Financial Crisis - Is the reality too much to handle?

Discussion in 'Politics' started by Drifterwood, Mar 9, 2009.

  1. Drifterwood

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    Through various contacts and articles, very frightening possible scenarios are looming IMHO. Here are just a few.

    33% chance of serious civil unrest in the UK by 2010. The US?

    Collapse of infrastructure in Eastern Europe, leading God knows where.

    National debt that could take 3+ generations to control.

    70% tax in the UK.

    House prices being 75% off their 2007 peak.

    I would say that we have fucked up pretty bad and the consequences could be extreme.

    Is there any point blaming those responsible?

    Is it best to pretend that it isn't happening?

    Should we be preparing to resist some backlashes such as Nazism after the last depression?

    I am afraid that in this situation, I am not an optimist. I can't see that there is much that our Politicians can do because the problem was already well established and taking it's own course by the time that they got involved. It's like the difference between a fire in a house with a sprinkler system and one where you rely on the Fire Brigade.
     
  2. Principessa

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    Honestly, you Brits envy Americans so much you copy everything we do. Even the stupid shit. :tongue:
     
  3. Guy-jin

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    Oh, I'm not an optimist either. The things being done to "fix" the situation now are band-aids over a broken leg. The people in charge are trapped, trying to create solutions through a system that has utterly failed. They're trying to "restore credit", when credit is what created these shenanigans.

    Social unrest? That's the tip of the iceberg. Just wait and see what happens as Eastern Europe, Africa, and Southern Asia begin to crumble. The governments in most of the "stable" countries in those regions only stayed in power by using credit to buy weapons, goods, and services for their people. Anyone else see a problem there?

    Meanwhile, you've got America trying to save the world once again with these ridiculous "stimulus plans". Rightists bitch about how it's being done the wrong way while Leftists say it takes time. The reality is that it'll never be "fixed" so long as the world is latching on to archaic Capitalist designs from an era when money was backed by physical goods as opposed to thin air and promises.

    Turns out globalization wasn't such a great idea. I mean, most people with a clue could have told you that, but hey, the profits were high for quite a while there. You want a cycle? Here it is. Get used to the flavor of human meat, people.
     
  4. sparky11point5

    sparky11point5 New Member

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    Don't panic. Or, are you trying to get a job at CNBC?

    Look, it's a bad recession, but, a Mad Maxx scenario is not going to happen. If anything, we should be concerned about anyone that tries to heighten the sense of crisis. (See Naomi Klein's excellent "Crisis Capitalism" for some perspective on how real or imagined crisis have been used for political ends over the last 30 years.)

    The right wingers here, for example, are emphasizing a sense of dread because they don't like Pres. Obama. It's just a game of politics.
     
  5. Nrets

    Nrets Member

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    I've been saying for years that if we didn't cut down conspicuous consumption we were going to see a situation eventually where the citizens of poor countries show up at the borders of the rich countries with pitchforks and molotov cocktails. It was a mattter of scarcity, and when they didn't have enough to appease them, where they would turn to get what they deserve.

    The financial system is a big ass pyramid scheme. It works when more people invest. What are we investing in? Gee whiz golly I dunno, but they are all up in there printin money an shit. They were investing in the ideal that America had a system set up that would allow us to perpetually rob the thrid world of resources and trade with other rich nations for fine products such as Chevrolets or Insurance on Real Estate loans.

    Whatever, all I know is that people keep telling me this shit is not gonna collapse, and I gotta tell you there is one serious doomsday sign that I can think of....I am thinking of buying stock. That's right me, the person who thinks the stock market is similar to the Texas Hold 'em table in Vegas. I figure if it gets bad enough money will be meaningless anyway, and if it gets fixed...well if I make the right investmment I'll be set up for quite some time. Stocks are seriosusly cheap right now. Just waiting for the right time to invest.
     
  6. B_VinylBoy

    B_VinylBoy New Member

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    Say it loud, sista!!

