Whitney On Wall Street's Future

[REWahoo]

As long as you are dreaming you might as well see if you can find an internet forum where everyone agrees with you.

[cute fuzzy bunny]

Quote:

Originally Posted by 2B You missed "Opening Bell" on CNBC. How do you make it through the day?

No problem. I have a tivo.

Anywho, i'm not watching it today. I had my fill yesterday.

I think I'll spend the rest of the day not worrying myself needlessly and go out to lunch with some friends.

This crap too, shall pass...you've spent years planning, now let your plan continue to work. If you have some excess cash, might be a good idea to cut it up into 3-4 pieces and throw a piece into the markets every month or so.

I'm betting you'll be a pretty happy camper about that by the middle of next year.

[cute fuzzy bunny]

Quote:

Originally Posted by REWahoo As long as you are dreaming you might as well see if you can find an internet forum where everyone agrees with you.

Shhhh...theres been a 25% drop in our 401k's, which means they're almost gone.

No wonder I'm way happier than I should be. All this time I thought there was a lot of ground between 25% and 100%.

[eridanus]

Quote:

Originally Posted by cute fuzzy bunny Pretty much my point. So in 1993-1996 and from 2004-2006 when unemployment was higher than that, did you feel that unemployment was a major factor in our economy and our economic future? Does anyone even remember unemployment as an issue during those time periods?

Yes.

[laurence]

Mike,

The less than enthusiastic reception for doomsayers mostly is a result of fatigue. Some people on the board have been investing for decades, and have been told the sky is falling hundreds of times. It sells magazines to make dramatic predictions.

Is it possible that things are going to be very bad this time? Absolutely. But the preponderance of evidence suggest it's more likely you will regret converting your stocks to guns and freeze dried food than holding your position. We've been accused before of not having an open mind and it's a valid point to discuss. Sometimes the accuser is saying, "Why aren't you open to the possibility of Newtonian physics being completely invalid and that gravity isn't real? We'll be flying as soon as we do!"

Often the doomsayers are saying, very eloquently and at great length, "Buy high, sell low". When things look dark, they may get darker, but most times in the past it's been the time to buy. Of course, it could be different this time....

[eridanus]

Quote:

Originally Posted by Michael Dirubio Yes- I am aware that the current economy doesn't meet the technical definition of a recession.

Though oft repeated, the government actually doesn't define a "recession" as two quarters of GDP loss. It has a more liquid definition.

If the "two quarters" definition is used, it misses several recessions in the past.

[Sarah in SC]

Don't forget the Ammo for those guns, you'll want to kill the lawyers eventually.
<duck>

[REWahoo]

Quote:

Originally Posted by Sarah in SC Don't forget the Ammo for those guns, you'll want to kill the lawyers eventually.

My advise is to shoot early and shoot often...

[dex]

Quote:

Originally Posted by REWahoo My advise is to shoot early and shoot often...

I just got back from the range. I'm pretty good with the .22 and 9mm when I'm shooting at paper and it doesn't shoot back.

[cute fuzzy bunny]

Quote:

Originally Posted by eridanus Yes.

So what was the issue then? I have faint recollection of old statistics from 5 and 15 years ago. All I remember is that most of these stats are trailing and non predictive of anything.

Shortly after the 1993-94 high unemployment the stock markets reeled off their best 6 year performance ever. During the last spike in 04-05 the markets shot up again and so did home prices.

So I take it these recollections are favorable?

And I'm not saying any of these things arent meaningful in some way or to some people. What I'm saying is they arent predictive or representative of much of anything. Certainly not signs of the coming apocalypse.

[2B]

Quote:

Originally Posted by eridanus Though oft repeated, the government actually doesn't define a "recession" as two quarters of GDP loss. It has a more liquid definition. If the "two quarters" definition is used, it misses several recessions in the past.

Recession is actually declared by a group of economists. You know about them. Economists just don't have the personality to be an accountant.

They make the "official" decision but it almost always comes after a recovery has obviously started. It doesn't depend on two quarters of GDP loss but I haven't ever heard of a recession with a 3% GDP gain.

The economy is actually not doing too badly. It's hell to be out of a j*b when you want one. I've been there and hope to never experience it again. A 6% unemployment is not a major disaster. It is being entirely overhyped.

Our big issue is the unwinding of the asset bubble created by Greenspan's loose money and clever financial instruments that really weren't.

I find it hard to believe but I think CFB is actually more of an optimist about our current situation than I am. It will pass. I suspect it will come very soon. Foreclosures should start fallilng in 4Q08 due to the timing of the liar loan interest rate resets having worked through the system. This will create a giant explosion of financial joy.

We could speed it up by getting rid of the "mark to market" rule for performing assets. These forced liquidations of good assets at distressed prices feeds a continuing downward spiral of the perceived asset value.

