is a worldwide great depression coming?

[Lee]

It makes sense to consider that it might happen in lite of all the bad economic news thats making headlines these days. Now its Lehman brothers thats in trouble. That makes trillions of dollars in losses by banks and investment companies. So what will it leed to? The big CEOs speak of a world wide depression but only behind closed doors so as not to frighten us lemmings in the general population. It is important to remember that when the stock market crashed in 1929 the depression didn't really hit until around 1931. So I see the big economic trouble coming a few years down the road. I don't know if its going to be a prolonged depression or not but I know that things are going to get worse. Any opinions on this?

[DID]

you "see" a lot of things, are you a financial specialist?

[BloodyTalon]

http://www.youtube.com/watch?v=GfO-0f8cjwk

[Flagg]

I'm following this topic very closely and am fortunate enough to have access to a group of highly regarded people with outstanding analytical track records......news is negative

Lehman will get bailed/bought out....but it only offers a short-term bandaid

those who undermine, or insult those who raise the possibility of dire financial consequences are ignorant of potential and real global consequences...up to and including serious consequences for most or all here

it's not a joke.....far from it

[wotsnext]

There are far too many people that have had it "so good for so long" that they can't imagine it any different............Wrong!

[Nano]

I'm following this topic very closely and am fortunate enough to have access to a group of highly regarded people with outstanding analytical track records......news is negative

Lehman will get bailed/bought out....but it only offers a short-term bandaid

those who undermine, or insult those who raise the possibility of dire financial consequences are ignorant of potential and real global consequences...up to and including serious consequences for most or all here

it's not a joke.....far from it

No kidding after you noted to me the problems that Northern Rock has aside from its exposure from U.S. mortgage securities I looked into world financial issues as a whole.
It seems to me that every other banker/loan officer got the same bright idea at the same scam at around the same time. Europe, UK, and the U.S. are probably going to be first hit with a severe recession and if things play out bad enough world wide depression is in short order. The U.S. government bailouts only prolongs the inevitable **** storm that is to come, but it definitely does not prevent it and it might actually make things worse in the long run scenario.

I'm already hedging what very little savings I got into buying some gold. Gold prices have come down because people think that the continuous U.S. government bailout of financial insts. has got them off the hook. I'm buying some now that it has come down and one more time when it hits a new low. Silver is also a good alternative to gold for those like me who barely make enough to save here and there.

[Notlim]

I'm following this topic very closely and am fortunate enough to have access to a group of highly regarded people with outstanding analytical track records......news is negative

Lehman will get bailed/bought out....but it only offers a short-term bandaid

those who undermine, or insult those who raise the possibility of dire financial consequences are ignorant of potential and real global consequences...up to and including serious consequences for most or all here

it's not a joke.....far from it

Agree (too big too fall, our economy is to strong to fail etc, bailing out CEO's with tax payers money, trickle down economics,etc etc

[sinophile]

Lehman will get bailed/bought out....but it only offers a short-term bandaid

Well Flagg, you're already wrong. Headlines say Lehman is going bk. No bailout. Merill Lynch may get bought out (rescued?) by Bank of America.

Lehman founded in 1850, Merill in 1914. This is a once in a lifetime event. Nobody knows how this will play out internationally, because its never happened before.

Its going to pass, but it could be a rough ride.

[Flagg]

No kidding after you noted to me the problems that Northern Rock has aside from its exposure from U.S. mortgage securities I looked into world financial issues as a whole.
It seems to me that every other banker/loan officer got the same bright idea at the same scam at around the same time. Europe, UK, and the U.S. are probably going to be first hit with a severe recession and if things play out bad enough world wide depression is in short order. The U.S. government bailouts only prolongs the inevitable **** storm that is to come, but it definitely does not prevent it and it might actually make things worse in the long run scenario.

I'm already hedging what very little savings I got into buying some gold. Gold prices have come down because people think that the continuous U.S. government bailout of financial insts. has got them off the hook. I'm buying some now that it has come down and one more time when it hits a new low. Silver is also a good alternative to gold for those like me who barely make enough to save here and there.

