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Old 10-11-2008, 12:29 PM   #11
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Let those dominoes fall where they may...

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Old 10-11-2008, 12:31 PM   #12
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Originally Posted by Ram Rod View Post
Take their money and run. It's a sign....a bad sign.
It's more like a bird on a wire.
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Old 10-11-2008, 10:07 PM   #13
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It was worse in 1929 and no bail out.but they set up WPA_PWA AND CCC.
as for this country.why not do as others did to use.stiff them. england never payed back the money/goods we supplied them with in WW1 or WW2 only finland payed us back in total.before we bail out this bunch change the rules of the game.the dems made the mess let them pay the piper.I can survive.I have land ,can grow all I need.plenty of meat [deer]water,I can pump by hand shallow well.plenty of wood and a fireplace or fire pit. might be a pain but can be done.

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Old 10-13-2008, 11:51 AM   #14
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Originally Posted by WILDCATT View Post
It was worse in 1929 and no bail out.but they set up WPA_PWA AND CCC.
as for this country.why not do as others did to use.stiff them. england never payed back the money/goods we supplied them with in WW1 or WW2 only finland payed us back in total.before we bail out this bunch change the rules of the game.the dems made the mess let them pay the piper.I can survive.I have land ,can grow all I need.plenty of meat [deer]water,I can pump by hand shallow well.plenty of wood and a fireplace or fire pit. might be a pain but can be done.
Maybe in this day & age we won't bear witness to a collapse similar to the one in 29'. At least I hope not.
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Old 10-13-2008, 12:27 PM   #15
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I think Vox Day says it best:

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The essential problem is that the administration is attempting to enact a Keynesian solution to an Austrian problem. The Austrian School teaches that monetary inflation, which in this case was primarily caused by the Federal Reserve's decision to keep interest rates artificially low to prevent the economy from going into recession in 1996, 2001 and 2003, creates inflationary booms that lead to the severe misallocation of capital resources. As the Austrian logic predicted we would, we saw two such booms in asset prices, the first in the stock markets, the second in the real estate and commodity markets.

Millions of people profited from the asset inflation, and trillions of dollars were directed into areas of the economy they would not have otherwise gone, such as second homes and investments in companies selling dog food over the Internet. The problem is Austrian theory also teaches that inflationary expansions are always followed by deflationary contractions which clear out all of the resource misallocations that occur during the expansionary period. The Dutch tulip mania of 1637 is a good example of resource misallocation, when a single tulip bulb was known to have sold for the modern equivalent of $35,000. Such misallocations can occur for diverse reasons, but the usual cause is easy credit and low interest.

America is currently suffering from severe capital misallocations quite possibly more extreme than the 17th century Dutch, since its money supply has been inflating steadily for decades, and at an increasing rate. Compounding the problem is the fact that this inflation has reduced the value of savings and people were given incentive to consume rather than save, so the nation has no savings pool from which investment into productive capital might be made. Instead, the nation has substituted foreign investment, which can and will be withdrawn whenever it is required elsewhere.
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Old 10-16-2008, 12:22 AM   #16
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Here's a pretty good interview with Peter Schiff on Glenn Beck, both of whom were way ahead of the curve on the economic crisis. A possible glimpse of what's coming.

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Old 10-16-2008, 01:38 AM   #17
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Thanks for the link-- just when I thought I couldn't feel any worse about the current idiocy. But it is food for thought. Seems like it would be impossible for some of the events that Schiff is predicting to occur, but just a few months ago, the current meltdown seemed like an impossibility.

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Old 10-19-2008, 12:10 AM   #18
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The credit spreads are easing a bit after last weekend's dramatic policy actions. Not a lot, but they are at least moving in the right direction.

Long-term treasuries rates are increasing due to all the new debt (i.e. bailouts). This has the unintended consequence of spiking mortgage rates, which is going to further hurt the housing market.

"We may have well passed the point where the federal government's total financial hole surpasses the net worth of all Americans."
(http://www.normantranscript.com/opinion/local_story_292012318)

Money seems to be leaving the equities markets, rallies are short-lived. I'm expecting another big sell-off in the next week or two.

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Old 10-19-2008, 01:44 PM   #19
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Credit Cards Could Become Next Trouble Spot in Crisis
By Kenneth Stier

Credit-card delinquencies are likely to become the next flashpoint in the credit crisis, though the impact on the overall economy won't be as severe as the housing slump, analysts believe.

As the economy worsens and unemployment rises, more Americans are having trouble paying off their credit card balances. That has pushed up losses for credit card issuers, forcing them to tighten standards, which puts a further squeeze on cash-strapped consumers.

“After mortgages and home equity, credit cards are the next in line to feel the crunch,” says Marc DeCastro, an industry analyst with Financial Insights.

With job losses growing, credit cards delinquencies could rise to 7 percent by the first quarter of 2009, which would be a 20 year high, says Howard Shapiro, an industry analyst with Fox-Pitt Kelton.

