Global Financial "Crisis"?

[Pumaman]

So, anyone who's been watching the news or reading the papers over the last few weeks would be forgiven for thinking that the end of the world is nigh. All the banks will collapse, nobody will be able to get paid and we'll all start trading chickens because money will be worthless.

And yet, in my day-to-day life, I haven't noticed any difference. Has anyone actually been affected by all this "turmoil" or are you all as indifferent as I am?

And who caused all this? Is it the banks' fault for lending out too much money to too many people, or is it the governments' fault for leaving interest rates too low so that house prices got out of control?

Does a record one-day fall on the Dow Jones or FTSE100 really mean anything and why should we care about the fortunes of stockbrokers?

[LimpingFish]

The Irish government has (stupidly) guaranteed to bail out, if ever the need arises, the six largest Irish banks to the tune of 400 BILLION euro!

These are the same banks that: never noticed that 700 MILLION euro had been lost by a rogue trader, overcharged their customers by over 70 MILLION euro, evaded 90 MILLION euro in taxes, lost laptops containing the personal information of over 30,000 customers, etc.

Now they are free to behave in a similarly carefree manner, but with the added bonus of a safety net provided by the Irish taxpayer; the very same people they've been screwing for years!

The banks in the US brought this on themselves, and the proposed bailout by the Bush admin seems just as ill-conceived.

As to noticing changes, I can't say I have. Time will tell, I suppose.

[Akatosh]

As the news over here casually mentioned once, the "crisis" hasn't had any effect whatsoever on the "real" economy (yet). That is, the fincance-only sector has suffered a good whopping, but for those people that trade in real goods (and services), the crisis most likely hasn't made any notable difference (again, yet). You'll probably run into trouble when attempting to get a bigger loan, but apart from that... meh.

And I'm going to start studing an economy-related subject in a week or so, so listen to my words. 

[bicilotti]

As the news over here casually mentioned once, the "crisis" hasn't had any effect whatsoever on the "real" economy (yet).

The crisis affected me: stupid finance students have real trouble finding a job now 

Let me state it without arrogance: government is not the solution to our problems, government is the problem.

[Snarky]

159,000 people in the US lost their jobs in September. I bet they think that this crisis is pretty real.

Besides, I seem to remember that about 50% of all Americans have stock market investments, so the Dow Jones does affect them, even before you consider 401k's (retirement funds).

[MillsJROSS]

No, at the moment, I am not directly affected but this crisis. However, I'm in a good situation in life where I'm not looking to buy anything large, and I'm not depending on student loans. However, it's hard to say how this would affect me in six months, or a year. I do think this bail out was necessary. The economy is not my area of study, but it seemed when I got actual news on this issue, and not just an injection of fear, it seemed there was real fear, and the thought that something had to be done. There may be some long-term side affects of this, like a weakening of the dollar. But only history will show whether or not the decision lead to anything productive.

I think there is enough blame for many people, and I do think that this could have been prevented. The government is part of the problem, but  the government can be part of the solution, as well. And all of us are connected economically enough that we will all rise and fall together.

-MillsJROSS

[ManicMatt]

Not yet, the owner of the GameWorld company has told me the "To Let" sign thats been hanging like a grim reaper over my shop for way longer than I've even worked there will finally be removed as the shop is no longer for sale as it's actually making a profit now. Hooray! (And this will look good on my C.V if I ever need to update it)

[InCreator]

US should shut up.
War is most expensive and financially uncaring act in modern world.

If they use hellfire missile to blow up clay cottage - yet you could build a whole city of clay cottages with the cost of one missile, I couldn't translate it other way than 'irresponsible'.

If people want jobs, they better get their leaders and leaders' priorities straight. All hail democracy!

But in general, I'm afraid that capitalism is as self-destructive as other ideologies. General sense of comfort and stability simply masks that until it's too late.

I find the ways of capitalism gotten too far, and really oppressive: Where I live, if you don't have a bank account, in most jobs you cannot get even paid. Nobody uses cash! Anyone, from police to court to companies can freeze your bank account with a simple phone call, thus making you instantly piss-poor.