My opinion is that gold and silver are looking reasonably attractive, but it's possible they could continue to fall further......my guess is silver/gold will do better than most other options moving forward.

Be aware that the price of physical gold/silver has decoupled from paper gold/silver...the usual premium for the physical has exploded......few,if any, are willing to sell at or even near the current spot price...so while the paper price has dropped, it hasn't on the street

Which to me is the strongest indicator of gold/silver being a lower risk choice than most others in the next few years.

Just keep learning and find the choices that work best for you and your situation.

[Nano]

My opinion is that gold and silver are looking reasonably attractive, but it's possible they could continue to fall further......my guess is silver/gold will do better than most other options moving forward.

Be aware that the price of physical gold/silver has decoupled from paper gold/silver...the usual premium for the physical has exploded......few,if any, are willing to sell at or even near the current spot price...so while the paper price has dropped, it hasn't on the street

Which to me is the strongest indicator of gold/silver being a lower risk choice than most others in the next few years.

Just keep learning and find the choices that work best for you and your situation.

It is interesting for you to note the premium price for the physical gold.
I just went over to the site where I bought my first and only ounce of gold last week. They are out of the pamp suisse bars I got. Since gold dropped I was going to buy more today to average out my gold costs.

[Violet Fashion by Mindy]

Oh man the makers of Prozac are going to make a fortune!

[Flagg]

Well Flagg, you're already wrong. Headlines say Lehman is going bk. No bailout. Merill Lynch may get bought out (rescued?) by Bank of America.

Int I've got says the deal with BOA fell through, but they are still meeting as I post this. Minimum bailout will now likely be bk Lehman, but "ring fence" the "counter party cascade" via federal support. Folks providing me with the int I'd bet my life on, but nothing's ever 100% I suppose.

Merril has much more junk in the trunk than Lehman.....3-5x and AIG is now moving quickly with an intended asset sell off...the next few days will be stressful

Lehman founded in 1850, Merill in 1914. This is a once in a lifetime event. Nobody knows how this will play out internationally, because its never happened before.

it's not a catastrophe like Pearl Harbour or 9/11......it's not a short and sharp single event.......this is a long, slow, drawn out mess that will take years to impact, absorb, recover,and understand...it's not a gunshot wound...it's cancer

Its going to pass, but it could be a rough ride.

the sun will still rise tomorrow and kids will still be laughing and playing.....but make no mistake about the severity and fragility of the current environment.

Ultimately, the best 2 second spiel I have heard regarding the current environment is:

"Finance is supposed to support the economy, not BE the economy."

[Flagg]

Oh man the makers of Prozac are going to make a fortune!

yes...and liquer distillers

[Albatross]

My opinion is that gold and silver are looking reasonably attractive, but it's possible they could continue to fall further......my guess is silver/gold will do better than most other options moving forward.

Be aware that the price of physical gold/silver has decoupled from paper gold/silver...the usual premium for the physical has exploded......few,if any, are willing to sell at or even near the current spot price...so while the paper price has dropped, it hasn't on the street

Which to me is the strongest indicator of gold/silver being a lower risk choice than most others in the next few years.

Just keep learning and find the choices that work best for you and your situation.

The value of precious metal, gold in particular, is so tied to the USD that its a mediocre buy at this point. The dollar is on the road to recovery, wont be back to record levels anytime soon though. What gold is worth on the street may be its real value, but not its investment value. Precious metals, in alby's opinion, should be a hold at this time.


the sun will still rise tomorrow and kids will still be laughing and playing.....but make no mistake about the severity and fragility of the current environment.

Ultimately, the best 2 second spiel I have heard regarding the current environment is:

"Finance is supposed to support the economy, not BE the economy."

Greenspan came out and said that the USA is in a once in a century financial point. I have no doubt that we will get this thing turned around, its going to take about 2 more years before we are back on the road to recovery. The states could face a very real, and very painful recession in a very short time. Save cash is the story of the year, don't use credit if you don't have too.

