The State of the Economy/Markets

[assassin_696]

Since the bailout thread seems to have died, I thought i'd make this. Is anyone else here following the events in the financial world with some interest?

 

 

 

Personally, I genuinely thought with all the bailouts now being passed globally the markets would regain some confidence, but that doesn't seem to be happening yet. But the IMF has just declared that the world is teetering on the "brink of systemic meltdown". All the best predictions seem to be useless right now, so I suppose we just have to sit back and watch.

 

 

 

On a side note, I can't decide whether or not this is a fantastic time to buy some shares in banks or an incredibly risky one. I turned 18 recently and have some money which I wanted to move to some form of longer term savings, it was going to go into Icesave but that's off the cards now. :P

[Necrobean]

Since the bailout thread seems to have died, I thought i'd make this. Is anyone else here following the events in the financial world with some interest?

 

 

 

Personally, I genuinely thought with all the bailouts now being passed globally the markets would regain some confidence, but that doesn't seem to be happening yet. But the IMF has just declared that the world is teetering on the "brink of systemic meltdown". All the best predictions seem to be useless right now, so I suppose we just have to sit back and watch.

 

 

 

On a side note, I can't decide whether or not this is a fantastic time to buy some shares in banks or an incredibly risky one. I turned 18 recently and have some money which I wanted to move to some form of longer term savings, it was going to go into Icesave but that's off the cards now. :P

 

 

 

I'd invest it in a bank. Probably sounds weird because they are the ones that are crashing the most now but eventually (we're talking about a few years here) they will rise again and you will make LOADS of profit.

[Range_This11]

It's just the fact that capitalism is slowly losing its power in America. Our standard of living is going to be on a downward trend for the next 10 years. America is going to finally be equaled out with the rest of the world powers after the financial crisis is settled.

[warren211]

Some online sites have had the time of their lives laughing at the American economic crisis. Then when the news said it affects the global market, everyone shut up :lol:

 

 

 

I'm not sure if I'm old enough to invest (do you need a license for that?) but if I could, I'd buy a couple cheap stocks that wouldn't kill me if they failed and see what happened.

[The Observer]

I've noticed it too and it's even effecting Canada. Right now, the TSX (Toronto Stock Exchange) is going down an average of 700 points per day with the NASDAQ. It doesn't affect me much really, but it's just extremely noticeable. The only thing I find worrying is the cost of groceries and taxes.

 

 

 

EDIT: 5,000th post. =D>

[Ginger_Warrior]

It's worrying. This is almost the same situation as the Great Depression. Previously, so-called 'experts' tried to claim it wasn't a repeat, because only the banks were failing, but now the other half of the equation is also hanging over - the stock market crash. We're not at crash stage yet, but we are very close. We've chucked the kitchen sink at it, and it still hasn't worked. Eventually, our leaders will have to come to the conclusion that we are entering a recession, quite possibly on the scale of the depression.

 

 

 

Why is that so bad though? After all, capitalism has troughs as wells as peaks. It has to bleed capital periodically to function. As others have pointed out, the bubble has to burst eventually.

 

 

 

Well, there is one major difference between now and the Depression - the lack of another economic system. In the Great Depression, there was free enterprise in the American and European markets, but there was also another working system in the world - the system made by the Bolsheviks in the then Soviet Union. This, along with the ongoing threat of War against the Nazis, revived industry and reversed the trend of recession into positive growth. Now no such situation exists, and it is difficult to see where this economic crisis, which started off only as a financial crisis, is going to stop, given there is now no major power in the world with a non-Capitalist system. The bottom of this pit is not in sight, and we are certainly not going to hit rock bottom in the next few weeks.

 

 

 

There are other impacts too. Namely, the rise of political extremism. Extremist groups, such as the Nazis and the Bolsheviks, came into prominence during periods of extreme economic difficulty. History tells us there is a link between economic hardship and political extremism. The Bolsheviks rose to power during the First World War, after Russia's economic system, which was barely more than Feudalism, was proven to be an inadequate model to fight a sustained war in the new modern arena. The Nazis rose to power following the Depression, as well as the impact of the Treaty of Versailles on the German real economy. When people are desperate for a solution, they are more likely to ignore the background beliefs of a radical party, in the belief they are the way forward. The seeds of extremism are already sown, and they are shooting. Austria recently held its legislative elections, in which the Austrian Freedom Party, the extreme right, made massive gains. They are now just a grasp away from power.

