Financial crisis ripples through

[Oleander Ardens]

Confidence Ebbs for Bank Sector and Stocks Fall
By LOUISE STORY and ERIC DASH

Even as the Bush administration moved to rescue the nation’s two largest mortgage finance companies, confidence in the banking sector spiraled downward Monday.

In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender that was seized by federal regulators on Friday, as customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington State, were compelled to assert that they were sound.

Even as federal regulators issued assurances that depositors’ savings were safe, Wall Street analysts circulated lists of lenders that might be vulnerable. Shares of regional banks plunged in one of the sharpest declines since the 1980s.

Many investors fear that the government’s resolve to help Fannie Mae and Freddie Mac, the giant companies at the center of the nation’s mortgage market, will not hold back the rising tide of bad loans unleashed by the weakening housing market and faltering economy.

Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, said the F.D.I.C. expected a small number of the nation’s banks to run into trouble over the next year. But she asserted that the worries driving down banking shares, fed by rumors in the marketplace, did not presage widespread failures.

“People should not assume that just because the stock price has been going down, that we’re going to close their bank,” Ms. Bair said. “In addition to our credit problems, I don’t want to have to start worrying about bank runs.”

Wall Street staged its own sort of bank run. Investors fled banking stocks en masse. The Standard & Poor’s 500 Bank Index fell nearly 10 percent. Washington Mutual, the nation’s largest savings and loan, lost more than a third of its value, prompting the lender to issue a statement that it was “well capitalized.” National City Corporation of Cleveland, which is the largest bank in Ohio, fell almost 15 percent. That bank also took the unusual step of issuing a statement saying that it was sound. The stock prices of large lenders in Tennessee, Alabama and Florida also swooned.

Nervous investors sent all three major stock indexes down on Monday. The Dow Jones industrials closed down 0.41 percent, at 11,055.19. The Standard & Poor’s 500-stock index lost 0.9 percent, to close at 1,228.30, and Nasdaq fell 1.17 percent, to 2,212.87.

The worries about the financial industry that gripped Wall Street when Bear Stearns imploded in March spilled over to Fannie Mae and Freddie Mac last week. They are now buffeting small and midsize banks, many of which are heavily exposed to weakening local property markets and loans to home builders. Some investors fret small institutions will not receive the kind of federal support that rescued Bear Stearns and the two mortgage giants.

“The market wonders: which institution is too small to bail out?” said William H. Gross, the chief investment officer of Pimco, the large money management company. Traders “seem to have picked on the regional banks as potential candidates to be the ones too small to bail out.”

Several bank analysts issued dire warnings about the banking industry, particularly smaller, regional lenders. Goldman Sachs said regional banks may be forced to cut their dividends to safeguard their finances, driving down shares of banks like Zions Bancorporation of Utah and the First Horizon National Corporation of Tennessee.

Rumors swirled that customers at National City were pulling money from the bank. There were no indications of mass withdrawals at the Ohio bank or any others aside from IndyMac, the lender based in Pasadena, Calif., which was seized by regulators last week.

“Look, we are not experiencing any unusual depositor or creditor activity today,” said Kristen Baird Adams, a spokeswoman for National City. “There is widespread speculation and rumors in the markets today.”

The rumors continued to rip through the markets despite a warning from the Securities and Exchange Commission on Sunday that it would crack down on traders who spread false rumors. More bad news is likely this week from large banks like Citigroup, which are expected to report bleak quarterly earnings. On Monday, M&T Bank kicked off the string of earnings releases, saying its profits dropped 25 percent from a year ago. The bank’s stock price fell 15.6 percent on Monday.

Regulators and investors are bracing for a small number of banks to fail over the next 12 to 18 months. Analysts predict that 50 to 150 banks might stumble. In the first quarter this year, the F.D.I.C. listed 90 banks as troubled, which is far lower than the levels during the savings and loan crisis of the 1980s. Still, Ms. Bair said that number would increase. IndyMac, for example, was not on that first quarter list at the F.D.I.C. but was still seized by regulators.

