(OT) Economy

A few years ago I had a conversation with a guy about buying and selling precious metals. He is in his 60s and has been collecting coins his whole life. He was in the process of selling off his rare and valuable coins and buying more common and less valuable silver coins.

His reasoning was (I thought was a little far fetched at the time) the economy is going to crash because of the interest only mortgage boom. Everyone was buying houses that they could not afford. Which was driving up the value of the properites but it was only going to be short term. The people that cant afford their homes once their mortgage rate skyrockets will be stuck with a house that is worth a lot less than what they owe. Because of this the banks are going to get stuck with too many properties that they forclosed on and because nobody is paying off their mortgages and nobody else wants to buy that house because it is not worth what is owed on it. The banks are going to crash.
This was over 2 years ago that he told me this.

He also went into the fact that this country grew on manufacturing and since there has been so manufacturers move or close because foreign products are cheaper, our economy is becoming based on borrowing and lending money. Once there are enough people or orginizations that can't afford to pay back their debt, the lending institutions are not going to be able to lend money either.

Going back to the silver coins. His theory is that our economy is going to crash really really hard. He was in the process of building a network of friends. This network consisted of doctors, farmers, mechanics, anybody he could think of who he knew he would need to count on when our paper money is worthless. These people were going to need to get paid for their services and the only way to pay is with precious metals. He could sell 1 rare coin and buy 10 more common, pure silver coins and stockpile them until the day comes.

I still don't believe that things are going to get that bad but right about now I wouldn't mind having a bag of silver sitting in a safe, just in case.

REMEMBER it is not my idea so if you meet me, don't call me crazy.
 
Manufacturing, natural resources and trade are in my opinion the keys to the economy. I don't think we are doing well in the first two anymore and this financial crises threatens the third.

We don't make most of what we use.

Oil and other carbon based resources are becoming more scarce as new manufacturing giants such as China and India continue to grow and compete with us for what's available.

The term capitalism and yankee trader are near synonomous . Both are driven by profit without necessarily producing anything. Just moving things and money here and there.When stocks were rising rapidly pre Enron days and the near collapse of tech stocks,real estate was pretty flat. When the market no longer offered high gains, money moved to real estate ;plenty of profits were taken and now we have a crises in that area.
I believe trade and a global economy are important since they breed an interdependence among nations. This works to keep peace with enhanced prosperity.
What happens when the prosperity part no longer works? History suggests the peace part no longer works either as nations become increasingly aggressive to get what they need or want.Does anyone think Russia's interest in Georgia and the Ukraine is humanitarian and not about controlling pipelines and energy resources?Does anyone remember the gasoline rationing in the 70s?
Energy resources (oil ,gas, coal and alternative sources) will likely dominate the world agenda for decades to come and unless new sources are available ,competition will be fierce,economies will crumble and keeping the peace will be evermore difficult.
 
These really are scary times. I don't know how well everyone watches the market, but I work for Constellation energy and we had some really tough times. We were trading for 107 a share in December and last tuesday it was down to 14 dollars. Our credit ranking got reduced and everything hit the fan. Luckily anyone who was close to retiring that I spoke to had already moved the stock. Warren Buffet bought our company and he is going to make money off this deal even if it falls through.

I believe that company's who have a great fundamental business plan will survive through this and I hope that it is a wake up call to lenders/borrowers.
 
I think people work themselves into a panic. The economy is not doing as well as it has been. But it has not officially recessed. As long as I see people standing in long lines for two days because they absolutely have to have a nintendo wii then I think we will be fine. The best thing you can do is not look at you're 401K. Besides, think of it like this. It is not just the United States that has seen these tougher times. The United States controls the Global stock Market. If we fail everybody fails.
 
<a href=showthread.php?s=&postid=13434484#post13434484 target=_blank>Originally posted</a> by tmz
Manufacturing, natural resources and trade are in my opinion the keys to the economy. I don't think we are doing well in the first two anymore and this financial crises threatens the third.

We don't make most of what we use.

Oil and other carbon based resources are becoming more scarce as new manufacturing giants such as China and India continue to grow and compete with us for what's available.

The term capitalism and yankee trader are near synonomous . Both are driven by profit without necessarily producing anything. Just moving things and money here and there.When stocks were rising rapidly pre Enron days and the near collapse of tech stocks,real estate was pretty flat. When the market no longer offered high gains, money moved to real estate ;plenty of profits were taken and now we have a crises in that area.
I believe trade and a global economy are important since they breed an interdependence among nations. This works to keep peace with enhanced prosperity.
What happens when the prosperity part no longer works? History suggests the peace part no longer works either as nations become increasingly aggressive to get what they need or want.Does anyone think Russia's interest in Georgia and the Ukraine is humanitarian and not about controlling pipelines and energy resources?Does anyone remember the gasoline rationing in the 70s?
Energy resources (oil ,gas, coal and alternative sources) will likely dominate the world agenda for decades to come and unless new sources are available ,competition will be fierce,economies will crumble and keeping the peace will be evermore difficult.
Click to expand...

Spot on Tom, nicely put.
 
Be careful...many people get spooked at times like this and end up selling low (stocks) and buying high (commodities). The stock market averages 10% returns on average but most individuals only average about 4% due primarily to selling low and buying high.

I remember when I was in 7th grade I bought an ounce of gold for $350 and sold it for $500. My best friend bought in around $500 and then it dropped...but he refused to sell. It took 23 years for him to break even!

These things go in waves...In the early 90s emerging markets were the place to be with rates of return close to 30% a year for 5 years straight. They then took a bath for about 10 years and if you bought at the peak (around 1996) you would have needed about 10 years to break even. The last 5 years they have been on a tear again. I think emerging markets are a great place to be but I started buying in 1993 and have bought every year since. Some years I lost money but all told I've done quite well.

