the world. We've never had markets this global or this interconnected before soooooooo I dunno<looks around> Now where did I put my crystal ball? BTW pg--I greatly enjoy your reports from the financial trenches of the bank's call center. I know the job sucks, but you are giving us all some great insights.
I think that housing prices in my area (Lake Elsinore in Southern California) probably won't go down much more. The reason for this is that housing prices are so low, you can buy a house and get a 30 yr mortgage for almost the same monthly cost as renting the same house. The only reason prices are so low are because
a) people can't get mortgages becuase they don't have a down payment
b) people are waiting to see if prices will go down more
In my area, prices have alread dropped by over 30%.
I am involved in helping people re-finance home loans. The interest rates have been up and down the last short while. This makes me think that we could be seeing the the bottom of the sub prime crisis.
I don't think we've heard the last of the bad news by a long shot. The subprime crisis has affected banks in several other countries. Unemployment is still increasing. Middle class earnings are down for the first time in a long time. The budget deficit and national debt are breaking records. We have no coherent energy policy. The Iraq war drags on. Very hard to be optimistic.
Stocks fall as oil jumps
http://www.nytimes.com/reuters/business … s-imf.html
http://www.nytimes.com/aponline/busines … ref=slogin
I know! It's a new onslaught of bad news every single day. It's craziness. And yet the market will hear one small positive thing from day to day and rally 300 points. It's all so volatile. I think that is almost worse than if it would just crash and stay down there.
Saw in the paper tonight that one gas station is already at $3.99/gal for regular gasoline here. Diesel has been over $4 for a couple of months now. It's not so much the cost of commuting as what it will do to the cost of everything else, especially food. That is going to hit ordinary people hard--it already is.
I'm more worried now about hedge fund leverage. The problem is that these guys are unregulated and control gigantic sums of money which they in turn leverage beyond belief. If one or two of those funds start going under, they could bring down the whole shadow economy.
If that house of cards comes down we'll be taking up farming again if we have the good fortune to have forty acres and a mule.
Even though I know that what you re saying is true, I confess I want to see the "shadow banking system" fall. The shadow banking system came about because stockholders expected and demanded greater and greater profits, and banks and large corporations responded to that pressure by gutting middle management, outsourcing entry level work, cutting wages and benefits, and skirting regulation at every opportunity.
So over the past 10 years, most of the money in this country has floated to the top 1/2% of the people who live here, and the rest of us share the ever diminishing leftovers while prices skyrocket. My partner and I could live comfortably for the rest of our lives on a small fraction of what the Fed loaned JP Morgan Chase to acquire Bear Stearns at a fire sale price. We could easily still get stuck with the bill for that bailout.
I say, let it fall.
LOL may be not to that extent, but I think we are up for something pretty serious...
The subprime mess is just part of the cycle. Anyone who could chew gum could get a loan for a house. Betting on the rising value of real estate. Anytime an investment becomes a sure thing then it isn't a sure thing. When you can't lose then someone will.
The goal of the government has always been to have every American have their own home. This goes back to Henry Ford's basic premise that any man who has an acre is never unemployed. The problem is many people are not responsible enough to own property.
I have no mercy for the people who put nothing down and bought a house they could not afford. Then they were stupid enough to make the loan an interest only payment. duhhh.... They are adults and they signed the contract. If they cannot handle their finances then we do not need to protect them. You cannot protect people from being stupid.
Are we at the bottom of the slump? Yes in some areas of the country but no in others. Where the percentage of loans that were interest only were the highest is where the drop will be the greatest.
The land flippers losing money? Too bad.
my two cents
George Soros remains pessimistic on market outlook
http://hubpages.com/hub/Stock_MarketMor … _happening
Great hub on the market Deeds.
At this point, I really do think no one has a clue how to stabilize the market or how to get the country back on track. It ought to be the United States of FUBAR right now. Seriously, what next? As I write this American Airlines just cancelled another 600 flights and NPR has airline people saying everything from "what an overreaction" to "run for your lives!"
This is what happens when the fox is in charge of the hen house.
I don't think it is what caused all that mess. It is definitely a part of the mess, but I don't think it is THE reason
I tend to think that is just one of the manifestations of the natural process, which goes pretty much like summer-winter, high tide-low tide, etc... All is alternating in our world, and finance is no exception.
That is very profound and easternly philosophical-ish Misha! Great attitude, you have my admiration.