[Flagg]

It is interesting for you to note the premium price for the physical gold.
I just went over to the site where I bought my first and only ounce of gold last week. They are out of the pamp suisse bars I got. Since gold dropped I was going to buy more today to average out my gold costs.

Keep an eye on reputable sellers on Ebay as well.

bullionvault may be worth researching

[T3ngu]

The slow down of the worlds markets has been innevitable for a while now.

The combination of people buying shares, the focus on profit for shareholders, the boom in the housing market (i.e. houses are simply overpriced here in Oz) and a generate that has to have everything now has put us here.

I think of it as an adjustment that had to happen.

[Flagg]

The value of precious metal, gold in particular, is so tied to the USD that its a mediocre buy at this point. The dollar is on the road to recovery, wont be back to record levels anytime soon though. What gold is worth on the street may be its real value, but not its investment value. Precious metals, in alby's opinion, should be a hold at this time.

USD is in a dead cat bounce.......double deficits, conflict costs, shrinking tax base, growing social costs....it's like saying the fittest guy in the race will win the marathon.....with an ALICE frame filled with lead on his back...odds are it ain't gonna happen

Greenspan came out and said that the USA is in a once in a century financial point. I have no doubt that we will get this thing turned around, its going to take about 2 more years before we are back on the road to recovery. The states could face a very real, and very painful recession in a very short time. Save cash is the story of the year, don't use credit if you don't have too.

Greenspan was the architect of why we are here.

http://www.federalreserve.gov/BOARDDOCS/TESTIMONY/1998/19981001.htm

Look at this......Greenspan 10 years ago...in a near identical crisis.....just far,far smaller....he KNEW this would happen....he's been here before.

Where was his big mouth 3-5 years ago?

[Albatross]

Greenspan was the architect of why we are here.

http://www.federalreserve.gov/BOARDDOCS/TESTIMONY/1998/19981001.htm

Look at this......Greenspan 10 years ago...in a near identical crisis.....just far,far smaller....he KNEW this would happen....he's been here before.

Where was his big mouth 3-5 years ago?

keeping his mouth shut, which is what I wish he would do now. Bernake is no where near as intelligent as Greenspan, but is in a bigger problem.

The gov't is doing its best to stay out of it, but some of it is way to big. The financial institutions are going to take the brunt of this one, we cant have a million more homeless. They shouldn't have signed the loans, but they did. The vote, business doesn't. (I am well aware of the lobbying power of big business) We will see, only time will tell.

We still have the largest economy on the planet, and will continue to be so. We are starting to wrangle our import/export back down to size. It will be better over the next few years.

[Jµµso]

I'm a plumber and security guard...i have nothing to worry about. There is always work for those two professions.

[Albatross]

I'm a plumber and security guard...i have nothing to worry about. There is always work for those two professions.

that is very true. if it comes to a depression the I will turn to a life of crime.

[DaveDash]

I'm going with history rather than hype and sensationalism.

I could be wrong, we could be going to a new depression, but I remember lots of very similiar things being said and "prepare for the worst, hope for the best" type comments before the dot com bust.

What it looks like to me, is the repeat of a cycle that has been happening SINCE the last great depression. A healthy, normal, cycle that most of our economies need in order to AVOID a great depression.

Panic, hyperbole, etc, will only WORSEN the effects of what is happening because our entire economies are based on trust in the financial systems. At the end of the day, I don't see a complete crash, however, how we react now will either soften or worsen the effects.

I think in the U.S. something like 4% of currency is actually real (and this is similiar to most other modern nations). I doubt we'll be going to gold any time soon.

Flag you should remember in NZ over the last few years there has been what, 10 finance companies gone down the tubes? Is the NZ economy in depression, are people lining up for food? No. Most people didn't even notice. Running out of oil is going to be a much greater concern to us all than financial markets slowing, housing prices falling, etc.

[Violet Fashion by Mindy]

Yeah but it's not the rich ****s that are affected by it. They will still be leaving in their million dollar homes, driving their mercerdes and having all the good gear.

