Worldwide financial crisis

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Grieg
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Worldwide financial crisis

Postby Grieg » Wed Oct 08, 2008 12:34 pm

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3141428/Germany-takes-hot-seat-as-Europe-falls-into-the-abyss.html

Link to one commentator's view. Things are changing daily and confidence, upon which the entire system depends, is slipping.
When the media frenzy dies down perhaps sanity will return. Too many pundits predicting doom and gloom and the end of the financial world as we know it just adds fuel to the fear which begins to approach panic.
I personally have lost 40k in retirement funds over the last 2 weeks. I suppose I will have to work a few extra years to replace it...if it doesn't get worse. :cry:

edit...Fed making an emergency half point interest rate cut this AM...hopefully investors will react to that and not to the Nikkei crash. :?

Is the EU just a sham? Why no attempt at concerted action? Instead everyone is scrambling to protect their own markets separately. I see today that Bush is calling a summit of world leaders to address the crisis. Hopefully some leadership will help to calm the waters of the storm.
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Re: Worldwide financial crisis

Postby Hubsu » Wed Oct 08, 2008 1:13 pm

Grieg wrote:edit...Fed making an emergency half point interest rate cut this AM...hopefully investors will react to that and not to the Nikkei crash. :?


It's more like pissing in your pants: it'll warm you a while, but after that it gets even worse. That .5% will hold the current stock up a few days or weeks at maximum. After that, the decline will continue and DJIA will most likely bottom at 6-7k. When we see the bottom, FED is too slow to react and inflation will see a new high.

If you've sold your stocks a few years ago and holding a pile of cash, it's a golden opportunity for you now. If not, someone with the cash will buy nonetheless. For the US, it doesn't look so good. You've given (hint: the huge trade deficit) all the cash to the arabs and Chinese and now they just have to wait for the bottom and buy whatever they want. The good thing about US is that the economy is largely dependant on domestic consumption. As long as you buy US cars and other stuff, the whole brunt of the economical recession shouldn't hit you.

I would be more worried about our UK and Danish members. United Kingdom has left itself out of the ERM altogether, so the lonely pound is facing the recession all by itself. Defending a small currency against much more stable currencies is going to be really hard. Danes being out of ERM III are facing the same thing, altough thye're part of ERM II and should get some back up from the Euro. Both countries have large debts from the US, so if the US economy falls totally, it's going to be like Iceland for the UK and Denmark.

edit:
DJIA 5 day -19%
Nikkei225 5 day -19%

Quick market crash is always better in the long run than a slow and agonizing decline.

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Re: Worldwide financial crisis

Postby Hubsu » Wed Oct 08, 2008 4:40 pm

Hubsu wrote:It's more like pissing in your pants: it'll warm you a while, but after that it gets even worse. That .5% will hold the current stock up a few days or weeks at maximum.


Well, at least no immediate change of direction. The .5% from FED and ECB realized into a 1.5h rally, and everything is back to normal decline track.

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Re: Worldwide financial crisis

Postby Grieg » Wed Oct 08, 2008 5:31 pm

edit:
DJIA 5 day -19%
Nikkei225 5 day -19%


I was just referring to todays NYSE reacting to last nights Nekkei crash. Too soon to tell how it will end up today. It's a roller coaster.
I just want to see some investor confidence return, not the return to bull market. That is years away, I imagine.
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Re: Worldwide financial crisis

Postby Hubsu » Wed Oct 08, 2008 6:04 pm

Grieg wrote: I just want to see some investor confidence return, not the return to bull market. That is years away, I imagine.


Usually, when things looks good, it's time to bail out. When things looks really bad, it's time to hop in. Guess to which time we are closer to now? ;)

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Re: Worldwide financial crisis

Postby Grieg » Wed Oct 08, 2008 6:58 pm

Hubsu wrote:
Grieg wrote: I just want to see some investor confidence return, not the return to bull market. That is years away, I imagine.


Usually, when things looks good, it's time to bail out. When things looks really bad, it's time to hop in. Guess to which time we are closer to now? ;)


Yep. Buy on the rumor, sell on the news.
There is bound to be some real bargains out there about now.
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Re: Worldwide financial crisis

Postby Revere » Wed Oct 08, 2008 9:30 pm

and the $700,000,000,000,000 bail out isnt going to work, who ever wondered that? pisses me off that the law makers still went through with it out and now admits its not the miracle it was ment to be. what about the AIG execs going on a party with the tax payers money?
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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 12:47 am

Revere wrote:and the $700,000,000,000,000 bail out isnt going to work, who ever wondered that? pisses me off that the law makers still went through with it out and now admits its not the miracle it was ment to be. what about the AIG execs going on a party with the tax payers money?