I personally blame persons though. Know their names. Know where they live.
I'm less evolved I guess...
I think Misha is right, though.
Those strange fellows who apply mathematics to stock market chart patterns have been saying we are in for small rallies and large falls for a couple of years now - it's just that nobody listens to geeks wearing pocket protectors when they sound like party-poopers. Everybody thinks that THIS bull market is different, and THIS bull market will be the one bull market ever in history to never turn, and the geeks are wrong this time.
Mark my words - the geeks are always right!
The downturn might be delayed a year or two, but it will always come.
It's nice to point a finger at a person or persons, and blame them, but the truth of the matter is that there is a pattern to markets, and even very powerful people can't manipulate them, even when they try really, really hard ...
Wow I hope you are right! I will concede that geeks rule.
I think it's possible to hold persons accountable AND respect the number crunching geeks though. Blame is a harsh word people use when they feel powerless to hold someone accountable (like now), but accountability is a more accurate word. Given that markets follow patterns and that number crunchers can identify them, persons and organizations STILL also play a part in what happens in the stock market.
To absolve CEOs and hedge fund managers of wrongdoing by invoking some kind of market "chaos theory" reminds me of the people who come out and site animal studies that "prove" that it is impossible for mammals to be monogamous every time some politician shows his butt in a public scandal. I want to see a market ethic evoked and I want to see some people take responsibility for behavior that pretty much amounts to greed and run-away speculation.
I am tired or the amoral nature of markets and of a government that lives by the capacity of market driven forces to self-regulate. Over time, ok, they self-regulate--but we've seen that this is at great cost to ordinary people.
...and the stockmarket is tanking today too--all atwitter over GE -- Now everyone is worrying about inflation--somebody better go tell Chicken Licken
BTW I saw George Soros interviewed on Charlie Rose last night--it was a great interview. The guy knows what he is talking about----unfortunately
Yes, it's feast or famine, you never know when you wake up in the morning what is next.
I saw him, too. Between the Charlie Rose show and the NYT article this morning, the market went down 250 points today. I guess there were some disappointing earnings reports as well.
Georges Soros is just another great Wall Street Manipulator like Warren Buffet who both like to appear as Wise Men and on the side of the Orphans:
You're like the chickens they want to frighten whereas they will buy into 2009. The Big Crash would be rather for 2011/2012 which may be a good pretext for full electronic money later stored in your body's microchip 20 years later since according to Rockefeller that's the END GOAL:
http://video.google.com/videoplay?docid … &hl=en
Of course the Big Banks crisis is not yet fully discounted in the news as some “surprises” are still in the tube for the mass public. For example when you read on Fool.com, in their “This Week in Banking” article, that “Citigroup (NYSE: C) is reportedly close to a deal to unload $12 billion in debt associated with leveraged buyouts to a group of private equity firms”.
What they omit to say is that the same bank funded this private equity group which means they’re “selling” the mortgages … to themselves . Don’t be in disbelief, apart from being able to tell lie by omission, the rationale behind is that they can also report higher gains on the sales than if they sold them on the open market.
Harvard law professor Elizabeth Warren proposes regulatory regime for credit.
http://harvardmagazine.com/2008/05/maki … safer.html
The subprime crisis is not over and will not be over till Americans do not change their spending habits. The global situation has changed which Americans still not understanding.
Not looking good today. Just some headlines from Friday:
Dow plunges 400 points
Unemployment rate at 5.5%, biggest rise since 1986
Oil made its biggest single-day leap going over $139 a barrel
Not to scare you or anything, but Friday, as the Dow was tanking and oil was jumping off the charts, the stock price of the bank where I work as a part-time CSR dropped to $4.91---It was just under $58 last summer. It's been hovering around $5.75 since the day after Bear Stearns failed. It dropped 70% that day alone. This was the biggest drop since that day. There isn't much more room for the stock to drop.
Friday the bank where I work was also put 'on probation' for having inadequate assets to back up its deposits. The FDIC has a list of about 70 US banks---mostly large regional banks like the one I work for---that it expects to tank in the coming two years. I'm not talking about a little bank here--we are in 7 midwestern states, we're really big.
The CSRs were given talking points in case people called concerned about it, to prevent a run on the bank and assure people their money is safe (it isn't). No one called during my shift to ask about it.(The day after Bear Stearns tanked tons of people called.)
