Fed To Auction Another $100bn To Banks

[Elfdart]

I recently (this week, in fact) was informed that I would be inheriting about $70k. Some folks are telling me now is a smart time to buy a house. Is that a good idea, or is housing going to be a few years before it gets back to a state where someone should invest in it?

I'd wait for the market to hit rock bottom and buy cheap. Depending on where you are (real estate in my neck of the woods is very cheap, for obvious reasons), you can get some real bargains.

[Edi]

Did nobody at the central bank notice that the US consumers at bottom of this massive inverted pyramid were running a negative savings rate during this period of explosive growth? Did they not have access to the fact that US manufacturing (that is, the actually productive portion of the economy) has been in a recession for over 10 years?

I remember making arguments very much like this a few years ago here on this board, only to be told by the various "economists" that I didn't know what I was talking about because I'm not an economist. Nope, I'm just an engineer, so I guess have an irrational fixation on industries that actually produce things.

I remember that. I've made similar arguments for the past several years as well and always the general attitude has been that I'm just being a stormcrow and doomsayer. But having been poor (in terms of cash, but not otherwise, claiming real poverty on my part would be an insult to those who suffer from it) and now making ends meet while putting money away from every paycheck, I know it in a way the fuckwits who predict a carpet of roses never have: If you don't have the cash to pay for it, it's not really yours and building an "economy" based on being in debt is fucking stupid beyond belief.

[Darth Wong]

I recently (this week, in fact) was informed that I would be inheriting about $70k. Some folks are telling me now is a smart time to buy a house. Is that a good idea, or is housing going to be a few years before it gets back to a state where someone should invest in it?

I'd wait for the market to hit rock bottom and buy cheap. Depending on where you are (real estate in my neck of the woods is very cheap, for obvious reasons), you can get some real bargains.

Is real-estate really a good investment? Let's take someone who bought a house in Toronto back in the 1980s for $200,000. At the peak of the real estate market, that same house might fetched $600,000 to $800,000 depending on circumstances. That's a gain of 3x to 4x, which looks pretty impressive.

But if you look more closely at the numbers, they're not quite as flattering. Every year during that period, the owner would have been paying property taxes: thousands of dollars per year. He would also be paying all manner of other housing-related costs, plus the occasional repair job, plus (probably) at least one major renovation in order to keep the house looking reasonably current so its value stays high. That's a lot of money.

And now let's imagine that this same guy put his money in shares of a reasonably well-run solid company. That's a $5 share which is now worth $60, and they've been paying dividends every quarter of every year since then, on top of that.

Now of course, one might say that the stock market is a bad idea right now, but frankly, everything is a bad idea right now. Unless you want to play with fire, go short on stocks, and live with the fear of an ill-timed spike and a banker's margin call, it seems like a lot of people just want to hold onto their cash for a while and see what happens.

[Edi]

Never mind that inflation will have eaten a lot of the value of the money in the meanwhile, so it's an even lower gain. Unless your example assumes it to have been taken into account.

[Admiral Valdemar]

The only area I'd really invest in is commodities, but even that isn't immune to market corrections, as we've had another sell-off in oil today. In the long term, they may offer hope for better investing opportunities. In the short term, you're going to be playing a risky game, even if oil, gold and base foods are highly sought after and always will be.

[Darth Wong]

The only area I'd really invest in is commodities, but even that isn't immune to market corrections, as we've had another sell-off in oil today. In the long term, they may offer hope for better investing opportunities. In the short term, you're going to be playing a risky game, even if oil, gold and base foods are highly sought after and always will be.

Don't waste your time with silly secular investing ideas. Go with Christian investing principles!

Here are some basic stewardship principles to remember in your financial investing life plan:

1. Accept Christ as both Lord and Savior. The beginning of Christian investing is to become God-centered. Dedicate every area of your life to His service. Jesus said, "Seek first his kingdom and his righteousness, and all these things will be given to you as well" (Matt. 6:33, NIV).