 

 

 

Then there is also the issue of America's influence over the rest of the world. The election between a black man and a Vietnam vet for the keys to the White House seems meaningless when there is a greater ideological battle in the world. After all, there is no real difference between either of them - both basically support the principles of a free market. If my fears in the second paragraph are true, then the American-born idea of global capitalism has been proven to be a toxic foreign export from the US. Russia has already closed its stock markets in anticipation that confidence in the markets will not improve in near times to come. This is not the collapse of Capitalism, even if Marxists such as myself wish it were, but there is little chance of India or China, the two upcoming rulers of the 21st Century and the latter being a 'former communist state', greeting the laissez-faire model with open arms for very long after this.

 

 

 

If you're a moderate, free market-loving American, life doesn't look good for the next year or two.

[jackattack]

All these stocks are undervalued now. Once people calm down and aren't afraid to invest the market will go back up. I was thinking about buying some GM stock if it goes down a little more. We will probably be back to where we were within a year or two. I think it was that in the 80's crash they regained all the value lost within a year. That probably won't happen if Obama is elected. Most people who actually invest in the market will probably be running scared. Now is the time when we should have 0% capital gains tax, not raise it for "fairness" even if we will take in less revenue. I actually have met David Dreier who is the chairman of the House capital gains tax caucus. I didn't talk to him much though.

[Saru Inc]

It's worrying. This is almost the same situation as the Great Depression. Previously, so-called 'experts' tried to claim it wasn't a repeat, because only the banks were failing, but now the other half of the equation is also hanging over - the stock market crash. We're not at crash stage yet, but we are very close. We've chucked the kitchen sink at it, and it still hasn't worked. Eventually, our leaders will have to come to the conclusion that we are entering a recession, quite possibly on the scale of the depression.

 

 

 

Why is that so bad though? After all, capitalism has troughs as wells as peaks. It has to bleed capital periodically to function. As others have pointed out, the bubble has to burst eventually.

 

 

 

Well, there is one major difference between now and the Depression - the lack of another economic system. In the Great Depression, there was free enterprise in the American and European markets, but there was also another working system in the world - the system made by the Bolsheviks in the then Soviet Union. This, along with the ongoing threat of War against the Nazis, revived industry and reversed the trend of recession into positive growth. Now no such situation exists, and it is difficult to see where this economic crisis, which started off only as a financial crisis, is going to stop, given there is now no major power in the world with a non-Capitalist system. The bottom of this pit is not in sight, and we are certainly not going to hit rock bottom in the next few weeks.

 

 

 

Uhh.... Ok... You're correct with the War against Germany, but wrong about the Communistic Bolsheviks. America's economy revived, not because of the New Deal, or because of the Bolsheviks. It revived because with the War, all the sudden a surge of work was needed, to go to factories or work in the Army. In fact, so much work was needed, that the Bracero program started, bringin in Mexicans to work Agriculture. Then, when everyone came home fromt he war, they had checks to spend, lots of em.

 

 

 

There are other impacts too. Namely, the rise of political extremism. Extremist groups, such as the Nazis and the Bolsheviks, came into prominence during periods of extreme economic difficulty. History tells us there is a link between economic hardship and political extremism. The Bolsheviks rose to power during the First World War, after Russia's economic system, which was barely more than Feudalism, was proven to be an inadequate model to fight a sustained war in the new modern arena. The Nazis rose to power following the Depression, as well as the impact of the Treaty of Versailles on the German real economy. When people are desperate for a solution, they are more likely to ignore the background beliefs of a radical party, in the belief they are the way forward. The seeds of extremism are already sown, and they are shooting. Austria recently held its legislative elections, in which the Austrian Freedom Party, the extreme right, made massive gains. They are now just a grasp away from power.