[2B]

Quote:

Originally Posted by REWahoo As long as you are dreaming you might as well see if you can find an internet forum where everyone agrees with you.

I agree with almost every opinion you have except for retiring in San Antonio. I know you appreciate this.

I don't want everyone to agree with me. If that was the case, why bother to post? Some people are sloppy with their "facts," argumentative and/or rude. I'll tolerate 2 or 3 clashes but after that I've had enough of their input. That's why the forum gods created an ignore feature.

[Sarah in SC]

Quote:

Originally Posted by 2B I agree with almost every opinion you have except for retiring in San Antonio. I know you appreciate this. I don't want everyone to agree with me. If that was the case, why bother to post? Some people are sloppy with their "facts," argumentative and/or rude. I'll tolerate 2 or 3 clashes but after that I've had enough of their input. That's why the forum gods created an ignore feature.

Um, I'm pretty sure he was talking to the guy that said it was his last post, the Michael Diabolical plot against America guy.
Not that the ignore feature isn't a good one.

[REWahoo]

Quote:

Originally Posted by Sarah in SC Um, I'm pretty sure he was talking to the guy that said it was his last post, the Michael Diabolical plot against America guy.

Yep, to be precise I was replying to this:

Quote:

Originally Posted by Michael Dirubio Oh well, a man can dream.

Quote:

Originally Posted by Sarah in SC Not that the ignore feature isn't a good one.

Hey! I haven't yet figured out a way to ignore a Madam Butterfly when they break into a hot rendition of "Con onor muore"

[cute fuzzy bunny]

Quote:

Originally Posted by Sarah in SC Not that the ignore feature isn't a good one.

Dont you wish you could use it?

[ladelfina]

Quote:

A 6% unemployment is not a major disaster. It is being entirely overhyped.

It would not be a major disaster if people had some level of savings and little debt.

Quote:

We could speed it up by getting rid of the "mark to market" rule for performing assets. These forced liquidations of good assets at distressed prices feeds a continuing downward spiral of the perceived asset value.

Your solution is to ignore the free market completely? Allow firms to set fantasy prices? People GOT INTO this situation by overlooking the fact that a 900 s.f. pre-war box in CA was not really "worth" $1mm. That a crack house in MI was not really "worth" $200k. Now the solution is to continue the fantasy that they are.. and that someone is going to keep paying the notes on them Good luck with that, as they say.

It's not up to the taxpayers or the government to make sure these credit bundles are worth something.. it's up to the companies that sell them to prove to us they are. They've shown they are incapable of that. I'm just stunned at the response of supposed "capitalists" to this crisis.. they should be rooting for the 'creative destruction' of such malinvestment.

[2B]

Quote:

Originally Posted by ladelfina It would not be a major disaster if people had some level of savings and little debt. Your solution is to ignore the free market completely? Allow firms to set fantasy prices? People GOT INTO this situation by overlooking the fact that a 900 s.f. pre-war box in CA was not really "worth" $1mm. That a crack house in MI was not really "worth" $200k. Now the solution is to continue the fantasy that they are.. and that someone is going to keep paying the notes on them Good luck with that, as they say. It's not up to the taxpayers or the government to make sure these credit bundles are worth something.. it's up to the companies that sell them to prove to us they are. They've shown they are incapable of that. I'm just stunned at the response of supposed "capitalists" to this crisis.. they should be rooting for the 'creative destruction' of such malinvestment.

I think you missed my point that if people are paying their mortgage on time the value of that cash stream has not collapsed. About 95% of the mortgages in the US (I don't know about Italy) are being paid on time and are not considered sub-prime. The big jump in foreclosures is tied to a few states and is heavily concentrated in sub-prime. The market for all mortgage backed securities and finacial assets of companies that hold large amounts of them has collapsed and no one will buy them except at great discounts. Forcing the immediacy of mark to market feeds on itself in driving the asset value down. The whole concept of mark to market is very new to our financial system. It sounds like a good idea until you see what it does to essentially sound assets during a panic.

[FIRE'd@51]

Quote:

Originally Posted by ladelfina Your solution is to ignore the free market completely? Allow firms to set fantasy prices? ........ Now the solution is to continue the fantasy that they are.. and that someone is going to keep paying the notes on them Good luck with that, as they say.

ladelfina, why do you continue to do this? 2B has raised a very good issue about these marks-to-the-market, a point BTW that has been raised by several prominent financial professionals. He clearly indicates in his post that he is talking about performing assets. Yet, you respond with an irrelevant "sound-byte" about "free markets" and "capitalists", rather than a serious discussion of the issue he is raisng.