    In some ways, I truly believe that this financial crisis is the "poor man's revenge", as we watch people who have never had to worry about a thing financially now having to deal with the same kind of struggles the average American deals with everyday. We have people who were born into generations of continued wealth, not ever having a real day to struggle in their lives. They can talk about how they avoided using their family's money and did things on their own, not even realizing that most people never had that option as a lifeline to begin with. It's easy to act as if you're going to be your own person and do your own thing if you knew deep down that your family would be there to help bail you out if you failed. The true definition of "struggle" is going to become a reality for a lot of the so-called wealthy people. And if these voices of dissent aren't already heading in a violent and destructive path, I can only imagine what will happen when the Dow drops below 6000... then 5000.

    Welcome to our world. Perhaps NOW you'll listen to someone less fortunate once in a while? Even THEY saw this coming.
     
  7. Drifterwood

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    CNBC - do they still have jobs?

    The anti-Obamans may be trying to turn it into politics, but where I am sitting the circumstances look very similar to the Great Depression. Even a cursory glance through the Wiki article will tell you that. Great Depression - Wikipedia, the free encyclopedia

    The UK government now controls more than half of our Banking Sector. Within a free market, they and the rest of the sector would have collapsed and the rest of the country in pretty quick order. I was around for the recession of the early 90's and I certainly don't recall anything like this.

    The oversupply of money this millenium has lead to a series of asset bubbles, these have burst and because Banks are allowed to lend more than they are worth, the Banks have become insolvent. They need their loans back to survive themselves and will not lend again. Politicians can say what they want, ultimately you end up where the UK is now, and Wall Street was at the start of the Depression.

    And Nrets, I wouldn't be in a hurry to buy stocks or any other asset for that matter, in the Depression, corporate profits in the US dropped o 10% of what they had been.
     
  8. B_New End

    B_New End New Member

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    We are fucked. Buy lots of lead and rice.
     
  9. B_starinvestor

    B_starinvestor New Member

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    It is a miserable scenario for everyone. Although, throughout history those that have bet on the demise of the U.S. economy have done so at their own peril.
     
  10. Guy-jin

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    Haha, so true.

    I have the "safest" investments in the world: Rice and guns. :smile:

    Welcome back, dude.
     
  11. D_Gunther Snotpole

    D_Gunther Snotpole Account Disabled

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    You mean your imagination can construct terrible situations.
    33 percent chance of civil unrest in the UK by 2010 ... how can that risk be quantified?
    Collapse of infrastructure in Eastern Europe, leading God knows where ... if it happens. But how total a collapse, and how can you predict that?
    National debt that could take 3+ generations to control ... easily possible, I'd say.
    70% tax in the UK ... are you sure governments don't see self-defeating folly in so high a level?
    House prices being 75% off their 2007 peak ... possible, but do you have grounds for saying this is likely?

    I don't get the logic in this.
    Don't politicians all the time face problems that are already established?

    Better to have a sprinkler system.
    But not every house that has to rely on the Fire Brigade burns down completely.
    And houses can be rebuilt.

    I can't tell if you are being capriciously pessimistic.
    Not that I downplay the seriousness of the problem.
     
  12. sargon20

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    There is a huge difference between then and now. Governments are not letting banks fail and depositers lose their money. Huge difference.

    Mankind is a resilent litle creature and will survive this episode. However our existence on the planet is still unsustanible and mankind will perish one day. Dow 0 how about that?
     
    #12 sargon20, Mar 10, 2009
    Last edited: Mar 10, 2009
  13. Drifterwood

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    Agreed. But in the UK the Gov now owns the Banking Sector. As I see it, that means that they are putting into place the Keynesian Depression recovery plan.

    Are failing banks a sign of depression? I imagine that there is some negative growth formula, but some countries are seeing negative growth of 15%, currency devalued by 30%+, Stock Markets down by 60%+ and property down by 50%. Such huge write downs in asset values will not bounce back overnight and they will effect further financial disaster imo now.
     
  14. Drifterwood

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    We will rebuild the house, or part of, that is our nature.

    I think that I am being realistic. Banks are insolvent, 650,000 people lost their jobs in the US in January, slumps in markets have left people with an even higher debt ratio, retired people may not have the income or savings to pay for themselves. How much reality do you need?

    As an investor, my gut feel is to let the whole situation bottom out before even thinking of trying to make a quick buck on the odd opportunity. I think this attitude is rife now and is similar to that that helped stoke the depression.
     
  15. Drifterwood

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  16. B_Nick8

    B_Nick8 New Member

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    Quoted for truth. Wb.
     