 

 

 

Then there is also the issue of America's influence over the rest of the world. The election between a black man and a Vietnam vet for the keys to the White House seems meaningless when there is a greater ideological battle in the world. After all, there is no real difference between either of them - both basically support the principles of a free market. If my fears in the second paragraph are true, then the American-born idea of global capitalism has been proven to be a toxic foreign export from the US. Russia has already closed its stock markets in anticipation that confidence in the markets will not improve in near times to come. This is not the collapse of Capitalism, even if Marxists such as myself wish it were, but there is little chance of India or China, the two upcoming rulers of the 21st Century and the latter being a 'former communist state', greeting the laissez-faire model with open arms for very long after this.

 

 

 

If you're a moderate, free market-loving American, life doesn't look good for the next year or two.

 

 

 

Well, apparently, it'll even out soon. I don't know the exact ramifications, but business cycles are healthy, so no it won't go back to the exact way it was, but this won't be the next Depression. Also, I find it fasciniting at the stupidity of people. For instance: AIG recieving a load of money from the Bailout, and sending their Executives on a $440,000 retreat with $23,000 spa expenses. WOW.

[Ginger_Warrior]

[hide=]

It's worrying. This is almost the same situation as the Great Depression. Previously, so-called 'experts' tried to claim it wasn't a repeat, because only the banks were failing, but now the other half of the equation is also hanging over - the stock market crash. We're not at crash stage yet, but we are very close. We've chucked the kitchen sink at it, and it still hasn't worked. Eventually, our leaders will have to come to the conclusion that we are entering a recession, quite possibly on the scale of the depression.

 

 

 

Why is that so bad though? After all, capitalism has troughs as wells as peaks. It has to bleed capital periodically to function. As others have pointed out, the bubble has to burst eventually.

 

 

 

Well, there is one major difference between now and the Depression - the lack of another economic system. In the Great Depression, there was free enterprise in the American and European markets, but there was also another working system in the world - the system made by the Bolsheviks in the then Soviet Union. This, along with the ongoing threat of War against the Nazis, revived industry and reversed the trend of recession into positive growth. Now no such situation exists, and it is difficult to see where this economic crisis, which started off only as a financial crisis, is going to stop, given there is now no major power in the world with a non-Capitalist system. The bottom of this pit is not in sight, and we are certainly not going to hit rock bottom in the next few weeks.

[/hide]

 

 

 

Uhh.... Ok... You're correct with the War against Germany, but wrong about the Communistic Bolsheviks. America's economy revived, not because of the New Deal, or because of the Bolsheviks. It revived because with the War, all the sudden a surge of work was needed, to go to factories or work in the Army. In fact, so much work was needed, that the Bracero program started, bringin in Mexicans to work Agriculture. Then, when everyone came home fromt he war, they had checks to spend, lots of em.

 

The War helped, just as it did across the world. But the American economy in particular was recovering before the war (well, actually, so were the Soviet and German economies but for totally different reasons). Don't forget, the economic troubles back then started in 1929. America joined the war officially in December 1941 after Pearl Harbor. Unless the economy was in a bad state for twelve years (it wasn't), the war was not the only thing that kick started the world economy again.

[jackattack]

^^ The war is what ended the depression. Roosevelt's policies got the country so dependent on government money that even when he thought they were spending too much and cut it the country went back into another mini depression within a depression. I bet having a top tax rate of like 98% didn't help him much.

[assassin_696]

Ginger, you make some interesting points which I'll address when I have a bit more time. But even by my standards you're sounding a little pessimistic.

 

 

 

All these stocks are undervalued now. Once people calm down and aren't afraid to invest the market will go back up. I was thinking about buying some GM stock if it goes down a little more. We will probably be back to where we were within a year or two. I think it was that in the 80's crash they regained all the value lost within a year. That probably won't happen if Obama is elected. Most people who actually invest in the market will probably be running scared. Now is the time when we should have 0% capital gains tax, not raise it for "fairness" even if we will take in less revenue. I actually have met David Dreier who is the chairman of the House capital gains tax caucus. I didn't talk to him much though.

 

 

 

I think the general consensus now is that this crisis is helping Obama, who's much more economically literate than McCain. Although it's hard to make predictions at this stage, I think an Obama lead White House would give the economy more of a boost than another Republican who needs to rely on his advisers.