I have money on my account and I cannot withdraw more than a specific sum (daily). Of my OWN money. Bank won't give it to me. To reach it, I must use a card. Which I pay monthly fee for. While bank is using my money and not paying any interest. If I decide to withdraw money in bank, I must pay some kind of additional fee. So teller could get her paycheck.

What's even worse than local banks belong to some kind of swedishs and finnish banks, and my money and its fate is in hands of someone from another country. Not only mine, but whole nation's. Some fat, rich jerk somewhere holds a whole nation by the balls.
What happens if relations between those two countries somehow get explosive??

Things like this tell pretty clearly who controls the world. Bankers.

And this is gone too far.

[miguel]

Reporting from Portugal:

   Here, at Europe's tail, the crisis has arrived. Not because there is a direct implication with American trades or commerce but simply because everybody that can do it, take advantage of this so-called crisis.
   Here, where the sun never turns its back and the sea vomits salty fish every 5 minutes, the prices have gone higher than Shaun Ryder's underpants  because government regulation fails under the big speculators hands.
   Well, at least the banks are holding on and apart from one or two false alarms, there is no indication that one should go bankrupt.
   I run a coffee shop on a tourist location in the south of Portugal and I actually did not make a profit this year. Bills are paid but no money in the bank.
   Well, zero is always better than having huge debts.

Over and out.

[Stupot]

My old man has had to lay off half of the workers in his brickmaking factory because nobody is buying houses, so nobody is bulding houses so nobody is buying bricks... Those good men have certainly noticed the difference.

As an extra note - and to live up to my reputation on these boards as a paranoid nut - I'm a bit worried by the fact that the government is trying to encourage us to be self sufficient, to grow our own food and whatever... sounds to me like they're preparing for another World War, and this "Credit Crunch" is a way for them to slowly leading us into a war economy so that they can spend more on the war efforts.*

^{*PS... I'm only half joking, please don't flame and/or insult me.}

[Domino]

I heard on the radio this morning that in the US, banks were giving people mortgages for homes without even checking their credit or source of income.

They were giving loans to people who were buying homes in which they could not afford. Then they had to foreclose on these homes and the banks were stuck with them. Plus, do these bank executives need to make millions of dollars a year, and also some with signing bonuses in the millions.

I wish it had been that easy when i was buying a car.

[Tuomas]

None of us own even half of our money. It's pretty simple, you put your money to an account at a bank, where it's immediately transferred into numbers on a screen, ones that currently state an agreed value. Those numbers are used in exchange of ownership in stocks and companies. The bank invests all your money in order to keep its value up. And once you draw money, they need to sell their stock to receive the paper equivalent. Basically what everyone noticed here in the early 90s, was that the stocks were losing their value, and people were realising, that by time, their money would be worth nothing. So everyone went, and drew out their money, stopped their accounts, which forced the banks to sell their stock, thereby dropping the value of the stocks collectively, which then made more people draw out their money. Now smaller banks had nothing to offer to their customers in order to give them their money's worth, and eventually went bankrupt. Because banks need their customers as we all do. And they all need to make money all the time to be able to sustain the currency.

Now people with loans, studies, new houses, all that, couldn't just draw their money out, because at that point, it was those people, that owed moneyto the banks, that were in need of some. With the 700 billion, the point was to transfer these depts to one bank, and pay the real banks so that the common customer didn't have to lose their savings. And with that in the States, it's only 20-30 dollars per person.

Do I see any effect? For example the housemarket is dropping like a rock down a cliff. The prices are higher than ever, and no-one's buying houses. Nobody wants to take a high loan of moeny that has no value, no-one wants to invest in a flat because everyone knows the prices will come down, and the flat will be close to worthless. This already happened in Spain, where they had great big condominiums built for the rich, but are now standing deserted with some 2-3 people living in them. I'm glad at the moment, that I don't have a great deal of money, because once the value starts decreasing, the more you've got, the more you'll lose, speaking in terms of solid currency of course. I think the change is obvious, and I sure hope it's not going to be as bad as it were 20 years ago. Also, I don't think the helping fund to the thrashcan bank is a bad idea. That's because it has a chance of really working, and I don't see anyone having more suggestions. That, and you'll realise, that the republicans only voted against it because the governor of Alaska Mrs. Palin accused them of ideally corrupt right wing politics. There'll be a new vote soon, which will take care of it, I presume.