And because consumers no longer have the equity in the house to fall back on, they're relying even more on credit cards to pay for living expenses.
“Now with their home equities getting shut off, people are going to start augmenting their income with their credit cards," DeCastro says. "They are going hit their limits and once they hit their limits, then they are probably going to walk away from their credit cards.”

Though consumer spending accounts for three-quarters of the US economy, the credit-card crunch isn't likely to be as big an economic blow as the housing crisis has been.

The reason is that credit card debt, while still large, is much smaller than the amount tied up in mortgages.

There is roughly $1 trillion of outstanding credit card debt—compared to $14 trillion worth of outstanding mortgages—and in the second quarter of 2008, $385 billion of this had been bundled into asset-based securities, according to the Securities Industry and Financial Markets Association.

Another reason for the smaller fallout is that credit card issuers have been working over the past year to tighten standards and limit the damage.

“I don’t see the credit card industry facing the kind of stress that the mortgage industry has faced," says Shapiro. "They have had time to prepare, to tighten their underwriting standards which were not stretched to the same degree as they were in the mortgage industry."

Still, that doesn't mean the growing losses aren't going to hurt.

Credit card write-offs last year totaled $26.6 billion, and are on track to reach more than $41.4 billion this year. And that's just the beginning.

“We think 2009 is going to be a difficult year for the credit card industry," Shapiro says. "There’ll be higher charge offs, slower growth, people are cutting back on spending. That is going to mean pressure on earnings.”

Innovest Strategic Value Advisors forsees delinquencies rising through the next three quarters, peaking at 10 percent, with industry losses of close to $100 billion in 2009.

That’s higher than most estimates but that's because most models do not sufficiently account for the freezing of the transfer market, in which borrowers could rollover debt into new cards with a low (or zero) introductory annual percentage rate (APR), says the investment research firm.

That option is quickly disappearing, leaving a growing raft of people with more debt than they can repay and no place to turn. That essentially was the situation that burst the subprime mortgage bubble, when people could no longer just roll over into a new subprime or sell their house.

The pain for the industry comes at a particularly difficult time for banks, which have long relied on credit card operations as steady, and highly lucrative, profit centers, contributing significantly to total revenues.

American Express [AXP 23.33 -0.31 (-1.31%)] and Discover [DFS 10.74 (+4.17%)] which both have small bank subsidiaries, are better positioned to weather the storm because of tighter standards. Retailers are probably the most vulnerable, mainly because they are usually the last to get paid by strapped consumers. Target [TGT 39.37 +1.46 (+3.85%)] recently lowered its guidance because of higher than expected credit card write-offs.

Another problem for the industry is its exposure to borrowers with less-than-stellar credit, also known as sub-prime. That’s believed to be about 20 percent industry-wide (more than 30 percent at Bank of America [BAC 23.24 -1.01 (-4.16%)] and Capital One [COF 39.92 +1.22 (+3.15%)]) but the scale of the problem is far smaller than in mortgages and much of that has been shifted off company balance sheets.

Tightened credit terms will help card issuers, but it also will mean fewer options for borrowers who have stumbled into trouble. Instead of transferring balances to a new card, often a new low introductory rate, they may end up defaulting.

This just makes a bad credit situation worse and is “unsustainable” argues Laura Nishikawa, an analyst with Innovest, who says issuers need to work with consumers to encourage "healthier use of credit," not the orgy of the past decade.

She says Discover is showing the way, by offering convenient loan calculators, allowing customers to choose payment days, and offering cash back rewards for being on time.

“There is some cause and effect here….but [as an issuer] you don’t want to the last one in the line” to get repaid, responds Dennis Moroney, research director for bank cards industry at TowerGroup, a wholly owned subsdiary of Mastercard [MA 156.75 +0.07 (+0.04%)] which operates with editorail independence.

That’s precisely the risk retailers run by issuing store-specific credit cards, as he expects retailers will feel compelled to do to boost holiday shopping revenues.

Since these cards can only be used in the stores issuing them, they are typically the last to get repaid, raising the chances of charge-offs, especially as the economy weakens.

Even if consumer spending retains its holiday sparkle, the real test for the credit card industry, he says, will come in early summer, when families’ ability to stay current on bills rolled over from the holiday binge, and when delinquencies typically pick up.

If the recession we are sinking into proves deep and prolonged it will probably force painful consumer change.

"People are basically spending far more than they earn and that is just going to have to change, especially if banks are not willing to indulge that kind of behavior any more, that’s going to have big repercussions in the economy,” says Gregory Larkin, a senior Innovest analyst.

That may mean the days of carrying card balances of ten of thousands of dollars may be over if banks have doubts about your ability to catch up.

The new economic reality may bring some rude moments, cautions Larkin. “You may have that embarrassing moment when you are out with your wife and the guy says, ‘Sorry, you are maxed out’ – you are going to get a lot more of that happening, your card not letting you charge dinner tonight.”
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Old 10-24-2008, 12:07 PM   #20
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Money seems to be leaving the equities markets, rallies are short-lived. I'm expecting another big sell-off in the next week or two.
It's here..overnight futures are lock limit (500 Dow points) down. 79 years to the day after the 1929 crash. This looks like the big one, folks.

Someone hold me..
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