Markets still crashing - Who'se to blame?

ScanIAm said:

jonathansampson said:

*snip*

You know what?  You are correct. 

My 64 year old mother with rheumatoid arthritis, who could never afford to get an advanced education, and is now collecting about $700 a month from social security should just work harder. 

She stupidly spent all of her meager income raising my younger siblings, when she should have used food and shelter money for a 6 month emergency fund.

I wish she would just grow up and get a job.  It's too bad that she, like many women who go through a divorce, ended up much poorer, but I'm sure it must be her fault, somehow.

Verily, in the land of douches, thine is the nozzle.

You're preaching the the choir. My mother has been disabled (for rheumatoid arthritis) for over 10 years now. She's also battling cancer, so let's not make this a pissing contest. My mother worked very hard when she was able to, and raised 5 children on her own after divorce.

My mother never banked on her children taking care of her, but she instilled enough in us that we do when we can. I help my mother with bills, I help my brothers and sisters with bills. That's the way a family works. I refuse to be mandated by the government to do it for anybody else, but that's likely where we're heading.

If your mother needs help, help her. Some people, like our mothers, have to live with sickening diseases and simply cannot do. But don't you dare think that our mother's conditions justify every other person out there who can work, but won't. If my mother could, she'd still be working in factories, or road-side construction, or anything else she could find just as she did my entire life.

I hope your siblings did what my brothers and sisters and I did when we turned of age to work, we all got jobs. Next month my mother-in-law will be moving in with my wife and I so we can take care of her too.

The advice I've been giving here is for those who can, but won't. Not for those who would, but can't. And you know that.

4:00 on Thursday 

Dow

8,589.70

-668.40

-7.22%

NOT GOOD.

phreaks said:

4:00 on Thursday 

Dow

8,589.70

-668.40

-7.22%

NOT GOOD.

Yes, definitely not a good day. And not a good day to have bought Google:

GOOGLE INC A

140

$343.09

$323.50

$45,290.00

-5.71 %

-$2,742.60

Or was it?  If this whole thing wears off in a few months, bargain hunting now will pay off later.

phreaks said:

4:00 on Thursday 

Dow

8,589.70

-668.40

-7.22%

NOT GOOD.

That's not going to be good for anybody

/well maybe not you can short now

jonathansampson said:

ScanIAm said:

*snip*

You're preaching the the choir. My mother has been disabled (for rheumatoid arthritis) for over 10 years now. She's also battling cancer, so let's not make this a pissing contest. My mother worked very hard when she was able to, and raised 5 children on her own after divorce.

My mother never banked on her children taking care of her, but she instilled enough in us that we do when we can. I help my mother with bills, I help my brothers and sisters with bills. That's the way a family works. I refuse to be mandated by the government to do it for anybody else, but that's likely where we're heading.

If your mother needs help, help her. Some people, like our mothers, have to live with sickening diseases and simply cannot do. But don't you dare think that our mother's conditions justify every other person out there who can work, but won't. If my mother could, she'd still be working in factories, or road-side construction, or anything else she could find just as she did my entire life.

I hope your siblings did what my brothers and sisters and I did when we turned of age to work, we all got jobs. Next month my mother-in-law will be moving in with my wife and I so we can take care of her too.

The advice I've been giving here is for those who can, but won't. Not for those who would, but can't. And you know that.

I know nothing of the sort.

What I know is that the financial advice you mentioned is good, but that the current economic situation can render it meaningless for a large number of people.

Here's an interesting tidbit:  a large majority of bankruptcies are due to medical incidents.

A person of your age, health, and statistical unlikeliness for serious medical problems will certainly do well to attempt to follow those steps.  Assuming you can earn enough so that you make more than you need to live and work and stay healthy.

If you can safely put away 10% of your current salary, then how much would you put away if you made 10% less salary?

ScanIAm said:

jonathansampson said:

*snip*

I know nothing of the sort.

