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

[luvfightgame]

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?

[pacfan]

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.

[luvfightgame]

Not only is it panic, it's a bad idea to begin with. It's like me saying that all I need to avoid bankruptcy and losing my home isn't to get a job and actually earn money, I just need a larger credit line on all my credit cards so I can keep doing the balance transfer juggling act.

If your coworker or friend told you that's their plan you would say what an idiot. It'll never work.

But a politician says it and we all say great I hope it works.

[Kirkland Laing]

It's a handy thing being Infallible, isn't it?

Though it looks like I was a little bit too optimistic.

[pacfan]

It's a handy thing being Infallible, isn't it?

Though it looks like I was a little bit too optimistic.

Must be in a good mood, Kirkland.

...Ok, folks. Most of you guys seem not to be aware of it but the economic situation now looks very, very grim. So far, the 700 million rescue package failed to do what it's supposed to do - get the credit market moving. The credit market got to get rolling! Or else, the already weakend consumption, housing and other investments - the foundation of the economy - are further weakened. When that happens, businesses are also weakened, naturally leading to more lay-offs. That further leads to lesser consumption and investments in a sort of chain reaction manner, until it reaches the pit. When that happens... (I haven't got the heart to tell you what will happen.)


...but don't worry too much, you probably won't go hungry...

[Kirkland Laing]

The $700 billion is a drop in the bucket, a pebble thrown into a churning ocean. This thing is going to cost many trillions. The Fed is now buying commercial paper and the commercial debt market is showing signs of life, but banks are all still terrified to lend to anybody else. Until we find out where the bodies are buried (may take years) that'll be the case. Until then the central banks will have to do everything, from guaranteeing commercial debt to effectively nationalising the banking industry in their respective countries. I'm still fairly confident that we'll avoid Armageddon but it's still a distinct possibility. The best-case scenario right now is a year to ten of recession, sluggish growth, economic contraction etc., while the global banking system deleverages and indivisual banks write off/pay down their debt/go out of business.

[Kirkland Laing]

Just to explain, if the commercial debt market remains frozen large corporations can't roll their debt over and then they have to shut down part or all of their operations. Done on a global scale this would mean easily 20+% unemployment pretty much overnight, a new Depression in other words.

Private credit is another market that will need bailng out eventually. There aren't going to be too many interest-free offers being advertised on goods in the next decade.