“We’ve been saying for a long time that the number of troubled banks will go up, the number of failed banks will go up,” Ms. Bair said. “It’s going to be well into the next year at least.”

Ms. Bair said her agency was prepared to handle the problem banks, after an extensive staffing increase. The F.D.I.C. has about $53 billion to pay back consumers for deposits that are lost at failed banks and is already working on plans to raise more money to cover the depositor balances at IndyMac. The agency will raise the money from banks, she said, with riskier banks paying more. She emphasized that the number of failed banks still appears to be significantly less than those closed in the 1980s. Some banks may avoid failing because they are purchased just in time.

Nevertheless, the financial markets are reacting to even small rumors, so every bank failure presents the potential for panic, analysts said.

“It’s about to start getting real bad,” said Richard Christopher Whalen, managing director at Institutional Risk Analytics, a research firm based in Torrance, Calif. The government, he said, should just move on with the process and “close not just one but a half-dozen institutions at the same time.”

The government’s plan for Fannie Mae and Freddie Mac initially seemed to calm nervous markets on Monday morning. The Dow Jones industrial average opened more than 100 points higher. The announcement should help regional banks that hold Fannie or Freddie bonds as well as Wall Street firms that do a significant amount of business for the government-sponsored entities.

Some investors said the government’s plan simply reaffirmed negative fears about the mortgage market.

“One could argue that government measures validated concerns about how bad things really are,” said David Bullock, managing director of Advent Capital Management, an investment fund in New York. “We are closer to the Depression scenario than not.”

Customers at two National City branches in the Cleveland area did not seem worried, despite the near panic in the stock market. They said they had heard about the bank’s drop in stock value from local radio and television news, but were not concerned enough to withdraw money from their accounts.

“Why, there’s no run on the bank, is there?” said Bernie Bragg, 60, who lives in Fairview Park, a Cleveland suburb. “It’s no big deal to me. The government said it’s going to bail out Freddie Mac and Fannie Mae. This thing with National City is small potatoes compared to that.”

The benchmark 10-year Treasury note rose 27/32 on Monday, to 100 5/32. Its yield, which moves opposite its price, fell to 3.86 percent, from 3.96 percent.

Following are the results of Monday’s Treasury auction of three- and six-month bills:

Christopher Maag contributed reporting from Ohio.

So now the euro is at an alltime high against the USD, but also European and Asian stocks keep plunging as investors fear that the big fat American consumer can no longer fatten the returns and that the easy credit which drove the Irish, British and Spanish growth is no longer easy to get. It seems that harder times are coming for the economy worldwide. But while Europeans and Americans are whining about the rising inflation which hits the lower classes hard billions suffer greatly and many millions must hunger because they can no longer afford the same amount of food.

Sometimes knowledge hurts, seems that my slogan "Beati pauperi spiritu" fits.

[KukriKhan]

So, are you still moving assets to gold and silver?

[Oleander Ardens]

I made an educated guess that gold would go through the 1000$ barrier about 5 months ago and it went down to 850$ before coming back to 980$. Silver was even a bit more volatile. Nobody knows were it will go in one or two years. However my original reasoning was that gold would get driven higher and higher as other targets of investments are becoming uglier. This seems now quit likely and makes it pretty attractive especially for USAmericans. If yoo go into them do it with an ETF and with diversification in mind. IMHO liquid assets are golden right now, because you might be able to pull off a Buffet who said once in a time of great crisis that he felt "Like an oversexed guy in a whorehouse. Now is the time to invest and get rich".

The timing and type of the reentry is now most important. And be always careful and diversified.

P.S: I made recently also a small investment in stocks - shows that the urge of investing is hard to overcome. Sometimes patience is really gold.

[ICantSpellDawg]

Move assets to firearms and home fortification. Gold and Silver firearms and home fortification.

Go to public colleges. Buy a Vespa. Invest in video games.

[Goofball]

Now is the time to start investing in big banks.