The takeaway is develop a sound strategy and stick with it. A good financial adviser should be able to help you put a strategy together based on your age, plans, risk tolerance, and financial situation. I did mine myself after a few years of research.
 
<a href=showthread.php?s=&postid=13429318#post13429318 target=_blank>Originally posted</a> by RowingMunkeyCU
It hasn't yet affected me much, although my investments are in the toilet (10-20% lower than the amount I've actually invested).

I've recently started to consider moving back in with my parents to help them pay off their chunk of my student loans (converting my rent and discretionary funds into loan repayments), since at this rate, they'll never be able to retire.
Click to expand...

I feel your pain, my investment are down about 25% from what they where a year ago. My parents who just retired lost a fortune on there investments. There both thinking of finding part time work until things blow over. They where in good shape financially last year. To top it it off I work for US Airways. High fuel prices, a substantial decrease in ticket sales, and now the whole credit thing. USAir has already announced plans to downsize it's fleet starting January 1st. Which means many jobs will be cut, probably mine. I barely made it through our bankruptcy that my co. just went through, I'm sick to my stomach right now.
 
<a href=showthread.php?s=&postid=13439932#post13439932 target=_blank>Originally posted</a> by ILoveReefer
Sorry to unload all that. I'm just beyond stressed
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:) Sorry to hear that. Hang in there. These things tend to cycle through after a while.
 
Thanks, I'll be alright. These things do tend to cycle but it's still scary. I admit I made out well during the last scare in 2001. Just hold your ground and resist selling your stock, and more often than not it will rebound.
 
Mixed feelings on congress failing to pass a bill. They haven't passed anything significant in a very long time. Way too much partisanship to make me wan't to trust the government with a trillion dollars of the future. The idea of the government actually owning mortgages is a bit too socialistic for my taste. Nonetheless, there is a real need to keep capital flowing. Perhaps the next bill will be better if all the politicians can stop worrying about blame and perception and try to solve a problem. I don't have a lot of confidence in them though. As someone aptly put it . We need a new set of bums in congress.
 
A four year degree in political science gave me very little knowledge of the economy actually...

However it may be a good idea to look up the idea of "Moral Panic."

With the woes our economy is currently facing, there may be a new enemy the world will soon demonize. A group of people, a controversial practice, corporations etc. We may be made to hate something or someone to get our minds off of the economy... keep this in mind...

Back to money issues,

It is possible that many good things will arise from this. Perhaps not for those planning or already in retirement, but for those of us in our youth. If markets continue to go down, stock prices will be at all time lows. A perfect time to invest! Also, companies in order to retain their stock value will be offering higher dividends as opposed to investing profits in themselves. It may be a good time to invest in dividend producing stocks. It could take only a few years to pay back the initial cost of the stock.

Real estate values are also very low. The bigger picture says if everyone is suffering, how can they pay their rent? But individuals can't fix that. We can however acquire investment or rental properties at a lower value, creating residual income for ourselves. Although some tennants could be aggrivating...

If all else fails, invest in corals! :D

Hopefully looking at the bright side of all this will please some,

Steve
 
i love how it seems that my generation has been screwed out of everything.

we finally come to the age we can drive. then gas goes to 4 bucks per gallon.

and now the economy is dying... right when people my age are on the cusp of being let go from parents, college etc...

not good.

i dont have time to go get facts or write a lot right now, so the above statements are basically how i feel about money. IT SUCKS.
 
My parents generation dealt with the Great Depression and World War 2 and then the Korean war.
My generation had the Viet Nam war and the hard times including gas rationing of the 70s along with the indignity of leaving about 400 of our citizens hostage in Iran for over a year.We also witnessed a wave of attacks on our leaders brought by the internal loathing of some. JFK, Bobby Kennedy, Martin Luther King were lost to all of us too soon. There was no job when you came out of school ,it was a military uniform for most. Your honorable choice was limited to enlistment or the draft.When I came out of the army there was a recession with very few jobs available.
In recent times we have seen the attack of 9/11.,the threat of terrorism and the Afghan and Iraq wars (1 and 2), the stock market surge of the 90s and the fall, home prices escalate and fall, and the current issues with gas prices and the financial market.
My point is that this nation has faced severe challenges before and the people have always risen to the occassion throughout the nation's history and will again as long as our values are strong. It's never easy but nothing worthwhile is.
I agree with Steve, invest in corals. I also agree that demonizing is a way to to shed some pain . Sometimes though the demons are real. Anyone who would strap a bombs to mentally disabled women and send them into a crowd to blow up is worth demonizing in my opinion, not to mention crashing jet liners into skyscrapers.We don't tell children fairy tales to teach them monsters exist but to lessen their fear of them. They instinctively know they exist.
Internal loathing is another matter,however, and the vitriolic partisan exchanges seem to be worse than ever to a point where the government seems unable to govern.There are bad guys and corruption in our government but most of the politicians are not demons. Many are just unable to get on with business that needs doing since they wear themselves out pointing fingers and attempting to demonize each other.
 
If we start demonizing unseen and unreal foes again, it will be clear that we haven't learned a single Fing thing since March 2003. I hope against hope that we have learned at least that much.

What I find interesting behind this whole discussion is that there is little concern for the reality of this debt mess; because some stockholders and CEO's wanted to make a quick buck. And those of us who didn't take out shady loan and are not up to our eyeballs in debt, will ultimately get screwed by this. Sigh
 
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the way i see it, these recent economic problems ARE real problems or we wouldnt be posting about it.

is it really wise to invest in coral?
 
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