[Squinky]

I've noticed my work (I install windows and do glasswork) has dropped this year pretty strongly. Still though, I keep busy enough, just people aren't building like they used too. Also, there are TONS of houses for sale.

[Makeout Patrol]

I understand that you can buy a waterfront condo with an included BMW on the California coast for something like $200 000US right now, but that hasn't changed anything here - rents for one-bedroom apartments in the Vancouver area have started to drop below the $1000/month mark, but I still feel like there's no way in hell that I'll ever be able to afford property unless I wait until after the olympics.

I guess that they're having trouble selling a couple of the houses that they've recently built, but that's because they're trying to sell houses for $1.5 million in a neighborhood where my parents paid somewhere in the $400 000 - $600 000 range back in the 1970s. I don't care how much inflation there's been, and I don't care how much more property is worth now; that is not a million dollar neighborhood.

[Shane 'ProgZmax' Stevens]

Any good student of free market economics saw this coming 20 years ago, and many of the brightest economists of our age pointed out that this would happen due to overinflating a currency backed only by good will.  The US Federal Reserve has been steadily inflating the US currency for roughly 25 years, artificially lowering interest rates (which causes mal-investment or investments people would not otherwise make at the natural rates) and generally trying to cover up for its own ineptitude by dumping money into a system that simply cannot be sustained.  The tough but wise medicine is to let the companies who have made these risky ventures liquidate their bad debt and tighten their belts, but instead the government has decided to throw more taxpayer money on companies who have mismanaged themselves into bankruptcy.

If you went to a bank and told them you managed your business poorly and borrowed more than you could hope to repay, do you think they would smile and hand you a check for $100 billion (or any money at all) and say 'here you go, sir!  This is yours for free, good luck!'

Fuck no they wouldn't, they'd let your business burn because you're a poor businessman and should go out of business.

The government prop-up days in the US are coming to a disastrous end, it's just a matter of whether we let it happen now or keep dumping good money after bad until it completely collapses the dollar.  I've been studying the boom-bust cycle in this country for awhile and the government just isn't listening to market economics or financial trends or even common sense, it's too busy fearmongering the people into thinking the world will explode if they don't bail out these failed banking systems.

This bailout mentality will unfortunately have lasting collateral damage not only on the US but on other countries who are readily embracing this corrupt and foolhardy measure of taking money from the people to save companies who have made critical investment and market errors.  Did anyone notice that one of the former CEO's of Lehman left the company with 30 million (or was it 16 million)?

A good site to read for anyone interested in brushing up on their economics is www.mises.org.  The more aware you are of the system, the more you can understand its strengths and weaknesses.

[SSH]

As any parent of small children knows, when your kid gets hurt you don't just lecture them on how they shouldn't have been playing with steak knifes or whatever, you take them to the hospital. The attitude of some in the US and UK is "they made this mess, let the bankers suffer" but of course its not that simple.

[Stupot]

[Just deleted possibly my worst post of all time.] 

The thing to remember about whatever happens over the next couple of years is that economics runs in cycles.  Things will improve again, it's just a mater of patience.

[Layabout]

I was working as an Estate Agent a year ago. When Northern Rock collapse, faith in the housing market died, the mortgage market froze up completely. I left in October 2007, because simply people couldn't get Mortgages anymore without a 25% deposit and a better credit rating than god.

[Nacho]

I recently asked to a big fish professor of economics if this was really going to be so serious as the 29th crack... He said "I wish this is going to be just so serious as that!"

Scary... 

[Makeout Patrol]

[Just deleted possibly my worst post of all time.] 

The thing to remember about whatever happens over the next couple of years is that economics runs in cycles.  Things will improve again, it's just a mater of patience.

You know, that's true, but most of the valleys in the cycles don't include the companies that guarantee more than 50% of all mortgages in the United States going bankrupt. Just based on that, this is an exceptional situation, in a way similar to that of the stock market crash in 1929.