Plunging US Economy.. Are we in trouble?

dir=85 billion from taxpayers' money to bailout AIG, and 200 billion the week before for the takeover of fannie and freddie. man, this stuff is serious.

dir, someone described it as "privatising the profits and socialising the losses" meaning when the companies made profits, the CEOs and shareholders took home the cash, but when the chips are down, the public had to put up the money to cover the losses. And mind you, the way everything is so entangled nowadays (they call it globalisation) indirectly some of it is our money too.

Heckler is right, the recession is already at our doorstep - Singapore's Aug's non-oil domestic exports (NODX) are down 14% (fall in July as well). Given what just happened this past week, the next quarter is prob going to be worse. 2 consecutive declining quarters = recession.

EDIT: Oh yeah, total Fed bill so far is US$900b.
 
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weiht=THe thing now everyone is fearful of is the future, and looking at the past will not give u answers. If it does, then this cld have been avoided. Business 100 yrs ago and today is so different, the leading industries are replaced. Then it was the rail road that was the $$$, now no one even takes those rails anymore.

There will be some economics professors and market analysts who will have a bone to pick with on this. Unless you have a special insight into the future, nobody knows how all this is going to pan out. Will the Fed rescue work? Will Washington Mutual (biggest thrift org in US) be the next one on the chopping board? Have all the bad credit been worked out of the system?

When you don't have much to steer by, the smart money is to look to the past for clues. Already analysts have noted several similarities between events leading up to Meltdown Monday and 1929. You are right about businesses being different, but you know what? At the heart of the markets then and now, are the primal instincts that drive all the business activities, and the paramount one that has been evident in the past week is one of fear. The same fear that made bank runs happen in 1929, and drove those thousands of Singaporeans to Finlayson Green. The scenes and props may have changed, but the actors remain the same.

About being able to learn from the past? It seems we can't even learn from the recent past. At least six years ago, some hedge fund managers detected problems with parts of the capital market (look for Eindhorn, Allied Capital, Lehman Bros). If people had looked properly at the findings they could have fixed the problems, but instead they ended up shooting the messengers.

weiht=Uncertainty and fear make ppl do stupid things

Very true. But it takes an inordinately brave soul to swim against the tide.
 
It is not as good a news as you might think. It will hold temporarily but it cannot be a permanent solution, because it is at the expense of the ordinary tax payers.

Basically, the situation is like this: since someone else lose their money, you have to pay for them.
 
Well, they have to restore the confidence.

Otherwise, it'll just go down and down and down.

Fear did lead to The Great Depression.
 
This stuff is really serious. Fannie Mae and Freddie Mac are big bubbles waiting to be burst anytime soon. They have between them some 6.5 trillion dollars of mortgage backed securities. Both companies have been big problems to the Federal Government since god knows how long. Their debts have been massive.Why didnt the US Government shut them down or break the companies into small pieces and sell them off? The reason that they have survived so long in the past is simply because they have very strong lobbying power in the Senate. If the true situations of these two companies manifest themselves, the financial crisis will blow out of proportion.
 
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I think its really sad really, cos it doesn't just mean the people involved getting screwed, everyone gets screwed just not as bad....
 
Geeze on Friday's paper, they mentioned that the bailout is 500 billion US dollars. Today, the amount has increased to 1.8 trillion dollars......There is no transparency at all. Now that definitely will put a strain on the global economy

http://www.cnbc.com/id/26808715
 
from the start i already knew that this was going to be a long, draggy affair. the start of a heavy recession. but alot of people thought that it would get better fast, probably due to personal interest and greed. i will explain this.

i think people take for granted the going concern of financial institutions. the going concern means that a company is always assumed to exist forever. but it is becoming apparent especially now that it is extremely unrealistic to think that companies will last forever, i.e. they will not go bankrupt.

and even at the worst of times people thought that "oh, the government has got that bank covered". well i hope those people realise how foolish they were.

anyway, when people don't appreciate the going concern of financial institutions, greed takes over. they start thinking that they can get a quick buck by buying cheap shares, thinking that someday SURELY the share price will go up. that is pure greed. i think it still hasn't occurred to them that their cheap shares can plummet to $0, at which case they will never go up again. if the company goes bust, their shares will be worthless.