[Redleg]

Now is the time to start investing in big banks.

one should watch the market over the next few days, I am willing to bet a vitrual coffee that the bank sector will fall another 15% before it stablizes. Watch the market and try to figure out when the scare is over and buy at the low point of it.

[Don Corleone]

These bank bailouts really torque me off. I find myself in amazement, but I think perhaps Idaho and Jag are right. ~:eek:

I just don't see the government giving investors who made foolish choices a blank check to spare them the pain of the consequences of those decisions as anything good. I would have liked to have seen Freddie Mac and Fannie May really pay for their poor decision making for a while. I understand that we don't want to be foreclosing on people's homes, but capitalism without consequences is a formula for disaster.

If the government wants to be bailing banks out, they have to at the very least increase regulation. No regulation, no money. Simple as that. Otherwise, we'll be bailing out another financial sector in 4 or 5 years. Each one encourages all the others towards ever greater stupidity. The hedge fund managers SHOULD have to take it on the chin for a while, either through financial losses or by having their wrists slapped repeatedly by regulators.

Right now, it's flip a coin: heads-investors win / tails-taxpayers lose.

[HoreTore]

capitalism without consequences is a formula for disaster.

The only suffering the people responsible for these things(ceo's, etc) will receive, is that they'll lose a bonus. If they get fired, who cares? They'll just add another experience to their resume, blame the economy and get another million dollar job....

Those who will suffer because of this are, as always, those on the bottom rung.



But I'm a great fan of your slapping idea! :smash:

[Adrian II]

But I'm a great fan of your slapping idea! :smash:Slapping, the Communist answer to whatever we don't understand.

Fannie May and Freddie Mac are 'too big to fail', in Wall Street parlance. If they had not been given a government bail-out, many people throughout the world would have suffered. As The Guardian writes today: 'The US government did the right thing. Had it allowed the mortgage firms to keep on haemorrhaging market confidence, the result might well have been curtains for the global banking system.' IN the UK the Treasury is bailing out a score of banks such as Northern Rock, Royal Bank of Scotland, Barclays, HBOS and Bradford & Bingley.

Don Corleone is right that the public should demand tighter regulation in exchange for a bail-out with taxpayer dollars.

More interesting is the warning issued today by investment bankers Merryll Lynch that the U.S. could face a foreign "financing crisis" within months as a consequence of the Fannie Mae and Freddie Mac mortgage debacle. The country depends on Asian, Russian and Middle Eastern investors to fund its $700bn (£350bn) current account deficit, leaving it vulnerable to a collapse of confidence.

[Whacker]

I'd echo Don and Adrian's sentiments, mostly.

First, I concur with Adrian, the bailout was very sorely needed. The American economy isn't doing too well, and this was just another bad step. Too little consumer and investor confidence leads to a crash, and with the economy essentially being global at this point, if the US markets go south in a hard way, they're going to take most of the rest of the world with it off the cliff. I get the impression most Americans share the mindset with Don that it rather torques us off that it was done, but on the other hand it was by far the lesser or two (or many) evils.

Second, I agree with Don. More regulation is needed, the fact that it even got to this point leads me to that conclusion, and that the current measures in place to prevent occurrences like these are not working as intended. Watching the pissing match between that senator and the (some wierd acronym) oversight organization was a sad combination of amusing and nauseating.

Meh.

[KukriKhan]

Fannie Mae/Freddie Mac 'too big to fail'.

They're too big to survive with my help, IMO.

They made bad bets. Bought crap product. Looking for the short-term profit, NOT the benefit of the US housing market, the mission for which they were created.

Let'em fall.

Why should we schmuck taxpayers, who've got a job, kept a job, bought a sensible fixed-rate mortgage, that we knew we could repay, bail out speculators who packaged ninja (No Income, No Job, (no) Assets) loans and presented them as viable to fawning quasi-government agencies chaired by political good-old-boys/girls?

No reason I can ascertain that benefits anyone but those good old boys..

Capitalism. It ain't just a snack anymore.

Burn, baby, Burn.