What I know is that the financial advice you mentioned is good, but that the current economic situation can render it meaningless for a large number of people.

Here's an interesting tidbit:  a large majority of bankruptcies are due to medical incidents.

A person of your age, health, and statistical unlikeliness for serious medical problems will certainly do well to attempt to follow those steps.  Assuming you can earn enough so that you make more than you need to live and work and stay healthy.

If you can safely put away 10% of your current salary, then how much would you put away if you made 10% less salary?

I can safely put away more than 10% of my current salary, because I live modestly. My wife and I don't go out to eat, to the movies, or shopping. Periodically we make a major purchase, but only after saving several months and paying with cash. It's amazing what small investments can become over time even with smaller interest rates. Practically anybody in the world could be a multi-millionaire if they invested as little as $40/mo on into their retirement age, but nobody thinks of that - today, people want results NOW. Nobody wants to be rich later, they want to be rich NOW, and that is unfortunately easier said then done.

Looks like we just may end the day on a positive note!

http://finance.yahoo.com

phreaks said:

Looks like we just may end the day on a positive note!

http://finance.yahoo.com

Well, kinda...if two steps down, one step up is "positive" Could be worse though.

jonathansampson said:

phreaks said:

*snip*

Well, kinda...if two steps down, one step up is "positive" Could be worse though.

Well we were up 300 for a second in the last hour of trading.  Traders tried to close it in the green heading into the holiday weekend, but it just didn't hold.  Hopefully the G7 meeting this weekend will give confidense a boost and we can get a nice bounce.  I do think that we are starting to form a bottom though, because you can see every now and then traders testing the markets to see if it is safe to go bottom fishing yet.

phreaks said:

Looks like we just may end the day on a positive note!

http://finance.yahoo.com

In economics this is refered to as "a dead cat bouncing", i.e. a momentary upturn in a generally collapsing market.

Rd_Falcon said:

jonathansampson said:

*snip*

Well we were up 300 for a second in the last hour of trading.  Traders tried to close it in the green heading into the holiday weekend, but it just didn't hold.  Hopefully the G7 meeting this weekend will give confidense a boost and we can get a nice bounce.  I do think that we are starting to form a bottom though, because you can see every now and then traders testing the markets to see if it is safe to go bottom fishing yet.

There's no good reason to think that we're anywhere near the bottom yet. In the 1987 crash, the total value of markets was less than half what it's worth now, which means the markets can happily fall by another third or more before we'll hit a capital-line bottom of the market.

evildictaitor said:

phreaks said:

*snip*

In economics this is refered to as "a dead cat bouncing", i.e. a momentary upturn in a generally collapsing market.

evildictaitor said:

Rd_Falcon said:

*snip*

There's no good reason to think that we're anywhere near the bottom yet. In the 1987 crash, the total value of markets was less than half what it's worth now, which means the markets can happily fall by another third or more before we'll hit a capital-line bottom of the market.

But what you are implying is that we need to wipe out not only all of the gains of the 2000's but also the 1990's.  So basically the businesses that make up the united states have not grown at all over the last 20 years.  I'm not saying that we won't decrease any more, but if you observe the sharp increase in volume over the last several days, I am actually seeing some promising signs.  Today's rally back from 680 down was led by the financials, which as you very well know are the cause of this mess.  If they were able buck the trend, I believe that a bottom will begin to form.

Also, if you look at option volume on various securities over the last couple of days, there has been strong interest in contracts 5-10% or even higher than the current market price.  With expiration next Friday, and it being a shortened week, either all of those people are incredibly dumb (its possible), or there will be some upward pressure as long as the G7 meeting goes well this weekend.    Just my opinion from what I have been noticing.


Edit:  I suppose I shouldn't be calling it a bottom.  I think a better word for it would be a support level, which may turn into a base, which would then lead to it being considered a bottom. 