It's 700,000,000,000. :) It's not that simple... that it isn't going to work. Whatever restores investors confidence will work insofar as getting the stock market back on track. The bailout is a related issue but not precisely the same. It addresses the increasing liquidity problems of institutions that hold large amounts of potentially bad mortgages. It was thought that if that underlying issue was addressed that investors would start buying stock again but also and perhaps more importantly it forestalls the possible affect that would result from widespread failure of banks and other lendors holding bad mortgages.
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Re: Worldwide financial crisis

Postby Revere » Thu Oct 09, 2008 2:22 am

Thanks so many 0's threw me off.


you dont put the government into a capitalistic economy. next its redistribution of wealth after universal health care...
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Re: Worldwide financial crisis

Postby Ricky » Thu Oct 09, 2008 7:43 am

A lighter note about the problem

http://news.bbc.co.uk/1/hi/business/7660409.stm

Just don't think about it too much ;)
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Re: Worldwide financial crisis

Postby wooden major » Thu Oct 09, 2008 8:40 am

remember back in the good old days when people would always say " wait until after the election , that will sort things out "..i notice that whoever wins , everyone thinks we are still fooked ..

there arent any windows arround here high enough to jump out of ,,so im just going to sell apples on the street corner ..

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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 8:51 am

Ricky wrote:A lighter note about the problem
http://news.bbc.co.uk/1/hi/business/7660409.stm


They opted the cheap way out of the digit crisis :lol:

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Re: Worldwide financial crisis

Postby Hubsu » Thu Oct 09, 2008 10:12 am

Grieg wrote: Whatever restores investors confidence will work insofar as getting the stock market back on track.


What will happen when the confidence is restored? Could it be, that all the money that has been waiting to be invested, hits the streets with the low interest rate loans? Dollar will take a nose dive and inflation goes off the charts. The same thing will happen in the EU, altough thanks to ECB's milder interest rate changes, it'll be slightly less worse.

Best bet would be hoarding Yuans as we speak. (Look at the exchange rate between Yuan and Dollar for the last few weeks/months) :twisted:

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Re: Worldwide financial crisis

Postby Grieg » Thu Oct 09, 2008 11:35 am

Hubsu wrote:
Grieg wrote: Whatever restores investors confidence will work insofar as getting the stock market back on track.


What will happen when the confidence is restored? Could it be, that all the money that has been waiting to be invested, hits the streets with the low interest rate loans? Dollar will take a nose dive and inflation goes off the charts. The same thing will happen in the EU, altough thanks to ECB's milder interest rate changes, it'll be slightly less worse.

Best bet would be hoarding Yuans as we speak. (Look at the exchange rate between Yuan and Dollar for the last few weeks/months) :twisted:


That is the worst case scenario. Like many people these days you assume that it must be one extreme or the other whereas in reality the stock market (and the economy) spends the majority of it's time not at those extreme ends but slowly gaining or losing ground. The cycles are normal and natural. I believe that tendency to view the situation from the extreme point of view is fueled by the media sensationalizing the situation which helped escalate it into a crisis..then pouring fuel on the fire as analyst after analyst is trotted out predicting doom and the end of the world as we know it. In such an environment naturally investors grow fearful and verge on panic.
Inflation and a weaker dollar is not the inevitable result of an interest rate cut though admitedly it puts pressure in that direction. The idea is to loosen up the credit market without causing overwhelming inflationary pressures. If the credit market doesn't open up some recession will of cource eventually occur. As long as oil prices remain relatively moderate the dollar should stabilize. The threat of recession and the amount of slowdown in the worldwide economy that has already occured should help to keep the oil futures moderated.
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Re: Worldwide financial crisis

Postby TISO » Thu Oct 09, 2008 12:25 pm

Seems Russians are helping Iceland which does couse some concern in the US:
http://www.ft.com/cms/s/0/d49ace36-94d1-11dd-953e-000077b07658.html?nclick_check=1
Last edited by TISO on Thu Oct 09, 2008 12:37 pm, edited 2 times in total.
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