[HoreTore]

Anyway, what kind of people invest their money in a Fannie?

[Marshal Murat]

They're too big to survive with my help, IMO.

I think that while they should 'crash and burn' due to some unfortunate policy decisions, it's more important that they're kept alive to prevent a market recession. It's like Sophocles' Antigone. While King Creon can command that Polynices not be buried, for obvious reasons, it's more self-destructive to prevent his burial than to allow it.

[Crazed Rabbit]

They made bad bets. Bought crap product. Looking for the short-term profit, NOT the benefit of the US housing market, the mission for which they were created.

Let'em fall.

Why should we schmuck taxpayers, who've got a job, kept a job, bought a sensible fixed-rate mortgage, that we knew we could repay, bail out speculators who packaged ninja (No Income, No Job, (no) Assets) loans and presented them as viable to fawning quasi-government agencies chaired by political good-old-boys/girls?

No reason I can ascertain that benefits anyone but those good old boys..

Capitalism. It ain't just a snack anymore.

Burn, baby, Burn.

Damn straight. Let them fall and let us stand by. They played with fire, so let them get burnt - hard.

CR

[drone]

Fannie Mae/Freddie Mac 'too big to fail'.

They're too big to survive with my help, IMO.

They made bad bets. Bought crap product. Looking for the short-term profit, NOT the benefit of the US housing market, the mission for which they were created.

Let'em fall.

Exactly. Are we capitalists here, or are we pinko-socialists? The risk/reward factor has been ignored for too long. Bailouts are the epitomy of regulatory failure, and spreading the effects of that failure across the tax burden of the populace is just criminal. The markets can go pound sand at this point, the Fed should be first and foremost interested in the financial well-being of the citizenry, not the market share prices. Once the amateurs sell off, rational investors will look at the actual assets/debt/earnings of the various listings and put their money in the more sound companies. Anybody that has questionable numbers will get punished, the earth will revolve around it's axis, the sun will rise in the East, and everything will go back to normal. By interfering in this process, the Fed is basically exposing the US Treasury (i.e. us hardworking, tax-paying stiffs) to unscrupulous manipulators and opportunists. There is no money easier to get than taxpayer money.

As far as investment goes, in situations like this there is always someone making money, it doesn't just disappear. If you have the spare capital, finding out where this opportunity is will make you a rich man.

[Adrian II]

Exactly. Are we capitalists here, or are we pinko-socialists? No, you're a bunch of whiners.

First of all, the two F's hold over half the American mortgage market. If they go, your mortage goes, too. And so does most of the banking sector, so you can kiss your savings and deposits goodbye as well. The resulting national and global divestment may even cost you your job, so you'll have no more income to pay a mortgage from. Suddenly, paying a bit of taxes to help sustain the system seems preferable.

Secondly, this is how capitalism works. It's chaos and the wrong people make money off your back. This is what you wanted. If the U.S. were a socialist economy, it would be chaos and the wrong people would make money off your back. You don't want that, do you?

[Ironside]

Exactly. Are we capitalists here, or are we pinko-socialists? The risk/reward factor has been ignored for too long. Bailouts are the epitomy of regulatory failure, and spreading the effects of that failure across the tax burden of the populace is just criminal. The markets can go pound sand at this point, the Fed should be first and foremost interested in the financial well-being of the citizenry, not the market share prices.

The question then becomes if it's better for the citizens to pay to get a small recession instead of letting them burn and get a big recession.

When Sweden had a banking problem in the early 1990ties, the state went in to keep the banks alive. The economists are currently in unison that is was a good move and thats pretty rare.

To have stronger regulations is needed of course, cannot have the banks causing economical crises by themself.

[Geoffrey S]

Would have been a bad move to drop them. Would be a worse move for the state not to watch, learn, and demand stricter regulation in return for the bail-out. Still, can only go so far with regulation before defeating the point of capitalism.

[SwordsMaster]

I think the government should stop trying to prevent inflation. A high inflation rate will erode the lender-borrower relationships anyway, and will allow the general public to escape mostly unscathed, while the big lenders will be hit very hard. Kinda what Tyler Durden tried to do. He should have just convince China to sell their currency reserve instead.