Meanwhile Joh Blow is off to the dole office, will have debt collectors on his case and is wondering where the next meal for him and his family is going to come from.

The people that cause this mess are the ones least affected by it.

[Flagg]

I'm going with history rather than hype and sensationalism.

I could be wrong, we could be going to a new depression, but I remember lots of very similiar things being said and "prepare for the worst, hope for the best" type comments before the dot com bust.

Trillions of dollars were lost in the dot com bust...trust me...I was right in the thick of it with some pretty disgusting stories about behavior of dot com owners, investment bankers, stock brokers, and the many joe six packs/joe blogs taken for a ride and hosed.

BECAUSE OF THAT, WE ARE HERE......immediately following the dot com bust and 9/11.....the greatest single chunk of liquidity came flowing throughout the world from the Fed led west.......ultimately causing things like the housing bubble/bust. While many suffered from the dot com bust......the actions of the Fed et al AFTER the dot com bust trying to stop the inevitable pain...led us to here......greater pain....it was a choice


What it looks like to me, is the repeat of a cycle that has been happening SINCE the last great depression. A healthy, normal, cycle that most of our economies need in order to AVOID a great depression.

The problem with your argument is that the "healthy, nromal, cycle" you describe was disrupted.......really just delayed....there is a cost to choosing to delay the pain:

a) pain today

b) more pain tomorrow

Panic, hyperbole, etc, will only WORSEN the effects of what is happening because our entire economies are based on trust in the financial systems.

I disagree with your implication that those who question where we are, how we got here, and what the likely outcomes will be somehow bear responsibility for this mess?

Trust has been clearly violated and if you think calling out the fact the king has no clothes is a serious risk to our system's continued viability what does that say about the foundation of the system?

At the end of the day, I don't see a complete crash, however, how we react now will either soften or worsen the effects.

Agreed, to a point...I'd love nothing more than to see the savings rates of Americans and Kiwis shoot up to 25% overnight...but that would destroy the system as well, funnily enough.....but treating citizens like sheep and failing to exercise even mediocre financial and monetary management is not just inexcusable, but criminal

I think in the U.S. something like 4% of currency is actually real (and this is similiar to most other modern nations). I doubt we'll be going to gold any time soon.

I did not state or even imply that the gold standard is even a poor option going forward......however investing a percentage of net worth in commodities proven throughout history to offer capital preservation insurance is an option many have and many more will likely consider moving forward.

When you talk about 4% currency "being real" keep in mind leverage...as in buying a home...if you buy a home with 4% down and it doubles you have received a gross return of 25x...same goes for a bank......but what if the assets backing your thin capital base drop even as little as 4%? That leverage tied to underlying garbage assets is where but ONE big problem lies

Flag you should remember in NZ over the last few years there has been what, 10 finance companies gone down the tubes? Is the NZ economy in depression, are people lining up for food? No. Most people didn't even notice. Running out of oil is going to be a much greater concern to us all than financial markets slowing, housing prices falling, etc.

Finance company failures now exceed 20.

I co-own(significant minority shareholder) one of the remaining ones quite likely to navigate this difficult patch. We source funds from commercial banks in Europe......the secondary market has DISAPPEARED...and we have an incredibly solid and conservative balance sheet. That's not chest pains, or even a heart attack, the entire secondary market has disappeared for borrowers....the patient is a corpse.

As I've stated.....the sun will come up tomorrow, kids will still laugh and play.

Will people in countries like the US and NZ eat? Sure.

But the gap between the impossible credit of the 70's with a 25% deposit barely able to borrow enough to buy a house for 2x annual wages and the recent easy credit, no money down McMansion costing 7x annual wages is HUGE....the pain experienced to achieve the new equilibrium will likely be spread pretty far and wide.

I take no joy in coming to this conclusion or writing this openly......I would love nothing more than to be completely off the mark......but my feelings and my conclusions...combined with those I have access to who are far, far better equipped to look a few years out says it's not sunshine and rainbows.

If you are trying to do your bit and talk up the current situation, then you really don't want to know what we've been contemplating as medium probability outcomes.

