Economy Wise--What do you think will happen?

[calpha]

Let me pre-empt this with a no-flames request. I'm horrified by the loss. More than you can imagine. My father was killed in an active duty plane crash, and the two videos of the planes hitting the building haunt me terribly. That being said, I'm only interested in what people think will happen when the market opens up again, and our country follows a path of war (or one much like it, economy wise).

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Based on the limited commentary I've heard as a result of this terrible disaster, there is speculation that the next Market day will result in a fairly wide selloff. For starters, I think the media is trying to assuade the public's fears and keep us from making a run on the bank (stocks). I personally feel the selloff will be HUGE.

I am not a stock expert, but I do follow the tech sector, regrettably.

One of the more unfortunate things timing wise IMHO, is the vast decline of the tech sector recently. I myself have some TECH holdings that I've been hoping to ride out to the middle to minimize my losses. With the tragedy before us, it seems like a definte bet that we are in for a further downtrend, and that any stocks that are high losses should be sold NOW. Emotionally, I'm fighting against the "PANIC-SELL" mentality. Logically, I don't see any argument why there won't be a sell off, thus dropping the market much worse. I feel this is especially true in the plagued tech sector where many investors were hoping for a partial to slight rebound in teh 4th quarter. (myself included). Surely, this won't be happening now.

Thinking about the stock market in the first place makes me feel horrible. My wife and I sleep quitely in our beds while literally thousands of others are laying in bed at night alone. Wondering. Hoping. Trying not to face the gruesome fact that their loved ones, if not home, are probably dead. I come from three generations of military service. My grandfather was a POW in WWII, and my father was killed active duty. I myself was in a military academy. Unfortunately, my prayers and donations are all I can give the victims.

What do you think will happen? Do you think the sell off is completely unavoidable? Do you think it's bad for people to be focussing on themselves in this time of great tragedy? Those of you with stocks, do you forsee yourself holding, or selling?

--Trying not to think about tomorrow, but facing the conclusing that for all of us, life must go on.

 

[spanky]

i think it will hurt BIG time. but i'm no economist...economer....whatever....

 

[USARULES]

world war three will happen.
which is good for the economy.

 

[crabbyapple1]

<< world war three will happen.
which is good for the economy. >>


The wars boost economy by what..... production. Most of what we have is already produced. I still don't see how this will benefit our economy. The WTC has been destroyed. We see the Int'l markets tumbling. And they want to open up on Friday? Well friday's a good day, it'll hold the losses for the weekend. To open on Monday, that gives people 5 whole days to dump their stocks. The weekend's a good buffer.

The stock market will hurt big time. But here's the other issue. If they hold out for too long, the rest of the world will become worried about it. They need to find the right balance of when ppl will be more stable to make trading decisions without causing issues to develop internationally.

The first day it opens, they can expect a huge sell off. But it should only be that first day. Typically the day after a large drop, there's bargain hunting the following day. We can't expect this incident to affect all stocks across the board. Level minded people will be the ones left holding the stocks. They will hold on to them I guarantee. There's absolutely no foundation for a large selloff. But there won't be that much buying, or as much as we have seen in the past.

 

[jaybittle]

Actually, I'm going to offer that there won't be that big of a reaction on the market when they open.. I think people will be still in shock over what happened, and the markets may decline, but not a huge selloff..

but i'm not an economist either.. i think we will avoid recession, however..

--jb

 

[0beron]

My feeling is overall fall in the beginning and recovery will be slow. Some sectors like defense will rise faster than say tech stocks. I don't think this terrible event will affect American consumption by that much in the long run.

 

[PeeluckyDuckee]

I'm no economist either, but some people will see this as a very good opportunity to snatch up on stocks and benefit from your fear. They're waiting for opportunities just like these. They are the big winners.

Perhaps there'd be some big name companies doing damage control as well, and won't let their stocks take an endless nose dive.

As for the economy, recession was rearing its ugly head, perhaps what had happened will increase this process? These are all just my guesses.


