What kind of impact will the banking crisis have on the overall economy

[Robor]

Originally posted by: newnameman

Originally posted by: ProfJohn
Can someone give a straight forward no political BS answer.

Good luck with that...

I thought the same but was pleasantly surprised. Good thread... :thumbsup:

 

[imported_Infidel]

Good information thus far. My .02

I know very little about financial markets, but I think that a 1930's style depression won't be happening. I think society is too different these days, less agrarian, more global.

For 3 months the buyer of my home has been trying to get his mortgage financed, current contract extension is up in a week or so. If he can't get it by then, I don't think it's going to happen. Sucks for me, but the 1 yr lease he has on the house is > than my note.

I agree that living beyond our means, on personal, national, ceo pay levels are root causes and it will take a shock to recalibrate our feelings on wants vs needs. Every generation beyond the great depression has been less and less in touch with maintaining personal security.

I'm on a path to get more financially secure, I just hope it happens before the bottom falls out. I have no investments, so don't really have much to lose, but I'd like to eliminate a bunch of debt.

 

[Kuragami]

Impossible to answer truthfully since the market is so obviously manipulated. Right up until Sept 17th the PM market was being pounded daily by NY and London exactly opposite of the Asia market and exactly at market opening every single day. This has been ongoing for months despite all of the banking failures and fears in the economy. This, for the first time, obviously broke the normal Supply and Demand cycle but PMs kept itself chained to crude. Since nothing significant occurred to crude on Sept 17th one must assume that PMs pushed it up along with the commodities market. This should have been the natural reaction from day 1 of the banking crisis and yet it was not. That's why I have been advocating that the market is manipulated even more heavily than ever before.

The next question to ask is this a dead cat bounce or have the manipulators purposefully allowed runaway gains in PM only to let it crash later in any effort to short the market and make a killing. Due to market manipulation it's not possible to ever think again that these prices aren't engineered. Have to think like one of them to try to understand where the economy is heading next. The question I want answered is are they truly going to slash the cost of crude by half and if they do what impact will that have on other commodities. Will PMs break free of their chain to crude if they do? Or were these rumors floating around that Gold will hit $525 just an effort to keep people out of it before the final fall of the market?

Either way we will find out how this plays out over the next 8 weeks. Knowing all this I'm still holding onto my cash and waiting to buy in. At this point its anyone's guess since the market seems to only behave as it should on queue.

 

[Kuragami]

A new twist. Asia and London pushed PMs up and NY has been pounding it.

Look at Silver especially:

http://www.kitco.com/charts/livesilver.html

It's still early in the market but it gives you an idea of what's going on.

EDIT:
P.S. Someone, whomever is trading in massive volume, is making a killing on PMs today. No doubt its the usual suspects. I wonder what institution may have needed to build quick capital? They couldn't be in NY could they? =P

 

[Moonbeam]

We need PC Surgeon tell us what will happen. He can see the future now.

 

[IceBergSLiM]

the system is cleansing itself. we will all be fine.

 

[LegendKiller]

Originally posted by: Moonbeam
We need PC Surgeon tell us what will happen. He can see the future now.

Ron Paul would have saved us, and a strong dollar will too. The only problem is, nobody will have any strong dollars to spend once they lose their jobs from a finance collapse.

But hey, according to them, the Constitution says we need to destroy our financial system and essentially work as farmers and nail makers, like their hero Thomas Jefferson.

Too bad Thomas Jefferson was a failed businessman and died bankrupt after a life of champaign on a beer income. But that was the evil of the banks.

 

[Xavier434]

Originally posted by: Mani
Most direct impact will be felt in consumer confidence. Lower consumer confidence -> less spending -> company cutbacks -> higher unemployment & lower wages. That's the simplest way I can put it.

Ya this sums it up. How long this will last is the big question. We need to get people to start buying again. That is the only solution.

This problem originates as far back as the 70s and it really started to bloom in the late 80s and early 90s where it then progressed to where we are now. The really short explanation is that we used to have the government regulate more but they changed that a lot and in a bad way. You will most likely see the regulations come back in some way even if not in their original form. Pray that it works and that people start buying much sooner than later.

 

[GrGr]

The Fed is penniless. The US Government is broke. And that with another Great Depression looming. During the first Great Depression the US was at least solvent and had a strong manufacturing base. That is gone as well now.

