Economics business.The Sub-prime Crisis. How bad is it?

[Zythryn]

Sorry to here that Freeztar:(

Hope everything turns out well for you!

[Qfwfq]

I'm really sorry too Pal, all the best! I'll be shopping around too, for January. :)

 

It's still playing out, but hopefully the "bailout" instilled enough trust in the marketplace to buoy things forward.

Don't count on too much. It was Sunday's decision that caused the rebound, I wasn't expecting it to be so strong or even to last a day and a half (almost). It wasn't just profit taking that brought it back down by yesterday's close and it's going back down today.

 

I've been seeing grim for next year, the link I last posted here is one of the confirmations and just think, I walked out of a permanent employee status in February. :(

[Cedars]

For the record: I'm officially unemployed now. :)

 

I always refer to these situations as being JobFree! rather than unemployed :(

 

Perfect time for a vacation. Pack up some stuff and head for the hiking trail for about a week. Rough it while relaxing. Charge up those batteries and bring us back some nature!

[Zythryn]

Yes! Roadtrip Freeztar!!!

Come visit Minnesota, You me and Cedars can go bowling (if Cedars is interested:))!

[freeztar]

Thanks guys. Bowling in Minn sounds great, but I don't see it happening. I would love to take a vacation, but I have one coming up in about 5 weeks (my wedding + honeymoon). What great timing to be jobfree! :hihi:

 

Although, I'm now considering the camping option. This sub-prime crisis and jobfree-ness can't stop my hiking boots. :)

[freeztar]

Don't count on too much. It was Sunday's decision that caused the rebound, I wasn't expecting it to be so strong or even to last a day and a half (almost). It wasn't just profit taking that brought it back down by yesterday's close and it's going back down today.

 

Indeed. :hihi:

 

What a roller coaster market we have now! How can we find the equilibrium?

[REASON]

What a roller coaster market we have now! How can we find the equilibrium?

 

Yes. It now reminds me of the huge annual swings in gas prices that we've all become familiar with. :hihi:

[Turtle]

Don't count on too much. It was Sunday's decision that caused the rebound, I wasn't expecting it to be so strong or even to last a day and a half (almost). It wasn't just profit taking that brought it back down by yesterday's close and it's going back down today.

 

I think they are still using those computer programs and their derivatives voodoo to make transactions and that is why the market surged and continues to yo-yo. :) Adding money without adding regulation is not gonna help much in my view.

 

Although, I'm now considering the camping option. This sub-prime crisis and jobfree-ness can't stop my hiking boots.

 

If you & yer gal get back up here to PNW, I'll drive us all out for a good ol' fashioned Sasquatchy hunt and forest resource gathering expedition. :) :hihi:

[Qfwfq]

I have one coming up in about 5 weeks (my wedding + honeymoon). What great timing to be jobfree!

Gosh that kinda crossed my mind although I didn't know dates and so on. It's just rotten luck. :(

 

When I resigned in February I was prepared to take just about anything temporarily, although I had more than one idea before hitting unqualified stuff. By fluke, through an old friend whom I had queried about his activities, I almost immediately found something fine enough for the moment. Trouble is, including for myself in January...

What a roller coaster market we have now! How can we find the equilibrium?

If that were the only problem we woldn't be worrying so much. It's economies on the whole that are looking bleak.

 

There have been many roller-coasters without so much worry, a major one was in 2006, sparked off in the East and propagating through European markets and then Wall street. It was no more than a signal that the Asia phenomenon couldn't go on at the same pace eternally and, once panic subsided, indices regained quickly and then markets began to alternate. The great bulls had run out, Dow had touched 14000 a couple times but it was obvious that one shouldn't bet on more. Then the subprime stuff began to weigh more and more on folks' confidence.

 

Soon after I first began typing all this after lunch, market-soothing news came in about US data for jobless claims and consumer core prices; Dow opened up a bit, oscillated and now it's going back down...

 

I think they are still using those computer programs and their derivatives voodoo to make transactions and that is why the market surged and continues to yo-yo. :hihi:

If you mean algorithmic trading, from what little I know about it, it can make things easier for speculators but the actual cause of oscillations is aggressive speculation in any form. Hoarding and flooding techniques have been around ever since there's been such a thing as a market, even before currency replaced barter.

 

Adding money without adding regulation is not gonna help much in my view.

Definitely agreed.

 

They've posed restrictions for uncovered shorts, something which allows (especially traders on the floor) to be much more aggressive. However, aside from calming markets, economies are in for radical changes. For most people, it's gonna be less caviar and frills, more bread and soap. For some of us it'll also be grab the job you can find.

 

addendum: 10:23am EDT NEW YORK, Oct 16 (Reuters) - "U.S. stocks slid in skittish trading on Thursday after a report showed a steeper-than-expected drop in factory activity in the Mid-Atlantic region for October."

[Cedars]

Yes! Roadtrip Freeztar!!!

Come visit Minnesota, You me and Cedars can go bowling (if Cedars is interested:))!

 

How long you think its gonna take freezee to hike up here? :)

[freeztar]

How long you think its gonna take freezee to hike up here? :)

 

Hike? Heavens no! I would catch a ride with a trucker. :)

 

(That's presuming that they have the money to refuel. I might be able to help out a little, but it will cut into the bowling alley fund ;))

[LaurieAG]

Adding money without adding regulation is not gonna help much in my view.

 

Hi Turtle,

 

I tend to agree, especially after what I read in The Australian Newspaper today.

