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S/O So the economy still sucks post-bailout?
I think there was a misconception on how the bailout was supposed to influence the markets once it was approved. I know many of you did not expect the bailout to be a magic wand that fixed everything over night, but it was still confusing to see how markets reacted yesterday.
Yesterday, the markets reacted to the effects of this financial crisis in Europe and Asia. Never before has it been clearer to investors here in the U.S. that this meltdown is not contained within our borders. Concern that more financial instittutions will collapse around the world curbed lending even more, thus driving panic selling in the equity markets. Russia and Brazil had to halt trading in their exchanges due to the widespread selling.
Everyone is impacted from this mortgage meltdown and we will continue to see large swings. The fact that the Fed, the ECB, the Bank of England, and other major central banks may need to coordinate rate cuts around the world proves exactly how large this crisis has become. Australia already cut rates today and the ECB has stated that they are ready to do so in their next meeting.
With that said, we are still far from a Great Depression. I wish I was not restricted from day trading since anyone can make a ton of money in this type of market. For long term holders, just stop looking at your accounts. Eventually this thing will bottom out. The key question, though, is when.
Re: S/O So the economy still sucks post-bailout?
I have stopped looking at my accounts. Since I know that I am not going to move any money right now, checking them was just making me depressed.
I feel that we are far from a Great Depression but when I saw that Mad Money guy on the Today show yesterday encouraging people to take their money out of the market if they were going to need any liquidity in the next 5 years, I thought great here comes the panic.
jla - Question for you, as the resident finance guru.
Is the ECB authorized to cut rates under its present authority, or will its rules have to be altered? I *think* I heard the ECB's sole duty was to control inflation and it does not have a dual mandate to encourage growth like the Fed. Will that change now Europe is having a meltdown too? Or was it always authorized to lower rates to stop an economic contraction?
I don't think we're anywhere near a Great Depression. But I do think people look to the stock market to see whether or not Wall Street approved of the bailout, so the drop told those of us on Main Street that Wall Street did not. So you're saying yesterday had nothing to do with our own bailout, only what's going on overseas?
To back you up, I heard a British financier on the radio this morning saying Europe's gov'ts basically aren't doing anything to restore liquidity like America's gov't is, which I find interesting since they're socialist and we're not. ::shrugs:: This person was lamenting how much worse this slowdown will be for them and how much faster we will recover. He says Europe's gov'ts pressured banks and encouraged lax loans to low-income people exactly like the US gov't did. So we're all in this sh!t storm together but the US is willing to do what it takes to recover quickly and so far Europe isn't.
It's so tricky. As a consumer, I'm trying to still spend money to make sure goods are still being produced so that people still have jobs creating and selling those goods so that they can be consumers, etc.
But at the same time, we're all saving and conserving in case our jobs are next to go.
At least the US can admit mistakes (granted a little too late) and work to fix them. I think Europe will soon follow suit though.
My investment guy told me to not open any statements right now either. Of course I opened my most recent one and saw I lost 20% of my money so far this year. I've lost every month since I rolled my old 403 into this IRA so it's all true loss, not a loss on earnings. Yikes. He is assuring me I won't lose it all but when you've only got $8K left...that's not much more to lose. *cry*
Sidenote before someone freaks out: I have retirement here too (OPERS) so that's not my only money right now. I also have had plans to contribute to the above IRA but not in the current market. I'll keep that in my savings account and make a contribution when the time is right, for now.
I am not sure about rules needing to be altered, but Trichet already signaled last week that he was ready to reduce borrowing costs. Considering the drop in the Euro vs the Dollar, I am sure they won't have any issues cutting rates under these conditions. I will have to do more digging about the mandates of the ECB to figure out its exact power.
I am not sure about rules needing to be altered, but Trichet already signaled last week that he was ready to reduce borrowing costs. Considering the drop in the Euro vs the Dollar, I am sure they won't have any issues cutting rates under these conditions. I will have to do more digging about the mandates of the ECB to figure out its exact power.
Yes, IMO the bailout plan being approved was already priced in last week, so yesterday's drop in the market reflected the panic that Asia and Europe and Emerging Markets were experiencing.
LMAO at your socialist comments
. Go figure, right?
Yes, European central banks have been much slower to address this meltdown and there will be a long lag b/w the US recovery and theirs. People were suprised that Trichet did not cut rates in their last meeting despite the signs that he should have. Lending between banks are just not happening right now, especially across the pond.
I've learned to take Cramer with a grain of salt since he can make some great stock picks at times. However, there are just some things he says that can cause mass hysteria. He should have worded that more carefully since I can understand his message. His delivery needs to be better though.
