Will the stock market hold...or is the bubble ready to burst?

The stock market has been overvalued ever since the 'irrational exuberance' days of Alan Greenspan - the former Federal Reserve Board chairman, IMO. Good for us, it has so far withstood all the crisis ever since that time, beginning with the Asian crisis, to 9/11 and Iraq war continuing up to now, primarily because of the safeguards that the government and the market have instituted over the years. We are facing a real crisis now and the situation is far worse than any of those previous crises, one of the worst in the recent times. Will all the safeguards put in place over the years help now? But the real questions is, if the safeguards were really in place, would the subprime crisis happened? Time has shown over and over that easy credit is a no-no for the health of any economy. The government and the market's decision to allow the stock prices to soar to unprecedent level even after Greenspan's famous warning puts to doubt if there indeed were adequate safeguards put in place, which makes the stock markets condition eerily similar to the loan market condition just before the subprime crisis. Without some form of intervention, the stock value can go up and up as long as there's fuel (money) to feed it. Once the money that feeds the prices up starts to dry up, the price will start to collapse and the long bubble would finally burst. The subprime loan crisis and the record-breaking oil prices are putting enormous pressure on those money that supports the stocks. So my friends, you may not be aware of it but there is a serious possibility that the long overvalued stocks could finally crash, putting the whole economy into a real crisis situation that we haven't seen in the recent years. Are we ready for this???

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

We always think we are the big picture, but it's key to recognizing the past and understanding it to see what the future will be like.

AMericans today just expect the economy to grow indefinitely and when there is any hitch in that it's always "OH NO!!!"

Economies dont just go up and up all the time. Nothing in life works that way, nothing can grow without consequence, there will always be set backs.

I'd say what is happening now is a natural process and for those who have belief in the system will adhere to the old adage "buy low and sell high" ;)

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Originally Posted by Clubber

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

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No Clubber, it probably won't be that bad though. It would probably mean that some people will lose some money and lots of jobs would be gone. I actually don't see it happening; it's just the possibility of that happening that bothers me. The possibilility is there no doubt, but it is a small one. But who feel comfortable thinking even just the possibility of losing jobs, right? All I can say for sure is that it can happen, but it probably won't. Let's just keep our fingers crossed.:)

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Originally Posted by Cortez The Killer

We always think we are the big picture, but it's key to recognizing the past and understanding it to see what the future will be like.

AMericans today just expect the economy to grow indefinitely and when there is any hitch in that it's always "OH NO!!!"

Economies dont just go up and up all the time. Nothing in life works that way, nothing can grow without consequence, there will always be set backs.

I'd say what is happening now is a natural process and for those who have belief in the system will adhere to the old adage "buy low and sell high" ;)

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Very well said.

9-11 was a huge factor. greenspan cut the fed funds rate to about 1% making loans easy to come by. the lack of regulation in the housing market exacerbated the prblem which eventually precipitated the subprime crisis. but its also the variable rate loans that eventually rebalanced combined with offshorig of manufacturing jobs that have perpetuated the housing market woes and the overall economy

the market overall will be fine in the lung run. if you look at history, black monday is a blip, the tech bubble isn't really noticeable and there has never been a 10 year period where there wasn't a gain.

if a crash is on your mind, short index futures.

There's a bubble in almost all capital markets right now. There's a vast amount of newly-printed money constantly being pumped into the financial system and that's a. causing the problem and b.going to keep the problem going till somebody gets a grip on monetary policy. Until then anything can happen. Long term, the stock market is a good investment. Short term, it all depends.

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Originally Posted by pacfan

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Originally Posted by Clubber

Does that mean any and all money we have in our banking accounts will be lost? (Like the Great Depression?)