 

Apparently there are between 500 and 700 trillion dollars worth of off balance sheet derivatives floating around the global financial casino today (shades of ENRON). A 5% drop in those derivatives would wipe out the worlds entire GDP in one hit.

 

It's not surprising that those most affected are selling what they have of value (i.e. like the 30 cents US off the Aussie dollar) to prop up what they have that has no value.

 

There's no doubt Turtle, the global financial system is in need of a complete audit to determine which of the toxic instruments, polluting the financial world today, should be lined up against the wall and shot by the global regulators.

 

After all, the receivers do a very similar thing if a company gets into an insolvent situation, and the world governments and their reserve banks are the receivers.

[Michaelangelica]

Has he decided he dosn't want the job?

I wouldn't blame him. What a mess!

 

* Whole communities/cities closing down

* A paralysed banking system

* 300 more US banks due to fold next year

* 3 TRILLION in OS debt

* 1 trillion budget blow-out

* Iraq

* Afghanistan

* Pakistan

* Israel

Who would want the job??

 

Today another big French bank announced it was in trouble. Where will it end? What about super funds, mutual funds and the futures market? When will we know the complete extent of this thing?

Mutual Funds don't have to tell anybody anything until it is too late.

I am told importers can't get letters of credit.

Big infrastructure and other mining expansion programmes here, can't get the banks to lend.

 

Economics books are going to have to be re-written after this.

We are in such uncharted territory and the usual economic models just don't seem to be working.

 

 

PS

Quote of the Week

'I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.'

Thomas Jefferson 1802

[Michaelangelica]

A facinating bit of psychological reseach on Wall St.

Made even better because it tested people in real life situations, not lab rats or undergraduate students!

Hormones on the trading floor - Science Show - 18 October 2008

John Coates: Essentially what we're doing in markets are buying and selling assets issued by either private companies or the government, and the job of traders is to buy and sell these securities, and in deciding whether to buy or sell them, they have to make an assessment of the return they're going to make on these assets over the life of holding them, and the risk involved.

 

Meera Senthilingam: So you've been looking into the physiology of traders in the city of London. What have you been looking into?

 

John Coates: We've been following up a hunch I had when I was working on Wall Street during the 'dot com' bubble. I was struck by the fact that traders at the time were acting very different from the way they acted before the bubble and after the bubble. They were displaying classic symptoms of mania; they were overconfident, they had racing thoughts, diminished need for sleep, and they were carrying themselves in such an odd way I began to suspect that there was a chemical involved. The second thing I noticed was that women were relatively unaffected by the frenzy surrounding the dot com bubble.

Listen to full story here:-

Hormones on the trading floor - Science Show - 18 October 2008

[REASON]

I just thought I would re-post a post by Freddy nearly a year ago on 11-3-2007. His was the third post in this thread. It's amazing how prescient he and the rest of you were about this situation we're dealing with.

 

This crisis is going to explode in the next two years as the interest rates are adjusted up. Two groups are at fault, first is the greedy lenders who made loans to people they knew could not afford them when rates were adjusted and who also told consumers they could refinance later to a fixed rate. The second, is the naive, stupid, and/or uneducated consumers who signed on the dotted line for property they could not afford at higher rates. The one group who is not at fault is the taxpayers who wisely stayed out of this mess.

 

The only way out is for lenders to negotiate with consumers and take a loss by giving them affordable rates and allowing them to keep their homes. If they do not then the losses will be too large to absorb. Some lenders have seen the light and started down this path. The US taxpayer is in no mood to bail out lenders and consumers, who have gotten themselves into this mess, as they remember the S & L crisis and its taxpayer bailout.

 

The bailout has commenced. $800,000,000,000 worth. but so far, there doesn't seem to be much mortgage negotiating going on. Just banking buyouts.

 

Third-quarter foreclosures up 71% from last year; down 12% for September

[Michaelangelica]

Interesting (long) article. it might make more sense to Yanks who know the personalities

Most Serious Economic Crisis in Modern History

 

The October 2008 financial meltdown is not the result of a cyclical economic phenomenon. It is the deliberate result of US government policy instrumented through the Treasury and the US Federal Reserve Board.

 

This is the most serious economic crisis in World history.

 

The "bailout" proposed by the US Treasury does not constitute a "solution" to the crisis. In fact quite the opposite: it is the cause of further collapse. It triggers an unprecedented concentration of wealth, which in turn contributes to widening economic and social inequalities both within and between nations.

 

The levels of indebtedness have skyrocketed. Industrial corporations are driven into bankruptcy, taken over by the global financial institutions. Credit, namely the supply of loanable funds, which constitutes the lifeline of production and investment, is controlled by a handful of financial conglomerates.

 

With the "bailout", the public debt has spiraled. America is the most indebted country on earth. Prior to the "bailout", the US public debt was of the order of 10 trillion dollars. This US dollar denominated debt is composed of outstanding treasury bills and government bonds held by individuals, foreign governments, corporations and financial institutions.

Who are the Architects of Economic Collapse?

[freeztar]

Excellent link, thanks M! :doh:

The author does a good job of showing the beginnings, and historical patterns, of the 2008 economic meltdown. I could do with less hyperbole and finger-pointing, but overall, I felt it was a good article.

 

Interesting (long) article. it might make more sense to Yanks who know the personalities.

 

I'd be interested to hear anyone's perspective on this. :hihi:

There's enough information in that one article to allow anyone, even those previously unfamiliar with the characters, to research and post their findings and opinions based on those findings. :shrug: