So... do you REALLY think we are headed for a New Depression? - Page 4 - Mothering Forums
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#91 of 104 Old 10-13-2008, 09:43 PM
 
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Originally Posted by obiandelismom View Post
I wish I could see Obama as our next FDR, except that when asked (at the second debate) if the economy was going to get worse before it got better, he said "No." : Even McCain had a more sensible answer ("It depends on what we do about it"), although I don't think he got into any more depth than that. I just wish one of them (or SOMEONE - ANYONE!) seemed to *know* what to do. Don't get me wrong - I'm for Obama all the way, but I was very very very disappointed in that answer.
I felt the same way about both their answers (I'm an Obama supporter, too), but I figured that they COULDN'T say that we were headed for difficult economic times, because who would want to vote for THAT? They both seem to be tiptoeing around real talk about the economy, IMO.

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#92 of 104 Old 10-14-2008, 12:10 AM
 
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First off, the FDIC has no fund to pull money from to pay you back. Their "insurance" comes out of the general fund - sure, they'll pay you back, but what good does it do if it puts us into further debt as a country?

I agree that we "need" some kind of depression. Go to www.stockcharts.com and look at the historical figures. I mean, sheesh, look at the numbers! We can totally afford as a country to come down. Like a PP said - we'll learn the value of things, and I think we'll be shifting to a different part of the world being in economic boom ........ can anyone say MADE IN CHINA?

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#93 of 104 Old 10-14-2008, 12:31 AM
 
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Originally Posted by mar123 View Post
If you didn't live through the 1970s, I can see why you might be worried. Things, in many ways, were worse then. Not only was the economy struggling, we had double digit inflation, double digit interest rates, and gas prices were even higher compared to what people were earning (2.00 a gallon when the min. wage was 3.00 and cars didn't have near the gas mileage they do now); and that is when you could find gas. There were gas lines everywhere! Not only that, there was no plan at all to really do anything about it. We had a President who told us to turn down the heat and put on a sweater. Look up the "Malaise speech". That time was followed by one of the periods of greatet prosperity in our country. The economy, like the weather and everything else, is cyclical. The economy is not bad everywhere, although to watch the news you wouldn't know that. It's booming in fact where I live and yes, I live in the US. I think the panic makes things all the worse. One of my favorite quotes is about learning from our history. If you look back at history you will see that we will come out of this just fine, hopefully learning some lessons.

I am at heart, an optimist. I have seen worse times than this. I was in a college town that surved the oil bust of the 80s. There were bumper stickers, "THe last one to leave, turn out the lights." The city was in shambles. 5 years later it was one of the most prosperous cities in the state and still is one of the best places to live.
I was thinking the same thing. Except I grew up in Detroit. We even had the same bumpersticker. The Carter era was hard on Detroit. Unfortunately the years since weren't much better for Detroit. Here in MI we've been feeling all of this much longer and much worse. I think it may be an adjustment for those who spent beyond their means. I think the media is going way way overboard and actually making things worse. How many stupid people have pulled out of the market because of the media sky is falling barage? C'mon folks, the market has never lost money in any historic 10 year period and 95% of the 5 year periods have made money. You haven't lost any money UNLESS YOU SELL! If you need your money earlier than 5-10 years that money shouldn't have been in the market anyway. I think folks who live frugally and have marketable skills should be basically fine. What concerns me is the gov'ts (ours and others) thinking that printing more money and spending money we don't have is the way out of the problem. HELLO! Folks, this is why we have he mess we are in, and unfortunately neither of the <UA violation> candidates seem to understand this basic fact that my 6 year old understands. Ugh!

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#94 of 104 Old 10-14-2008, 12:46 AM
 
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I felt the same way about both their answers (I'm an Obama supporter, too), but I figured that they COULDN'T say that we were headed for difficult economic times, because who would want to vote for THAT? They both seem to be tiptoeing around real talk about the economy, IMO.
Obama could totally be the next FDR. Because of him and the New Deal, the depression lasted about 10 years longer in the US than in most of the rest of the western world. He tried to spend away the depression. It didn't work then. It won't work now. (Dare I even mention, what ended the depression was WW2.)

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#95 of 104 Old 10-14-2008, 12:56 AM
 
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Obama could totally be the next FDR. Because of him and the New Deal, the depression lasted about 10 years longer in the US than in most of the rest of the western world. He tried to spend away the depression. It didn't work then. It won't work now. (Dare I even mention, what ended the depression was WW2.)


Thank you. I couldn't decide whether I wanted to get into that argument here. FDR is not the savior your American History textbooks in 8th grade told you he is. Because of the New Deal, we were crippled as a nation for a LONG time.

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#96 of 104 Old 10-14-2008, 01:13 AM
 
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I was a little afraid. I can't even look at the politics board without getting bit.::

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#97 of 104 Old 10-14-2008, 09:47 AM
 
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How many stupid people have pulled out of the market because of the media sky is falling barage? C'mon folks, the market has never lost money in any historic 10 year period and 95% of the 5 year periods have made money. You haven't lost any money UNLESS YOU SELL! If you need your money earlier than 5-10 years that money shouldn't have been in the market anyway. I think folks who live frugally and have marketable skills should be basically fine.
How many "stupid people?" The BANKS aren't even lending to each other for fear they won't get that money back. Don't most retirees keep their money in their mutual funds and draw fixed amounts? I guess that's their dumb mistake. Oh well. Hard lesson learned, huh? The market hasn't seen the economic failures we're seeing now. I think you are missing some of the very historic and never-before-seen failures here. The global economy is tanking around us. And I guess I have to wonder what "basically fine" means to the frugal elderly around me who are begging my husband for advice on how they are going to keep from freezing to death this winter since they can no longer afford oil.
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#98 of 104 Old 10-14-2008, 09:50 AM
 
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C'mon folks, the market has never lost money in any historic 10 year period and 95% of the 5 year periods have made money. You haven't lost any money UNLESS YOU SELL!
But the history of the stock market is not that long in the scheme of things. If you're fearful of an entire collapse this logic will not allay those fears.

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#99 of 104 Old 10-14-2008, 01:14 PM
 
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I don't live in Texas, and there are also many states (not gas producing ones) that are doing okay right now.

I also have a dh who works, not compeltely, but on the perimeter of the oil industry (they supply them with products). He is not at all worried about running out of oil. Is it harder to get? Yes. IS there an impact? Yes. But it is there and as long as it is, they will continue to drill for it.
My dh does the same thing!!!

We live in a gas-booming state right now. As much as I hate it, the more we drill = more job security for my family. That's how we are keeping food on the table, barely.

I think we are in for a huge awakening, as a country, in the next 5 years or so. And I am not to the terrified point, but it is the first thing (and usually only thing) that we talk about when he gets home.

How do you keep your head out of the sand, but not hoard food and money? I think it's becoming a smaller fine line everyday.

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#100 of 104 Old 10-14-2008, 02:37 PM
 
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My parents were told by their financial advisor to put a year's worth of their financial needs into cash. They were scared, and they did it.
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#101 of 104 Old 10-14-2008, 02:42 PM
 
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How many "stupid people?" The BANKS aren't even lending to each other for fear they won't get that money back. Don't most retirees keep their money in their mutual funds and draw fixed amounts? I guess that's their dumb mistake. Oh well. Hard lesson learned, huh? The market hasn't seen the economic failures we're seeing now. I think you are missing some of the very historic and never-before-seen failures here. The global economy is tanking around us. And I guess I have to wonder what "basically fine" means to the frugal elderly around me who are begging my husband for advice on how they are going to keep from freezing to death this winter since they can no longer afford oil.
Retirees are supposed to move the money needed in the next 5-10 years to more conservative vehicles within their mutual funds, like bond funds. From my understanding, that is a big part of the stock market debacle. The banks were making ridiculous sub-prime mortgages and then bundling them into what were basicallly junk bonds, which no one wanted to buy since the foreclosures started going crazy on those. And people buying bonds (Bond fund managers and individuals) want fairly safe investments and take the tradeoff for a low rate of return. Nobody buying them made the bonds market value zero. And that matters because of a law that came out of the Enron (and others) mess. It is called Sarbanes-Oxley (sp?) and a part of that is what is called the mark to market rule. What mark to market says is that publically traded companies have to say what they are worth every day. (The Enron fraud is that they took assets worth, say, 10 million when they bought them and when the assets value went down to, say, 7 million, they kept the value at 10 million on their books) Another rule that was changed lowered the minimum that banks were required to keep in cash. Now logically, these sub-prime mortgages stand good for actual houses on actual land. They may be worth less than their original appraised value, but even if the house burned to the ground, they are worth something, right? But with the mark to market rule they are worth nothing on the banks books. So some of the proposed solutions to that are to lift the mark to market rule for a short period and extend FHA type insurance to these sub-prime mortgages. That should make these bonds much more "safe" in the bond buyers eyes. They then start buying and the market logjam starts to break free. All these sub-prime mortgages wont go into foreclosure and so the cost for the FHA type insurance would be significantly less than the multiple inputs of 700 billion by the gov't. I heard numbers estimated in the 40 million range. I'm not saying that the markets not bad, nor am I saying that it won't get worse, but if you allow the market to do what it does and you follow classic conservative investing advice, like only be in the market if you don't need the money in the next 5-10 years, dollar cost averaging, and not buying single stocks, and diversifying your portfolio you wouldn't and shouldn't sell right now.

