Today in the economy

[killersheep]

I am very ignorant about economics as a whole and I would like to learn more. I thought I would start this thread to hopefully discuss daily events of Importance.

I'll start with today 2/23/09, the important things today are the following.

European Union - Trichet speaks

European Central Bank (ECB) President Jean-Claude Trichet will hold a press conference after the bi-monthly Bank for Intercountryal Settlements (BIS) meeting, in Basel. As head of the ECB's governing body, which is responsible for setting the euro zone's short term interest rate, his speeches can sometimes cause market volatility as Currency traders react to clues regarding future monetary policy.

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Canada - Core retail sales
Actual: -3.2% |Forecast -2.0% |Last month -2.3%

Derivative of Retail Sales that omits the Automobile Sales component. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumption. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture.

[Kirkland Laing]

Trichet is shitting himself. He's head of a European Central Bank that doesn't control the central banks of the Eurozone nations. European banks make US banks look like well-capitalised models of regulation. They've lent billions to eastern European economies that are being described as "basket cases" and "clinically dead" by their own finance ministers. The Ukraine looks like the one first to go pop but there's a lot of competition.

There's also a lot of competition for first Eurozone lending country to blow up. A couple of weeks ago it looked like Ireland would win, then Austria took the lead, then Portugal/Italy/Greece/Spain ( new acronym ), then the UK took the lead then motherfunking Switzerland then Germany then back to Ireland at the end of last week.

So Trichet needs to get European countries to backstop him setting up a two trillion plus stabilisation fund to bail out Eurozone lenders/non Eurozone landers like UK or Switzerland/eastern European basket cases. Pressure will grow for this as the crisis gets worse but Trichet will find herding cats easier.


Canada's retail sales are dropping. So are everybody else's. Retail sales are 60+% of every major economy's GDP. They used to be propped up by consumers taking loans against the rising value of their homes. Now consumers are looking at underwater home values and still have the debt secured against their former high values to pay back. And if we tip into deflation and their wages are cut the debts stay priced in old money. You can imagine what that will do to spending on an ongoing vicious circle-type basis. You should cancel that bet with Lyle.

[Von Milash]

So Sheep, if you want to learn more about economics, why not just take a college course or two?

[CGM]

There's a website called The Motley Fool, at Fool.com: Stock Investing Advice | Stock Research , that IMO is very good. It's focus is primarily investing for the average Joe, they have a great section called Investing Basics.

There is also a headlines section that contains many articles relating to current economic conditions and investing.

The site has primarily a US focus, but the Investing Basics section will apply to most countries.

[Von Milash]

Dow down to it's lowest level since 1997. Brilliant.

[CGM]

Dow down to it's lowest level since 1997. Brilliant.

Well Von, if you subscribe to the Buy Low Sell High theory of investing, I suppose that makes this a pretty good time to get into the market.

[Gandalf]

It's beyond me how so called reputable large banks have managed to screw themselves up so bad. And with so much money being put into those intitutions by people who are just trying to bank their hard earned wages. A decade ago, you just wouldn't have worried about puting all your money in the bank. I look at the British banks now and I'm filled with horror. Surely people are being held accountable for gross misconduct somewhere? It's not really related to what Sheep said, but I was just thinking about it now.

And like Von Milash says, the financial markets are slumping and it doesn't seem like it's going to abate. About 2 years ago I seriously thought about trying to get higher returns on my money by putting it into stocks and shares. I'm so glad I didn't bother. It's at the lowest level for 12 years and it seems it will get worse before and sign of recovery.

And the exchange rates suck too. The U.S dollar generally holds at about 1100-1200 won against the dollar. It's spiralled up to 1500won and up against the dollar now. And it will probably get worse. I get very hungry here because the supermarkets SUCK. So I import a load of stuff from the UK twice a year. My next ordering time is due next month. However, my Korean credit card works by converting the pound into dollar and then into Korean won, so I'm likely to get hit with a crap exchange rate when I next order. It's either that or eat dog for the rest of the year.

So, my conclusion is that everything kind of sucks.

[CGM]

Miles you might well be right about things getting worse before they get better. That in and of itself doesn't make this a bad time to invest though. Right now things are rally low. They may get lower still, but the losses won't be nearly as big as in the last year I don't think. The problem is that it is very difficult to time the upswing. and it is also different to tell if an upswing is long term or just a blip. If you wait until it is proven to be a recovery, then by that time stocls will have climbed quite a bit, and you will miss out on some potential profits.