[Flagg]

Yeah but it's not the rich ****s that are affected by it. They will still be leaving in their million dollar homes, driving their mercerdes and having all the good gear.

Meanwhile Joh Blow is off to the dole office, will have debt collectors on his case and is wondering where the next meal for him and his family is going to come from.

The people that cause this mess are the ones least affected by it.

I take no joy in seeing anyone suffer, but you'd probably get a laugh out of some stories I'm hearing about former high flyers in the banking industry.........people on multi-million salary/bonus incomes out of work for only weeks and "struggling"

[Albatross]

It really all boils down to one thing. greed.

The banks got greedy for the interest on the money.

The borrowers got greedy for huge homes and second homes.

[WarriorMonk]

I'm no economist (going to med school in a year), but these days I really don't like the economic attitude of OMG WE'RE ALL GONNA DIE/IMMINENT DEPRESSION kinda thing I see from some alternate news sites/mainstream news, I mean, yeah, things look bad, many people will learn their lesson about money management and greed, but that doesn't mean we shouldn't do all we can to try and stop the recession or at least lessen it's impact. You can try and plug some of the wounds now or you can fret about it, not do anything, and watch the infection spread...(lame medicinal analogy)

Hell I even learned the value of not purchasing things on credit in frikin 3rd grade...we did this little "city" project for class, only way you could buy something was, well...did you have the money or not? Did you save up and whatnot? None of this investment stuff and all that. You took the money you "earned" and figured out a budget, how hard is it for people to realize these days that "credit" really isn't their own frikin money?

[Albatross]

I'm no economist (going to med school in a year), but these days I really don't like the economic attitude of OMG WE'RE ALL GONNA DIE/IMMINENT DEPRESSION kinda thing I see from some alternate news sites/mainstream news, I mean, yeah, things look bad, many people will learn their lesson about money management and greed, but that doesn't mean we shouldn't do all we can to try and stop the recession or at least lessen it's impact. You can try and plug some of the wounds now or you can fret about it, not do anything, and watch the infection spread...(lame medicinal analogy)

Hell I even learned the value of not purchasing things on credit in frikin 3rd grade...we did this little "city" project for class, only way you could buy something was, well...did you have the money or not? Did you save up and whatnot? None of this investment stuff and all that. You took the money you "earned" and figured out a budget, how hard is it for people to realize these days that "credit" really isn't their own frikin money?


Ease of access over the past few years has really changed how things are getting done in the states. The past 5 or so years people have had such easy access to credit, that people just live on it then refinance. If you don't have any credit you can't get **** done. Hell, employers even check credit now.

[Flagg]

It really all boils down to one thing. greed.

The banks got greedy for the interest on the money.

The borrowers got greedy for huge homes and second homes.

"Greed is good"

As long as it includes carefully constructed and enforced regulation.

(lack of)Regulation and/or (lack of)enforcement failed

[Flagg]

Ease of access over the past few years has really changed how things are getting done in the states. The past 5 or so years people have had such easy access to credit, that people just live on it then refinance. If you don't have any credit you can't get **** done. Hell, employers even check credit now.

I agree that credit has been too easy.

But what happens when you try to get access to credit back to sanity?

Lots of big problems

[Nano]

It really all boils down to one thing. greed.

The banks got greedy for the interest on the money.

The borrowers got greedy for huge homes and second homes.

This was much more than simple greed and much of it would have been illegal if the lending industry was not so self regulated. Who in their right minds signs off on 250k mortgage loans to unemployed people. Really there needs to be a whole lot more investigating on part of the government on what scams went on not just on the street level scams, but the big investment firm scams. My view is that the investment banks packaging mortgage loans into derivatives securities were the driving force behind the local loan scam.

[Flagg]

This was much more than simple greed and much of it would have been illegal if the lending industry was not so self regulated. Who in their right minds signs off on 250k mortgage loans to unemployed people. Really there needs to be a whole lot more investigating on part of the government on what scams went on not just on the street level scams, but the big investment firm scams. My view is that the investment banks packaging mortgage loans into derivatives securities were the driving force behind the local loan scam.

