the economic crisis

[pinknic38]

holy smokes guys, times are getting rough. I know everyone is feeling what is coming down the wire here.

I got laid off my part-time job, over drew my bank account, and had to borrow money, all in the past week cos of some shit that went down b/c of the economy. I had to find a new bank, and what pisses me off most is I have a full ride to Ohio State but I just took out a student loan today to make ends meet.

I didn't start this thread so it would evolve into a political dispute but just wanted to open up discussion to see how everyone else has been doing and what everyone's thoughts were.

my family just called and said in Chicago people are getting evicted even though they pay rent because landlords can't pay their mortgages.

my cousin lives out in Vegas and she and her fiance couldn't make rent this month and her land lord said it was okay as long as someone was in the house. also she said all the casinos have laid people off, and everything is CASH ONLY, no credit or debit cards.

holy smokes guys.

I know my next check from the VA, I'm going to go get a gun and a bottle of gin and sit in the basement until this is over. times are tough!

[marc873]

So, I def feel ya Nic. Finances are tight as hell, around here, actually just came up with the funds to get caught up on bills today. Sadly with the industry Rox and I are both in, Massage is turning into more of a luxury then a selfcare item. It seems as if all the Therapists around my city are feeling the crunch and business is slowing. For those clients of mine that would come once or twice a week due to injuries or for other selfcare reasons, are now dropping down to once a month..... That means on average I'm losing 3 sessions a month per regular client. Thats a WHOLE lot of cash.

[Canadian Bacon]

Holy crap... i didn't know it was that bad in the States. Things are pretty much normal up here, except for rising prices.

[MeTurk]

The Irish stock market has been in freefall over this recession. Droping up to 13% a day. We where already heading into a slump but now we're screwed. We have allot of American companies here because we charged them next to nothing in tax but their all shuting up shop now.

I don't know how some people around here are going to stick it out. buiilders around here got very rich, very quick during the boom and built these huge mansions out in the middle of nowhere. Now there's literally no one buying houses, there's half finished houses all over the country. I don't think they'll be able to run their home and fancy cars.

The thing that pisses me off the most about it though was every one knew it was coming for over a year and did nothing to stop it. The people at the top squeezed the last few cents out of us and left us for dead.

[ScarlotteDorian]

Originally Posted by MeTurk

The people at the top squeezed the last few cents out of us and left us for dead.

and this is a surprise? Our country's leaders and corporations have been squeezing embarrassing amounts of money out of it's citizens and the world for quite some time now. The Bush administration and it's affiliates just gave us the final kick over the edge. YAY AMERICAN AND CAPITALISM!!

yea, my company (starbucks) has laid off ALOT of people and is closing a ton of stores for the first time in the company's history (opened in 1971 here in Seattle). I also received a 4,000 dollar cut on my finacial aid for school this year and had to take out a small loan. don't even get me started on how bad my mutual fund, stocks and 401K is doing right now. I'm seriously thinking about burying all my money in jars in the backyard.

I feel worse for my parents though, who are looking to retire in the next 5 years. Their investments won't have a chance to recover by the time they retire.

This whole thing sucks, but in all honesty, i expected nothing less. Paranoia isn't entirely a bad thing.

[ScarlotteDorian]

haha. classy!

[travelpunk]

I can't even put into words what I have been through the past year and a half. Let's just say that I was in the mortgage industry for the past 5 years and that entire industry was anihilated. That left me without a pot to piss in.

Took 8 months of sending out resumes to get a good job in another industry(no one wanted mortgage reps), all the while jobless and barely surviving. I wanted to move to Spain early this year and concentrate on Tpunk, but we decided on having the baby in the US.

Stayed positive, though, and will bounce back stronger than ever .



But yeah, the economy is in the shiznitter !

[dudeman]

I live in Dallas, witch kept getting listed as a growing economy by all the yahoo and msnbc articles. I graduated in December of 07 and have yet to find substantial employment. The number of out of state license plates running around here is ridiculous. I am still applying for jobs left and right, but I am seriously considering investing half my savings and taking the other half and roaming around Europe and Russia for a while. I don't think anything will be better in the U.S. till summer 2010 at the earliest. Yeah, America!

[voyd]

I, like most folks, have probably lost 30% in the market this year. This includes my retirement plans (what a scam!). But times are rapidly changing and I am just cutting my losses now and trying to prepare for rockier times ahead.