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No Clubber, it probably won't be that bad though. It would probably mean that some people will lose some money and lots of jobs would be gone. I actually don't see it happening; it's just the possibility of that happening that bothers me. The possibilility is there no doubt, but it is a small one. But who feel comfortable thinking even just the possibility of losing jobs, right? All I can say for sure is that it can happen, but it probably won't. Let's just keep our fingers crossed.:)

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What a relief. It's already hard enough to find a job out there as it is. Several factories in the town we live in have already been shut down, even though they'd been in business for years.

http://i17.photobucket.com/albums/b8...ax_630_378.pnghttp://i17.photobucket.com/albums/b8...ax_630_378.pnghttp://i17.photobucket.com/albums/b8...ax_630_378.pnghttp://i17.photobucket.com/albums/b8...bers/HHGDP.jpghttp://i17.photobucket.com/albums/b8...bers/HHDPI.jpg

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Originally Posted by pacfan

The stock market has been overvalued ever since the 'irrational exuberance' days of Alan Greenspan - the former Federal Reserve Board chairman, IMO. Good for us, it has so far withstood all the crisis ever since that time, beginning with the Asian crisis, to 9/11 and Iraq war continuing up to now, primarily because of the safeguards that the government and the market have instituted over the years. We are facing a real crisis now and the situation is far worse than any of those previous crises, one of the worst in the recent times. Will all the safeguards put in place over the years help now? But the real questions is, if the safeguards were really in place, would the subprime crisis happened? Time has shown over and over that easy credit is a no-no for the health of any economy. The government and the market's decision to allow the stock prices to soar to unprecedent level even after Greenspan's famous warning puts to doubt if there indeed were adequate safeguards put in place, which makes the stock markets condition eerily similar to the loan market condition just before the subprime crisis. Without some form of intervention, the stock value can go up and up as long as there's fuel (money) to feed it. Once the money that feeds the prices up starts to dry up, the price will start to collapse and the long bubble would finally burst. The subprime loan crisis and the record-breaking oil prices are putting enormous pressure on those money that supports the stocks. So my friends, you may not be aware of it but there is a serious possibility that the long overvalued stocks could finally crash, putting the whole economy into a real crisis situation that we haven't seen in the recent years. Are we ready for this???

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So you know some concepts in financial management pacfan.;D What I'm more concerned is the increasing price of fuel.:eek: It's very alarming.

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Originally Posted by brucelee

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Originally Posted by pacfan

The stock market has been overvalued ever since the 'irrational exuberance' days of Alan Greenspan - the former Federal Reserve Board chairman, IMO. Good for us, it has so far withstood all the crisis ever since that time, beginning with the Asian crisis, to 9/11 and Iraq war continuing up to now, primarily because of the safeguards that the government and the market have instituted over the years. We are facing a real crisis now and the situation is far worse than any of those previous crises, one of the worst in the recent times. Will all the safeguards put in place over the years help now? But the real questions is, if the safeguards were really in place, would the subprime crisis happened? Time has shown over and over that easy credit is a no-no for the health of any economy. The government and the market's decision to allow the stock prices to soar to unprecedent level even after Greenspan's famous warning puts to doubt if there indeed were adequate safeguards put in place, which makes the stock markets condition eerily similar to the loan market condition just before the subprime crisis. Without some form of intervention, the stock value can go up and up as long as there's fuel (money) to feed it. Once the money that feeds the prices up starts to dry up, the price will start to collapse and the long bubble would finally burst. The subprime loan crisis and the record-breaking oil prices are putting enormous pressure on those money that supports the stocks. So my friends, you may not be aware of it but there is a serious possibility that the long overvalued stocks could finally crash, putting the whole economy into a real crisis situation that we haven't seen in the recent years. Are we ready for this???

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So you know some concepts in financial management pacfan.;D What I'm more concerned is the increasing price of fuel.:eek: It's very alarming.

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Eventually the gas will start going down. Just pray and have faith, and do as little driving as you can.

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Originally Posted by Clubber

Eventually the gas will start going down. Just pray and have faith, and do as little driving as you can.

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I highly doubt that mate, as right now we would be getting pretty close to peak oil. But I'm glad my dad is not on this site, he would be writing a 20 page essay on this as we speak. But basically many western economies along with the world will probably be screwed over by this. With that level of debt and people living beyond there means people's standard of living is going to fall eventually and take with them not only the US but dent the world's economy. Although Aus will be fine with our plentiful supply of natural resources :)

Fed auctions $75 billion to banks to ease credit stresses
Tuesday May 6, 1:27 pm ET
By Jeannine Aversa, AP Economics Writer
Fed auctions $75 billion to banks to ease credit woes, total is $435 billion since December WASHINGTON (AP) -- Battling to relieve stressed credit markets, the Federal Reserve said Tuesday it has provided a total of $435 billion in short-term loans to squeezed banks since December to help them overcome credit problems. The central bank announced the results of its most recent auction -- $75 billion in short-term loans -- the 11th such auction since the program started in December.
It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March.