There is a lot of truth to what you've posted.

I own/co-own a couple of companies.

When I finance a customer......I am ultimately on the hook if the deal goes bad....so it IS in my best interest to ensure I only lend to viable customers.

If I can finance retards, at huge profit, without any recourse back to me.....it is NOT in my best interest to finance responsible people, it's in my best interest to finance retards.

[vryhpyammoadded]

I can’t predict if we are in for a real Grapes of Wrath scenario or just a bad Carteresque malaise but I do feel certain enough that the economy will fall somewhere in between for several years and have prepared accordingly.

I’ve since bugged out of the city for a paid off, small yet working farm in the jungle to keep my distance from the urban ground zero should an actual crash come. I’m hoping that this plus the state job supposed iron rice bowl along with some careful, diversified investments will smooth out any potential economic downturns.

People should listen to Flagg, he knows what he’s talking about.

[NuclearHead]

Greenspan was the architect of why we are here.

http://www.federalreserve.gov/BOARDDOCS/TESTIMONY/1998/19981001.htm

Look at this......Greenspan 10 years ago...in a near identical crisis.....just far,far smaller....he KNEW this would happen....he's been here before.

Where was his big mouth 3-5 years ago?

I really dislike Greenspan right now. That SOB had a huge role getting us where we are.

Here's what Ron Paul said about him in 2003:

In an article entitled "Gold and Economic Freedom," Federal Reserve Chairman Alan Greenspan wrote that "The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom...The speculative imbalances had become overwhelming and unmanageable by the Fed... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation." The irony is that Mr. Greenspan's words, written in 1966 to describe the era leading up to the Great Depression, could easily have been written in 2003 to describe the consequences of his own Fed policies during the 1990s.
http://www.lewrockwell.com/paul/paul125.html

Needless to say, Dr. Paul was right all along. Unfortunately, people don't seem to like listening to reason.

[Mr.K]

"Greed is good"

As long as it includes carefully constructed and enforced regulation.

(lack of)Regulation and/or (lack of)enforcement failed

nice one Ivan Boesky.

The last people that speculators want is any kind of regulaton.

[Flagg]

nice one Ivan Boesky.

The last people that speculators want is any kind of regulaton.

We need traffic lights and cops to keep us from killing each other in our cars....a bit of regulation(and well enforced) to keep us from having a financial crash sounds reasonable

[Mr.K]

The problem is you will be much more paid speculating than working for the government and monitor speculators. So there is clearly short staffing.

I think we need a J.M. Keynes.

[SrB-23Q]

well my dad has been saying that the world is in a big economic crisis for a while now...and now it seems he is right:|

[Mr.K]

well my dad has been saying that the world is in a big economic crisis for a while now...and now it seems he is right:|

Yes prosperity bought with a credit card. You cannot give new loans and trade (speculate) non existing wealth endlessly

[Kilgor]

Oh Noes

http://edition.cnn.com/2008/BUSINESS/09/15/lehman.bankruptcy/index.html
U.S. bank giant Lehman to file for bankruptcy

[lightfire]

bankrupt>depression>populists with radical ideologies. I'm quite pessimist on that, people don't learn from history

[Violet Fashion by Mindy]

I take no joy in seeing anyone suffer, but you'd probably get a laugh out of some stories I'm hearing about former high flyers in the banking industry.........people on multi-million salary/bonus incomes out of work for only weeks and "struggling"

Mate I've gone through a company going broke as an employee and the things we heard. So it's nothing knew to me.

[Basillicus]

Good thing I paid my loans and finished school in time to get a work before depression, at least now I'll land on my feet even if things get truly ****ed up.

[Creeper]

Bingo ! Spot on. I like the words that 'Flagg' stated:


"Greed is good"

As long as it includes carefully constructed and enforced regulation.

