Banking Armageddon imminent? / General Chatting / Forums

Forums

4hv.org :: Forums :: General Chatting

« Previous topic | Next topic »

Banking Armageddon imminent?

Move Thread

LAN_403

Conundrum

Thu Aug 16 2007, 09:32AM

Registered Member #96 Joined: Thu Feb 09 2006, 05:37PM
Location: CI, Earth
Posts: 4061

Apparently there's a good chance that the repercussions from this could result in world recession that makes the 1929 crash look like a minor hiccup.

-A

"Bother" said Pooh, as he purchased 100,000 shares in White Star Liners...

ShawnLG

Thu Aug 16 2007, 04:25PM

Registered Member #286 Joined: Mon Mar 06 2006, 04:52AM
Location:
Posts: 399

An Armageddon is imminent when we approach the steeper slope of peak oil. Since the price of oil is getting more expensive. This would drive the price for everything else up. Busnesses do not compensate their employees with better pay to pay their more expensive bills, because busnesses themselfs are also stuck with higher expenses. In the long run, many more people will defalt on their morgage payments and make the problem worse. Since the oil we use up take millions of years to form naturally. There will be no immediate recovery after the crash.

I have been seeing many "Start your own Real Estate business today" ads nowadays. This is the worst type of business to get into today.

Eric

Thu Aug 16 2007, 05:59PM

Registered Member #69 Joined: Thu Feb 09 2006, 07:42AM
Location:
Posts: 116

Conundrum wrote ...

Apparently there's a good chance that the repercussions from this could result in world recession that makes the 1929 crash look like a minor hiccup.

I'm not sure there's a 'good' chance of it but the scary thing is no one really knows what's going on. There are lots of financial instruments like these mortgage backed securities that no one knows the value of since they're not publicly traded. Essentially the owner sets their own price for them (!) overseen by rating agencies who are paid by the owner for their ratings (!). And they are leveraged many times over to buy other securities so if someone cuts 5B off the value of one, suddenly you have to have a fire sale of 100B in securities. And like anything leveraged tens of times over again, a little loss and you can unwind the whole thing to find out the actual cash you started with is completely gone (plus some).

You have to wonder when these people will learn. I mean they are the professionals that run the big financial institutions of the most advanced economy in the world. And they are essential playing craps with their (our) money. The whole system is seriously corrupt and irresponsible. The Fed actually encourages the whole thing by allowing a tiny reserve on borrowed funds. I agree that a spike in energy prices will eventually trigger a credit collapse that will make 29 look like childs play but hopefully it won't be today.

Here's an interesting read on the subject.

Sulaiman

Thu Aug 16 2007, 07:26PM

Registered Member #162 Joined: Mon Feb 13 2006, 10:25AM
Location: United Kingdom
Posts: 3140

I'm a bit of a conspiracy theorist, so to me;

The entire economic cycle is DESIGNED to
periodically pump wealth from the lower and middle income citizens to the rich.
As a part of this overall mechanism it is required that
pensions and investments are massively attacked
AT LEAST once in each person's earning lifetime,
thus maintaining the balance of power.

I have been expecting a 'downturn' for the last three years
oil price and supply/demand are clearly an added factor,
but they usually are.

Watch for gold price rises and George Soros &co! (m.o. = share/currency manipulation)

P.S. I'm now on the look out for black helicopters
but they will not find me because I'm safe in my tinfoil hat,
and protected on all sides by Tesla Coils.

Eric

Thu Aug 16 2007, 07:47PM

Registered Member #69 Joined: Thu Feb 09 2006, 07:42AM
Location:
Posts: 116

I'm not sure it's a conspiracy but certainly human nature. The corruption and abuse of power, etc. The neat thing about these hedge funds is you can operate one and make lots of money and if/when it explodes in your face you just close the doors and walk away. You might lose the corporate jet but you personally aren't necessarily in any financial danger. If only it worked that way with my credit card bills.

Hazmatt_(The Underdog)

Thu Aug 16 2007, 09:14PM

Registered Member #135 Joined: Sat Feb 11 2006, 12:06AM
Location: Anywhere is fine
Posts: 1735

Okay so the sub-prime market is collapsing from within like a broken hour glass emptying its sand, but not to worry, everything works out in the end.

The sub-prime lenders borrowed money from institutions, they default so the 'property' the lender has defaults back to the lender who lent the money to the sub-prime institution. Now that the initial lending institution has property it doesn't know what to do with, it will liquidate at lower prices in an attempt to recoup the loan. This translates to the property being put on the market at reduced rates which devaluates the over-inflated market costs of housing and thus begins a buyer's market.

Wether the buyer's market is in the range of the middle class or only the upper class ( eg. the rich buy up the property and sell it off as they desire), I can't say. But the downturn should force the market value of property in a price range that is more affordable in the future then it is now.

thedatastream

Mon Aug 20 2007, 02:57PM

Registered Member #505 Joined: Sun Nov 19 2006, 06:42PM
Location: Yorkshire!
Posts: 329

This is an interesting analysis of the situation -

Carbon_Rod

Fri Aug 24 2007, 07:39AM

Registered Member #65 Joined: Thu Feb 09 2006, 06:43AM
Location:
Posts: 1155

Macroeconomics was an interesting subject, and it gives an in depth analysis of what happened in 1929.

1.) The lending institutions set up a false growth estimate with Germany: And since most companies in the recursive false growth cycle kept investing it caused the eventual domestic collapse when mass loans faulted.
Now days, Military pay and allowances or interest rate controls this cycle in most countries trying to adjust the deflationary dollar value for trading (A certain country is known to have 30% of their tax dollars spent this way -- no one seems to care as long as it remains stable.) Also, families no longer inherit the liable debt of their parents.

2.) What is good for the individual is not necessarily good for the country. The marginal propensity to save decreases the economic growth. Therefore, a paradox occurs where more "poor" people increase the growth through trade and economic activity echoed throughout the economy. War, Natural disasters, and population growth all affect this aspect of the average persons behavior and are ironically good for the economy in terms of economic activity.

3.) Psychology, the theory of consumer behavior doe not govern investor activity despite what most would imply. The belief that the economy will do well will increase the marginal propensity to spend -- therefore, no economic adviser ever agrees the economy will do badly as it can become a reality.

4.) Successful people usually understand these points well:
a.) A savings account at a bank or cash is the worst investment to own as the interest rates are rarely going to exceed deflationary dollar value by much.
b.) Learning to invest while you are young will open more opportunities as you age.
c.) Anyone can make excuses: generally people who value achievement over having will gain more.
d.) There are only two mistakes people make (everyone):
i.) They use heuristics instead of logic to estimate the probability of something succeeding.
(Vegas was built by the people who get this point wrong.)
ii.) They fail to judge the value of something or base decisions on relative comparison.
e.x. Was $10.00 now $9.98 ... where real price is $1.99
e.x. Do you want $20 now, or $25 in 6 months? most take the 20$
e.x. Buy a car for $21,093 or go across town and pay $21,013? most take the $21,093
e.x. Buy a car stereo for $93 or go across town and pay $13? Same bias listed above.. Hmmm... =)

5.) Hiring professional accountants and firing the fund adviser is generally the best decision to date anyone could make.

Moderator(s): Chris Russell, Noelle, Alex, Tesladownunder, Dave Marshall, Dave Billington, Bjørn, Steve Conner, Wolfram, Kizmo, Mads Barnkob