[Adrian II]

I think the government should stop trying to prevent inflation. A high inflation rate will erode the lender-borrower relationships anyway, and will allow the general public to escape mostly unscathed, while the big lenders will be hit very hard. Kinda what Tyler Durden tried to do. He should have just convince China to sell their currency reserve instead.Inflation will allow the general public to escape mostly unscathed? :laugh4:


Voodoo economics! Ayeeeeeeeyaaah!

https://img186.imageshack.us/img186/7983/savagefw7.gif (https://imageshack.us)

[Husar]

Secondly, this is how capitalism works. It's chaos and the wrong people make money off your back. This is what you wanted. If the U.S. were a socialist economy, it would be chaos and the wrong people would make money off your back. You don't want that, do you?

:yes:

I've said it before, stock markets etc ruined the world, it's best to buy a house by trading in three tons of fur and then it's your house and noone owes nothing, then you buy ten litres of milk from your neighbor for a nice fur from a bear and after that you go buy a table for some furs etc.
I mean cmon it works, some russian guy making a phonecall and saying "I want to sell this virtual piece of paper saying I own 0.00000001% of this american company (would that equal a ruler or a ruler and a pencil?)." ruining the american economy is just silly. :dizzy2:

How many different kinds of stocks and expensive papers you can get ripped off with buy are there anyway? And how can someone make sense out of hundreds of guys shouting at him in this wall street building or whatever it is? This whole kind of economy has gotten so complicated that we cannot even come to one single conclusion as to what is the next best step(probably because with any step one side loses and another wins, there are almost never only winners), how can this chaos ever work?! :no:

The stock market is like legal gambling but unlike casinos it affects the lives of those who do not participate as well.

[KukriKhan]

The stock market is like legal gambling but unlike casinos it affects the lives of those who do not participate as well.

Salient observation. :yes:

[SwordsMaster]

Inflation will allow the general public to escape mostly unscathed? :laugh4:


Voodoo economics! Ayeeeeeeeyaaah!

https://img186.imageshack.us/img186/7983/savagefw7.gif (https://imageshack.us)

Haha, well, credit-wise. Their bank borrowings will devaluate. Obviously, the cost of living will go up, but you usually don't take out big loans to pay for groceries anyway. And since car sales are down, and housing is too, and these are the 2 biggest expenses in general, i think right now inflation would be less of a problem than if petrol was still cheap, and houses expensive.

[SwordsMaster]

:yes:

I've said it before, stock markets etc ruined the world, it's best to buy a house by trading in three tons of fur and then it's your house and noone owes nothing, then you buy ten litres of milk from your neighbor for a nice fur from a bear and after that you go buy a table for some furs etc.
I mean cmon it works, some russian guy making a phonecall and saying "I want to sell this virtual piece of paper saying I own 0.00000001% of this american company (would that equal a ruler or a ruler and a pencil?)." ruining the american economy is just silly. :dizzy2:

How many different kinds of stocks and expensive papers you can get ripped off with buy are there anyway? And how can someone make sense out of hundreds of guys shouting at him in this wall street building or whatever it is? This whole kind of economy has gotten so complicated that we cannot even come to one single conclusion as to what is the next best step(probably because with any step one side loses and another wins, there are almost never only winners), how can this chaos ever work?! :no:

The stock market is like legal gambling but unlike casinos it affects the lives of those who do not participate as well.


.... So participate. It seems obvious. And you can still go and trade furs if you want to. Or rights to sell your furs, or obligations to buy them, or bonds on fur market development projects.

Just because you think the system is complicated, doesn't mean it is useless. Do you know how your mobile phone works? Do you know what the difference is between 2g and 3g?

[Sigurd]

Anyway, what kind of people invest their money in a Fannie?