Plucky

 

[Rainsford]

People will stop buying for a variety of reasons, many of them due to fear or uncertainty about the economic future. Stock prices are the least of our worries. Buying is what creates real money in any monetary system, as any economist well knows. The problem is that people equate stocks with what's really happening (not always the case) and will spend less when stocks go down (and they will). This will create a real money problem and I beleive that the US will enter into a recession far worse than what we've been experiencing recently. As horrible as the loss of life is, the economic factors will last far longer and be more devestating. JMHO by the way. I'm not an economist, so I might be wrong.

 

[KevinH]

I was an economics major (only a bachelors' so don't hold what I say against me).

Rainsford - You're dead on. Right now, the fact that wall street is at a stand still, the market's taken a beating since uncertainty is the bane of all investors (see pres. election, etc.). This really coudln't have come at a worse time since the market's been reeling since March of last year.

However...from what I recall from macro, war's have historically been a boon for the economy because government spending increases (spending increases in general are a good thing). This was one of the reasons the tax rebates were touted as being a good thing since it would have increased consumer spending. From my point of view though, I think the economy is going to get a lot worse before it gets better and don't count on fiscal policy to help out any time soon.

Every one of my old professors have said the Fed is reactive and not proactive enough to aid in the short term and my observations over the past year seem to indicate that they're right.

 

[Czar]

When I was learning Economics one of the first things we learned was about the man who "invented" modern economics, Adam Smith.

Anyways, before that government reactions to depression was to pull back, lower government spending and cut back everywhere. What he came up with is that the government should take loans, lots of it, build up roads, buildings, just about everything. When he first came to the whitehouse and told the president and his economists they laughed at him. Later when the depression had started he came back and they tried his way and it worked.
War is a reason for government loans and buildup.

http://dir.yahoo.com/Social_Science/Economics/Economists/Smith__Adam__1723_1790_/


What I predict will happen is pretty much what Rainsford said, but I think it can go either way. If world leaders can use this as they are trying to and improve cooperation between countries stocks and currencies could go up, but for few weeks or maybe months there will be alot of fluctiations.

 

[seewhy]

Yeah war in the past has helped economy, but this time, the US is fighting against smaller group of terrorist instead of full scale war. So how much will government spending increase is unknown. We don't know if Bush is gonna fire few rounds of missle and send a small troop to get bin Laden, or declare war on the whole Middle East, so we have to wait and see on that.

As for the stock price, foreign market fell by 5-10% on the first days of the tragedy, but has recovered since. Currency market was stable because most central bank worked together to get currecy market stable, so dollar did not depreciate a lot. So US market may not fall as bad as some people think given the stablity of international and currency market, especially after investors have fews days to think about what is gonna happen in long term, rather then panic sell off in the first given chance.

But this tragedy will only hurt the stock market in the short run(next few month). Gas price has gone up and may keep going up if Bush decide to go to war with ME countries, that will increase the cost of many businesses. Airline industry is already hurt by flight cancelation, and business is hurt by inability to go to client by airplane (even after the airports are open, the security will be tight, it will be time consuming because of the security procedures, and the cost of flying will increase). Government may start to restrict exports of high tech gears so that terrorist cannot get a hold of them. Headquarters of some of the largest brokerage/investment bank are destroyed. All those are not gonna help the already low investor confidence.

However, few industry will definitly benefit from this tragedy. The defense industry, the security equipment for airport security are some of the best examples.

 

[db]

If I were an investor I would be buying oil and defense industry stocks. And beer stock.

 

[daddyo]

As much as people are upset about this tragedy, I believe that the moment we make some kind of action towards justice, moral in this country will skyrocket.


Bush has already asked for ~$1 billion in emergency funding. That is just the beginning. The gates holding back govt spending are about to be opened wide. Any industry even remotely related to defense, infrastructure, non-air travel, or security is about to be overwhelmed.

I work for a company that designs imaging products used in aviation and security. We are already planning on getting swamped very soon. Just a note though, we aren't about to take advantage of people here, in fact, we've already volunteered a lot of our equipment to search and rescue in NYC.

I honestly believe we will be out of this slump in 3-6 months.

 

[RSI]

Economically, the country was set back by this, but it will go ahead further faster than it would have should nothing have happened. When the USD is low, invest in it, you'll see it go way back up, and you'll make lots of money.

-RSI