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  1. NaCl
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    NaCl Contributing Member Contributor

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    Recession . . . depression?

    Discussion in 'The Lounge' started by NaCl, Sep 15, 2008.

    Merril Lynch bought by Bank of America to avert financial collapse. Lehman Brothers filed for bankruptcy protection and will now be systematically liquidated by a court appointed trustee. AIG insurance company borrowed 30 billion from its subsidiary companies and is still $10 billion short of its needs. And the federal government announced they will not bail out these failing investment banks and insurance companies. Washington Mutual Bank's rating on www.bankratemonitor.com dropped to 1-star.

    What does this mean to you?

    Me? With the $500 drop in the Dow Jones Industrial Average today, my stock portfolio lost value by probably 30% this year. My banks (Wells Fargo, El Dorado Savings and Valley Credit Union) are all rated 4-stars out of five, so they are okay for the time being.

    Am I worried? No. This downturn is a wonderful buying opportunity. The markets have dropped severely twice in my lifetime and they always came back to hit new "highs" a few years later. Fear is the greatest threat we face. People who sell now in a panic are assuring their losses.

    Who is at fault for the economic problems during the past 12 months? We the people are! Greed drove real estate speculation. Greed drove people to buy more house than they could afford. Greed provided the incentive to take the risk of variable rate mortgages.

    Could government have stopped this crisis by tightening up credit last year? Yes, but at what cost? Tightening credit would have "hurt" lower income people as they would be denied access to the great American dream of home ownership. Instead, we let them enjoy the home until the ARM rates went up, which, by the way, was entirely the decision of the Federal Reserve Board...in essence, the government caused the collapse by raising interest rates. The Federal Reserve Board triggered the collapse of the financial house of cards that was built by our own greed.

    This economic shake out is HEALTHY! After the immediate "crisis" is over, the economy will be stable and growth will be slow but steady unless government spending continues to grow massive deficits.

    Recession or depression. Neither. It's just an overheated, greed-driven economy that is finding balance. Hunker down, have faith and take advantage of the wonderful profit potential as this economy restores.
     
  2. lordofhats
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    lordofhats Contributing Member

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    Isn't there a business maxim that says: "Losses are just misunderstood opportunities?"
     
  3. mammamaia
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    mammamaia nit-picker-in-chief Contributor

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    not to worry, folks!... bush says the economy is in great shape, the surge worked, bin laden is in his sights, and mccain will keep it all going, while palin reshapes our nation's policies on how the world was created, what women can't do with their own bodies, and how many poor, innocent fellow critters we can each 'take down' and 'field dress' whether we're starving and need 'em for food, or not...................................
     
  4. EyezForYou
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    EyezForYou Active Member

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    It's neither recession or depression.

    It is simple corruption.
     
  5. TWErvin2
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    TWErvin2 Contributing Member Contributor

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    I guess I'll pick up were mammamaia left off.

    ..........and Obama and Biden will tax our economy right back to full strength because raising taxes always helps a struggling economy recover.
     
  6. tehuti88
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    tehuti88 Contributing Member

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    *reads OP and scratches head*

    It's all Greek to me. o_o I honestly don't see how anybody even comprehends half this stuff.

    Then again I suck at math too. *shrug*
     
  7. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    Having moved recently from Central Florida, all I can add is...

    Did people in Central Florida really believe that there was anything economically stable about 1300 square foot homes selling for $450,000 dollars?

    I mean, really?
     
  8. lordofhats
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    lordofhats Contributing Member

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    Having been to Central Florida very often to visit family I can assure you, yes. Yes they did. I'd also like to point out that Houses in California and DC and around New York of the same size can sell for will over $500,000 to $1,250,000.

    Then we have those Investment Banks. The Investment bank gives out a loan, and then invites investors to invest in said loan. Essentially investors were buying shares of debt. That sounds very economically sound to me.
     
  9. Wreybies
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    Wreybies The Ops Pops Operations Manager Staff Contest Administrator Supporter Contributor

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    Don't get me wrong. I know full well that the people in Central Florida believed that this state of affairs would remain so. I sold right in the middle of the market boom in Melbourne FL, and made a disgusting profit.

    I sold for a little less then $300,000. I had bought that home for under $70,000.

    I guess I can see it from both sides. I translate for every single one of the financial institutions mentioned in the OP, and I can tell you that loan modification is the word of the day. Calls concerning loan modification comprise a good 40% of my regular calls.

    What pains me is that so many of the people trying to dig themselves out from under a variable rate loan of $300,000+, are doing so on properties that under no circumstances are anywhere near that valuable in the Central Florida area.

    A 1300 square foot home which sells for $450,000 outside of the Orlando or West Palm Beach area had better have solid gold bathroom fixtures! Period.

    Unfortunately, I think everyone is to blame in this matter. Why was the housing market allowed to become so artificially inflated? Did no one think that there would not be fallout? And the people buying should have known better. There is nothing real about the value of a home that has tripled within the span of one year, especially when there is so much room to expand and build new homes in Florida.
     
