There will be tough economic times ahead

[antonioac]

I wish I could share some optimism to all of you, but looks like the worst might be in front of us. There are no clear indications of the gravity of the entire complexity of the crisis; no one has sufficient courage to inform the market, which are the real numbers behind the collapse of the subprime. Yesterday, the US treasury secretary warned that more banks will fail despite the $700bn rescue package to shore up the financial system, telling also that the financial crisis would not end soon. In addition and in the same day, the IMF's chief economist, Oliveri Blanchard, said the orchestrated rate-cuts could not solve the world's financial crisis on their own but were clearly a step in the right direction. What this mean for us? Difficult times ahead. My crystal ball is not happy these days neither forecast that the current fall in the stock market will end soon. The only conviction that I have after this comment is the clear certainty that the coming year will be bad. It will be very rough. A lot of bad things will happen again with a lot of layoffs and an international turmoil. From now on, playing in this market will be tough, where any stop loss must be well introduced to avoid the high levels of volatile. No one is more confident about the financial institutions; the losses exceeded the reality for many people. The responsible for these bankruptcies are now enjoying the sun and the beach somewhere in the world, while most of the shareholders are crying in the streets with their pockets completely empty. What democracy is this ? Why there is no law to punish these guys ? The economy is near collapse thanks to those vultures.

By AC

[Bolimomo]

Originally Posted by antonioac

.....
The responsible for these bankruptcies are now enjoying the sun and the beach somewhere in the world, while most of the shareholders are crying in the streets with their pockets completely empty. What democracy is this ? Why there is no law to punish these guys ? The economy is near collapse thanks to those vultures.

Now com'on... This is scape-goating. The state of our economy cannot be just pin-pointing on a few bad CEOs of banks. They wish they have that kind of power. I am not on the side of these bad guys who conduct risky businesses but I think Americans public by and large are partially responsible too. You can blame it on the bankers who approve loans to questionable borrowers. But you think those who "living beyond their means" greedy bastards who signed the loan docs knowing that they might not be able to repay the loans are all innocent and are just victims?

From 2002 on, we got a war-stimulated economy. Cheap credits. Rising house prices, which turned into a bubble. House prices rose too far too fast. And that led to many people living a life that's supported by home-equity or other loans. Buying new cars, luxury vacations, whatever. The business environment attracted financial institutions to go brave with subprime loans. "The house prices always go up, right?". We Americans as a nation borrow way too much money and save too little. One can look at the figures of our national debt compared to GDP over the past decades. As new home sales topped out in 2005, house prices peaked, then subprime loans finally showed their problems, and a series of triggering effects that led to our credit crunch issue now and stock market crashes.

Easy, cheap credits usually precede stock market crashes, as did in 1929.

[lynn fishman]

These vultures sicken me. And yet the saga continues.... Check out AIG's latest vacation at the expense of the taxpayers. The government bails them out and then they spend $23000.00 on spa treatments. When will this type of behaviour ever end?

[Dutch]

I don't get it either.
For instance, why had the US government to put in appr. 100 billion dollars into AIG?
They could have simply taken over all the insurances, create a federal insurance company, and let the rest just rot away.

They would have had a substantial source of income with wich they could have handed out the so much needed loans to the companies that do real business.

The fact that the "fried air" economy is a lot bigger than the real economy, makes me very scared.

Jim Rogers is right when he says that the bailout plan is not going to work, and that the government should just let those quote "29 year olds driving Maseratis, just go bust".

There is going to be economic pain anyway, the bailout plan is just making it take longer to get out of this crisis.

So my humble opinion is: Let all those greedy bastards go bust, let it be over as quickly as possible.

The thing that happens now is, that a lot of good money will get burned in an already failed attempt to recover a really huge amount of already lost money.

Thats my two cents.

[aiki14]

Originally Posted by Dutch

Jim Rogers is right when he says that the bailout plan is not going to work, and that the government should just let those quote "29 year olds driving Maseratis, just go bust".

I am totally against this. Flooding the market with used Maserati's would be a terrible thing. You are forgetting about all the hard working Maserati owners whose resale value would plummet. Remember, for every snot nosed wall street brat driving a Grandtourismo, there is an honest Quattroporte owner struggling to put his daughter through Brown.