The 1929 Crash went on for years.
Look at the dates on the X-axis.
We are in for the same thing.
How can panic last this long ?
Why are people freaking out when there is no reason to freak out ?
obama
One word: derivatives.
It's my view that we will see an attempt at either real globalization of our economy (joining with other countries under a single international regulating body) or a full-on power grab by our government over its people in order to raise the funds needed to stay in power and pay for the awful debt it has so foolishly incurred. What's it, 10 trillion now?
I could suggest people buy gold, but then I think our government won't be too long in declaring another 1933, where it became illegal for all U.S. citizens to buy gold. Frankly, I would have to say invest in stable foreign currencies. That may be the wisest investment move one could make at this time.
I was born in AL in 1935 and we were still in the depression. Luckily, we had a house, water, and a good garden spot, but very little money. That was 6 years after the stock market crashed.Looks like it is still crashing, now.
vaudine
Starting to think its time to get back in???
Pray for W, Palin/McCain and Our Troops
“Why are people freaking out when there is no reason to freak out ?”
Because banks have stopped loaning money to other banks, as no one knows whom is solvent, and who isn’t.
EU Countries are making banking promises they can’t possibly cover, and the bailout money will take TIME to have an effect.
who knows....there is a lot of good economy out there but when the financial industries and their investments get tanked it dopplers everywhere
i actually think more of the economy is good rather than bad.....technically the earliest we can be in a recession in January
but the last big panic lasted from 1929 till 1943 or so
The rest of the world can see that our politicians are so drunk and stupid on their own power, they soak us for $850 Billion and make less than no effort at fixing their own corruption. They have turned us into a worldwide joke.
The 1929 Crash went on for years.
Look at the dates on the X-axis.
We are in for the same thing.
se_ohio_young_conservative wrote:
How can panic last this long ?
Why are people freaking out when there is no reason to freak out ?
^^^^^^^^^^^^^^
Fractional Reserve banking is a pyramid scheme. Legally, the Federal Reserve can loan out $50 in paper currency on one $20 gold piece. The Fed has (had before the bailout) a 40% reserve requirement.
The bank that borrows that $50 can loan out $450, since banks have a 10% reserve requirement.
If the Fed loans the $50 to a Foreign Central Bank (foreign Federal Reserve), that Foreign Central bank can loan out $125 under their 40% reserve requirement. The foreign banks that borrow that $125, under 10% reserve requirements, can loan out $1125, all backed on one $20 gold piece.
Because of this pyramid scheme, if a single bank fails and defaults on $100, the downstream effect as the dominoes tumble is much greater than $100.
Mortgages from the housing bubble were bundled into packages, called “tranches”, by Freddie and Fannie, high risk of default, medium risk and low risk.
The banks that bought those packages also bought “insurance policies” in case they should fail. The “insurance packages” were in essence derivative investments, a piece of paper that went up in value if mortgages failed.
The company that sold the derivatives for $100 could turn around and loan out X times $100 under yet another pyramid scheme.
There are estimates out there that the derivative market pyramid scheme represents a total exposure of $500 trillion dollars. Some discount this figure since the entire world’s annual production is around $50 trillion.
Some say the derivative exposure is much greater than $500 trillion.
Nobody really knows.
In any event, nobody knows who’s holding all these shaky derivatives, so nobody wants to loan money to anybody else. Mainstream companies like Ford or Exxon or your local grain and feed company, used to being able to borrow tens of thousands up through hundreds of millions overnight, or for a week (commercial paper), now cannot.
They aren’t necessarily able to alter their normal practice fast enough to function properly while the short term credit market is frozen. They may not be able to pay back yesterday’s short term loans because they can’t borrow enough today. They may not be able to borrow enough tonight to buy enough steel to run the assembly line tomorrow. They may not be able to make payroll next payday. Regular companies, not banks.
Effect?
The entire global pyramid scheme, piled atop the Fractional reserve pyramid scheme, is tottering, wobbling, and nobody klnows when a key domino will fall, taking out many, many other dominoes with it.
Everybody wants out. Everybody is selling as fast as they can.
Two different brokers, one at Merril Lynch and one at Chase, both respected firms backed by arguably two of the strongest banks on earth, have predicted to me that the bottom of this stock sell-off lives around 8500 in the Dow Jones.
Keep in mind though, that these are bankers talking. Bankers usually won’t admit that Fractional Reserve banking is a pyramid scheme just like Amway or a chain letter, and they’re even uncomfortable describing derivatives as a pyramid scheme, even though derivatives make most bankers nervous.
Normally bankers don’t believe/won’t admit that a total meltdown is possible.
The markets will find bottom when people stop being afraid of losing loaned money, globally, whether that bottom is at 8500 or 0.
There’s plenty of reason to freak out.
Read this board (any topic) and you'll see why. It's the herd instinct. Stampede -- even though there's no reason to. React rather than think.
Read about the people who are seeing their retirement funds evaporate.
Why are people freaking out when there is no reason to freak out ?
They think America is poised to elect a marxist to the Presidency.
The unwinding of derviative cannot happen all at once.....it will take time.
But anyone with an MBA, heck, a BA, should have seen this coming a mile away.
Anyone CEO who put all of their company’s eggs in the derivatives basket should be at the very least, stripped of all assets to help pay for this mess. But I would argue they should be hung.
You want me to believe people with money are freaking for no reason? You've been drinking the kool aid... (Hint: it's not the subprime mortgage costs - it's the derivative add ons...)
Learn what ted spreads are:
http://www.econbrowser.com/archives/2008/09/understanding_t.html
http://en.wikipedia.org/wiki/TED_spread
Now, check the ted spreads for the past month, see how throwing trillions of dollars to the banks has not lowered them (gotten them to lend money) and tell us there is nothing wrong, no panic needed, move along.