I don't think people realize how screwed up things really are. Every day I wonder if I'll show up and the doors will be locked. Supposedly there can't be another big rush or bank failures because of the post-Depression era regulations but so many banks (ours especially) have recently found ways to skirt those regulations that now they are in big trouble. One day we could wake up and just see a bunch of them fold all at once. It wouldn't take much at this point.
If the retail banks start to fail it won't matter if you have gold or silver, the problems will get so big so fast it just won't matter. Money won't mean anything. It will be good kindling. We are trying to become as self-sufficient as we can. That's all anyone can do right now while it all comes apart.
The US Dollar is going to be useless soon, everyone should be investing in commodities - metals like silver and gold. There are only so many uses for paper, money should not be one of them, even though it does make it easier to move around.
The US dollar is not backed by anything but the hard working people of the US. What happens when half the US does not have work?
Oil up almost $11 to mark its biggest daily dollar gain on record
Last Update: 6/6/2008 4:52:00 PM
Oil prices shoot higher by almost $11 a barrel, scoring their biggest
one-day gain in dollar terms.
Gold Surges Most in Six Months on Jobs Data, Dollar's Slump
June 6 (Bloomberg) -- Gold jumped the most in six months after the U.S.
jobless rate had the biggest gain in more than two decades, spurring a
drop in the dollar. Silver also rose.
The dollar took a nose dive as soon as this jobs data came out, and
that's a big reason we've seen gold move up,'' said Matthew Zeman, a
trader at LaSalle Futures Group in Chicago.
Silver futures for July delivery advanced 34.5 cents, or 2 percent.
U.S. stock indexes end with stiff losses on spike in oil prices
Last Update: 6/6/2008 4:52:00 PM
U.S. stocks drop sharply after the government says the nation’s jobless
rate in May soared to 5.5%, the highest since October 2004, and as the
price of crude-oil futures jumps atop $139 a barrel.
Stocks slump as crude futures close at record high
Dow Jones Industrial Average loses nearly 400 points in 8th-worst such
NEW YORK (MarketWatch) - Slammed hard by the soaring price of crude-oil
futures, which on Friday closed at a new record high, and a rise in the
jobless rate, U.S. stocks more than wiped out weekly gains, with the Dow
chalking up the 8th-largest point drop in the blue-chip index's history.
This should tell you something about the dollar. The only thing is, what are we going to do about it? Under a republican congress gas topped out at $2.10 per gallon. Under the current democrapic congress it has soared to over $4.00 per gallon.
And the democraps blame Bush - give me a break!!!
OK, what you - as a banker - can say about Emigrant direct and HSBC? Yes, I do have some money there - leftovers from my resignment benefits...
I don't know much about Emigrant, but HSBC is one of the banks hit hard by the subprime crisis, although it is not even close to being in the kind of trouble our bank is in. I'm thinking of moving all our money to ING--they are one of the strongest banks in the world and barely touched the kind of slimey deals that got a lot of US banks in trouble.
I wouldn't move your money Misha. But you might want to check into whether your funds are insured. I'm not a stockbroker, so beyond that I can't reall make personal suggestions--like I said, I'm thinking of pulling our money out and putting it into ING, but I haven't done. We don't have much.
Geeze, was not paying attention about HSBC and I bank with them, thanks for the heads up. I have become somewhat detached about finance news and banking after working in Citicorp for most of my adult life, and the investments I have are not that big, but do pay attention about becoming resourceful in earning a living away from a 9-5 job as most do, and being self sufficient. Have just checked out ING have the site up and will see if I decide to open an account with them this week as I have been looking for an additional bank account.
I know that pulling our money from the bank I work for is wrong but I've been thinking of putting some of it at least in ING myself, just to tide us over if our bank goes under. We don't have anywhere near 100K so we're insured, but if the bank were to fold it would take awhile to get that money out.
I only know about the different banks and their respective health from reading the financial pages, they certainly don't tell us anything at work. ING and Suntrust are the two I've read the best things about in terms of capitalization and sane investments.
America is not seen the worst yet. What is going on is alarming. The Americans should read the words in the walls.
http://hubpages.com/hub/Why-Americans-a … al-Problem
America is in problem and will remain. They have done much damage to the rest of world earlier.
Now we the successors will raep the fruit.
I actually have an account with ING, I just don't use it. Looks like it is time to move some money there
Oh, and by the way, the less money you have, the more valuable they are
I have an ING account too. I don't use it as much as I should. The interest is great.