2. Pray for divine wisdom and the help of the Holy Spirit. All planning begins on our knees, as close to the cross as we can get. "If any of you lacks wisdom," said the apostle, "he should ask God, who gives generously to all without finding fault, and it will be given to him" (James 1:5).

3. Study Bible principles. There are more than 2,600 texts in the Bible dealing with money or money-management principles-more than faith, prayer, love, and peace. It's an important topic, and God has given ample guidance for us. Read the books of Proverbs and 2 Corinthians for starters.

4. Work with integrity and excellence. God has only one method for supporting the work of His kingdom: His people using their skills (both acquired and natural) to work with excellence and honesty. They are paid for their work: they, in turn, return to Him tithe and offerings as He blesses them. Then the cycle continues.

5. Develop a heavenly mentality; be truly Adventist. Focus on heaven and eternity. Ellen White wrote: "You need ever to cultivate spirituality, because it is not natural for you to be heavenly-minded" (Testimonies for the Church, vol. 5, p. 520).

6. Give tithes and offerings. You need the blessing of God along with wisdom from above to live a life that will honor your Creator, provide for yourself and your family, and support God's kingdom.

7. Budget to save. Don't just prepare a budget: make one that includes savings. The Family Financial Workbook: A Practical Guide to Budgeting has control built into the budgeting system. Most budgeting software lacks this important function.

8. Be debt-free. Make a list of every debt, from the largest to the smallest pay-off amount. Next, concentrate on paying off the smallest outstanding debt. When it is paid off, go to the next one on your list and use the amounts saved from the previous debt to accelerate payments on the next one, etc. Once your consumer debt is paid off (including automobiles), focus on the mortgage. Once that is paid off, put the amount of your mortgage payment into your retirement plan.

9. Get educated about life and its details. Read books, go to seminars, listen to people you believe to be wise. Then make your best decisions. Our decisions, based on knowledge, help us protect God's goods.

10. Have an investment plan. Begin saving for your children's education when they are born. Then, when they are school age, you will be "well planned" for their education needs. Someone once said of parents, "We are not responsible for our children's choices, but we are responsible for their training."

11. Have a retirement plan. Start now, not later. Use compound interest and time to your advantage. The younger you are when you start, the more interest you earn, and the faster your retirement funds will grow.

...

There are only two kinds of stewards: faithful and unfaithful. When Jesus told His disciples to store up treasures in heaven (Matt. 6:20), He was assuming that His listeners would be faithful stewards of the material and spiritual riches He was about to bestow.

Those same principles are as true now as they were then; just as firmly grounded on God's wisdom, love, and faithfulness. Our present happiness in doing God's will is but a dim reflection of the glories He has reserved for those who serve Him faithfully as good stewards.

http://www.adventistreview.org/2003-1532/story1.html

See? God will show you the way, so long as you think about him before you think about money, or anything else.

[aerius]

I recently (this week, in fact) was informed that I would be inheriting about $70k. Some folks are telling me now is a smart time to buy a house. Is that a good idea, or is housing going to be a few years before it gets back to a state where someone should invest in it?

I, nor anyone else on this board can tell you since we don't know what your situation is. We don't know how things are in your area, some places may hold steady while others will drop like a rock, if you're buying the home to live in or for some other purpose, your job stability & career plans which can determine how long you'll live there, and so on. My advice would be to read & learn everything you can about housing & mortgages, understand how everything works and what you can & can't afford. Then shop around and consult with financial advisors, and always check if what they're telling you makes sense in light of what you know. Some of them are good guys making an honest living who really want to help you, others are snakes looking to pad their commissions at your expense. You need to go in prepared.

A home is by far the largest and most important purchase you will ever make in your life, study study study like you're preparing a PhD dissertation. And of course read all the fine print and make every last word is crystal clear.

[Admiral Valdemar]

Mike, that's hilarious. I mean, really, you can substitute "God" for "common sense" here or "frugality". A lot of that is very sensible, just it's sugar coated with TEH LAWD looking over you, like the personal fund manager from Heaven. And I actually doubt the Bible is much worse than some books by economists.

