Fucked Factor Five
First of all, the good news: In a current poll, Europeans (nearly 7 in 10) say that they prefer Obama to McCain in the upcoming U.S. elections.
The bad news: Europeans seem to know more about common sense and logic as it applies to the United States than many Americans. And that’s pretty sad.
I’ve said it before, I’ll say it again: Who do I want to be the president? ANYONE but McCain. Anyone. Fucking Michael Jackson, Mickey Fucking Mouse, David Hasselhoff…I don’t give a fuck. Just keep that crazy, old Bush crony bastard as far away from the White House as possible.
AS FAR AS POSSIBLE.
Americans just don’t seem to get it.
More bad news, you ask? Sure, I’ve got some.
Today, Wall Street took the biggest single day hit since the days after 9/11/2001.
The housing market crisis is really just starting to hit. Yep, it’s just starting to get bad. After having a government that encouraged giant corporations to buy unchecked in an effort to make as many billions as possible, when things fall, they fall hard and they fall deep.
This government of ours has promised MY money and YOUR money to bail out several companies whose corporate greed got the best of them. There’s no fear…absolutely no CREDIBILITY within these huge billion dollar corporations. So yeah, you and I are going to be paying for the billions lost. So that’s awesome.
BUT, the government decided that after bailing out a few of these irresponsible companies that they can’t do it anymore. So that’s why you see the bankruptcies you’re seeing and companies scattering to find some support.
THIS IS A SCARY, SCARY SITUATION.
Ever hear about the Great Depression? Google it. Read about it. Study it. Honestly. And then go bury your fucking cash in your backyard.
Ironically, McCain today said again that our economy is sound. He PROMISED Americans that if HE becomes president, he’ll save Americans from this ever happening again. He forgot to remind everyone how he doesn’t seem to understand even the most basic, elementary high school logic associated with the economy. So he’s promising he’s going to clean this mess up EVEN THOUGH HE HELPED CREATE IT WITH HIS VOTING RECORD in congress. Awesome. One more thing I suppose Americans simply don’t get or just don’t fucking care.
Don’t care?
Better start. And quickly.
The Bush administration has ridden this economy down like a wounded bull. When they climbed on, the bull was strong and they’ll be leaving this country literally economically crippled. And Americans are apparently (if you believe the polls) ASKING FOR MORE OF THESE INSANE CONDITIONS. Wanna learn the hard way? Want to lose your home? Your job? Your savings?
I sure as fuck don’t.
But then again, a lot of people knew this was coming. I didn’t take a genius to realize that this was imminent for the U.S. under the rule of an administration that most likely couldn’t run a McDonald’s, much less this country.
Here’s a guy who knew exactly what was coming and people called him crazy, ironically. In the meantime, his party chose John McCain over him to represent the republicans in the upcoming elections.
Always, ALWAYS question the media. There are better sources to turn to for legitimate information.
This is a vicious environment right now. Honestly. Talking heads are lying through their teeth on prime time television and they’re getting away with it. They prey on the uneducated, the uninformed and the ignorant.
They only way they can successfully sell their bullshit is if you’re willing to buy it.
Keep one thing in mind: The administration that has literally crippled this country financially and, at least in some ways socially, is on its way out. WHY IN THE FUCK WOULD ANYONE IN THEIR RIGHT MIND WANT TO PUT THEM BACK IN THERE?
It defies logic. Completely.
They say the definition of insanity is doing the same thing over and over and expecting a different result? I think we’ve safely been able to discern the sane from the insane in this country at this point.
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16. September 2008 - 17:03 Uhr
The Golden Parachute of the Filthy Rich.
I had a friend mention in the wake of yesterday that at least the rich wall street bankers are finally going to get theirs. And that’s the general consensus of middle America; that bankruptcy is going to take these fat cats down who in part caused this collapse.
Nope.
Take top McCain advisor Carly Fiorina, for instance. She received a $21 million severance package when she was forced out as CEO of Hewlett-Packard, after her not-so-successful stint there–and the value of her golden parachute eventually reached $42 million.