[jackattack]

 

I think the general consensus now is that this crisis is helping Obama, who's much more economically literate than McCain. Although it's hard to make predictions at this stage, I think an Obama lead White House would give the economy more of a boost than another Republican who needs to rely on his advisers.

 

 

 

It is helping him but it really shouldn't be. Obama winning would kill the market. His tax policies are to give tax cuts to middle class and raise them by a massive amount on the rich and business. While any tax cuts are good it's mostly upper class people who are investors. If I know that the capital gains tax is going to go up am I really going to invest much? Now is the time for at least a temporary reduction to 10%.

[Range_This11]

 

It is helping him but it really shouldn't be. Obama winning would kill the market. His tax policies are to give tax cuts to middle class and raise them by a massive amount on the rich and business. While any tax cuts are good it's mostly upper class people who are investors.

 

That's a good thing. The rich in the America are a very small percentage compared to the middle class. Taxes have been killing the middle class for years and will continue to until something is done. The standard of living is defined by the middle class, and if we keep holding it back with the middle class high tax, we have nowhere to go. Taxing the upper class is the best decision that could be made at this point.

[Saru Inc]

 

I think the general consensus now is that this crisis is helping Obama, who's much more economically literate than McCain. Although it's hard to make predictions at this stage, I think an Obama lead White House would give the economy more of a boost than another Republican who needs to rely on his advisers.

 

 

 

It is helping him but it really shouldn't be. Obama winning would kill the market. His tax policies are to give tax cuts to middle class and raise them by a massive amount on the rich and business. While any tax cuts are good it's mostly upper class people who are investors. If I know that the capital gains tax is going to go up am I really going to invest much? Now is the time for at least a temporary reduction to 10%.

 

 

 

 

 

That's so true, actually; when people have a lot of money (i.e. rich people), they have well, maybe not left over money per se, but they're not scorunging for money, so they invest. And if you tax them, they'll have less money. Same reason why you never raise taxes in a situation like this: people don't want to spend any money right now, tax them more, and then they won't have as much money, thus locking away their wallets, and not spending any at ALL. Now, THAT will lead into a deeper depression, people will lock away thewir wallets, so no one is buying anything, so Businesses are losing money so they die out. Then the workers get fired, and then they really do have no money at all.

[Lenticular_J]

Obama's and McCain's economic policies are near the same - well, most of their policies are, but that isn't the point of this thread. That's the trouble with our having two parties - both full of rich, old blue-blood families that want to keep their wealth.

 

 

 

They won't be raising taxes on the rich. They are the rich, anyways.

 

 

 

I hate our politics. Oh well. Let's economic crash it up, I guess.

[assassin_696]

It is helping him but it really shouldn't be. Obama winning would kill the market. His tax policies are to give tax cuts to middle class and raise them by a massive amount on the rich and business. While any tax cuts are good it's mostly upper class people who are investors. If I know that the capital gains tax is going to go up am I really going to invest much? Now is the time for at least a temporary reduction to 10%.

 

 

 

McCain's promise to cut taxes whilst still balancing the budget is ludicrous. If you want the value of the dollar to keep falling then by all means vote for McCain. Obama's not budging the cap gains tax for those earning less than $250000, which is the majority, and even for those with more it's only going up by 5%. This is proportional to the investment that these kind of earners make and won't significantly hurt their investments. He's increasing income tax by 3% for that same group. To break it down, 80% of households would pay less tax whilst only 10% would pay more. Hardly a "massive amount". I think it's fairly plain to see that Obama would most likely boost investment in a large sector of the economy and not dramatically reduce it in the wealthier sector. There is no evidence that Clinton's 1993 tax increase stopped the wealthy from working harder and investing significantly less. Whatever benefits McCain's tax cuts might have would completely be cancelled out by the borrowing needed to finance his deficit.

 

 

 

Besides, this crisis isn't fuelled by the wealthy hedging their bets about whether or not to buy a few more shares, it's been caused by the generation of billions of dollars worth of toxic assets in the form of dodgy subprime loans. It isn't the wealthy who are unable to pay these loans off. The response to this crisis will come through the candidate's policies on regulation and what to do with the banks. And this certainly isn't the time for laissez-faire politics.

