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Current State of financial affair in the world


Caomhanach
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Well I thought they already did something like that before and thought why would banks be encouraging more risk and exposure with the mess we're in now? But then I saw the quoted average rate, and thought its been a decade since they were that high. After realizing this was published almost a decade ago, it reinforces the fact that even though you may not immediately feel the pinch now, you will when you're denied credit or a loan based on ill-advised stimulus plans last century.

Banks are in a panic now - I'm trying not to lose sleep over this debacle but its making my job a bit of a roller coaster at the moment. Its really unprecedented what's taking place in the financial markets but each time the fed cuts the prime lending rate half a point, expect the banks to add more of a spread to make up for their losses when they resell the loan on Wall St. I wouldn't be surprised if Bernanke cuts it a full percentage point. Good for the banks when transacting with each other here and abroad, but bad for Joe Sixpack who'll be scrutinized for every expense in his credit history to justify him a loan; as long as there's uncertainty in the market due to uncertainty of the bailout's success, banks will be more tightfisted to avoid another fiasco. The cut is supposed to counter that but when the market indexes tank almost everyday, I fear for the future.

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So much of this was caused by greed ... the banks did not know when to say "no". The secondary markets for the mortgages got greedy for subprime mortgages. What made any of these financial wizards think the boom would go on indefinitely? A house built out of credit is a house of nothing.

The sad part about the subprime mortgage fiasco is less than 10% of all mortgages are in default. There are over 50 million home mortgages in the U.S. But the financial institutions bundled all the subprimes with the other mortgages and sold them mixed together. Now there is no way to unravel the bundled mess.

Home prices jumped so high that many people, to afford a house, are faced with horrific commutes. Now they cannot afford the fuel to go to work due to the spikes in fuel prices. How many areas in the U.S. have mass transit into the suburbs? Not many when looking at the total U.S. geographic picture. We threw out mass transit and became car dependent.

In my mind corporations and state, local and federal governments are allowed to control too many things. We the People need to go out and vote and hold ourself along with the others accountable.

That's my lengthy 2 cents.

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Well, no one forces a person to sign a loan. No one forces someone to buy a huge car with no money down. If we're in this mess, it's our own fault really.

Sadly the result of all the predatory lending will make it harder to qualify for even non-frivolous loans such as small business or college. I personally don't have any bad debt to worry about, but the the laissez faire trickle-down approach tolerated by the current administration which enabled unscrupulous banking practices makes it seem like I'm paying for one whenever I check my 401k. Looks like I'll be tightening my belt and reining in any unnecessary expenses.

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All the doom and gloom on Wall St. aside, here's what I can't get out of my mind - total economic collapse. After all, our entire financial system is essentially one giant pyramid scheme. Is it not? The Government needs some cash, borrows it from the Fed Reserve agreeing to repay it with interest. How can you repay the loan when you have to borrow the cash to repay it?? It's madness. Eventually, there's inflation and blah blah blah... much like all pyramid schemes, is it not doomed to fail?

If this is the case, then why the **** should I have any money in the market? Can I realistically expect to have that proverbial "nest egg" that everyone says you need to retire? Why do I care about my credit cards, debts, etc? If it's all going to ****, what will it matter how much cash you have?

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Yeah baby! This is a great time to be buying stocks. I don't believe this means all that much. I went to a motorcycle dealer last Saturday and he said he economy for him is unchanged - he's selling a lot of bikes.

My co-worker just bought a new car as did two of my neighbors. Maybe it's region specific, but if in Seattle the job market is healthy and while people are cutting back life just seems to move right along, regardless of what wall street does. Heck, I'm still seeing houses being sold. :-p

Some of my more savvy co-workers have decided to just start managing their own 401ks/IRAs on eTrade or similar - I think I may do the same. Heck, couldn't do worse that these folks. :)

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Yeah baby! This is a great time to be buying stocks. I don't believe this means all that much. I went to a motorcycle dealer last Saturday and he said he economy for him is unchanged - he's selling a lot of bikes.

My co-worker just bought a new car as did two of my neighbors. Maybe it's region specific, but if in Seattle the job market is healthy and while people are cutting back life just seems to move right along, regardless of what wall street does. Heck, I'm still seeing houses being sold. :-p

Some of my more savvy co-workers have decided to just start managing their own 401ks/IRAs on eTrade or similar - I think I may do the same. Heck, couldn't do worse that these folks. :)

Sadly no one is going to be immune from this and only if it were that simple to be region specific. This is a global problem that will affect most markets sooner or later. I'm also not sure about the veracity of a dealership being so upbeat -after all, why would they tell you different if their ultimate goal is to sell product in a sinking economy? Or maybe consumers are more shortsighted than I thought or have enormous cash reserves to pay up front. In reality most people don't have those sort of budgets. I believe what you're seeing is more the exception than the rule.

Now wouldn't be a good time to buy stocks with the market so volatile. Some of my co-workers have already been slapped with warnings and outright bans for short selling on the online trade sites.

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I saw this coming back in 2005 and began preparing for it then. Took my hard earned and bought land. Don't be too surprised if the crap has all blown over by this time next year, this is just the kind of hype that goes down every election year and it looks to me like they've figured out most everyone these days is so used to "instant gratification" they can manipulate us easily this way. We need less governing and more balls for sure! Don't even want to think about how many US dollars made their way across our southern borders in the past five years. :( But that's another story, and for the record I'm no Partisan.....although if Thomas Jefferson were here today I'd probably be on his team. It's time the candy-a$$es took a back seat. "country folks CAN survive."

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a few certain people in the governement who have a D (not all dems, but mostly) next to there name that forced/cohereced banks to lend to poeple that cant afford a house basically started the collapse of this house of cards.

no one deserves anything.

you have what you have because you earned it.

once again liberal / hippie thinking has us all suffering. why try when someone will lobby that you, somehow, deserve somthing with out trying? thats rewarding bad behavior. what we are seeing now is the bursting bubble. all bubbles burst. i can only wonder where was the forsesight of people like Dodd, Franks, Bernanke and Paulson? they seem to have great ideas how to fix it in a matter of days but couldnt see it coming. ridiculous.

the market will correct itself, it always does. all we are seeing is things return to thier true value. it wont make getting a loan harder if you are qualified. if you arent qualified, yes it will be harder. thats how it works. another lesson to learn is never use credit with a variable rate. duh, right? also CEOs shouldnt have a golden parachute if all of there employees lose thier hard earned pensions and benefits. if they tank a company they should forfiet that years earnings and stock options.

the good things is that we will see over-regulation at first which should get things back to "normal" qucikly. the best we can hope for is moderate and common sense regualtion. not the crazyiness that it has been allowed to become. ok, well im done ranting all over the place :lol:

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Over here across the pond banks are being taken over by the government, to make sure that we all still can get to our funds. But in Iceland there is a savings bank that has closed down for all it's customers..so bye bye to the hard earned savings for them <_<

I hope we all can get through this period safely.... :unsure:

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Today was a good day for the Stock market, but it was also to be expected. As low as it closed on Friday, Monday was guaranteed to be a good day to buy up some great bargains. Let's hope this is at least the bottom.

I invested in more 30-round magazines over the weekend. B)

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  • 4 weeks later...

Some sobering insight from a Wall St insider. Doesn't offer any solutions but gives you a POV from someone who was in on the mess:

http://www.portfolio.com/news-markets/nati...s-Boom?tid=true

I have to say I know many people taking control of their own 401(k)'s and IRA's for this reason. The whole point of these firms is to make money for their shareholders. They will make *just* enough money to keep us with them, but no more.

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