  17. Drifterwood

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    I am not predicting the demise of the US or anywhere else, I am just saying that things will be extremely tough - perhaps to the point that is hard to imagine given our relative prosperity of the last few decades.

    Here are some of the things that happened to the US in the last depression.

    • 13 million people became unemployed. In 1932, 34 million people belonged to families with no regular full-time wage earner.
    • Industrial production fell by nearly 45% between the years 1929 and 1932.
    • Homebuilding dropped by 80% between the years 1929 and 1932.
    • In the 1920s, the banking system in the U.S. was about $50 billion, which was about 50% of GDP
    • From the years 1929 to 1932, about 5,000 banks went out of business.
    • By 1933, 11,000 of the US' 25,000 banks had failed.
    • Between 1929 and 1933, U.S. GDP fell around 30%, the stock market lost almost 90% of its value.
    • In 1929, the unemployment rate averaged 3%.
    • In 1933, 25% of all workers and 37% of all non-farm workers were unemployed.
    • In Cleveland, Ohio, the unemployment rate was 60%; in Toledo, Ohio, 80%.
    • One Soviet trading corporation in New York averaged 350 applications a day from Americans seeking jobs in the Soviet Union.
    • Over one million families lost their farms between 1930 and 1934
    • Corporate profits had dropped from $10 billion three years ago to $1billion in 1932.
    • Between 1929 and 1932 the income of the average American family was reduced by 40%.
    • Nine million savings accounts had been wiped out between 1930 and 1933.
    • 273,000 families had been evicted from their homes in 1932.
    • There were two million homeless people migrating around the country.
    • One Arkansas man walked 900 miles looking for work.
    • Over 60% of Americans were categorized as poor by the federal government in 1933.
    • In the last prosperous year (1929), there were 279,678 immigrants recorded, but in 1933 only 23,068 came to the U.S.
    • In the early 1930s, more people emigrated from the United States than immigrated to it.
    • The U.S. government sponsored a Mexican Repatriation program which was intended to encourage people to voluntarily move to Mexico, but thousands were deported against their will. Altogether about 400,000 Mexicans were repatriated.
    • New York social workers reported that 25% of all schoolchildren were malnourished. In the mining counties of West Virginia, Illinois, Kentucky, and Pennsylvania, the proportion of malnourished children was perhaps as high as 90%.
    • Many people became ill with diseases such as tuberculosis.
    • The 1930 U.S. Census determined the U.S. population to be 122,775,046. About 40% of the population was under 20 years.
     
  18. Jason

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    I'm based in the UK. In the last few days I've had the following:

    * Doubts about whether a big company I've done a job for (10 days' work) would actually pay up (at the moment I think they will).
    * Lots of negativity from people I see at the gym - basically their hours are being cut, and fixed term contracts not renewed.
    * Realisation that the value of my home is even lower than I thought (if indeed I could sell it) so basically I'm staying put.
    * Told that the council tax (local tax) in my area will have one of the lowest rises in the UK of "only" 3%. My income sure isn't up by 3%.
    * Savings interest is so low it is shocking. About to hunt around and change where appropriate, but the very best accounts are paying dismal rates.

    As far as I can see the bad news is relentless. I'm just hanging on. So is everyone who can. This attitude is going to make it worse.

    I think we are looking at something much worse in the UK than the 1990s recession. Maybe depression.
     
  19. Elmer Gantry

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    I'd like to think that, but in the face of the massive debt that the USA has gotten itself into, I can see the very real possibilities of a major upheaval. The inflationary policies that have been embarked on (and I'm pointing the finger at all parties here) have done nothing but set the USD up for a fall of biblical proportions with nothing of any substance to save it.

    What will come of it? That will be the interesting part.

    Will we see an even greater push towards fasicism than already exists? Going on history then very probably.

    All I know is that peace, love and mung beans won't be tolerated in the new hyperinflated, financial crisis, terrorism fuelled world order.
     
  20. sparky11point5

    sparky11point5 New Member

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    Chuck, maybe you are just a big pussy then :)

    OK seriously, I think we need to remember that most people are working, and there are opportunities in crisis. Worst case, we end up like Italy. But, has anyone ever vacationed in Italy? Fuckin' sweet!

     
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