[Darksider]

Mike, that's hilarious. I mean, really, you can substitute "God" for "common sense" here or "frugality". A lot of that is very sensible, just it's sugar coated with TEH LAWD looking over you, like the personal fund manager from Heaven. And I actually doubt the Bible is much worse than some books by economists.

I never understood the Christian right's ability to excuse the sins of the wealthy.

I mean, isn't one of the few examples of jesus getting violent in the bible when he threw the money lenders out of some temple somewhere?

It seems to me that the bible is pretty clear that wealth does not equal getting into heaven.

[Admiral Valdemar]

It doesn't, but the points raised in that piece advocate better use of your finances to avoid being a dick and expecting the state to bail you out. I think it's better to educate God-fearing Christians how to spend what they already earn well and save for the future, rather than try and hammer into their heads that their own canon is opposed to greed.

[Admiral Valdemar]

Oh man...



2.5 billion people are about to get very hungry if this doesn't get sorted out soon. The developed world not lending money is now being matched by the developing world not exporting food.

[brianeyci]

It's all over the Asian community. There's huge lineups for rice in supermarkets to stock up before the local merchants hike rice up 60%.

But at least the first world has options. Other countries: empty supermarket shelves and merchants selling to the black market or farmers exporting rather than selling to starving masses.

[Darth Wong]

Mike, that's hilarious. I mean, really, you can substitute "God" for "common sense" here or "frugality". A lot of that is very sensible, just it's sugar coated with TEH LAWD looking over you, like the personal fund manager from Heaven. And I actually doubt the Bible is much worse than some books by economists.

I never understood the Christian right's ability to excuse the sins of the wealthy.

Elsewhere in the article, they actually mention the famous line where Jesus said it is easier for a camel to pass through the eye of a needle than for a rich man to enter Heaven:

When Jesus said, "How hard it is for the rich to enter the kingdom of God!" (Luke 18:24, NIV), He was simply saying it is hard for the rich to be saved, not impossible. This is a great caution to all who are wealthy to keep their perspective on God and His kingdom (by global standards that includes virtually all of us who live in North America). This is why our focus must be on God and His kingdom.

In other words, Jesus says "no fucking way, rich boy", and the Americhristians respond with "so what you're saying is ... it's OK to inherit my daddy's vast fortune, as long as I try to be righteous!"

I mean, isn't one of the few examples of jesus getting violent in the bible when he threw the money lenders out of some temple somewhere?

It seems to me that the bible is pretty clear that wealth does not equal getting into heaven.

In his famous Sermon on the Mount, he says that the wealthy among us will be the poorest among us in God's Kingdom. In short, he says that in Heaven, the Americans and the Zimbabweans will change places. This does not sound like a ringing endorsement of wealthy people. But Americhristians can convince themselves of anything, no matter how self-contradictory.

[Xisiqomelir]

Wow, more boasting from Aerius and J about how they're going to make a shitload of money off other peoples' misery! It must be one of the seven days of the week!

It's funny how The Daily Show lambasted certain people on FOXNews for doing exactly the same thing, saying that it's tasteless in the extreme, but these two can't seem to figure out why anyone has a problem with it.

Would you rather they just didn't talk about it? To be honest, I'm glad that they're putting their money where their mouths are. That makes the deluge of housing crash/PO/econocession threads justifiable to me.

In fact, I can't really fault the thread torrent either. It's always fresh news, because things are just snowballing out of control now.

[Darth Wong]

Wow, more boasting from Aerius and J about how they're going to make a shitload of money off other peoples' misery! It must be one of the seven days of the week!

It's funny how The Daily Show lambasted certain people on FOXNews for doing exactly the same thing, saying that it's tasteless in the extreme, but these two can't seem to figure out why anyone has a problem with it.

Would you rather they just didn't talk about it? To be honest, I'm glad that they're putting their money where their mouths are. That makes the deluge of housing crash/PO/econocession threads justifiable to me.