Fed auctions $75 billion to banks to ease credit stresses: Financial News - Yahoo! Finance


While the Fed keeps printing money on this scale to deal with the results of Bush's disastrous presidency, oil prices are only going to remain high. If you think gas is expensive now, just wait till the summer.

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Originally Posted by Kirkland Laing

While the Fed keeps printing money on this scale to deal with the results of Bush's shitty and pathetic presidency, oil prices are only going to remain high. If you think gas is expensive now, just wait till the summer.

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It already IS summer. :(

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Originally Posted by Kirkland Laing

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Ooogh. We not only have a stock bubble but also a debt bubble, part of which already burst. National (public) debt is always manageable but the level of those personal household debt is somewhat alarming, especially the increase in percentage relative to the disposable income. But let me tell you that debts themselves are not necessarily bad things as long as they are manageable. You can keep on borrowing and borrowing without problem as long as you have the capacity to pay the due amounts. But the problem is that any imbalance in the economy may affect that capacity or capability to pay. Now, we are faced with at least two of them, the subprime crisis and the high oil price. IMO, among the three of them, the debt crisis, high oil price and the stock market, one gotta give. So the way I see it, if the subprime debt crisis and the high oil price persists, the stock market, which is the barometer of economic health, will be increasingly vulnerable. But, good for us, even if it falls it'll probably be a soft landing like a domino tipped with short one-ended track. But - a big but - on the other hand, it is not entirely impossible that the domino could be a long, multi-ended tracks, which once tipped could have immense impact on the economy. I have to say that I'm not about to press the panic button, but still, it won't hurt to be prepared for the worst. So what I'm trying to impress upon you guys here is that you should at least be prepared for the worst, mentally and emotionally - there is nothing to lose. Though it's easy to exagerrate the effects of economic decline, the worst that can happen is that there will be more business and personal bankrupcies, more lost jobs, less or even negative economic growth, which translates as lesser overall wealth and declining values of your assets (properties) and earnings. Can you live with that? Of course you can. At least you guys in the developed world are still lucky because you probably won't go hungry, unlike the rest of the world.

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Originally Posted by brucelee

So you know some concepts in financial management pacfan.;D What I'm more concerned is the increasing price of fuel.:eek: It's very alarming.

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No, I'm just a boxing fan who dabbles in everything.;D

Seriously, I wanted to involve myself in local socio-econo-political discussions but just don't have the time to do so. You probably know we got lots of mess to clean up.:(

Unfortunately whenever a topic like this comes up everyone gets wrapped up in the details and the side effects of the real problem.

We have debt money. There is perpetually more debt than money. This is because of the way the system is designed. There is no way to get out of debt unless the system is changed. There is too much debt owed to people who do nothing. Money is simply to exchange things between people, the people who provide the money get too much out of it.

For a house... you borrow $100k but you pay back $300k. The person who built, sold, and lived in the house get paid out of the $100k. Then the other $200k of interest is payed out the rest of your life. To put it simply we have economic leeches that are sucking the system dry.

Don't believe that there's lack in this world. We have plenty of food, water, shelter, for every human on the planet. But it's being held back for money. One fastfood chain's waste for a day could feed all the starving people. The major hotels have enough empty rooms, the newly built houses that are empty, etc. Don't believe the hype. There's plenty for everyone, but millions starve so hundreds can have so much they couldn't spend it in their life times.