$21 million dollars for basically being fired? TWENTY-ONE MILLION? Now worth $42 million? THIS is the kind of end that these people meet with because of the infamous golden parachute.
Meanwhile, Americans who can’t even afford the most basic of health care end up footing the bill via taxes for these mult-billion dollar failures.
AWESOME, McCAIN!
I’m not going to pretend that the federal reserve didn’t play a huge part in this crumble. I’m just saying that people like McCain advisor Phil Gramm WROTE legislation with the help of financial industry lobbyists, essentially removing newfangled financial products called SWAPS from any regulation. Credit default swaps (basically insurance policies that cover the losses on investments), have been at the heart of the subprime meltdown because they have enabled large financial institutions to turn risky loans into risky securities that could be packaged and sold to other institutions.<p>
Sorry. I woke up to a pompous windbag republican stating that this fallout is the fault of the democrats and that ‘common folk’ couldn’t possibly understand what’s happening within the market right now.
Which I guess explains why Republicans are still supporting Cotton Jowls McCain. You don’t get any more ‘common’ than those folks, right?
Never forget the new era in America: Down is up, Up is down, Right is Wrong and Black is White.
The guy who was steering the ship at Lehman Brothers stepped away with a nice $22 million dollar Golden parachute. Meririll Lynch ceo walked away with $161 million dollars. ONE HUNDRED AND SIXTY ONE MILLION FUCKING DOLLARS FOR RUNNING A BUSINESS INTO THE GROUND?!
What happens when the average American business owner goes through bankruptcy? Lose their home? Their healtcare? Their retirement? All their belongings?
Wow. These two people are a great example of how America has failed its citizens in the recent past. Disgusting.
16. September 2008 - 17:32 Uhr
The old adage of “be careful what you wish for, it may come true” seems appropriate here. I think people forgot, it cost money to fight a war - a war that didn’t need to happen and a war that continues.
There is one reason to re-elect the Republican’s - let them fix their own mess. Ya, I know it would hurt everyone in the country but, having them out of office now feels like having a CEO leave a company when the shit hits the fan and receiving a huge compensation package.
Don, I’m not sure if we should compare the current situation to the great depression - Yes the situation is BAD (ok, very bad) and there are many similarities but, the world is different now..different world economy. Could we sink into a situation like the great depression?? Yes, definitely - will it likely happen? No I don’t think so.
Economic hardship is definitely on its way - life will be harder for most Americans (a hardship that we haven’t experienced in our life time), people will have to change from their excessive “American” ways. In some ways, I think the American lifestyle will be more European - no more being too excessive, bigger isn’t going to be better (nor realistic). But we shouldn’t panic, let’s not forget panic was a contributing factor to the great depression, we should all be concern though. No longer can Americans sit back and let someone else handle the problems, let someone else speak for you. It’s time to take notice and know what’s going on with your money, your politics, and your life.
Ignorance is not bliss! Especially in times like this.
16. September 2008 - 17:59 Uhr
SC,
I’m expecting the worst after studying this situation for over a year based on projections and indications from the past. Will the collapse be as dramatic as the Great Depression? Nobody knows. But by all indications of a weak dollar, the current rate of rising inflation, the devaluation of ALL American currency (which incidentally isn’t backed by ANYTHING of value…you’ll remember back in the good old days when every dollar was backed by gold, giving it actual value) isn’t worth the paper it’s printed on by the Federal Reserve.
There were a handful of people in congress who have warned about this coming fallout for over a year now…well over a year. And the scary thing is the ‘house of cards’ effect that the American financial system is based upon. You don’t just see things that this that don’t trickle down dramatically. You see an inflated effect as it trickles down historically.
And this is just the beginning. There isn’t a safety net anymore within our economy. None. I think most Americans feel like there is a system in place to keep things at a certain level. FDIC insured funds and all that good stuff. But the bottom line is that if your government is in bankrupt and owe huge, huge amounts of money to a private bank (the federal reserve), then when the government goes belly up, so goes the banking system.
What spurred the Great Depression was, in part, a crash in the stock market and a failure on the part of banks.