i am not making reference to the US market, i am trying to hit closer to home, greedy investors such as temasek holdings. now of course, having ALREADY invested millions in share prices going up, they surely are not gonna acknowledge that the economy would get worse.

in the end, the US government has screwed up, wall street has screwed up, and the only way to save the economy is to make the people pay. the people always suffer, they always pay the price.

but remember, these are a people who kept george bush in office for 8 years...

the people still suffer in the end. many would love wall street to pay the price for screwing up... but that would mean that the economy would collapse. and that would directly affect the people. imagine not being able to take out mortgage loans, car loans, study loans, insurance companies not being able to provide assurance to clients (AIA) etc.
 
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shinobi said:
but remember, these are a people who kept george bush in office for 8 years...
Click to expand...

I can't help but pity him a little.

A terrorist attack that caught a whole nation off guard because of security and intelligence incompetence, a yet-to-be-found terrorist head on the loose, a war on a non-existent weapon of mass destruction, battles in Afghanistan and Iraq that cost millions of lives and trillions of dollars, on top of international criticism, Katrina aftermath inadequacy, a weak economy that has yet to reach bottom, even before the catastrophe of the sub-prime mortgage started, and now a bill that nobody wants to vote for.

He's making history in all the wrong ways.
 
Heh, I don't mind too, James. But I don't even have a million to begin with to be able to invest like Mr Oei or Temasek Holdings. Neither, I believe do most of us here.

The thing about investors, especially a smart one like Mr Oei and Temasek is that they can afford to take risk and have ample assets to spread about, so should one investment fail, there are others to fall back on. In the end, their liquid assets are thick and plentiful enough to cushion any set backs. One investment in a failing industry might go bankrupt and they can still have their 5 Cs.

For the average ordinary Singaporean though, our assets are equivalent to a packet of nasi lemak. You invest one packet, you either get 2 or nothing. Basically, you either eat plenty or starve. And with such a high risk of starving, I personally would rather keep that one packet of nasi lemak, so that I have the energy to work to get another packet the next day.

Hats off to those who are willing to risk, like Mr Oei and Temasek Holding, but if it wasn't for the cushioning assets they have to fall back on I do not think they would be any different from us.

Of course, if they don't mind loaning me 1 million, so that I can buy some of AIG and make a killing, then I will surely return the 1 million back, perhaps a bit more as well. But nobody want to take that kind of risk on us, the ordinary citizens.

However, I remembered sometime back that Singaporeans were allocated Singtel shares. I dunno whether that has a cut off time or something. Anybody still holding on to theirs? Can anyone remember how many shares were we each allocated, what was the value back then and what is the current value now?
 
THOA

One thing i learnt about money is that "If we cannot manage $1000, we won't be able to manage $1,000,000".

If we can make $100 with $1000, that is a 10% profit. We can proceed to $10,000 and so forth.

Problem is, "How to make $100 with $1000?"
 
Even if you're a neutral with the OBama / McCain thing, you'll have to admit that Obama easily pwns McCain in this debate

Either way, whoever goes into the whitehouse, he's walking straight into a sh||tstorm of things to rebuild!
 
I haven't watched till the end but from what I can see, McCain has actually brought up more good points to put forward than Obama.

However, in certain issues, he stepped on some really unpopular territory eg alternative energy in the form of nuclear power and more oil drilling off their coastlines.

One of the few alarms that went off for me is on the nuclear power part. No doubt that I recognised the viability of such an alternative form of energy, but considering how the US are so keen on shutting down nuclear facilities in North Korea and Iran, there's huge, huge discrepancies there. And he said as a maverick, he has chosen a good maverick partner. I basically slapped my forehead on that.

On the whole though, I'd say McCain is the winner in terms of content. Obama may be confident, assured and calm, but his points are mostly skin deep, preferring to arrow blame on "The Bush Administration" for their economic and social catastrophe. Maybe he is just holding back his cards for debates 2 and 3?

But heck, Obama certainly look the better guy on stage. We are all suckers for rock stars, aren't we?

I am looking forward to debates 2 and 3.
 
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