Both HSBC and Emigrant offer similar interest. I believe Citibank does this too - at least last time I checked - but they have too many strings attached
And I scheduled my transfers to ING so I will have about the same amount of money stored in any of those three. Diversification
I think HSBC is not in danger. It is on date having highest assets globally. It is also backed by China, the strongest economy.
Sub-prime will be worsen in America.Stock market crashing, crude price rising. Job situation
Inflation due to fed rate cuts.
<snipped links -- excessive linking to own hubs on this thread>
I don't think there is a bottom of US economy problems. Even at Zero, there is always room for debt.
Fannie and Freddie are way down. Now's the time to buy stock in tent manufacturers
Do you think tents are safe?
Seriously, it's getting freakin' scary. IndyMac got shut down this morning by FDIC, second biggest bank closure in history. They had a bank run just like in the Depression. FDIC is looking for 70 of 'em to go down in the coming two years.
The fall in housing prices in some areas is now so large that good, responsible borrowers who put down 20% deposits to buy their homes are now upside down on their mortgages. All good while they can keep making the payments, but if they run into problems, they can't sell the house to get out of the situation - they just end up defaulting.
So even responsible lenders who made no subprime loans at all are now facing rising default rates, simply because they made loans on the basis of "bubble" valuations.
The subprime crisis is morphing into a prime crisis.
Well, European and Asian markets are down sharply already this morning on loss of confidence in US banks and concern over a systemic worldwide market failure.
I'm really dreading work today. My shift is 9-1 and Tuesday is Overdraft Day anyway since everything that went wrong over the weekend posts on Tuesday morning, and then people call in and tear our heads off for crap they did to themselves.
The Euro reached an all-time high against the dollar today. I just don't know what to expect. I think that's always the scariest ride, the one where you don't know what's coming next.
I have an ING savings account linked to my checking account with automatic weekly deposits set up. It's pretty good (was earning 4.2% about a year ago, 3% right now). Interest grows daily and gets added to your account at the end of the month (for instance, with my little ball of cheese I currently earn about 18cents a day and at the end of the month that $5 and change in interest gains actually becomes part of my account balance).
Another detail is that it takes a week for deposited funds to be available for withdrawal.
If you're really worried, roll some of your money out into Australian dollars or Euros.
The big plus with the Aussie dollar is that you can get 8% on a fully guaranteed at-call cash savings account. European rates aren't quite as high, but you have diversified your currency risk across the European basket of nations.
And with the greenback heading south, and likely to continue that way for a good few months yet because its an election year so nobody will be game to make any of the necessary hard calls on the economy, you could net yourself a nice capital gain on the currency fluctuations.
Do Aussie banks allow foreigners to open accounts over the Internet and wire money?
Yes, they do - certainly Westpac does.
You do have to get identified at some point before they will let you withdraw the money (in case you are a Mafia money launderer or something) - this means showing your passport and either birth certificate or driver's license, or a credit card. You basically need 100 points of ID documents, and a passport counts for 70.
Once you have been identified, they will let you transfer money out of the account via internet banking.
Westpac has at least one branch in the US to do the ID check - or they did last time I looked - and you may be able to organise to do it by mailing the documents over. I have a feeling that certified copies weren't good enough last time I asked - they want to see the originals.
I don't think so the US market is going to deep to 0. The position is coming now when the US share market can stable.
This is only the trailer, Main picture is yet to come. We are witnessing this trailer itself for all those wrong policies and the worst style of spending, but still they are not able to accept it because of Pride and Prejudice problem, so this is will not end now. Unless you really want to get out of it your brain is not going to function free and you will not see a clear path.
Here's what Warren Buffet said tonight about the economic outlook:
Here is a partial transcript from Susie Gharib’s interview with Warren Buffett airing tonight on Nightly Business Report. You can check your local listings here
SUSIE GHARIB, ANCHOR, NIGHTLY BUSINESS REPORT: Are we overly optimistic about what President Obama can do?
WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: Well I think if you think that he can turn things around in a month or three months or six months and there’s going to be some magical transformation since he took office on the 20th that can’t happen and wouldn’t happen. So you don’t want to get into Superman-type expectations. On the other hand, I don’t think there’s anybody better than you could have had; have in the presidency than Barack Obama at this time. He understands economics. He’s a very smart guy. He’s a cool rational-type thinker. He will work with the right kind of people. So you’ve got the right person in the operating room, but it doesn’t mean the patient is going to leave the hospital tomorrow.