IMO, the "main street" equivalent of 2B's point is like owning a home in a stable neighborhood (with no recent real estate sales) and making your mortgage payments on time. Then your neighbor loses his job and is forced to sell his house at a below-market price. Do you think your creditors should then move in on you, revalue your home downward, claim your balance sheet has been weakened, and make you pay a higher interest rate on your debt, thus weakening your financial situation.

Many of these marks reflect an illiquid market, where the only sales are distress sales, and bids are "low-balled" by investors who are trying to maximize their risk-return profile. In these cases, wouldn't some type of discounted cash flow analysis, taking into account the probabilities of the cash flows actually being received, be preferable?

[utrecht]

Quote:

Originally Posted by Michael Dirubio All- I believe this will be my last post to this forum. There just doesn't seem to be an atmosphere here to allow honest discussion of idea's and thoughts. It appears to me that any one trying to sound some warning bells gets attacked. I'm not saying we are going into a depression, but anyone who believes that we are not in a recession is delueding themselves. Yes- I am aware that the current economy doesn't meet the technical definition of a recession. That is part of the problem: I honestly believe the government has changed the statistical formulas so that we can't have GDP contraction. Same with unemployement. Every time the government changes the formula, the unemployement rate goes down. I think that makes any comparison of unemployement rates meaningless. The incompetance of this administation cannot be overstated. The incompetance runs to every aspect: The CIA claims WMD are a slam dunk. Oops. None there. Lets give Tenet the Medal of Freedom rather than admit the mistake. And it just goes on: How did the CIA not see 30,000 Russin troops massing on the Georgian border? That was a complete surprise to the President? If it wasn't a surprise, why was he in Bejing instead of the situation room? What did we learn in Katrina and Ike? The government cannot respond to help citizens in a crises. As a californian, I have no illusions about the response for an earthquake: I am on my own. I'm ready for it. How can I not be aware of the problems with the economy and the governments total lack of response. This was a posted point on this thread: "Pretty much my point. So in 1993-1996 and from 2004-2006 when unemployment was higher than that, did you feel that unemployment was a major factor in our economy and our economic future? Does anyone even remember unemployment as an issue during those time periods?" Yes I do. I remember article after article on the "Jobless Recovery", and how that was going to hurt us in the long run. Jobs going overseas doesn't mean good news for us. People didn't have good paying jobs and used thier houses as ATM's. Now the HELOC's are gone and 401K's are being depleted. The 25% drop in the market means that the 401K's are now almost gone. Where do we turn next? A drastic drop in the standard of living in this country. Do I want this to happen? No. Am I preparing for it? Yes. Statistics are tough things. Someone on this thread said this: the employees that lost thier pensions are only .15% of the population and thats not significant. That is a statistically fallacious argument. Yes .15% of the total population, but how much of the working population? And more important: what percentage of the PBGC's remaining assets? What I mean is this: The Leman Brothers employees will take a significant portion of the remaining PBGC assets. The PBGC is broke. I know because DW gets a statement cataloging 15 years worth of hard work for UAL for pennies on the dollar. Where is the PBGC going to get more money? Taxpayers. Maybe. We can make the same argument on the FDIC. The total number of banks failing is small. It only takes afew to deplete the FDIC. Once the FDIC is gone, there will be a run on banks. I saw an artical on the web to that effect. People need to keep an eye on deposited money. Is that panic? Is that likely? Each person needs to decide. I am arming myself both literally and figuratively. I like the Warren Zevon insurance policy: Lawyers, guns and money. Since I will not be around to reply to all the "conspiracy nut" posts: I'm really not. I don't believe in black helicopters and bugged phones, the NSA eavesdropping program aside. I just believe that the foxes are running the henhouse and we need to hold them to account and be ready for the consequences of our laxness. Here's hoping the market recovers. While I'm at it: here's hoping that the government balances the budget, people start saving more money, someone invents a better solar cell (or cold fusion), and honest people start running the government. Oh well, a man can dream.

How did I know that this guy lives in California? (read: hes an overly liberal democrat)?

Bush gets bashed for Iraq and in the next sentence gets bashed for not doing something to stop Russia from moving into Georgia.

[2B]

Quote:

Originally Posted by utrecht How did I know that this guy lives in California? (read: hes an overly liberal democrat)? Bush gets bashed for Iraq and in the next sentence gets bashed for not doing something to stop Russia from moving into Georgia.

There is a large contingent of people that live their lives to "hate Bush." He is the devil incarnate to them even though they seldom believe in God.

I personally think he's done a poor job but I don't live my life around that. I did vote for him 4 times (2 for gov and 2 for pres) only because the dems found even less desireable candidates to run against him. It's an unfortunate fact that elections don't have a "none of the above" option. Failing to vote doesn't achieve that.