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jesus christ, is it possible to actually let an institution fail in this country??? (pg. 6)
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| Shakka |
| quote: | Originally posted by The17sss
I thought, for example, if you have a 401K and it's being handled by Lehman Brothers it's fine because you own the asset, Lehman Brothers does not. Just because they go south doesn't mean that your 401K goes south with them, right? Or is that how it works depending on how that particular 401K is set up? |
Lehman in particular is known for encouraging its employees to buy/hold company stock. I believe the figures are that Lehman employees owned upwards of 30% of the company's outstanding shares. Today it's basically worthless. If they held other securities in their 401ks, I'd assume those assets would be fine. But it's still a big hit for almost all of them no matter what you think. |
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| atbell |
| quote: | Originally posted by The17sss
I don't think they're stupid, |
I do.
That's the problem. Stupidity makes everything seem less risky. It's a fairly standard problem, usually it manifests in the difficulty between sorting out the incredibly brave and the incredibly stupid. Both types of people can apear the same. |
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| atbell |
| quote: | Originally posted by Shakka
But I digress because the subprime crisis was merely a canary in a coal mine and housing is just the tip of the iceberg of a much larger, more pervasive problem of an overdependence on credit and leverage and a society and an economy that is massively dependent on debt to finance a standard of living that few of us can truly afford.
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I completely agree with this. I agree so much that I've actually planned to write a quick piece on what I describe as "American Capitalisim". It's a perversion of capitalist theory where investment that used to be based on using saved capital is instead based on borrowed capital. I'm still fleshing it out but I'll be sure to throw it up when I get a half decent draft.
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I know a lot of people that are out of a job today. They will not receive a paycheck and their life savings which was largely in company stock, has been essentially wiped out. Even worse, it will be incredibly difficult for many of them to find new employment soon as the financial services industry that they would look to for employment ain't exactly in a hiring mood right now.
I highly recommend an article written by Warren Buffet several years ago that essentially predicted a lot of what we're seeing today. Anybody that said the subprime issue or the credit crisis was ring-fenced or contained within the last 2 years can eat a dick.
Thriftville Vs. Squanderville by Warren Buffet
I can't wait for another marathon day tomorrow. |
Although I feel for people who are on the rocks... I told you so comes to mind.
The stock market is risky and people have forgoten that. Finance is also only moderately useful as a career path. The semantics and the lexicon have diverged to much from other industries so getting a new job will probably invovle translating "finance english" into some other form of english that the rest of the world speaks.
Buffet is one of the people I have a lot of respect for. Soros is another one to pay attention to. Great examples of intelegent, human investors who understand but do not abuse capitalisim. What strikes me about Soros is he seems to have made a killing without screwing any one over. His money comes from calculating when the markets are out of alignment and risking big sums. |
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| atbell |
| quote: | Originally posted by daydreamer
what i want to know is what i do with my MONEY?
do i take out of the bank (chase)?
move it overseas, or just keep it there.
the amount isn't vast, but it also took me a while to put together.
damn U.S. economy. |
It's a pretty common question. There are lots of guru's who will tell you how to work the system and there are going to be lots more who are just waiting for you to buy thier book. (btw - book sales don't make money, it's the speaking engagements that get authors thier coin, or the pyramid scam they sell.)
The only thing I know for sure is that if you are lucky enough to know a trade then investing in actual capital is a good thing right now. For example a lathe or other tools will be hold value as production devices because you will be able to trade what you make for cash and the staples of life no mater what.
Another good investment would be in things you find entertaining that don't require further expenditures of money. If you're lucky enough to be entertained by board games they can provide hours of entertainment with no expenditure. Cost cutting could become really important as things get worse so thinking in terms of "how much does this activity cost per hour of entertainment I get" is a great way to think. And make sure you include all the costs. Sailing might be "free" per hour, but the cost of buying a boat and docking it is huge.
My guess is that everybody is going to have to take a hit in thier standard of living. In a global economy standard of livings are going to balence and those millions of people in India, China, and Brazil without clean water, 24 hr electrisity, and acess to thier own toilet have a long way to go before they start considering where to maximize the returns on thier savings. |
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| atbell |
| quote: | Originally posted by Fir3start3r
Happy they didn't actually take the plunge into the sub-primes full force like their southern brethren you mean.
Don't fool yourself, I know for a fact that they were toying with the idea here in Canada.
CIBC lost of a lot of money due do their fingers the pie down there... |
I've heard as much about CIBC and the attemts to get into sub-prime.
Yeah, the investors in general take to short term a view of things. The politicians are better at this but still have trouble seeing much past elections. Then there is the problem of thier frequently concealed motivations. |
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| jerZ07002 |
| quote: | Originally posted by Shakka
But I digress because the subprime crisis was merely a canary in a coal mine and housing is just the tip of the iceberg of a much larger, more pervasive problem of an overdependence on credit and leverage and a society and an economy that is massively dependent on debt to finance a standard of living that few of us can truly afford. |
on point. If we think the US is bad, britian and japan should be worse. Britian has more individual debt and japan has more government public debt.
good article, i remember reading that when he first wrote it. |
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| DJ Shibby |
| quote: | Originally posted by jerZ07002
on point. If we think the US is bad, britian and japan should be worse. Britian has more individual debt and japan has more government public debt.
good article, i remember reading that when he first wrote it. |
What do you mean "should be"? |
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| jerZ07002 |
| quote: | Originally posted by DJ Shibby
What do you mean "should be"? |
The de-leveraging of their economies should be worse. Both countries are more leveraged than the US.
Although the US has different accounting rules, and i'm not an accountant so i'm not sure how much the american accounting rules have played in the current situation. I know that the rules regarding marking assets down to fair value has played a huge role in recognizing losses before those losses actually occurred, however, that is not the fundamental problem. People over extending themselves is the problem. That problem is more acute in the UK where the average household debt is something like 25% greater than in the US. |
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| St_Andrew |
| quote: | Originally posted by jerZ07002
The de-leveraging of their economies should be worse. Both countries are more leveraged than the US. |
Aren't they already worse off than the US? |
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| jerZ07002 |
| quote: | Originally posted by St_Andrew
Aren't they already worse off than the US? |
maybe, i'm not sure because the world is focused on the US right now. Even in the FT it's all US markets at the moment. |
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| daydreamer |
not even close to 100K
more around like 20K
i know not much, but it's a lot for me
no debt or anything.
with, that much i can live like a king in central america for a couple of years....hahaha
maybe i should move there until things begin to pick up again. |
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| St_Andrew |
| quote: | Originally posted by jerZ07002
maybe, i'm not sure because the world is focused on the US right now. Even in the FT it's all US markets at the moment. |
Well, I was more thinking in general terms. The Japanese economy hasn't fully recovered from their debt crises more than 15 years ago. Britain is facing a far greater risk of recession than the US (Q2 growth at 0.0%, and with the OECD amongst others having a much worse outlook for Britain than for the US). |
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