If you read the wikipedia entry on the Great Depression, it reads like a current assessment of the financial market and the federal reserve. Here is the link: http://en.wikipedia.org/wiki/Great_Depression
Here is an except:
“Monetarists, including Milton Friedman and current Federal Reserve System chairman Ben Bernanke, argue that the Great Depression was caused by monetary contraction, the consequence of poor policymaking by the American Federal Reserve System and continuous crisis in the banking system.[10][11] On this view the Federal Reserve, by not acting, allowed the money supply as measured by the M2 to shrink by one-third from 1929 to 1933. Friedman argued[12] that the downward turn in the economy, starting with the stock market crash, would have been just another recession. The problem was that some large, public bank failures, particularly that of the Bank of the United States, produced panic and widespread runs on local banks, and that the Federal Reserve sat idly by while banks fell. He claimed that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of the banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did.[13] With significantly less money to go around, businessmen could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch”
I very much respect your right to be optimistic amidst the situation and the idea that we’ll be fine for all intents and purposes. I don’t have that kind of faith in the powers that be and I’m preparing for the worst. Actually, I have been for a while. When there is a huge economic bubble created, that bubble will eventually burst, especially when the value of the dollar is devalued.
Want to know what a dollar bill is worth in the mortgage sector right now on Wal Street?
TWENTY TWO CENTS.
And that’s while things are ‘decent’ with the economy.
TWENTY TWO CENTS is what each of your American dollars are worth in terms of value within that market, historically the strongest sector of investment.
Again, that’s right now with the economy the way it is currently. Can you imagine what your dollars will be worth if things continue to slide, as all signs indicate to most financial experts?
I don’t want to find out, personally.
Nobody thought the Great Depression COULD happen to America, much less actually would happen.
I hope with every fiber in my being that the situation improves. I just think that, as you said, ignorance is bliss. Americans could very well wake up one morning, find that their money is worthless basically and then think, ‘what the hell happened?’
It’s hard to discuss the realities of the current economic situation without sounding like a scaremonger simply because the facts are indeed, scary as fuck.
Let’s monitor the situation and see how it goes. This is a long-term problem…stocks will fall and recover systematically for a while until things settle into the situation they will eventually find themselves in.
I’ll be the first to admit I’m no financial expert. I’m just a student of facts and logic and understand the basic monetary system of the U.S. and how the Federal Reserve plays into it.
Let’s hope for the best and watch it closely over the next six months. A change in direction could create a rebound effect with consumer confidence, which could spur some economic growth but it’s hard to imagine that in a situation where Americans’ homes (where traditionally the majority of a person’s financial worth lays) are worth about 1/2 (or less in some areas) of what they were only 5 years ago.
Like I said a few posts back, it doesn’t matter if your house is worth $350,000 or even a million dollars if you can’t find anyone to buy it. Traditionally, that’s where banks come in to save the day. They jump in, citing a long-term recovery possibility of a ’sound’ investment’ and then you recover some of your funds.
What happens when ALL banks suddenly see Lehman Brothers and Merrill Lynch and decide that homes are worth saving because there’s no return on that investment and it ends up being a complete loss financially?
Homes sit there empty, you’ve lost the majority of your wealth with an investment that no longer has any real financial value and things get turned on their ear economically.
16. September 2008 - 18:24 Uhr
just out of curiosity, what can you do on a personal level to prepare yourself against a Depression like this?
16. September 2008 - 19:07 Uhr
You may want to steer that question to our resident expert Eric Stricker. He and I have discussed this for a while and he has some good ideas that might help.
Unfortunately, in an economy that’s tied together so tightly through a single devalued currency, there isn’t a whole lot to be done in a situation should it get really bad. I think in a really bad scenario, the best you can do is try to remain stable.
Moneyweek is a good source of financial information because it’s been pretty spot on in terms of forecasting. The consensus seems to be that gold will always retain a good amount of value while stocks and other investments are susceptible to failure:
http://www.moneyweek.com/investments/how-the-dollars-collapse-will-lead-to-a-new-gold-standard.aspx
Another way to prepare is to eliminate as much debt as possible, cut back expenses and expenditures. The fewer bills you have to pay, the more money you’ll have for the things you absolutely need in a worse case scenario.
