Governments & stock markets panicing , heading for a Depression in 2009 ?

[Ian Robinson]

Originally Posted by casstony

Many of these people are primarily interested in the fees they can earn off your investment; with such conflict of interest how can you know who to trust? Educate yourself to the extent that you can pick which advice to follow.

I learned the hard way not to trust financial advisers after accepting bad advice just before the 1987 crash. After ending my career due to poor health last year I've had to worry about protecting savings again. Just for kicks I accepted an appointment with a Bank financial advisor late last year - his advice was to put everything into managed equities funds. I argued against that advice and got the same tired old lines about the sharemarket always going up over the long run. (it took 25 years for markets to exceed their peak prior to the Great Depression).

Here's one place you can get an understanding of current events:
http://globaleconomicanalysis.blogspot.com/

That's what I did , and I came to the conclusion that none of them had my best personal financial interests in mind .... I did my sums and made my own decision.

[norm]

Ian, Tony - I agree with your sentiments. Fortunately I'm not really exposed too much in this crisis, although, job safety is never a sure bet, not even in IT.

As for financial advisers, your damn right there. Their only interest at the end of day is how much commission they will get. I used one once and didn't take his advise, thank goodness for that! I insisted I was a conservative investor and all he was interested was me taking out a margin loan......go figure!

When you reflect back over the last 12-18months and recall Howard/Costello and their cronies bragging about how great the economy was and Australians never had it so good...... and look at us now!

As someone stated before, best advise, reduce your loans and where possible put some money away for a rainy day.

Riddle me thee:

I keep hearing economists say that we need to reduce interest rates. Logic/reason being, this will stimulate the economy. eg, a family may save $150 per month on their mortage. Instead of them putting that money back into the mortage, they'll use it to save for a plasma TV. Multiple this a 1000 times with spending and aren't we just fueling a false economy, ie money we don't really have?

Alternatively increase interest rates and this slows the economy to a halt, but at least this may kerb some spending - thats the theory anyway!

I know this isn't a new observation, but really does anyone have an answer ?

If anything I like to see the government reduce, if not remove tax from saving accounts. Greedy B**ST**Ds.

[mick pinner]

if people didn't see this coming they must have been living on Mars. American interest rates have been super low for some time to attract people to the real estate market that they could normally not afford, eventually rates had to rise and guess what? they cannot afford the repayments. now we have a real estate market with houses that people can't afford and those with money won't buy because they are worthless.
ln Las Vegas at the moment there are 30,000 empty houses built by developers that people cannot afford to buy and at the same time 3-4,000 evictions are taking place every month, yes every month, housing affordability is a great indicator of a countries financial position so guess what sort of a mess the good old US of A is in. we will follow but not to the same extent IMO, if you are in a secure employment situation a recession can also be a time to make money, sure you will lose some superannuation but what a time to make money in the real estate market.

[norm]

Financial planners, funds managers, all the so called experts didn't even see it coming

I should re-phrase this comment. They saw it coming, but did very little to warn people as to the options they should take. At the end of the day, we're all responsible for our own finances. Those in the industry need to be made accountable.

but what a time to make money in the real estate market.

South Western Sydney is an example of where some Mac Mansions could be had for now a reasonable price. Great for an income stream, but as for making a tidy profit in the long term - tough call.
Housing, in particularly Sydney is still priced unrealistically and to many unaffordable.

That said, as you mention Mick, if you have secure employment, some spare cash saved, one could do reasonably well !

[GrahamL]

I know of somone in the last week who has had to already had to deal with the fallout from this .. He has run a smallish overdraft on his (droughtproof) rural buisness for the last 20 years without problems so you couldn't really say its a marginal loan .. yet the bank has called it in for payment.

You wonder where this sort of thing will go in time with many small buisnesses using this sort of credit to survive..

[wavelandscott (Scott)]

Originally Posted by Ian Robinson

What do you think of the actions being taken by the central banks and governments , and the response of the stock markets ?

I think the global economic outlook is grim and a global depression is highly likely , this is probably the start of the Great Depression of 2009.

I believe that the actions being taken are appropriate for the situation...I do however think that it may take some time for things to recover.

I believe that the Stock market will continue to fall...markets (and auctions) like the stock market are not necessarily rational...they swing too high on the highside and too low in the following correction. As happens during change events there will be winners and losers...that is how the free market works whether this is a good thing or a bad thing is all a matter of perspective.

There is no one single cause for what has happened and no one single fix that will get everything back on track.

[Alchemy (Clive)]

Originally Posted by nightstalker

I know of somone in the last week who has had to already had to deal with the fallout from this .. He has run a smallish overdraft on his (droughtproof) rural buisness for the last 20 years without problems so you couldn't really say its a marginal loan .. yet the bank has called it in for payment.

You wonder where this sort of thing will go in time with many small buisnesses using this sort of credit to survive..

i remember in the late 80,s in victoria, pyramid went down, estate mortgage went down .... panic.... banks mercilessly closed overdue accounts, the buisinesss i worked for was hammered by the bank that 1 month before was offerring more money... end result ... buisiness closed.

currently the world is in a panic , and like lemmings everything is running over the edge of a cliff, somewhat unnessecarily in this country,

the sun is still shining, there is still PLENTY of money around ..... people will just hold on to it . self fullfilling in a way. hold on to it just in case and there it is recession.