 

[hide=]

It's worrying. This is almost the same situation as the Great Depression. Previously, so-called 'experts' tried to claim it wasn't a repeat, because only the banks were failing, but now the other half of the equation is also hanging over - the stock market crash. We're not at crash stage yet, but we are very close. We've chucked the kitchen sink at it, and it still hasn't worked. Eventually, our leaders will have to come to the conclusion that we are entering a recession, quite possibly on the scale of the depression.

 

 

 

Why is that so bad though? After all, capitalism has troughs as wells as peaks. It has to bleed capital periodically to function. As others have pointed out, the bubble has to burst eventually.

 

 

 

Well, there is one major difference between now and the Depression - the lack of another economic system. In the Great Depression, there was free enterprise in the American and European markets, but there was also another working system in the world - the system made by the Bolsheviks in the then Soviet Union. This, along with the ongoing threat of War against the Nazis, revived industry and reversed the trend of recession into positive growth. Now no such situation exists, and it is difficult to see where this economic crisis, which started off only as a financial crisis, is going to stop, given there is now no major power in the world with a non-Capitalist system. The bottom of this pit is not in sight, and we are certainly not going to hit rock bottom in the next few weeks.

 

 

 

There are other impacts too. Namely, the rise of political extremism. Extremist groups, such as the Nazis and the Bolsheviks, came into prominence during periods of extreme economic difficulty. History tells us there is a link between economic hardship and political extremism. The Bolsheviks rose to power during the First World War, after Russia's economic system, which was barely more than Feudalism, was proven to be an inadequate model to fight a sustained war in the new modern arena. The Nazis rose to power following the Depression, as well as the impact of the Treaty of Versailles on the German real economy. When people are desperate for a solution, they are more likely to ignore the background beliefs of a radical party, in the belief they are the way forward. The seeds of extremism are already sown, and they are shooting. Austria recently held its legislative elections, in which the Austrian Freedom Party, the extreme right, made massive gains. They are now just a grasp away from power.

 

 

 

Then there is also the issue of America's influence over the rest of the world. The election between a black man and a Vietnam vet for the keys to the White House seems meaningless when there is a greater ideological battle in the world. After all, there is no real difference between either of them - both basically support the principles of a free market. If my fears in the second paragraph are true, then the American-born idea of global capitalism has been proven to be a toxic foreign export from the US. Russia has already closed its stock markets in anticipation that confidence in the markets will not improve in near times to come. This is not the collapse of Capitalism, even if Marxists such as myself wish it were, but there is little chance of India or China, the two upcoming rulers of the 21st Century and the latter being a 'former communist state', greeting the laissez-faire model with open arms for very long after this.

 

 

 

If you're a moderate, free market-loving American, life doesn't look good for the next year or two.

[/hide]

 

 

 

For a start, Marxism is hardly the solution to this and wasn't the solution to the last depression. And as bad as this week might have been, it's no 1929. The depression really got going because of incompetency on behalf of the American administration, they were reluctant to offer any support to the failing banks. This hasn't been the case this time. I don't know how you define rock-bottom, if you mean the trough of the stock market then depending on who you talk to it's either already been hit or another 1000 points will be wiped off the markets in the next few weeks before they start to recover. I would imagine short of a catastrope rock bottom will come soon.

 

 

 

I believe the election of the Austrian far right party has little to do with this crisis, although I'm not sure. I agree that traditionally in times of hardship people move away from the centre, but I'm not sure that this is the case this time. Communism has only recently been shown to the world to be an utter failure when it comes to providing a viable solution, and there hasn't been a recession like this since the Berlin Wall came down. And unless the far right come up with some rather brilliant economic policies soon no major power is going to take them seriously. You answer your point in the next paragraph, ideologically both Obama and McCain favour free markets, so where's the extremist threat to the major powers?

 

 

 

This crisis is not a failure of capitalism, it is a failure caused by incompetent regulation and irresponsible lending. The fact that these things stem from capitalism is irrelevant, it's important not to throw the baby out with the bathwater and China and India will see that. China's economic growth is entirely down to them adopting a more free market based approach, they're not going to abandon that in a recession.