(lack of)Regulation and/or (lack of)enforcement failed

and 'Nano'

Quote:
Originally Posted by Nano http://www.militaryphotos.net/forums/images/buttons/viewpost.gif (http://www.militaryphotos.net/forums/showthread.php?p=3549313#post3549313)
This was much more than simple greed and much of it would have been illegal if the lending industry was not so self regulated. Who in their right minds signs off on 250k mortgage loans to unemployed people. Really there needs to be a whole lot more investigating on part of the government on what scams went on not just on the street level scams, but the big investment firm scams. My view is that the investment banks packaging mortgage loans into derivatives securities were the driving force behind the local loan scam.
The buying ans selling of mortgages , of consumers who ultimately could not afford the rise of interest rates, may have been the root cause the "**** is Rolling Down Hill" effect.
Excellent points from those two.
The US Feds 'De-regulation' and the industry's 'self-regulation',,, big mistakes ?
Am I tracking?

[Rudolph]

Good thing I paid my loans and finished school in time to get a work before depression, at least now I'll land on my feet even if things get truly ****ed up.

Never been a credit junky myself either. Car and house payments are unavoidable, but live within your means, you can always trade in your car, or buy a new house if you truly get a significant raise. I've got one credit card though, although I could pay it off right now if I really wanted to. Plus insurance to pay it off if I lose my job, whatever the amount... Gotta start up that annuity now though, the fear of being poor has been always been this nightmarish thing which drives me to manage my money well. I don't know why, but since childhood I've had this fear of being extremely poor... some weird mental issue I've got here. :) Other than that, my humble advice is to invest in indexes rather than shares. They are the most stable. Look at this for example, over 40 years on the JSE:

http://users.iafrica.com/j/jr/jrp/smalls.gif

[Calanen]

Credit cards are for people WITH money. Not those without it. People lose sight of this simple truth.

I've got one debit card, and no debt. And I like to keep it that way. If I dont have the cash, I dont buy it.

[Macs.]

If I dont have the cash, I dont buy it.

That's not the case with most the population of the western hemisphere...

[Rudolph]

That's not the case with most the population of the western hemisphere...

Anyone here know how the developed nations in the East are coping? Are they having the same problems with easy-credit blowback?

[vryhpyammoadded]

I eagerly await the October surprises, Novembers Chicken Little’s running about screaming the economy is falling and the release of the stretched out interest rate sling shot come next year. Anyone care to guess the release date? Will it vary much depending on which party takes the US federal crown?

Also, just what’s going on with the Perth Mint? A buddy of mine just told me to avoid silver then blabbered something about Perth and miners refusing to work etc before catching the bus to work.

[Macs.]

Anyone here know how the developed nations in the East are coping? Are they having the same problems with easy-credit blowback?

China has Multi-Multi-Billions invested in the US, ofcourse they will be affected in a way sooner or later.

[Rudolph]

China has Multi-Multi-Billions invested in the US, ofcourse they will be affected in a way sooner or later.

Sorry, I meant culturally.

[Albatross]

Sorry, I meant culturally.

Please clarify your question.

[Rudolph]

Please clarify your question.

Are the Japanese, Chinese, etc. also abusing credit at the same rate as Westerners?

[Mr.K]

Credit cards are for people WITH money. Not those without it. People lose sight of this simple truth.

Calanen we often disagree, but I agree with you on this one.



I've got one debit card, and no debt. And I like to keep it that way. If I dont have the cash, I dont buy it.

Then you're are not helping the economy, go spend the money that you don't have!p-)
Which makes wonder sometimes, why do you need credit if you can afford it.

Here credit cards are given to practically anyone who has a pulse and can sign a paper. I got so many junk mail for credit cards as a student.
I think the problem lies with the pushy credit card reps that are paid comission everytime they get a new applicant (regardless of their financial situation), and lure people with stupid "a 15$ value gift" or gift certificates.

[Albatross]

Are the Japanese, Chinese, etc. also abusing credit at the same rate as Westerners?

The Chinese are caught up in the stock markets, over 85% of their savings have been invested in the markets. In a culture where gambling is so big, its natural that they move a lot of there money to stocks. With all that money in the markets, if they markets take a crap then they are going to feel it. I am not knowledgable on the credit markets in Asia.