Rd_Falcon said:

evildictaitor said:

*snip*

But what you are implying is that we need to wipe out not only all of the gains of the 2000's but also the 1990's.  So basically the businesses that make up the united states have not grown at all over the last 20 years.  I'm not saying that we won't decrease any more, but if you observe the sharp increase in volume over the last several days, I am actually seeing some promising signs.  Today's rally back from 680 down was led by the financials, which as you very well know are the cause of this mess.  If they were able buck the trend, I believe that a bottom will begin to form.

Also, if you look at option volume on various securities over the last couple of days, there has been strong interest in contracts 5-10% or even higher than the current market price.  With expiration next Friday, and it being a shortened week, either all of those people are incredibly dumb (its possible), or there will be some upward pressure as long as the G7 meeting goes well this weekend.    Just my opinion from what I have been noticing.


Edit:  I suppose I shouldn't be calling it a bottom.  I think a better word for it would be a support level, which may turn into a base, which would then lead to it being considered a bottom. 

I'm not saying we "need to" anything - most of the market bouyancy over 1980s capital investment isn't due to any more "real" money in the markets - it's mostly tied up in the value of property and in an overvaluation of stocks and commodities. Consequently there's little reason why the markets shouldn't in principle be able to go to 1980s levels before hitting a capital-line bottom, where the value of the market is propped up by the real value of the economy.

evildictaitor said:

Rd_Falcon said:

*snip*

I'm not saying we "need to" anything - most of the market bouyancy over 1980s capital investment isn't due to any more "real" money in the markets - it's mostly tied up in the value of property and in an overvaluation of stocks and commodities. Consequently there's little reason why the markets shouldn't in principle be able to go to 1980s levels before hitting a capital-line bottom, where the value of the market is propped up by the real value of the economy.

I try to take my assessment of the markets from a several-week long rolling average rather than based on the intra-day trading price on the stock markets, but even if you do look at the markets you may see that the financials are rallying after a whole pack-of-cards of important people are throwing US-GDP-sized sums of money at them in order to get them out of a financial rutt, there are signs the credit crisis is starting to hit the real-economy. While I suspect it's a massive overplay by the markets, BP (as in the oil and energy giant) lost nearly 40% of it's share value in the last 24 hours, and the only good reason as to why would be that big players in the energy sector are going to have to live with the fact that during a recession we use less energy. In the housing market, there's just under 98% fewer homes being sold than in 2006, and all developed countries with sensible GDPs are now entering recession, including France and Switzerland (the US and UK have hit recession in mid August /early September).

So while you may be seeing things to be optimistic about on the intra-day market trading, a more long term view might be to say that economic slowdown is a given, and that 2009 will almost certainly be a net recession for the US and the UK. This being said, if the credit-crunch has told me one thing, it's that everyday there is news that just 24 hours ago would have been ridiculous to even contemplate - so in one sense, nobody knows. The downside of that is that banks don't like risk, and they charge more when risk is involved. This coupled with the high cost of the London Inter-bank trading rate (LIBTR) and the expectation (not the likelihood - the expectation) that other banks will fail soon means that we certainly haven't seen everything that the crunch is going to throw our way.

It's a bit extreme to think that every nation with a considerable GDP is going into recession. The global financial situation is bad, but not that bad.

tfraser said:

evildictaitor said:

*snip*

It's a bit extreme to think that every nation with a considerable GDP is going into recession. The global financial situation is bad, but not that bad.

Well, the IMF is a bit extreme then. On the other hand, it does know what's it's talking about, and it said in its most recent study that the UK and US economies entered recession at end Q2/ start Q3 and that all major developed economies would enter recession in late Q3 except the asian economies which would most likely enter recession before Q12009 and Switzerland and France which would enter recession in early Q4. Furthermore they conclude that the world economy would enter recession in late Q3/early Q4.

evildictaitor said:

Rd_Falcon said:

*snip*

I'm not saying we "need to" anything - most of the market bouyancy over 1980s capital investment isn't due to any more "real" money in the markets - it's mostly tied up in the value of property and in an overvaluation of stocks and commodities. Consequently there's little reason why the markets shouldn't in principle be able to go to 1980s levels before hitting a capital-line bottom, where the value of the market is propped up by the real value of the economy.