I agree stupid is too harsh of a word. I was tired. I apologize. A better word would be ignorant. Panicking because of the media frenzy and selling because they make you feel like its the end of the world is ignorant. This is not rocket science, it is high school economics and if you missed it there, it is freely available from Dave Ramsey, Suze Orman, Jim Rome, the Wealthy Barber, the Beardstown Ladies or most financial teachers who are not a fly by night get rich quick money guru. And, as for me, I have an economics and political science degree.

But the truth is panic is driving a lot (note I didn't say all!) of the market mayhem. If people would just calm down the market would smooth out a lot. What market indicators have we not seen before? Want to compare great depression unemployment to now?

And as for the frugal elderly, I'm guessing they are not in the market, but rather living off of social security and pension money. I empathize. We can't afford to heat our big old drafty house either. I think a couple months last winter were $1000. We are still paying that off. We are closing off half of our house house the winter, plasticing the windows and using a woodburning stove to heat whats left and wearing heavy layers at home. Perhaps your neighbors might close off all but a room or two and heat with a space heater? (I'm assuming they would not be physically able to keep a woodburner going) I know not perfect, but desperate times call for desperate measures. The heating oil has more to do with the price of oil than the market. Heating oil comes from the same part as diesel and (I think) aviation fuel. Hopefully with gas prices coming down it will help some.

I am oht nak, so please excuse any typos.

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#102 of 104 Old 10-14-2008, 03:30 PM - Thread Starter
 
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I agree stupid is too harsh of a word. I was tired. I apologize. A better word would be ignorant. Panicking because of the media frenzy and selling because they make you feel like its the end of the world is ignorant.
I agree that when you are near retirement, you should be conservative. I've made that point here before.

But you know, emotions are the primary factor of investing. It isn't ignorance, it's emotions. If you can block your emotions, you can come through. If you can't, you are taking risks.

When our taxable investments went down in $200,000 unrealized losses, I felt the acid taste of panic rise in my mouth. I'll admit it. We don't rely on that money for anything. It was put there for our dd to inherit when we are worm food. I still felt the panic. And I am a veteran investor, with an iron stomach. There is nothing wrong with feeling emotions about money. Everyone does. Making bad decisions out of panic is not good, but can you blame anyone for it?

It has nothing AT ALL to do with ignorance. I consider myself well-educated in the area of personal finance. I still feel unsettled. Everyone *should* feel unsettled. These are trying times.

We haven't changed anything, but when people rely on those funds for a reason, I can't blame them for panicking and jerking their money out of the markets. I would advise them not to, but what's a person to do?

I also don't think it's panic that is driving the markets right now. These are calculated moves that professionals are making. It's a confidence issue.
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#103 of 104 Old 10-14-2008, 03:32 PM
 
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Maybe folks aren't as ignorant as you think. Maybe they are just poorer than you think. Maybe they can't afford to just "ride it out."

I don't know. I don't have any econ education--I went to college prep school and university. But, for me, if I was one of the mamas coming here to figure out to stay in my house or cash out my 401 or put food on the table, I'd feel like a big piece of doo doo after reading some of the stuff here.

And like I've said before, if our economy can't withstand some panicking on the part of its "ignorant" investors, then maybe it's not much of an economy to begin with. But I think blaming the victim has been a long-used tactic and I don't subscribe to it. THis is way bigger than panicky investors.
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#104 of 104 Old 10-14-2008, 03:51 PM
 
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and like i've said before, if our economy can't withstand some panicking on the part of its "ignorant" investors, then maybe it's not much of an economy to begin with.

...

This is way bigger than panicky investors.
ita.

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