Good luck.

 

[IceBergSLiM]

Originally posted by: GrGr
The Fed is penniless. The US Government is broke. And that with another Great Depression looming. During the first Great Depression the US was at least solvent and had a strong manufacturing base. That is gone as well now.

Good luck.

Wasn't the fed created to prevent another "great depression" lol. The concept that the government can be bankrupt is seriously hilarious. Brazil had to start over with new currency 3 times over the last 30 years. Their economy is stronger than ever. We don't need the fed. The government has the right to issue its own currency.

 

[Jaskalas]

Originally posted by: shira
One of the biggest problems in our financial system is that people are rewarded for short-term good results but not held accountable for longer-term bad results. So you have some fund manager walking off with millions for investing heavily in sub-prime-backed securities (leading to huge short-term profits), but when the fund collapses that same fund manager doesn't pay a dime.

Similarly, CEOs are given huge incentives for increasing stock prices, but if the company ultimately fails, that CEO is simply shown the door and given a golden parachute.

They were trained and rewarded for shaking that money tree, who cares if it falls over and crushes the people under it?

I'd be shocked frankly, if we didn't have a depression.

 

[LegendKiller]

Originally posted by: IcebergSlim

Originally posted by: GrGr
The Fed is penniless. The US Government is broke. And that with another Great Depression looming. During the first Great Depression the US was at least solvent and had a strong manufacturing base. That is gone as well now.

Good luck.

Wasn't the fed created to prevent another "great depression" lol. The concept that the government can be bankrupt is seriously hilarious. Brazil had to start over with new currency 3 times over the last 30 years. Their economy is stronger than ever. We don't need the fed. The government has the right to issue its own currency.

The Fed was created before the GD for the intent of maintaining a liquid banking system.

 

[Xavier434]

Originally posted by: IcebergSlim

Originally posted by: GrGr
The Fed is penniless. The US Government is broke. And that with another Great Depression looming. During the first Great Depression the US was at least solvent and had a strong manufacturing base. That is gone as well now.

Good luck.

Wasn't the fed created to prevent another "great depression" lol. The concept that the government can be bankrupt is seriously hilarious. Brazil had to start over with new currency 3 times over the last 30 years. Their economy is stronger than ever. We don't need the fed. The government has the right to issue its own currency.

Is that really what you want to see happen?

 

[mshan]

Found this while googling for info about the Japanese stock market and real estate crash:

"Yet Japan's fatal mistake, economists now mostly agree, was regulators' refusal to confront the stockpiled bad debt and in some cases encouraging banks to hide it. Such decisions not only sickened the banks and their clients further by allowing bad debt to get worse but also inhibited those banks from making fresh loans to healthy companies." Link

 

[IceBergSLiM]

Originally posted by: LegendKiller

Originally posted by: IcebergSlim

Originally posted by: GrGr
The Fed is penniless. The US Government is broke. And that with another Great Depression looming. During the first Great Depression the US was at least solvent and had a strong manufacturing base. That is gone as well now.

Good luck.

Wasn't the fed created to prevent another "great depression" lol. The concept that the government can be bankrupt is seriously hilarious. Brazil had to start over with new currency 3 times over the last 30 years. Their economy is stronger than ever. We don't need the fed. The government has the right to issue its own currency.

The Fed was created before the GD for the intent of maintaining a liquid banking system.

sorry I'm getting these events mixed up in my head you are right.

 

[ProfJohn]

The idea that we are heading to another depression is crazy.

It would take a string of bad decisions to get us even close to that type of economic situation.
If you actually study the great depression you will see that nearly everything the government did in response to it was wrong.

They tightened the money supply, they raised tariffs etc etc. You could almost take a list of what we did in the 1920s and use it to write a book on what NOT to do in an economic crisis.

 

[LegendKiller]

Originally posted by: ProfJohn
The idea that we are heading to another depression is crazy.

It would take a string of bad decisions to get us even close to that type of economic situation.
If you actually study the great depression you will see that nearly everything the government did in response to it was wrong.

They tightened the money supply, they raised tariffs etc etc. You could almost take a list of what we did in the 1920s and use it to write a book on what NOT to do in an economic crisis.

Heh, you're really not tied into the financial markets, are you?