[casstony]

Originally Posted by Alchemy

currently the world is in a panic , and like lemmings everything is running over the edge of a cliff, somewhat unnessecarily in this country,

the sun is still shining, there is still PLENTY of money around ..... people will just hold on to it . self fullfilling in a way. hold on to it just in case and there it is recession.

"He who panics first gets at least some of his money back". Can't remember where I read that but I like it. I have unpleasant memories of holding onto investments, not wanting to crystalise a loss, and watching them go all the way to zero.

[gregbradley]

I think Aussie is in a different situation than it was 20 years ago. As far as I know we are not really that dependent on the USA financially anyway. We are more involved with Japan and China.

Perhaps the US is losing its top of the financial world status. Not sure who is rising to take its place though.

Did they really think they could afford a 3 trillion dollar war with no gain and no end to the cost in sight? I guess its been a while since Vietnam and they had forgotten how wrecked that had left their economy afterwards.

As far as increasing liquidity this is the correct thing to do. The trigger that made the great depression great was the fact that liquidity dried up and in those days the current think was to squeeze tight when things were tough. It didn't work of course.

Greg.

[avandonk]

I would let these parasites die by not giving them more money! They have used other peoples money and paid themselves astronomical amounts for their multiplicity of privileges. I would give them the choice of a credit card made out to the amount they have plundered each and make them pay it back! For every late payment lets say a $30 late fee. Sound familiar? They will then realize we have no inclination to have them hold us to ransom to bail them out. They are scum of the lowest kind. Any government that thinks pandering to these utter parasites will solve the problem is very poorly advised. Even incarceration is too good for them as they will only be screwed at one end while we have been really well screwed from all directions!

Bert

Here is a comedy? clip that was done in 2007 and the masters of the Universe could not see it coming?

http://www.brasschecktv.com/page/187.html

[space oddity]

I agree- those greedy bankers do not deserve bail outs and should be stripped of all their perks - they simply did not do their jobs. Any goose can make a "profit" in a boom, but they are paid to be able to weather the storms. Australia is in a funny position. Our banks are (too) strong and probably do not have so many suspect loans out compared to the US, but we have surrendered our secondary industry to China. Nothing is made in Australia any more - all the money is made by shuffling the stuff around and taking cuts off it to feed the parasitic leaches of the finance industry. I cannot for the life of me work out why central banks are reducing interest rates when the crisis is one of liquidity - a shortage of capital(all been soaked up to create asset price inflation) should create higher interest rates. To support reducing interest rates will require governments to print money along with the subsequent inflation. The economic cycle now should be turning toward debt reduction rather than the futility of propping up overpriced assets. I am lucky in that I have not that much in super (even less now) but very high equity in my own home . Space oddity's strategy :- cash is king, wait for shares and real estate prices to undercool and buy before the inflationary cycle begins(the skill element), you could find the cost of a property could cost you the equivalent of a cup of coffee. Wishing you all a non painfull recession/depression . At least there is no cost involved looking up at the stars.

[GrahamL]

I noticed an observation the other night by somone that a lot of the share prices of the companies that have a lot of solid equity and a good
balance sheet have dropped well below what this suggests there current worth is .. bet theres quite a few silent watchers sitting on piles of money who will of noticed this as well and will likely drop in at the end of the hysteria and make a killing on this ... tommorow maybe ?

[qld]

Originally Posted by nightstalker

I noticed an observation the other night by somone that a lot of the share prices of the companies that have a lot of solid equity and a good
balance sheet have dropped well below what this suggests there current worth is .. bet theres quite a few silent watchers sitting on piles of money who will of noticed this as well and will likely drop in at the end of the hysteria and make a killing on this ... tommorow maybe ?

qld

this is a top time for Jimminy Cricket (Kev) to introduce a carbon tax and make kangaroo eating compulsory.,it sure beats eating Lemmings

[casstony]

There hasn't been much action yet aimed at exposing massive hidden bad debts such that trust can be restored in the financial system. No trust means no lending leading to a complete lock down of credit markets; this scenario could unfold very fast and drive economic activity a lot lower. It worries me that our leaders don't seem to be even recognising the problem let alone developing a solution. I feel were at a turning point. Last I heard the G7 decided that they need to do something - but they don't know what to do.

[Starkler (Geoff)]

Originally Posted by qld

this is a top time for Jimminy Cricket (Kev) to introduce a carbon tax and make kangaroo eating compulsory.,it sure beats eating Lemmings

If you want to reduce carbon emissions, a recession will do it quite effectively

[Ian Robinson]

Originally Posted by casstony

"He who panics first gets at least some of his money back". Can't remember where I read that but I like it. I have unpleasant memories of holding onto investments, not wanting to crystalise a loss, and watching them go all the way to zero.

Isn't that what happens when paying the pokeys ? Been a while since did that and I don't recall ever coming out in front .... a mug's game.