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Originally Posted by pacfan

Ooogh. We not only have a stock bubble but also a debt bubble, part of which already burst. National (public) debt is always manageable but the level of those personal household debt is somewhat alarming, especially the increase in percentage relative to the disposable income. But let me tell you that debts themselves are not necessarily bad things as long as they are manageable. You can keep on borrowing and borrowing without problem as long as you have the capacity to pay the due amounts. But the problem is that any imbalance in the economy may affect that capacity or capability to pay. Now, we are faced with at least two of them, the subprime crisis and the high oil price. IMO, among the three of them, the debt crisis, high oil price and the stock market, one gotta give. So the way I see it, if the subprime debt crisis and the high oil price persists, the stock market, which is the barometer of economic health, will be increasingly vulnerable. But, good for us, even if it falls it'll probably be a soft landing like a domino tipped with short one-ended track. But - a big but - on the other hand, it is not entirely impossible that the domino could be a long, multi-ended tracks, which once tipped could have immense impact on the economy. I have to say that I'm not about to press the panic button, but still, it won't hurt to be prepared for the worst. So what I'm trying to impress upon you guys here is that you should at least be prepared for the worst, mentally and emotionally - there is nothing to lose. Though it's easy to exagerrate the effects of economic decline, the worst that can happen is that there will be more business and personal bankrupcies, more lost jobs, less or even negative economic growth, which translates as lesser overall wealth and declining values of your assets (properties) and earnings. Can you live with that? Of course you can. At least you guys in the developed world are still lucky because you probably won't go hungry, unlike the rest of the world.

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What's going to happen in the future is that economys are going to keep growing, but the wealth generated by those economys is going to increasingly end up at the very top end of the earnings scale. People who have to work for a living are fucked as labour rates are increasingly arbitraged downwards by the billions of new workers in the global economy.


In America the median wage has stood still since Reagan took office and this generation won't do as well economically as their parents. For the next generation or two in industrialised countries, things will be increasingly tricky for their populations. But in the long run -- by which I mean the long run in which we're all dead -- economic circumstances will improve immeasurably.

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy. :rolleyes:


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

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Originally Posted by Lyle

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy. :rolleyes:


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

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Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

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Originally Posted by Kirkland Laing

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Originally Posted by Lyle

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy. :rolleyes:


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

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Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

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I've just breezed through these articles which were written on early 2006, several months after the start of oil price increases but little over a year before the eruption of the subrime loan crisis. It pretty well illustrates why the theorists' views sometimes fail against what actually happens, or collides with that of what businesses (the practical ones) actually do.

The part about household debts clearly illustrates my point. The author strongly implied that the household debt situation was healthier than what the data were indicating then (2006). In his analysis, he even included the mortgage credits, which is where the subprime loans comes in, and everyone by now knows what actually happened. Let me quote the crucial part of his analysis:


<EM>For investors, this scrutiny of the data has important implications. Careful analysis of consumer debt service and financial obligations ratios reveals a healthier American consumer than commonly thought. That throws some cold water on the pessimists’ slowdown story, because presumed household balance-sheet fragility is the lynchpin for that scenario. If I’m right about the prospects for improving job growth and wage gains, moreover, my colleague David Greenlaw and I think the housing bust scenario that many investors fear is far fetched. In our view, it would take soaring interest rates or declining employment to produce a bust (see “Housing Wealth and Consumer Spending” and “Home Sweet Home,” Global Economic Forum,

Wait a minute folks, I've put much more than what came out above, the reply posting is having some bugs here so I'll continue later. Probably it has something to do with the copy and pasting.

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Originally Posted by pacfan

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Originally Posted by Kirkland Laing

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Originally Posted by Lyle

Kirkland....always the happy go lucky, sunshine on my shoulders, today is a wonderful day kind of guy. :rolleyes:


A better way to look at things is this way: "Now or in the recent future is a great time to invest"

---

Here are a couple of articles for you to read. They're written by partner in one of the world's biggest investment firms. This guy is one of the high priests of globalisation, and these articles caused controversy in the financial community when they were released. They're long and have no pictures but for somebody just setting out on the earning curve they're very worth reading. Try taking in some actual facts instead of nonsense, you'll benefit in the long run :

Morgan Stanley - Global Economic Forum


Morgan Stanley - Global Economic Forum

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I've just breezed through these articles which were written on early 2006, several months after the start of oil price increases but little over a year before the eruption of the subrime loan crisis. It pretty well illustrates why the theorists' views sometimes fail against what actually happens, or collides with that of what businesses (the practical ones) actually do.