[killersheep]

So Sheep, if you want to learn more about economics, why not just take a college course or two?

I plan on it, my plate is full for the time being, I've been working 50-60 hours a week and I'm taking two programming classes already. Economics is a hobby for now, it seems to be more and more the topic of conversation. I guess it's about time I get a little edumucated.


CGM, thanks for the link, I already have an investing strategy deployed, and I gained 1% last year, doesn't sound like much, but compared to the 40% lost in the S&P I feel pretty confident that it is a functional strategy in bull and bear markets. And yes part of it has been buying down broad based ETF's which are really cheap especially today, with my time horizon being about 20 years, I can't pass up this sale.

[brucelee]

careful with buying now. it might still do down. buy after 3 months.

[CGM]

So Sheep, if you want to learn more about economics, why not just take a college course or two?

I plan on it, my plate is full for the time being, I've been working 50-60 hours a week and I'm taking two programming classes already. Economics is a hobby for now, it seems to be more and more the topic of conversation. I guess it's about time I get a little edumucated.


CGM, thanks for the link, I already have an investing strategy deployed, and I gained 1% last year, doesn't sound like much, but compared to the 40% lost in the S&P I feel pretty confident that it is a functional strategy in bull and bear markets. And yes part of it has been buying down broad based ETF's which are really cheap especially today, with my time horizon being about 20 years, I can't pass up this sale.

I'd say +1% is great in these conditions. I know my father, who is a 40 year verteran of playing the markets and knows his stuff, took an absolute pounding because it has always been his strategy to more or less ride things out and not panic when things get bad fo a while.

Sounds like you are not really a beginner then. Motley Fool has some more advanced stuff on stock valuation that might interest you.

[killersheep]

So Sheep, if you want to learn more about economics, why not just take a college course or two?

I plan on it, my plate is full for the time being, I've been working 50-60 hours a week and I'm taking two programming classes already. Economics is a hobby for now, it seems to be more and more the topic of conversation. I guess it's about time I get a little edumucated.


CGM, thanks for the link, I already have an investing strategy deployed, and I gained 1% last year, doesn't sound like much, but compared to the 40% lost in the S&P I feel pretty confident that it is a functional strategy in bull and bear markets. And yes part of it has been buying down broad based ETF's which are really cheap especially today, with my time horizon being about 20 years, I can't pass up this sale.

I'd say +1% is great in these conditions. I know my father, who is a 40 year verteran of playing the markets and knows his stuff, took an absolute pounding because it has always been his strategy to more or less ride things out and not panic when things get bad fo a while.

Sounds like you are not really a beginner then. Motley Fool has some more advanced stuff on stock valuation that might interest you.

I personally am a fan of investopedia.com there is a great wealth of knowledge there, it is much more dry than the Fool.com, but I don't have to register to read the full articles.

My true interest right now is the bigger picture though how these international affairs inpact daily life and how great the impact of each cog in the global economy effects everything around it. It is a bit muddled right now because all news seems to be bad news. I have a different way of looking at things right now. There is much opportunity for those that have the patience to plan. Equipment for new businesses and contractors are cheap, there are plenty of prime real estate for business and residential that are at great prices for those responsible with money.

[Spicoli]

Don't spend what you have never had.Dumb it down and carrry no notes,payments,contracts or such.Really iss time to scrimp on capital

[killersheep]

careful with buying now. it might still do down. buy after 3 months.

I'm buying down now, nothing is binary for me.

[killersheep]

2/24/09

USA - Actual25.00Forecast35.50Previous37.70

Determines the mood of consumers in regard to economic conditions. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy. The reading is concluded from a monthly survey that asks respondents to evaluate the prospects for the economy in the future.
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USA - Ben Bernake, US federal reserve chairman will be testifying before a house panel regarding America's economic outlook and financial markets.
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New Zealand - Actual - not yet listed |projected N/A|Previous 2.7%

This quarterly survey reflects the business expectations of NZ business managers.
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I find the consumer confidence number to be quite disheartening, it will undoubtedly cause another sell off on Wall street. Wouldn't be suprised if the Dow is at 6700 by Friday.