I don't want to panic people, but I would prepare for post-crash scenarios if you can just to be safer. I would stay out of fear mode, but frankly it's a very distinct possibility for the US as we approach 2012.
It turns out the "wacky" tinfoil hat theorists may have been right...

Prayers and blessings to all.

[pinknic38]

Originally Posted by Canadian Bacon

Holy crap... i didn't know it was that bad in the States. Things are pretty much normal up here, except for rising prices.

It's fucking terrible. People with credit scores of 750 are getting denied car loans, no one is getting credit cards. Shit it's so bad, gas went down! I filled up the other day for $3.01!

I don't know what the answer is but damn things are rough! Because none of us have money right now, we were thinking of having a "Great Depression" party where we drink Natty and go to this diner across from my friend's house that has .99 cent sandwiches hahha.

[Dig]

Well, I am not invested in the stock market nor am I in need of credit. The Crisis is not really effecting me at the moment. However, I live in Texas which has been insulated from the Crisis due to our oil deposits. I am really only seeing a problem with the rich or over-extended, however it is interesting and unfortunate to hear that my fellow tpunks are hurting because of it.

[LaurieL622]

if you're under 40.....ride it out. no doubt these are rough times but the market WILL get better again. it may take 2 years, it may take over 10. this has never happened before so what the future holds is any economists' guess. it's a major 'system' failure that has caused a crazy domino effect...and the effects of it will be much deeper than what anyone (under 80 years old) have ever seen. anyway, in time the market will pick back up so don't panic with investments, and be responsible with your spending. my 2cents.

[joe7f]

Originally Posted by Dig

I am really only seeing a problem with the rich or over-extended, however it is interesting and unfortunate to hear that my fellow tpunks are hurting because of it.

That's because economically, we tend to be dependent on each other. When the rich have to stop spending money (and let's face it, who here is employed by someone poor?) their recipients do the same.

--Joey

[MeTurk]

Originally Posted by pinknic38

It's fucking terrible. People with credit scores of 750 are getting denied car loans, no one is getting credit cards. Shit it's so bad, gas went down! I filled up the other day for $3.01!

I wish they'd do that here, I've heard the price of a barrel of oil has gone down to $84 a barrel and there still charging us €1.29 a litre.

The government put out our budget soon I've heard they plan to put everything up (cigarettes by €2!) and cut spending on everything. Irelands going back to the good old days I think.

[Canadian Bacon]

I wonder what this will do to the tourist industry... I'm thinking of taking a trip to the US West Coast next year.. hopefully things will have settled down a little. Right now, (from what you US tpunks are describing) shit is getting closer and closer to the fan.

[ajb3000]

right now as i'm travelling the only way it's affecting me is with the exchange rate. The pound has fallen so much over the past year that i've now given up hope of finishing my trip in australia and realise i'll either have to go home early or skip a few countries on the way. I realise how lucky I am to be able to travel at all though so I can't complain, it's just bad timing for me.

[MeTurk]

Originally Posted by Canadian Bacon

I wonder what this will do to the tourist industry... I'm thinking of taking a trip to the US West Coast next year.. hopefully things will have settled down a little. Right now, (from what you US tpunks are describing) shit is getting closer and closer to the fan.

I think the Irish government should look towards the tourist industry. Ireland has an almost guaranteed influx of at least 9 million tourists a year ( our population is 3.5) and that's with ridiculous high taxes and prices. It's got to the stage whwere tourists 2nd guess coming to Ireland it's so expensive. We could easily drop prices and relie on tourists.

With any luck Ireland will become a cheaper place to visit. I think already the dollar is gaining against the euro which is a huge relief to Europen business. The fact remains America is a huge market with loads of money in it. If Americas happy and in the mood to spend the world is happy.

[zapptacular]

I am actually planning to leave in january for ireland. And get a work visa for year. Think they'll be any jobs??

Or maybe I should go someplace real cheap? Like turkey, or india, philipines... Etc. or just stay put until it stabilizes? Or whatever, anythings possible, crazier things have been done.

Probably wait a couple of monthes and see how it unfolds.

[Sijuki]

You know, it's crazy... I can't really complain too much. I got a new job that guarantees 40 hours, plus i get paid mileage and travel time. Gas prices are down. I have money to pay off bills, debts, and invest in super cheap stocks. Plus I just got a new credit card to help with bumps in the road.