[2Sheds_Jackson]

Are the Japanese, Chinese, etc. also abusing credit at the same rate as Westerners?

I would say not -the average Chinese can't get 7 credit cards with 70k worth of credit issued to them. But even if they don't, their jobs likely depend on those Westerners abusing their credit cards. So we're all connected, like sinuses made of sweet, sweet money.

As to the question originally posed in the thread - is a worldwide great depression coming - IMO, no. "Great Depression" means something very specific - it means economic and social conditions similar to what happened in the 1930's - and that simply won't happen today. We may face a downturn- but that doesn't = another great depression. Things will suck to different degrees in different places - but I doubt anybody in the West will be standing in a breadline.

The trading day isn't over yet...but even with all the hand-wringing and the-sky-is-falling rhetoric over Lehman / Merril Lynch etc...it's still only down 277 right now. I can't remember a week in the last 5 years when the Dow didn't feature single days with the market swinging ether up or down by that much.

This is big news because it affects people who make piles of money - you know, the ultra-rich who reaped massive profits during the bubble then ran off when things turned sour - the people who really matter. When they're upset, we all need to stand up and weep openly at their misfortune >sarcasm icon<

[Creeper]

AIG has fallen as a result of damaged mortgage securities and collateralized debt obligations.
More fall out will continue from failed Fannie - Freddie operation,,,IMO.

[vryhpyammoadded]

The Chinese are caught up in the stock markets, over 85% of their savings have been invested in the markets. In a culture where gambling is so big, its natural that they move a lot of there money to stocks. With all that money in the markets, if they markets take a crap then they are going to feel it. I am not knowledgable on the credit markets in Asia.My wife’s family in Hong Kong invested a lot in precious metals when the government suggested everyone should do so about two years back. They've all done pretty well with that move so far.
About four months back the government was urging people to take great care on the stock market due to projected instabilities and told the banks to keep larger cash reserves on hand especially during the forth quarter.
The feeling I get is that the Chinese are beginning to go into the hunker down and ride the storm out mode.

[Flagg]

Paulson says Americans can remain confident in the soundness, resilience of financial system

WASHINGTON (AP) -- Treasury Secretary Henry Paulson says the American people can remain confident in the "soundness and resilience in the American financial system."

Briefing reporters at the White House, Paulson said he "never once" considered it would be appropriate to put taxpayer money at risk to resolve the problems at Lehman Brothers. The nation's fourth largest investment bank filed for bankruptcy protection earlier Monday.

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Starting Friday, Paulson participated in three tense days of negotiations at the New York Federal Reserve Bank in which he held firm to the position that the federal government would not step in and supply any money to resolve the crisis at Lehman.

Faced with the prospect of no government help in dealing with Lehman's huge losses on its mortgage holdings, other financial firms lost interest in trying to buy the venerable firm. That forced New York-based Lehman to file for bankruptcy protection, making it the largest bankruptcy in history in terms of assets, surpassing the failures at Worldcom and Enron earlier in the decade.

Paulson explained his decision by telling White House reporters he did not "take lightly" any decision to put taxpayer money at risk to prop up a private company.

"Moral hazard is something I don't take lightly," Paulson said, referring to the belief that when the government steps in to rescue a private company it encourages other companies to engage in risky behavior.

"I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers," Paulson said.

When the treasury secretary has to make a speech to remind us to trust a system built on trust....I get quite concerned.

IF the system is truly sound, it would be obvious to all and not require being reminded of it's "soundness"

[Flagg]

Are the Japanese, Chinese, etc. also abusing credit at the same rate as Westerners?

thailand and South Korea have seen massive consumer credit expansion in recent years....with the associated problems.

Consumer credit availability and velocity of growth in developing nations like turkey and Brazil has been staggering...and not without serious blowback.

[Flagg]

Anyone here know how the developed nations in the East are coping? Are they having the same problems with easy-credit blowback?

One thing that stands out is folks in Asia cannot fathom walking away from a home mortgage foreclosure...people seem really puzzled by it.

Not just because you can't, but that you shouldn't