Oh, that's fanny ... err ... funny :mellow:

[Adrian II]

And how can someone make sense out of hundreds of guys shouting at him in this wall street building or whatever it is?Oh please.. :brood:

It is called freedom. Billions of people enter into contracts and the result is more or less controlled mayhem. You have to be very modest, very knowledgeable and very sure of political support if you want to effectively intervene in this exercise of freedom.
The stock market is like legal gambling but unlike casinos it affects the lives of those who do not participate as well.We all influence each other. It is called society. If you want to curb the way we influence each other, you have to curb freedom. And you have to be very careful with that.

I understand all posters in this thread who complain about the expensive bail-outs and the unfairness of it all, but apart from better market regulation there is very little we can do to alleviate the situation.

ON the subject of regulation: as a modern socialist I favour real competition, which means that no matket shall be controlled by a few major competitors. The U.S. used to lead in antitrust law. I hope that it still can. If Diocletian could do it, then so can George W. Bush.

[Husar]

We all influence each other. It is called society. If you want to curb the way we influence each other, you have to curb freedom. And you have to be very careful with that.

So there was no society and no freedom before stock markets? :mellow:

I want more freedom to be lazy instead of having to run around and inform myself on millions of things to be free, freedom is hectic and a lot of work, one really has to wonder why people want it so much, real freedom is walking in a forest, go wherever you want and live from berries, roots and whatever else nature has to offer. :hippie:
Stock markets are so unromantic. :no:

The difference between 2g and 3g is 1g of course and at around 7 to 9 you black out. :hide:

I'm actually seriously intrigued about the stock markets and my views are a bit ambiguous(as always) but you do not hear a lot of positive messages coming from there, usually it's responsible for rising prices, products being released prematurely and companies lieing to drive up the value of their shares, at least that's my impression, apart from that I'm not really into gambling with my money. :shrug:

I'm always surprised how banks can go bankrupt though, maybe that's the problem when almost all the money you work with isn't your money or doesn't exist anyway. :sweatdrop:

[TB666]

When Sweden had a banking problem in the early 1990ties, the state went in to keep the banks alive. The economists are currently in unison that is was a good move and thats pretty rare.

Yeah but we live in a country where that sort of thing is expected.
The goverment is suppose to look after everyone.
In the US it seems that such action leaves a taste of socialism in their mouth even if it is the right thing to do.

[Adrian II]

I'm always surprised how banks can go bankrupt though, maybe that's the problem when almost all the money you work with isn't your money or doesn't exist anyway. :sweatdrop:See? You have an excellent grasp of the subject, confined in one sentence.

Stock markets are extremely exciting battle grounds of conflicting human interests, pursuits and capabilities. Don't take my word for it. Google 'Liar's Poker and take it from there.

[Oleander Ardens]

First of all speculation and investment may seem to mean gambling - but there is a key difference. The bank which always wins is in the long run society. Yes crisis and bubbles may happen but the foundations of capitalism, powered by the driving forces of hope, greed and fear are human and deeply natural. And it is this the energy which enabled us to construct ever better ways to raise capital - the ressource of the ressources - to ever accelerate innovation.

Sounds almost too philosophical...

[Adrian II]

The credit crisis explained in black and white (http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&xml=/money/2008/03/26/bcncrisis126.xml&CMP=ILC-mostviewedbox)

[Husar]

That was very interesting, so in the end when I mortgage my house(no I don't really have one) to get more money, the money might actually come from a small town in Norway because the whole thing got sold a quadrillion times and noone believes I could ever pay it back, or something like that. :dizzy2:

And now I should participate in that and make a company on the cayman islands to make the world a better place and rescue the US taxpayers? :mellow:

Or how about I do nothing and watch the US ruin itself, hoping that the dollar will only be worth half a euro soon so that I can make a nice cheap trip over there and come back here to rich socialist laland and enjoy government intervention again? :sweatdrop:

Seriously, if I got your link correctly then there is a crisis because of these practices as describes in the comic, the investors will lose trust and stop investing in those bonds and mortgages etc which in turn deprives certain banks of their money because they more or less live from those investments?