I'm not gonna sugar coat the whole world. There are definitely some tough spots out there. But a lot this is merely the economies balancing out from the large surplus of paper money that was accumulated during the 90's. We all remember those times... house prices increasing hand over fist, stocks rising and splitting, and everyone everywhere seemed to be making money or getting bonuses and good jobs. Where did it all come from so quickly? It's very similar to the 1920's. A lot of it was hyped up, and as Americans, what did so many people do? They got a dollar and spent a hundred. Unfortunately that eventually catches up to everyone. Somewhere something cracks and it eventually balloons from there. It's not end times. There will be some big changes, some big overreacting, and some things that will probably stunt growth in certain sectors. But give it a few years and we will be start to come back. It will be like the 80's all over (except hopefully not as bad inflation).

If you get the chance buy some stocks... enjoy the cheap prices. I'm buying some Ford, Caterpillar, and a few others. Realty Income (stock symbol : O) is always a favorite as they provide a monthly dividend. I guess I can agree that my 401k is pooched right now... I'm down about 28% on the year... oh well... I got a few years to fix it right.

Remember, spending and investing keeps the economy going. Just don't overspend. Keep your finances in check. I'm one of those few people that is looking to buy a new car in a few months, take a vacation or two, and whatever else tickles my fancy. But in no means spend more than I can make.

[The Monsignor]

Sijuki has it right in that people were earning a dollar and spending a hundred... Credit fuels our economy, and with the rapid expansion of 'sub-prime' mortgages (loans to people that wouldn't normally qualify for home loans), the cost of housing - normally tied to the rate of inflation - skyrocketed with the huge volume of speculation in real estate. People were getting way over their heads with variable rate mortgages in the hopes of turning a quick profit by 'flipping' homes.

Unfortunately, though it occurred during this current administration, the root of much of this is the Carter administration's Community Reinvestment Act. It was a piece of legislation designed to open up home ownership to disadvantaged Americans.

Under the Clinton Administration, the CRA was expanded dynamically, forcing banks to accept higher risk loans or be fined for non-compliance. The Housing and Urban Development secretary, under Bill Clinton - Andrew Cuomo, in an interview about a lawsuit regarding this act in Texas, acknowledged that the government was forcing lenders to accept loans that they know would present an unacceptable risk of default.

This requirement created changes in how banks do loans, and because they had to market a certain percentage of their loans to unqualified buyers, the rules for the mortgage industry as a whole became looser. Unscrupulous mortgage brokers (no offense to the Godfather), realizing that they shared none of the risk and were paid for making the loans, encouraged people to borrow more and more. They had no vested interest in making sure that people could afford the loans they were getting, and were rewarded for getting them to borrow larger amounts of money. This, in turn, contributed to skyrocketing real estate prices, as the supply of available housing was getting tighter.

In order to make these loans work, Freddie Mac and Fannie Mae bought up these sub-prime notes and repackaged them as securities and sold them to investors. Because Freddie and Fannie were quasi-governmental agencies, these securities were purchased widely by companies, pension funds and mutual funds.

As a result of the shenanigans at Fannie Mae and Freddie Mac - like falsely stating earnings in order for their directors to earn obscene bonuses - calls were made in Congress to implement some controls over these two agencies, because of the increasing risk to the economy over these securities. These calls were ignored in congress, in part because of serious lobbying (and arguably, outright bribes) paid to members of congress to keep any sort of legislation from passing. This carried through both the Clinton and Bush administrations, with the beneficiaries of this largesse hailing from both Democrat and Republican Parties.

The bill has now come due, with all these securities becoming worthless because the assets (mortgages) are in default because lenders would loan money to people who were absolutely not good risks.

I don't like the situation we've found ourselves in, but as far back as 1999, our government has been aware of the coming crisis, but chose greed over the well being of the economy.

The real cause of this economic crisis isn't the greed of the banks, rather the government intervention in the free market. By forcing banks to write loans they wouldn't have otherwise, they traded political capital for our economic futures.

<<edit>>
As far as your retirement investments go - you'd be a fool to sell anything now. Stocks are falling, but it also means that many companies are currently undervalued, and unless you have to have that cash right now, you're better off sitting on it for the long term.

As a strategy, as you approach your retirement age, you should be shifting more and more of your retirement savings from risk-based investments (such as stocks etc.) to more guaranteed investments, such as government bonds and insured investments. If you have a longer time before you have to use your investments, normal market forces will balance the losses and you shouldn't suffer much for having left your money in stocks. People who have only a few years to retirement should already have much of their savings in secure investments because they can't afford the time it takes for their investments to recover.