Sliding Down
A rhetorical question: if the bailout is supposed to halt the decline, why in the hell isn't it happening? The market has known for days that the bailout was signed. I think it's because the government has scared the daylights out of investors, and they're in a panic. I also think it's because it's impossible to predict who is going to be saved and when. How do you know when to invest when one company is allowed to crash and burn, but another is bailed out? You can't make smart decisions to buy, you can only rush to sell.
Other countries seem similarly concerned. Russia just suspended its stock market activities after its market lost 15% of its value. The Indian stock market is down over 700 points. The US is still sliding down, in spite of the knowledge that the bailout passed. In fact, it was basically the first thing the market did this morning.
It's going to take a while for things to sort themselves out. Job losses are going to be reported, but unemployment right now is still at about 6.1%. It's going to get messy for a while. We've made poor purchasing and financing choices. I honestly don't believe we're in for another Great Depression. I think the circumstances are different now than then. I do think we're going into a deep recession. But I don't think the economy will grind to a halt. Stay safe. And my advice, for what it's worth, is not to panic. There really is no reason to. We're nowhere near "panic" mode yet. Make conservative and safe choices with your money, cut your spending where you can, and you'll ride it out just fine.
The real question is going to be who gets bailed out and who gets left to fall on their faces? That will be where the rubber meets the road. So far, there haven't been any decisions made yet.
-- DV
posted by contemplator at Monday, October 06, 2008
10 Comments:
The bailout is most certainly shameless plutocracy. It is just that the elites will simply not admit it. I saluted congress for not passing the bailout the first time around. I became quite pissed off after it got passed the second time.
I do not even think that this is a left vs. right issue. People who are considered extreme leftists like Ralph Nader and Cynthia McKinney condemned it, as well as those on the 'extreme right' like Bob Barr, Chuck Baldwin and Ron Paul. Lou Dobbs has also condemned it, as do most of the American people.
The elite must really think we are a bunch of idiots if they think we will take their crocodile tears seriously. Today, I was in a fast food place, finding myself waving my arms and pacing around all of a sudden, after thinking about this.
p.s.: I think that this bailout will not help the average american out in any way. If that is not bad enough, I have heard it will simply dilute the value of dollar further.
I am thinking of putting my dollars in something else, like commodities or foreign currency. I refuse to just take this nonsense.
The only way I think this bailout will help the average American is if it saves somebody's pension plan. I may be missing something, but other than people in retirement now or within the next five years who simply don't have the time to recover in the stock market, I think they deserve the bailout and that's the only way I really see it helping. Normally, the rest of us should be happy, especially if we're dollar cost averaging--we're buying up more stock for less price in companies that are on average pretty solid. They won't be expanding any time soon, probably, but there's nothing wrong, really, with the way they're structured. We should be able to clean up on this, really. Stocks like Procter & Gamble, after all, have nothing to do with the subprime crisis. The only way they should be affected is through the credit freeze.
The other way it could hurt the average American is if too many businesses close down and we go jobless to the extent that we did during the Great Depression. That would be a different story. But in spite of people telling me (not proving, just telling) that businesses run even their payrolls on credit, I'm just not buying it. If they're that shitty, they'll fall apart sooner or later anyway. Nobody can go off of credit forever. Eventually you have to make money.
Foreign currency is no good--it's not immune, and Europe and Asia are currently propping up their own banks. Commodities, maybe. But honestly, buy the blue chip stocks or the stuff that has nothing to do with housing/real estate. It'll go back up eventually, and you'll make a bundle having bought it low.
I don't think it's a left/right thing either. I think most people are average people who have already been hurting, but nobody cared until the wealthy started to feel the pinch. Then suddenly there needs to be a "rescue." Dr. Suess has a great political cartoon about it--I'll see if I can post it.
"The only way I think this bailout will help the average American is if it saves somebody's pension plan. I may be missing something, but other than people in retirement now or within the next five years who simply don't have the time to recover in the stock market, I think they deserve the bailout and that's the only way I really see it helping"
If this is the case, why not simply give that $700 billion to the pension plan holders themselves?