[Kralizec]

It starts when investors realize that the whole practice is built on quicksand and stop putting money in it. As a result the mortgage rent will rise a bit, so that fewer people can take them. Since less people can take mortgages, the demand for houses drops and so do the prices. Then you have millions of people whose houses just have become worthless, but who are still stuck with a large mortgage debt and a lot of investors who feel screwed because they've indirectly been financing these houses while they were still expensive.

At least, that's how I understand it. I've never been good at grasping economics.

[KukriKhan]

I think Fenring and Husar have a pretty good grasp of the concept.

What I think we're watching (in my extremely humble, under-educated opinion) is the (so far) gradual collapse of the US's credit-based spending system - which is to say, purchasing things based on an exaggerated estimate of future ability to pay. That system has 'infected' the entire society from individual consumers/citizens, thru finacial institutions, to government.

Mostly financed, in a convoluted manner, by emerging economies: China, mostly. They (specifically, the People's Army of the PRC) hold a whole bunch of our Treasury Notes. They've basically financed our deficit-speding 'war on terror'.

In 5 years, I predict a return to financing ala my parents' day: "Need something? Save up!" This, after a bunch of poeple lose their over-valued homes and underpaid jobs, or have to work much longer in their lives than they originally thought they would need to.

In sum, I think it's gonna get worse before it gets better - but it will get better.

[Adrian II]

It starts when investors realize that the whole practice is built on quicksand and stop putting money in it.Think hard about what you wrote there. Does the latter follow from the former? :grin:

[Husar]

Oh yes, the US based system on buying things you cannot afford, I wanted to live it a bit and bought a 400EUR PS3 with money I didn't have. :2thumbsup:
Of course I will be able to pay it back, I wonder which norwegian town actually owns it until then though. :sweatdrop:

Of course this is a rather small debt and would look even smaller if I'd tell you more about it, but one has to wonder whether people are aware what they are doing when buying a house for many thousand dollars or euros and take a credit for it. My dad did the same and few years later his company went bankrupt, he got out pretty well but not well enough, so nowadays the finances are pretty tight, manageable but tight, in other families that could mean the family is ruined, as usual, if you take a risk, it does not always end well, I guess when people get used to taking risks they take higher and higher risks to the point where they took the wrong risk and it threatens to destroy their lives/companies, a bit more care and thought may not hurt, will be interesting to see whether the banks go on just like now once this crisis is over.

[Sigurd]

Oh yes, the US based system on buying things you cannot afford, I wanted to live it a bit and bought a 400EUR PS3 with money I didn't have. :2thumbsup:

Husar, Husar ... :no:
Consumer loans are too expensive.
What is the real price of that PS3 when that loan is finally paid?
You should have saved for it and then bought it... much cheaper that way.

My problem is I have the money, but aren't allowed to buy one, because I apparently can't control my gaming addiction (according to my wife).
I can't just buy it nonetheless because the sanctions she could impose is not worth it.
Damn addictions!!!
Addicted to love and gaming and they are not vereinbar (are there no English word for it?) :disappointed:

[Husar]

Husar, Husar ... :no:
Consumer loans are too expensive.
What is the real price of that PS3 when that loan is finally paid?
You should have saved for it and then bought it... much cheaper that way.
Maybe 5 bucks more, like I said you don't know the details. ~D


My problem is I have the money, but aren't allowed to buy one, because I apparently can't control my gaming addiction (according to my wife).
I can't just buy it nonetheless because the sanctions she could impose is not worth it.
Damn addictions!!!
We have to do something about that, limit the amount of games you buy for example, even the best game gets boring when it's the only one you play day in day out. A bit of self-discipline, prove to yourself and your wife that you're above that addiction.


Addicted to love and gaming and they are not vereinbar (are there no English word for it?) :disappointed:
they are not compatible?

[macsen rufus]

Husar - I don't think you have so much to worry about with your credit, compared to many:


(07-17) 04:00 PDT Washington - -- As the Bush administration proposes backstopping mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit and Congress contemplates another economic stimulus, the question is who will bail out the government?