The part about household debts clearly illustrates my point. The author strongly implied that the household debt situation was healthier than what the data were indicating then (2006). In his analysis, he even included the mortgage credits, which is where the subprime loans comes in, and everyone by now knows what actually happened. Let me quote the crucial part of his analysis:


<FONT face="Times New Roman" size=3><EM>For investors, this scrutiny of the data has important implications. Careful analysis of consumer debt service and financial obligations ratios reveals a healthier American consumer than commonly thought. That throws some cold water on the pessimists’ slowdown story, because presumed household balance-sheet fragility is the lynchpin for that scenario. If I’m right about the prospects for improving job growth and wage gains, moreover, my colleague David Greenlaw and I think the housing bust scenario that many investors fear is far fetched. In our view, it would take soaring interest rates or declining employment to produce a bust (see “Housing Wealth and Consumer Spending” and “Home Sweet Home,” Global Economic Forum,

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Nobody working on Wall Street will ever state publicly that they think any capital market in anything is going to lose value at any point in the future. Everything is always a fantastic investment and only ever going to improve.

When one of these characters whose job it is to boost up the products his company buys and sells tells you that there's trouble ahead it's worth paying attention to.

Let me continue where I left off.

But at least, the author had some forsight to say that,

As always, there are risks to the story. The American consumer isn’t invincible; for example, even moderate levels of debt and debt service can turn into vulnerabilities in the face of shocks such as supply-induced energy price hikes. Contrariwise, however, if energy prices stabilize and job gains improve moderately, overall growth may be stronger, inflation risks higher, and monetary policy may tighten further than is currently in the price.

Those vulnerabilities are exactly what I've been trying to point out here. High oil prices and subprime mortgage crisis are putting some (nobody knows exactly how much) pressure on the stock market, making it vulnerable to fall - the whole idea behind this thread. So now, you guys know why I'm a bit (to put it mildly) concerned about the health of the stock market.


About the falling real income of rich countries, geez, that's common sense! It goes like this: when a country become rich, because of high income and strong demand, the overall cost tends to go up. Businesses, which continuously aims for efficiency, naturally don't like high costs. So when the costs go up, they tend to shift to places where the costs (relative to production) are lower thereby shifting some of the incomes there.

Where the original idealists of globalization probably failed is that they failed to see the magnitude of that shift. They thought that the shift would probably be limited to low-tech, purely labor related areas. But that was clearly not the case, they shifted almost everything.;D

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Originally Posted by Kirkland Laing

Nobody working on Wall Street will ever state publicly that they think any capital market in anything is going to lose value at any point in the future. Everything is always a fantastic investment and only ever going to improve.

When one of these characters whose job it is to boost up the products his company buys and sells tells you that there's trouble ahead it's worth paying attention to.

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Yup, even the news that comes from Wall Street usually paints the rosier side of the picture. They've got business to protect - which runs into trillions:o of dollars.

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Originally Posted by pacfan

Let me continue where I left off.

But at least, the author had some forsight to say that,

As always, there are risks to the story. The American consumer isn’t invincible; for example, even moderate levels of debt and debt service can turn into vulnerabilities in the face of shocks such as supply-induced energy price hikes. Contrariwise, however, if energy prices stabilize and job gains improve moderately, overall growth may be stronger, inflation risks higher, and monetary policy may tighten further than is currently in the price.

Those vulnerabilities are exactly what I've been trying to point out here. High oil prices and subprime mortgage crisis are putting some (nobody knows exactly how much) pressure on the stock market, making it vulnerable to fall - the whole idea behind this thread. So now, you guys know why I'm a bit (to put it mildly) concerned about the health of the stock market.


About the falling real income of rich countries, geez, that's common sense! It goes like this: when a country become rich, because of high income and strong demand, the overall cost tends to go up. Businesses, which continuously aims for efficiency, naturally don't like high costs. So when the costs go up, they tend to shift to places where the costs (relative to production) are lower thereby shifting some of the incomes there.