Runs on banks helped spur the last depression so the jury is out as far as I’m concerned on that front. Different people have different opinions and again, I’m no expert.
To me, it’s literally like being at a casino and making bets and gambling with very high stakes. Pull your stocks and you take a huge loss. Keep them and you could lose your ass. The key of investment is LONG TERM gain. If the economy does recover, stocks will most likely pay off. I’m definitely not the guy to be making suggestions in terms of serious investment.
Here’s another good link that discusses possibilities and options:
http://www.moneyweek.com/news-and-charts/economics/how-to-prepare-for-a-new-us-depression.aspx
Again, nobody knows what’s going to happen with the economy. We can only guess based on projections and information. At this point, it’s hard to be optimistic but time will tell. On this side of the pond, it’s been so mismanaged for so long that it’s hard to imagine any kind of quick recovery. It’s taken a long time to get into this situation and it’ll take a long time to recover is the way that I’m playing it. And also the old adage, it’s better to be safe than sorry goes a long way. I’d never suggest super severe actions at this point; I’m just suggesting that people watch and be vigilant on that front. Stay informed, watch the market, the federal reserve board, inflation rates and interest rates.
I think the stakes are so high that I get easily riled up about it and it’s nice to have someone like SC step in and remind me that the sky hasn’t fallen yet. I spend a lot of time digging through financial stories and it’s very true that there are a lot of different opinions.
I tend to draw my own conclusions because I have a hard time trusting the media reports and government assessments.
It’s time to be cautious in my opinion, it’s time to be conscious of what’s going on and draw your own conclusions based on the signs.
16. September 2008 - 19:48 Uhr
Don,
Thanks again for your insights and opinions, I really do respect both - I think your posts/comments are great.
I think you and I agree fundamentally on many of the issues involved in the current situation in the US. Like you pointed out, I am optimistic about the situation but, just because I’m optimistic doesn’t mean I am not concerned. I just think that we should be concerned and not panicked.
I, like you, am no financial expert - in fact I hated economics in Uni. But I do understand some of the basics. I am also not an expert in the great depression but, I do understand some of the issues around it (thanks for the wiki link, it did add to what I knew about it). I have in no way done the amount of research you have, so maybe my comments are just ignorant - as I don’t know all the facts and figures you are looking at - but these are just my thoughts.
I want to get across the point that I don’t think we are at a point of panic yet. In fact, I think panic would make things worst. While I respect your (Don’s) comparisons, I think there is a difference in our current economy situation that will, hopefully, keep us from a great depression. I would encourage people to check out the wiki page on this topic.
There has been great debate as to what caused the great depression and no, there hasn’t been a definitive answer (not that I’m aware of) yet. Yes, you’re correct that the great depression could be contributed to the fall of the stock markets, failure of the banks, and the federal reserve. Yes, there are many similarities in the situation of the 1930’s and today, but similarities does not always mean equal results. From what I gathered from the wiki page is that the issue with the Reserve and the depression was that they contracted money supply - I don’t see this happening in the US, is this happened?
The issue with the collapse of the banks was to do bank run’s - a situation where everyone panics and wants to withdraw all their money at the same time. This is exactly why panic would make the situation worst. Also, now there is some protection in place to protect peoples bank deposits - FDCI - and help prevent bank runs.
Another issue that could have attributed to the great depression was the government lack of deficit spending. I don’t know if the US government is in a position to spend, since it’s already 3 trillion in debt, but I am sure the government would be able to “get” money some where to keep us out of great depression - IMF??.
Also, during the great depression the US decided to limit international trade - which reduced cash flow coming into the country. In today’s world, I don’t think this would happen.
Finally, I think we live in a more global world today, which would allow for people to find jobs in other countries that are not available here in the US. While the job market in the US is the worst it has been in recent history, China and other emerging markets are real options for people nowadays - something that wasn’t a real option, to most, in the 1930s.
So, while the situation is bad, people shouldn’t panic. Instead, start paying attention to your money, don’t live over your means, explore options in other countries, do your research and watch out for your own. Basically, STOP BEING IGNORANT AND GET INFORMED!!!