I guess it won't reassure anyone on this board that DH and I have kept our cash in a HY account this year. It was due to the wedding and we got lazy in trying to put it back into the markets. I am now glad we were lazy since we are still up a small 3% vs the S&P's -28% year to date.
No worries, all of our retirement accounts are shot though. I am in the same boat, and then some.
Is the stock market supposed to suck for a while then since the industry overseas isn't getting better any time soon?
I'm asking this purely for selfish reasons b/c I moved my current investments out yesterday, although I kept my future purchases in the stock market. : )
Don't worry about researching it! I can stop being lazy and look it up myself. I'm sure you're more than busy with work under the current circumstances. Thanks for the insight into what is happening, though.
For long term holders, yes the market will suck. However, you can still make a ton of money on a short term basis if you watch it carefully and buy on the dips and sell during those rare rallies. I am definitely scrambling around to put more money into this stuff that I think I can hold for at least 60 days. I am restricted to make a gain on any stock in that time period b/c of compliance reasons. Boo.
I don't personally make those day-to-day investment decisions and I don't know if I trust the people who do it for me to judge it right!
What are you thoughts on what the bond market will do in the near future?
For my professoinal sake, I hope the bond markets get ten times better. Unfortunately, it's not going to recover in the next few weeks until people see the effects of the bailout and the CP mandate. Treasuries are the safest bonds to buy at the moment, but they aren't even giving back any yield since everyone wants them.
Thanks jlaj.
I'm personally ok with it not doing well in the very short-term (a few weeks). I was just hoping it picked up over the next few months. That's where I moved all my investments to (bonds). So I was crossing my fingers they could buy low and make some money. Hell, at this point I just want to break even (for the quarter or at least the year). As long as I'm not losing 20% I'd be happy.
Jlaj - Thanks for posting this, its always nice to get your perspective.
Caden- I am confused, are you blaming this whole thing on low income people not paying their mortgages?
What whole thing? I don't know what post you're referring to.
I think I've made it clear I blame the gov't first and foremost - for their role in creating the housing bubble as well as what they did to banks, the secondary market, and their dismal failure to correct all of this years ago when everyone knew the industry would collapse.
I've also blamed banks for being lax on loan qualifications and predatory lending. Yes I blame individuals for taking on more than they could afford too. There's enough blame to go around but I've never heaped all of it or even most of it on any class of people. Bad loans were taken by speculators too, not just low-income people. Low income borrowers never would have gotten loans without the gov't anyway.
So this is a purely selfish and superficial question....
But how does this effect the exchange rate for the euro? Didn't the dollar go up in value and the euro go down (I think it went down against the yen or something, not sure if that's the same as going down against the dollar). Meaning, is it technically cheaper to travel to Europe in the next few months than it was just a few weeks ago?
"As of page 2 this might be the most boring argument ever. It's making me long for Rape Day." - Mouse
I would kind of like to know this as well. DH and I were going to go to Mexico at the end of the month, but I am seriously considering a trip to Paris instead. Mainly because of Katies posts about the Euro going down.
I would kind of like to know this as well. DH and I were going to go to Mexico at the end of the month, but I am seriously considering a trip to Paris instead. Mainly because of Katies posts about the Euro going down.
Yeah, we are trying to plan a trip sometime in the next couple of years. If Europe is going to have a slow recovery, it might make more sense for us to go Spring 09 vs. Spring 10. I feel like an ass asking about vacations in light of everything, but it's important for me to do this one last hurrah before the baby making starts.
"As of page 2 this might be the most boring argument ever. It's making me long for Rape Day." - Mouse
Yeah, we are trying to plan a trip sometime in the next couple of years. If Europe is going to have a slow recovery, it might make more sense for us to go Spring 09 vs. Spring 10. I feel like an ass asking about vacations in light of everything, but it's important for me to do this one last hurrah before the baby making starts.
"As of page 2 this might be the most boring argument ever. It's making me long for Rape Day." - Mouse
Does this mean I won't be hearing as many european accents before Christmas this year??
(Sorry - I was annoyed last year at all the Brits on the subway while I was on my way to work at an investment bank that was laying off my coworkers while they were getting their Christmas shopping done here where everything was essentially 50% off for them).
This whole thing is going in favor of the USD. Right now, 1 USD = 1.36 EUR. I believe that is one of the lowest in a long time. 1 USD = 1.75 GBP.
This year the place for the Brits to go would be Mexico, the exchange is roughly double the USD exchange rate at 1:21.