Where the original idealists of globalization probably failed is that they failed to see the magnitude of that shift. They thought that the shift would probably be limited to low-tech, purely labor related areas. But that was clearly not the case, they shifted almost everything.;D

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The subprime mess is inadvertantly propping the stocl market up as a great deal of the money the Fed is printing ends up being invested in stocks. Also the current inflationary monetary policy means that future inflation is factored into current stock prices, propping them up too.

Falling incomes wasn't in the brochure when the benefits of deregulating world markets was being sold to western populations. It's unlikely they'll view the effects of globalisation favourably in the future. Maybe if you're worried about the stock market it might be a good time to hedge your investments by investing in pitchfork futures.

Mr. Doom and Gloom strikes again....we haven't even really had a TRUE recession.....although it might be better for everyone in the long run if we had one as it corrects the market in small doses as opposed to an economic doomsday a la the Great Depression.

If the US economy tanks then everyone else is going to follow....same thing happened a couple years ago with the Asian markets. Everyone was like "Oh my God the World is going to end China and Japan are having a hard time!!!" well everyone is still here.....and the greatest thing.....Europe is next....have fun yall ;)

The US economy will continue to soar upward barring the occasional hiccup. The problem is that the beneficiaries of that growth are a small number of people and the vast majority of Americans are treading water at best and will be worse off in the long run. People entering the job market today will not do as well economically as their parents.

Okay, folks, here comes mr. doomsday...

Ya kirk, no doubt for most Americans the real income hasn't gone up in awhile. It has to do with the maturity of the US economy. The average income has gone up to the level where it has affected the overall costs of doing business there and so any effort to increase production activities is negated by that increase in costs. It's sort of a state of equilibrilium - increase production - increases incomes - which increases costs - which then pulls down production - and which in turn pulls down income; sort of tug-of-war that keeps income from going up. Of course some of it has to do with the migration of jobs due to globalization. Something similar happened in Japan almost 2 decades back. Japan has reached the peak of its production activities, practically producing everything for the world, which tremendously increased their income. With huge amount of money in the system and few other options left to invest within the country, it chased limited assets, chiefly real estates and stocks, resulting in highly unrealistic assets prices or the bubble. To make the situation worst, they had almost unlimited savings which means unlimited loanable funds, most of which found their ways to the property/stock markets, further hyper-inflating their prices. And you know what happened next; the bubble got so big that it wasn't able to hold itself anymore and so it burst. Ever since then, the Japanese economy went through a long period of deflation, something almost unheard of until that time, where the value of of almost everything there went down, including the income.

Of course the situation between Japan and the US is quite different as the US still has much more room for growth in its economy. But because of globalization, they are limited to only certain areas of the industry, mainly the services-oriented IT related ones, which as you've said, makes only few individuals rich - hyper-rich, while most other people's wealths are unaffected.

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Originally Posted by Lyle

Mr. Doom and Gloom strikes again....we haven't even really had a TRUE recession.....although it might be better for everyone in the long run if we had one as it corrects the market in small doses as opposed to an economic doomsday a la the Great Depression.

If the US economy tanks then everyone else is going to follow....same thing happened a couple years ago with the Asian markets. Everyone was like "Oh my God the World is going to end China and Japan are having a hard time!!!" well everyone is still here.....and the greatest thing.....Europe is next....have fun yall ;)

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Are you basing our "true" recession on statistics? You might enjoy this article...

Behind the falsification of US economic data

:mad:

Whether the Dow takes a trip to 7000 in the next year or so depends on events, but one thing we are assured of is inflation. This is just the start of it, worth reading :

Pressure from oil prices spreads - International Herald Tribune


This is all down to the idiot Bush. I'm really furious about that guy right now. In a day or two I'm going to install a piece of art in this thread expressing my feelings for George. :)

Yup, the effects of high oil price is starting to show their ugly faces little by little. As I've said, something's gotta give - either the oil price or debt crisis eases or the stock market goes, though that doesn't necessarily mean it'll end up in a depression, but definitely a recession at the least...

...go slow on the ol' man though, he ain't got much time left anyway, I mean in the office.;D;)

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Originally Posted by pacfan

Yup, the effects of high oil price is starting to show their ugly faces little by little. As I've said, something's gotta give - either the oil price or debt crisis eases or the stock market goes, though that doesn't necessarily mean it'll end up in a depression, but definitely a recession at the least...