[jackattack]

People who make under $250,000 a year aren't really the biggest investors in the stock market. Considering how bad it is doing we need more investment, not less. I think he wants to raise the capital gains tax back up to 28%. That's stupid. When Bush cut it he doubled the revenue. Why raise it if you will take in less revenue? Oh wait..."Fairness" And while McCain won't balance the budget he will come closer than Obama.

 

 

 

 

 

 

It is helping him but it really shouldn't be. Obama winning would kill the market. His tax policies are to give tax cuts to middle class and raise them by a massive amount on the rich and business. While any tax cuts are good it's mostly upper class people who are investors.

 

That's a good thing. The rich in the America are a very small percentage compared to the middle class. Taxes have been killing the middle class for years and will continue to until something is done. The standard of living is defined by the middle class, and if we keep holding it back with the middle class high tax, we have nowhere to go. Taxing the upper class is the best decision that could be made at this point.

 

 

 

It's the worst decision we could possibly make. Upper class people are the investors and owners of businesses. Increasing taxes on the would discourage investment and cost jobs. I would agree that tax relief should be directed towards the middle class first even though that is unfair. It would be terrible for the economy to raise taxes on businesses and the rich.

[RSBDavid]

At least with the messed up economy, gas prices are going down. I drive 50 miles to work everyday and it kills on gas.

[Ginger_Warrior]

Remember, "upper class" and "middle class" have different socio-economic meanings on either side of the Atlantic. Business owners here are the middle class.

 

 

 

Living in a house worth six digits doesn't make you middle class. If people think it does, maybe that's why we are in this mess in terms of the housing market crashing.

[Lenticular_J]

Huh, never knew that was middle class over there. Here, it's anyone who lives relatively comfortably, but still works - and most likely, not for themselves, unless it is a small business.

[Deiophobus]

At least with the messed up economy, gas prices are going down. I drive 550 miles to wrok everyday and it kills on gas.

 

 

 

Really?

 

 

 

I haven't seen the effects of this yet, as my city is one of the most affluent in the state, but I'm sure it will start soon. My worry at the moment is whether I'll be able to get loans from banks for college. Does anyone know the state of that? I was under the impression that banks don't make that much from college loans anyway, but if it's going to be a problem I would like to know.

[1_man_army]

People who make under $250,000 a year aren't really the biggest investors in the stock market. Considering how bad it is doing we need more investment, not less.

 

 

 

 

If you give the majority of people a break it will allow them to spend, which ultimately will help business to get back on it's feet which will have the knock on effect of getting the banks trading again.

[RSBDavid]

At least with the messed up economy, gas prices are going down. I drive 550 miles to wrok everyday and it kills on gas.

 

 

 

Really?

 

 

 

I haven't seen the effects of this yet, as my city is one of the most affluent in the state, but I'm sure it will start soon. My worry at the moment is whether I'll be able to get loans from banks for college. Does anyone know the state of that? I was under the impression that banks don't make that much from college loans anyway, but if it's going to be a problem I would like to know.

 

 

 

Meant to say 50 >.<. ANd gas is 2.94-2.99 /gal here where I live and even cheaper If i use the companies credit card.

[Lenticular_J]

Gas is still 3.50 or so a gallon here, I don't know why. A town a hundred miles north of us has 2.60 a gallon, I think. Which is stupid.

[remington]

People who make under $250,000 a year aren't really the biggest investors in the stock market. Considering how bad it is doing we need more investment, not less.

 

 

 

 

If you give the majority of people a break it will allow them to spend, which ultimately will help business to get back on it's feet which will have the knock on effect of getting the banks trading again.

 

 

 

And if you raise the taxes on the minority that just happen to run the businesses and also raise the taxes on the businesses themselves what happens?

 

 

 

I know if I ran a business and it's taxes got raised I'd raise the price of my final product to compensate.

 

 

 

Which means the buying power of the majority gets lowered so they STILL get to bear the burden of higher taxes.

 

 

 

The best thing is to cut spending, and deal with the consequences now, instead of waiting and dealing with something 100 times worst later.