I try to take my assessment of the markets from a several-week long rolling average rather than based on the intra-day trading price on the stock markets, but even if you do look at the markets you may see that the financials are rallying after a whole pack-of-cards of important people are throwing US-GDP-sized sums of money at them in order to get them out of a financial rutt, there are signs the credit crisis is starting to hit the real-economy. While I suspect it's a massive overplay by the markets, BP (as in the oil and energy giant) lost nearly 40% of it's share value in the last 24 hours, and the only good reason as to why would be that big players in the energy sector are going to have to live with the fact that during a recession we use less energy. In the housing market, there's just under 98% fewer homes being sold than in 2006, and all developed countries with sensible GDPs are now entering recession, including France and Switzerland (the US and UK have hit recession in mid August /early September).

So while you may be seeing things to be optimistic about on the intra-day market trading, a more long term view might be to say that economic slowdown is a given, and that 2009 will almost certainly be a net recession for the US and the UK. This being said, if the credit-crunch has told me one thing, it's that everyday there is news that just 24 hours ago would have been ridiculous to even contemplate - so in one sense, nobody knows. The downside of that is that banks don't like risk, and they charge more when risk is involved. This coupled with the high cost of the London Inter-bank trading rate (LIBTR) and the expectation (not the likelihood - the expectation) that other banks will fail soon means that we certainly haven't seen everything that the crunch is going to throw our way.

May I ask what it was in the 80's that makes it the capital-line bottom?  I honestly don't know what the markets were like back then because I am only 20 years old, so I have only actually seen the last several years of trading to base my limited knowledge on, so I would appreciate it if you could point me to some information to find out more about this.  Right now, I am basing my thought on the bottom being higher than what it was for the 87 crash on the GDP being exponentially higher than it was back then.  Wouldn't the bottom be around where the markets were at the bottom of the 2000-2003 decline? 

I day trade, which may help explain why I am so focused on the intraday charts, so I greatly appreciate your longer term perspective.  As you mentioned, it has taken the big players tossing a substantial amount of money at the financials to prop them up here.  The key part though is whether this will be able to change the psychological perspective of the markets just enough to slow the bloodshed. 

As for  the global nature of this situation, I honestly think that is what has kept the US market from crashing all at once.  By everyone going through this together, we fall as a group.  When the US market closes red, Asia opens down, and then their decline goes over to Europe, and then back to the US.  So it is kind of a vicious cycle, but no one will fall more than the next.  This is not counting for the smaller or undeveloped exchanges that we have seen being halted.    This is just a theory that I have, so if you have any thoughts on this I would be very interested to hear them.

I absolutely agree that there will be a slow down well into the future.  It took 7+ years to create this, so I can only imagine that it will take years to begin a new uptrend.  I think we are done seeing the major banks colapse, but until the credit markets open up again, some regional banks may fall yet.  I read an article today that said the federal government may insure the interbank loans to try to help this problem, but I haven't seen anything official yet.

evildictaitor said:

tfraser said:

*snip*

Well, the IMF is a bit extreme then. On the other hand, it does know what's it's talking about, and it said in its most recent study that the UK and US economies entered recession at end Q2/ start Q3 and that all major developed economies would enter recession in late Q3 except the asian economies which would most likely enter recession before Q12009 and Switzerland and France which would enter recession in early Q4. Furthermore they conclude that the world economy would enter recession in late Q3/early Q4.

Well it depends on who you believe. Some analysts have said that Australia will slide into recession next year, while that same IMF report you cited predicts that we will comfortably avoid such negative growth.

Aside from the US, which has largely exhausted any avenue of energising the economy, I think the central banks of many other developed nations still hold quite a lot of leverage to fend off recession.