"People seem to think the government has money," said former U.S. Comptroller General David Walker. "The government doesn't have any money."

A rare consensus has developed across the political spectrum that the government's own fiscal affairs are precarious, with an astonishing $53 trillion in long-term liabilities, according to the Government Accountability Office.

To put that number in human terms, the debt has reached $455,000 per U.S. household. As that debt grows, the United States increasingly relies on foreigners, including China and Middle East oil producers, for financing.

"The factors that contributed to our mortgage-based subprime crisis exist with regard to our federal government's finances," said Walker, now head of the Peter G. Peterson Foundation, a group established to raise alarms about the nation's budget. "The difference is that the magnitude of the federal government's financial situation is at least 25 times greater."


Concern grows over a fiscal crisis for U.S. (SF Chronicle)
(http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/17/MN8Q11OT2M.DTL&tsp=1)

[SwordsMaster]

Exactly. And where did the average american spend his half million? On the war on terror? I'm sure that if given the choice they'd rather spend on something else.

So no tax cuts during the next election, I'm afraid. If anything taxes will go up, up, up. And social security down, down. So get ready to dispose of your elders in some kind of free-environmentally friendly way.

[Husar]

Husar - I don't think you have so much to worry about with your credit, compared to many:

I never meant to say I did, sorry if it derived the thread.

But my guess is that the national debt of 455 thousand per household won't have to be paid back by the households, if that were the case it could take hundreds of years.

[KukriKhan]

I never meant to say I did, sorry if it derived the thread.

But my guess is that the national debt of 455 thousand per household won't have to be paid back by the households, if that were the case it could take hundreds of years.

Precisely; my now 6-year old grandson will be paying for the privilege of having grown up while his country (and his Dad) was fighting a war on terrorism. Hopefully, he'll have an 8x12 foot extra bedroom for his Grandpa Kukri to sleep in, when he's not off to work in his walker-wheelchair, as a greeter at WalMart.

[Husar]

You're a lucky guy kukri, here they rationalized greeters away, if we ever had any in the first place. :no:

[macsen rufus]

I never meant to say I did, sorry if it derived the thread.

I should have put a :clown: in there, I wasn't implying you were whining or anything :2thumbsup:


the national debt of 455 thousand per household won't have to be paid back by the households

Not directly, but it will through taxes, eventually..... :sweatdrop:

@Kukri -- I certainly hope there's someone left to lend your grandson a mortgage when the time comes, either that or real estate continues to get "more affordable" (that being the shiny, optimistic face of negative equity and rising slumburbia :clown:). Better make that walker-wheelchair an off-road model, things are going to get very bumpy.

Am I the only one seeing the general contribution of the finance industry being one of a handful of super-rich bonus-fed bankers etc, a handful of bankrupt banks, plus millions of homeless (at least repoed) workers (who may not even have their jobs much longer), and millions of unsaleable empty homes now seized by the bankrupt banks? It is a horrible mess, and personally I'm not thinking 'recession', I'm thinking 'depression', there's so much going wrong all at once.

Anyway, guns, tobacco and alcohol are reckoned to be good stocks to buy into in a depression....

[Adrian II]

Am I the only one seeing the general contribution of the finance industry being one of a handful of super-rich bonus-fed bankers etc, a handful of bankrupt banks, plus millions of homeless (at least repoed) workers (who may not even have their jobs much longer), and millions of unsaleable empty homes now seized by the bankrupt banks?No, I think more and more people will understand that the financial deregulation and market liberalisation of recent decades went much too far to be productive anymore. It's not just bankers who have grown fat on the stupidity of the middle classes who voted for these policies and only now recognise the consequences. Hedge fund managers are growing fat these days by manipulating the price of essential commodities.

I hope that one outcome of this cycle of nonsense will be that central banks will no longer be independent. This fetish of the 1990's should definitely be crushed, and its cult eradicated.

[Marshal Murat]

This fetish of the 1990's should definitely be crushed, and its cult eradicated.
Can we start with the Clintons?