  10. Fluxhavok
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    Fluxhavok Active Member

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    uhhhg... what is going on? stupid friggin analysts and their friggin doomsday prophecies are spooking investors away. If they'd all just shut up with their theories and just report the facts the market would be doing a lot better right now. Can i see just one optomistic report? jeez it's like watching the news in Oakland.
     
  11. lessa
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    lessa Contributing Member

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    I just watched a house hunters show and one crazy lady (imho)
    just paid over 2 million for a 3 bedroom house in Naples Florida.
    For that kind of money I would demand maid service and lawn care tossed in.
    I know my house does not compare but 10 years ago we paid 20,000 cdn for it.
    It does us fine and has 3 bedrooms and could have 2 bathrooms.
    What is with people complaining about recession and depression and then going
    out and spending that kind of money for a view.
     
  12. Banzai
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    Banzai One-time Mod, but on the road to recovery Contributor

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    People are morons. I'm just happy to have some accommodation for university.
     
  13. Fluxhavok
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    Fluxhavok Active Member

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    Fluxhavok <---- REALLY FRIGGIN PANICKED RIGHT NOW.
     
  14. Banzai
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    Banzai One-time Mod, but on the road to recovery Contributor

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    Banzai <---- Losing interest. Seriously, when everything sounds like a headline of the Daily Mirror, it's hard to take anything seriously.
     
  15. EyezForYou
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    EyezForYou Active Member

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    Again, corruption.

    Do you know why are in this "crisis" in the first place? Because banks, insurance, and home morgages are loaning money to people who can't afford it in the first place. There is corruption going on both sides, and it will take probably ten years to fix--if anyone is willing to fix it.
     
  16. Banzai
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    Banzai One-time Mod, but on the road to recovery Contributor

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    I liked the Dara O'brien summary of the situation (from Mock the Week). The gist of it was:

    "Basically, American banks have been lending large amounts of money to the studio audience of the Jerry Springer show, and now we're all in the ****."

    Very general, probably not true, but it made me giggle.
     
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  17. lordofhats
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    lordofhats Contributing Member

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    100% True. Oh, except for the ten year part. Estimates say that with proper management we can get out of the recession by the end of 2009... then again, finding proper management is probably too much to hope for XD.
     
  18. Fluxhavok
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    Fluxhavok Active Member

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    I'm freaked because a good chunk of my change is tied up in a market that keeps dropping drastically. Screw the speculation I'm talking about my portfolio.

    Vote Nader
     
  19. EyezForYou
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    EyezForYou Active Member

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  20. Fluxhavok
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    Fluxhavok Active Member

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    ...godammit Obama...
     
  21. stoned4assassin20
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    stoned4assassin20 Member

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    Somehow I have a sneaking suspicion that if the news media would stop painting this as the cusp of the apocalypse, we could avert further exacerbation. One of the contributing factors to the great depression was everyone pulling their money out of banks in trepidation of what was to come.

    It might also help if people would stop spending money they DO NOT HAVE, and businesses would stop doling out loans to those who can't pay them back. Alas, it is the American way of life.

    I don't have the money.

    I'll use my credit card.

    Problem solved.
     
  22. Shadow Dragon
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    Shadow Dragon Contributing Member Contributor

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    I have to agree. Those are the biggest problems with our economy. Banks and companies have been loaning out a lot of money to people who couldn't pay it back, and people have been using too much credit. They should only spend the money they have.
     
  23. Banzai
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    Banzai One-time Mod, but on the road to recovery Contributor

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    That's exactly the problem. Time was, if you wanted something, you saved up for it. However in today's society, people are unwilling to wait. They just use credit cards, get loans, and rack up huge amounts of debt without any thought as to how they're gonna pay it off. And the banks lent money to people who would never be able to repay it, and traded the debts to the extent where everyone is playing with virtual money, ignorant of the fact that all the real world money is under some old woman's matress in Inverness!

    Essentially, the banks, and the people of the world in general, have buggered up in a rather spectacular fashion. General impatience and materialism are to blame, but so are greedy, shortsighted banks, who thought that the economy boon would never end. A slump was inevitable, but it didn't have to be as catastrophic as this ungodly mess we've wrought.
     
  24. Speedy
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    Speedy Contributing Member Contributor

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    I would love to see the market crash, as sick a that is. It would be a great wake-up call to all those materialistic people out their.

    I dont think we'll ever see another great depression and im sure everyone wikl be fine, but how close do people wanna cut it ;)

    <-- will never use a credit card, i like buying things outright with cash. Saving and finally buying what i want is great.
     
  25. Banzai
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    Banzai One-time Mod, but on the road to recovery Contributor

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    Yeah, thats my philosophy too. Since I was little, it's always been a case of save up and buy, not buy then save up. If I do get a credit card, I'll do what my parents do- pay everything off straight away, and take advantage of the interest free credit periods. You can use credit cards to your advantage, you just have to keep your eye on the ball, and not be late with payments, else you get gutted.
     

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