...go slow on the ol' man though, he ain't got much time left anyway, I mean in the office.;D;)

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The debt crisis is going to get a lot worse. It's going to get worse as long as house prices keep falling. We haven't seen the start of the bank failures yet, then there's all the investment banks which have bs accounting and are all in trouble. If it gets as bad as it could and the Fed bails everybody out as they almost certainly will, the amount of money they'll have to print to do it will see oil hit $250-300.

And that's just if the credit crunch doesn't extend past the current markets it's affecting. It's already making its way into regular prime debt, personal debt, you name it. Bond insurers are shitting themselves. The stock market tanking may not even be the worst problem we have to face. The credit swaps market is four times bigger in dollar value than the stock market and is built along the same principles as the CDOs and other credit implements that caused the subprime meltdown. If the contagion hits the swaps market, hang on to your hat. :)

What'll probably happen is that to save impending disaster the Fed and the world's central banks just bail everybody out, but the amount of money they'll need to print to do this will inflate prices to god knows where. That's probably the best-case scenario right now. :)

What the heck was that, Kirk, that looked more like an end of the world scenario - an apocalypses! - than an economic crisis. Relax, buddy, here's a good news to cheer you up a bit.

BP chairman rejects "apocalyptic" talk of $250 oil - Yahoo! News

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Originally Posted by pacfan

What the heck was that, Kirk, that looked more like an end of the world scenario - an apocalypses! - than an economic crisis. Relax, buddy, here's a good news to cheer you up a bit.

BP chairman rejects "apocalyptic" talk of $250 oil - Yahoo! News

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I'm not, I'm just talking about a bit of a meltdown in the financial system. I do also point out that however bad it gets all losses will have to be bailed out by the world's central banks, so it won't end in total disaster. There will however be a great deal of inflation which is what the Gazprom people are anticipating and what the BP guy is avoiding. The price of oil isn't being governed by how much is in the ground but by how many dollars the Fed is printing. More financial trouble, more dollars printed, higher oil prices/inflation.

Yup, the feds have already injected tens of billions of dollars to bail out some troubled banks so we'll just have to hope that that will be it and the debt crisis eases - or else, the apocalyptic;D (ok, I'm exaggerating) oil price spike can just make it worst and put the world into another recession, at the least.

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Originally Posted by pacfan

Yup, the feds have already injected tens of billions of dollars to bail out some troubled banks so we'll just have to hope that that will be it and the debt crisis eases - or else, the apocalyptic;D (ok, I'm exaggerating) oil price spike can just make it worst and put the world into another recession, at the least.

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We're just in the first stages of the credit crisis. When banks start failing we'll get some idea of the size of the problem. Washington Mutual just issued a denial that they're in trouble :

WaMu Statement Regarding Rumors of Regulatory Action: Financial News - Yahoo! Finance

Mr. Laing (who else but Kirkland!) has been reminding me ever since about the imminent collapse of the economy. So I've just dropped by to update you all on the real situation of the economy.

So where is the economy heading towards? Nobody seems to know, not even the top economists out there. So it must be real bad. Hope I had something better to say but, sorry guys, I don't...

Ok, Kirkland, tell 'em all about it...

It's much worse than they are saying. Even if they somehow get through the housing and credit crunch, we still have the baby boomers retiring. We are instantly broke when they all start drawing ss and medicare. That's not to mention the stock market suddenly getting all these people taking money out rather than putting it in. We are in big trouble folks and the talking heads aren't addressing real problems at all. Vote for me I will give everyone free medical care even though I can't pay for your retirements we promised. It's not just our federal government that's broke, virtually every state has multi billion dollar deficits.

The only people really talking about these problems are censored by tv, and not given an opportunity to talk about solutions. But we keep on paying the idiots who created the problem. Not only do they get paychecks, they don't really spend their own money on most things they do.

When do we wake up?

Pretty much true, Luvfightgame. 700 billion dollar won't be enough if many more banks start to fall one be one and what scares me is that the possibility is there, however remote it might be. I'm not impressed by the hastily crafted rescue plan either - the words panic and confusion is written all over it.