How so? "Sorry to hear that Broomstick and Steve are unemployed due to the economic downturn, but I'm making lots of money by profiting off other peoples' losses! Hooray!" does not qualify as a positive contribution in my book.

In fact, I can't really fault the thread torrent either. It's always fresh news, because things are just snowballing out of control now.

I have no problem with the news stories. I have a problem with the gloating.

[TithonusSyndrome]

I think that at one point it was an alright thing to say that the economic establishment was completely fucked five ways from Sunday and that they, with a little decent judgment and immunization from their dogma, could avoid the kind of brain-burningly ignorant freefall into debt that John Q. Public seems to leap eagerly at when they're told they can approve all kinds of loans - but there's a fine line between that and gloating, which tastes bitter to everyone but them.

[Big Orange]

The Independent had a front page article titled "United States of America 2008: The Great Depression", and look at all the whinging from American posters about "Limeys", Europeans and Liberals (although their comments about greedy freeloaders leeching off welfare seems dead on). One very good comment so-far:

I find it startling that so many people are playing ostrich and sticking their heads in the sand, lambasting the Independent for what others have been predicting for quite some time.

What the average American fails to understand is that the US government has placed them in a situation never seen before, where it was revealed to congress only last week that the US Government is spending 150% of its revenue income without the slightest sign of abating but respond by printing more paper bills thus weakening the dollar from within.

What the US Government does not wish the average American to know is also the very fact that foreign nations have the US's economic balls within their grasp, that countries like Venezuela and Iran have enormous impact now on the US and its allies, that China is beginning to lose interest in keeping America's debt free flowing.

So keep sticking your heads in the collective sand folks, it isn't going to go away, maybe a President who recalled the foreign forces, closed down the bases, sued for peace and renewed friendships with allies, that could help but President Bush has eviscerated the economy of America and the west in his futile lust for oil and power and this America is YOUR responsibility for what happens next.

And consider that whilst your Vice President is touring the planet seeking support for a war against Iran, that by attacking Iran will be the very death knell for the American nation simply as oil from that nation and from Venezuela ceases to flow to western states, you maybe do not understand that Chavez's oil accounts for 10-15% of Americas essential oil imports, that without that oil would leave the US in a fuel crisis which then causes OPeC to cease trading in dollars and move to the Euro, we'll be fine here in the UK and Europe but how does anyone think the US will be able to buy oil with scraps of worthless paper?

The end of the US empire is drawing to its close, prepare for it, accept it but don't try and deny it because it is already under way, President Bush in his inept management has managed to shift the global power positioning from the west and handed it on a silver platter to Russia, China, India and Iran.

Way to go America...

Dr. Woolworth Van Husen III, DDS | Tuesday, 01 April 2008 at 12:27 PM

[Admiral Valdemar]

The massive rally today, despite UBS' report of writedowns, just shows the reality disconnect going on.

http://www.ameinfo.com/16529.html

The treacherous nature of bear market rallies (Thursday, January 10 - 2002)

[snip]

Probably the most famous bear market rally in history is the rise, which took place following the October crash of 1929. Stocks began to recover strongly following the November 13th 1929 low amidst wildly bullish comments and confident statements by a very large number of respected Wall Street personalities.

In fact, for a while the bulls were right. From a low at 199 on November 13 - down from the September 4, peak at 381- the Dow Jones Industrial rallied to a high of 294 in April 1930 (up 48%). This famous and well-documented bear market rally took place for a number of reasons. After the October 29 crash, the market had become very oversold - incidentally far more oversold than the US stock market's position on September 21, 2000. Thus, a technical rally was natural.

Also, the Federal Reserve Bank cut the discount rate immediately following the crash from 6% to 5% on November 1, 1929, to 4.5% on November 15, and to 4% on January 30, 1930. Subsequently the discount rate was repeatedly cut to 2.5% in June 1930, to 2% in December 1930, and 1.5% in mid 1931.