SG: But I know that during the election that you were one of his economic advisors, what were you telling him?
WB: I was telling him business was going to be awful during the election period and that we were coming up in November to a terrible economic scene which would be even worse probably when he got inaugurated. So far I’ve been either lucky or right on that. But he’s got the right ideas. He believes in the same things I believe in. America ’s best days are ahead and that we’ve got a great economic machine, its sputtering now. And he believes there could be a more equitable job done in distributing the rewards of this great machine. But he doesn’t need my advice on anything.
SG: What’s the most important thing you think he needs to fix?
WB: Well the most important thing to fix right now is the economy. We have a business slowdown particularly after October 1st it was sort of on a glide path downward up til roughly October 1st and then it went into a real nosedive. In fact in September I said we were in an economic Pearl Harbor and I’ve never used that phrase before. So he really has a tough economic situation and that’s his number one job. Now his number one job always is to keep America safe that goes without saying.
SG: But when you look at the economy, what do you think is the most important thing he needs to fix in the economy?
WB: Well we’ve had to get the credit system partially fixed in order for the economy to have a chance of starting to turn around. But there’s no magic bullet on this. They’re going to throw everything from the government they can in. As I said, the Treasury is going all in, the Fed and they have to and that isn’t necessarily going to produce anything dramatic in the short term at all. Over time the American economy is going to work fine.
SG: There is considerable debate as you know about whether President Obama is taking the right steps so we don’t get in this kind of economic mess again, where do you stand on that debate?
WB: Well I don’t think the worry right now should be about the next one, the worry should be about the present one. Let’s get this fire out and then we’ll figure out fire prevention for the future. But really the important thing to do now is to figure out how we get the American economy restarted and that’s not going to be easy and its not going to be soon, but its going to get done.
SG: But there is debate about whether there should be fiscal stimulus, whether tax cuts work or not. There is all of this academic debate among economists. What do you think? Is that the right way to go with stimulus and tax cuts?
WB: The answer is nobody knows. The economists don’t know. All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves. We do know over time the American machine works wonderfully and it will work wonderfully again.
SG: But are we creating new problems?
There is much more including a discussion of Madoff.
I'm usually with Buffett, too, at least philosophically, lol...
The weird thing is that much of what he says seems obvious (?)
What is most striking to me is how little Buffett says in all this that is reassuring. He basically says 1) Obama is a reallly smart guy, (agreed), and 2) We are in deep deep sh#t economically and no one really knows how to fix it, it's very serious.
He also says getting out of it could take a very long time.
What troubles me is not the huge stimulus plan, it's more the fact that I don't see where this recovery is coming from, long term. There's really no such thing as a "consumer economy". You can't consume cheap crap you don't produce indefinitely without a crash. A country has to produce something. There have to be jobs for people who are not entrepreneurs or geniuses, jobs for C- students who just got out of high school and now need to make enough money somehow to feed a family. I don't see those jobs on the horizon. I don't see how to get those jobs on the horizon.Right now C- students are not even getting out of high school. In the city where I grew up over half the students who start high school drop out, because there's nothing there for them. They can wash dishes or sell pot just as easily without a diploma, and no amount BS can convince them otherwise.
The only idea showing any promise in this regard right now is alternative energy, but that is a long, long wind-up before we see lots of jobs. And the workers will have to at least be able to read and do basic math. Right now, it isn't even there, not really.
Reading between the lines of what Buffett said here, what I hear is, "Wow we are so f*cked. At least we no longer have a moron owned by Big Oil at the helm."
This just in:
My partner, Matt, just got back from a business meeting with a man, R.B. in Phoenix who is the 'bundler,' for McCain's financial interests.... HE is saying that because Buffett is behind Obama, that there is hope, though the situation is more dire than most of us at a certain level can imagine. That several large name companies are about to go under right now (can't name them.) That although he supported McCain, as they are friends and do business together, that Obama is the man we want there in office at this point.
From a financial stand point, for what it is worth, this man is saying 2009 is gonna be hell. But that from there, we should see a light at the end of the tunnel.
The debt is due to those liberal republican spending habits (Bush); i.e. overseas invasions of course.
wall street may take off again by summer as a glimmer of light may shine through.
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