Giving people who currently have $500 million to their name, like the CEO of Lehman Brothers an extra $700 Billion in the name of allegedly rescuing the pension holders sounds extremely fishy to me. I think that giving it to Grandma and Grandpa directly would make more sense. (but I was not a finance or economics major)
"That would be a different story. But in spite of people telling me (not proving, just telling) that businesses run even their payrolls on credit, I'm just not buying it."
I am confused as to what you mean here.
"If they're that shitty, they'll fall apart sooner or later anyway. Nobody can go off of credit forever. Eventually you have to make money."
It seems like you are saying that a lot of the businesses are essentially running purely on credit. I would in this case agree with the entire statement. I would also like to add on that I have heard that the lion's share of our economy is riding on credit. I have heard that this has been going on for decades, to such a degree that it is impossible to pay off all the debt. We essentially have credit as currency. At some point, everything might collapse as a result.
I agree with you about foreign currency, for the reasons you have stated. I really only wanted to speak fondly of commodities, especially gold and silver, but I was afraid that I might come across as a right wing crank.
As for stocks, I do not know. My grandparents did well with stocks, but my parents did not. I am really frightened about my country in light of events that have been going on during the past decade. If I do invest in stocks, it might be someplace outside of the United States.
If this is the case, why not simply give that $700 billion to the pension plan holders themselves?
Giving people who currently have $500 million to their name, like the CEO of Lehman Brothers an extra $700 Billion in the name of allegedly rescuing the pension holders sounds extremely fishy to me. I think that giving it to Grandma and Grandpa directly would make more sense. (but I was not a finance or economics major)
Well, I've thought as much myself. Or at the least, why not just prop up the pension funds and leave the rest to shake out as it will? I guess the gov't would say "where can gramma & pop store the money if all the banks collapsed?" But I'm not convinced that's going to happen. The banks here--in WV, no less--are still giving out loans to credit-worthy people.
I am confused as to what you mean here.
Our economy does definitelyrevolve on credit--the promise of some payment at a future date. But businesses don't solely live on credit. I've had people arguing that companies pay their payroll with credit, which is impossible to sustain for more than a short while, and I'm just not buying it. All businesses have accounts receivable and lines of credit they use, of course. But to insinuate that everything a business does is dependent on credit, and so that's why we need a $700 billion injection? It just doesn't ring true to me, if that makes sense.
As for stocks, I do not know.
Depends on what you buy and how willing you are to hold on to it/move stuff around. We're in blue chips and we're doing OK. Nothing extraordinary, mind you. But overall, doing OK. I expect to leave it alone for a while and see what happens with it. I'm in no rush to sell off, even though I know our next statement is going to look shitty.
Foreign stocks are suffering the same problems ours are right now. No market is immune. They are all vulnerable to what happens to us, because their banks bought into our bundles as well. Look at Russia today--down close to 20% by the time it was all said and done. They shut their market down. Speculation is that if the US has another crap day like it has the past few trading days, it'll temporarily close as well. There is no safe foreign stock right now. I still think the establishment blue chips are the way to go--but it's your money. :)
"I guess the gov't would say "where can gramma & pop store the money if all the banks collapsed?" But I'm not convinced that's going to happen."
Yes, I expected them to make that excuse. They have made it before. I consider it nonsensical as well. I mean, even if all the currently existing banks, money lenders and investors were to collapse, new ones would take their places provided that there was ample demand for them.
By the way, here is another reason why I think the bailout should be opposed. Be prepared; I think that this is quite disturbing: http://www.youtube.com/watch?v=gnbNm6hoBXc
I have no sound, so I can't watch YouTubes. I'm pretty skeptical of them in general anyway.
I will do what I can to find a transcript
Sorry, but I seem to be having difficulty doing this. I can only find videos. Basically, it is Congressman Sherman saying that if the bailout bill was not passed, that the president threatened that Martial Law would take place.
OK, I am familiar with what you're talking about now.
Bush is an idiot if he thinks he has any ability whatsoever to impose martial law. The fact that he even said the words is further proof of what a moron he is. That doesn't take away from the OMFG factor of what he said, obviously. But the fact that he thinks it could get to that point really says something.
I think if he did such a thing, he'd find a cold, hard slap of reality waiting on him.
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