The interest rate cuts after April 1930 did, however, no longer support the stock market, which began to sell off once more. And by the end of the year 1930, the Dow Jones Industrial had broken below the November 1929 low and fell to 158 (from there it fell 41 in July 1932). Another reason for the 1929/1930 rally was that the economy held up following the October crash, which led a number of leading business and stock market personalities to make positive comments and to buy equities.

[snip]

The point I should really like to emphasize is that rally phases after a serious break frequently lead to a false sense of security and confidence among the investment community 'that the worst is over' because stocks are rebounding strongly. Moreover, because business conditions do not deteriorate very badly during the first phase of a bear market, economists and well-known market observers remain optimistic about the future.

http://www.telegraph.co.uk/money/main.j ... iew131.xml

Bear market rallies only delay day of reckoning (April 1st, 2008)

There have been nine bear rallies since 1970. The average length is four months. The surge misleads investors into believing that sunlit uplands lie ahead. Then the sucker punch hits.

[snip]

The capitalist system is now so deformed by debt that it requires ever lower interest rates to keep going. It survives on perma-bubbles. Monetary rigour at this late stage would endanger democracy.

How did we ever let matters reach this pass?

[Big Orange]

I read somewhere that the current mess is partially the Clinton administration's fault, when Congress passed through the the Gramm-Leach-Bliley Act after repealing the Glass-Steagall Act way back in 1999 to "loosen up" the market, since the Glass-Steagall Act was presumably seen as too much oversight (the GSA was allegedly passed during or just after the Great Depression). For those of you can bother reading the rants in The Independent's blog, the willful delusion and insecure arrogance typical of the American rightwing gatecrashers seems more pronounced than usual, insulting Europeans (just because), being neurotically paranoid about constructive criticism and viciously denigrating Britain (even though the British armed forces are loyally serving an integral role in furthering the Neocons' dubious overseas agenda).

[Darth Wong]

Clinton was a middle-ground politician, and compromised with Reaganites enough that he might as well be considered one of them. The guy signed the DoMA, after all. He's not the flaming liberal that right-wing Republitards have always painted him to be. Hell, go back a few decades and Clinton might have been considered an arch-conservative, at least in terms of economic policies. Ultimately, this bullshit must be laid squarely at the feet of the Reagan Revolution, and all of the media people and politicians who suck his balls must bear partial responsibility.

[Big Orange]

Despite my dad and Starglider's apologies, I'd say Margaret Thatcher is partially to blame for the current economic system as well, even though most of the economic/social damage she inflicted was in Britain (but she and Regan were playing along to a similar tune). And most of the American comments on The Independent blog are hilarious, since how can an economy be sustained indefinitely by foreign made consumer products and lazy, stupid people leeching off benefits? I also chuckled at American posters saying how affluent their gated communities still are - if you went to a upmarket US neighbourhood in 1933, you wouldn't get a immediate impression of profound economic ruin either.

[K. A. Pital]

Fuuuuuck.

Well, here's to the cheap food we used to have - I'm pretty sure everything from wheat to meats is hiking faster than I can say Utinni since I can see that in the supermarket.

[SirNitram]

And yet I'll bet there's still financial incentives offered to farmers in the US not to make and ship crops.

[Uraniun235]

And yet I'll bet there's still financial incentives offered to farmers in the US not to make and ship crops.

Isn't that partly intended to try and make sure that we don't over-farm land into uselessness? I think we should be more worried over farmers rejecting such incentives en masse in favor of growing "biofuel" crops.

[Admiral Valdemar]

The likes of India, Malaysia, Indonesia and others are blocking all exports so as to feed their own populace (export land model, but with food, not oil).

I think in Indonesia you'll get four years in prison for selling food to non-natives on the market. It's funny, y'know, that trying to make an honest buck in a free market is worthy of prison, yet screwing millions of people out of billions of dollars gets you a bail out by the government in a pseudo-socialist/capitalist circle jerk.

Life is just plain ol' funny right now.