Down pluges over 700 pts - now under 10,000 - yikes

[Craig]

Posted: 10/6/08 at 10:38am

Not good...

Updated On: 10/6/08 at 10:38 AM

[Borstalboy]

Posted: 10/6/08 at 10:39am

Jesus Christ. It just gets worse and worse and worse. And me with investments and my job ending in a week and a half! Whee!

Updated On: 10/6/08 at 10:39 AM

[Bluemoon]

Posted: 10/6/08 at 10:40am

European markets are in a free-fall today with a number of their lending institutions failing. A dangerous game of dominoes if ever there was one.

[PalJoey]

Posted: 10/6/08 at 10:43am

We are looking at a strong possibility of a worldwide depression.

[madbrian]

Posted: 10/6/08 at 10:45am

And the McCain campaign wants to 'turn the page' on the economy as an issue.

[best12bars]

Posted: 10/6/08 at 11:13am

Holy crap. Way worse than I thought.



EDIT: Here's the deal, though. And it's not pretty. The housing market crisis isn't "done" yet.

Until you can take the average income of any given location, multiply it by 3 and get the cost of an average home... we're not there yet.

Right now, in the past 18 months with real estate prices tumbling, I'd say we're just about half way there.

Half way there.

That's a frightening thought. You're looking at another 18 months of prices falling. The average home price in L.A. fell $150K so far. But... (brace yourself), it's got another $150K to fall before we're remotely in the "normal" zone.

I'm not sure what to think about this... but the math doesn't lie.

Updated On: 10/6/08 at 11:13 AM

[SNAFU]

Posted: 10/6/08 at 11:17am

Did we just throw good money after bad?

[best12bars]

Posted: 10/6/08 at 11:18am

I'm just hoping it's not "too little too late."

And the thought of $700 billion being "too little" is sickening.

[best12bars]

Posted: 10/6/08 at 11:22am

The worst thing we can do right now is panic. Drawing all your money out, or switching it around, or scrambling is only making things worse. FAR worse.

The only people (in my mind) who have a reason to panic right now are those that are retiring this year (or in the next 2-3 years). They need to do something now, or risk losing their 401Ks or other retirement funds.

For the rest of us, we need to WAIT it out. If we all draw our money out now, the only thing we are guaranteed is a collapse of the national economy.

That's a guarantee.

So if you want to add to that possibility, go ahead and freak out.

Otherwise, as Davis put it, "Fasten your seatbelts. It's going to be a bumpy night."

Updated On: 10/6/08 at 11:22 AM

[madbrian]

Posted: 10/6/08 at 11:25am

B12B is right. I have a 401K with what I consider to be a lot of money in it. I haven't checked its balance for weeks, and I'm not going to check it for the near future. I'm 47, so my retirement is a long time away, so I'm not going to panic.

[wexy]

Posted: 10/6/08 at 11:33am

True, you just have to sit tight. I'm happy that I have a government job. Friday I was talking to a neighbor who works for AIG. He told me that they had a meeting and he's in a middle group that might lose their jobs and he was looking at ads in the paper for $50,000 SUVS intending to get one. Crazy.

[tazber]

Posted: 10/6/08 at 11:42am

Exactly. Everyone needs to stay calm. Remember that your money in the bank is insured. This is the market trying to make sense of what exactly this bailout will do. It was never going to be an overnight fix. It will take time and adjustment.
Don't forget that now the gvt owns all those sub-primes. They haven't even set up an organization to work with homeowners yet.
It's still very very early in this thing.

Posted: 10/6/08 at 11:55am

And if you are in your 40's this market turbulence will probably be good for you (personally) in the long run; A 20% drop in the price of stocks will mean that each month you will be buying 20% more stocks in your 401K. Which means when the stock market goes up (As it will in time) you'll be making 20% more money.

[best12bars]

Posted: 10/6/08 at 12:09pm

Taz---My thought on this.... the sub-prime and freaky ARM home owners are to blame for this too. Perhaps not quite as much as banks, but their own greed taking out loans they couldn't pay back is (almost) as bad as the banks setting up the bogus loans for them.

Buyers need to work on switching to a 40 or 50-year fixed rate, and the government needs to help them do it (since they own many of the loans now). 30 isn't really possible, unless the average homeowner can afford a $4,000-$5,000 per month mortgage payment. Don't think so. Or perhaps it can be a sliding rate based on income (with a minimum payment established, but no maximum---sorry kids, you brought that on yourself). Of course, if they can SELL their houses, great. That gets them out of the nightmare too. But good luck in this current market.

I know a lot of new homeowners in L.A have just stopped paying their mortgages entirely because they can't possibly dig their way out now. Sure, they will be (or have been) foreclosed upon, but they believe at least they can start over fresh.

That's a truly frightening thought.

...so is the notion that you can dig your way out of personal bankruptcy in only a few short years, instead of a minimum 7-10. I am shocked at how fast people with bankruptcies can get credit cards, cars, etc., again so easily.

I know they say this practice is a thing of the past now (since the recent bank collapses), but I'll believe that when I see it.

The banks have to stop ANY unrealistic loans. (Not "risky" loans, but unrealistic... where there is no way in hell that the loanee can ever pay it back, aka, the current non-fixed, interest-only housing loans). The people HAVE to pay off their credit debt now. They have to stop buying houses they can't afford, and they have to set up a realistic payment schedule on the houses they do own.

And God help us all during this "rude awakening" process.

Try telling "entitled America" that it's not entitled anymore! See how far that gets you. See how much Americans listen.

I predict the average American is going to get very ANGRY in the coming months. Once they're finished being scared. They're going to see these recent developments as "we gave those rotten banks $700B! Why can't I have my ridiculously overpriced house and my four cars and my $10,000 patio grill and hot-tub? I'm ENTITLED to it, because I helped bail them out with my taxes!"

Just wait. That rant is coming. The Clueless Victim Blues will be sung loudly from coast to coast. And I don't envy the next president of the U.S. or the next congress. They are facing one of the biggest messes in our country's history.

Updated On: 10/6/08 at 12:09 PM

[NYadgal]

Posted: 10/6/08 at 12:16pm

A little bit of information is a dangerous thing! I almost choked when a "spin-meister" on one of the morning shows recommended getting out of stocks now. A financial 'tsunami', he called it! Talk about feeding the 'panic'.

B12b is right - we have to reign it in, stop the ridiculous practices of lending/borrowing what we can't afford and start living within our means. We have to hold people and ourselves accountable and wait this out. There is opportunity in our economy. We just have to get back to basics, and that won't happen without some pain.

I'm in for the long-term. But, it's going to be a rough one...

Updated On: 10/6/08 at 12:16 PM

[Borstalboy]

Posted: 10/6/08 at 12:18pm

Subprime Primer in 45 Frames

[PalJoey]

Posted: 10/6/08 at 12:19pm

Madbrian--you should definitely check your 401K. If you have some of your money in high-risk emerging-market or international funds, you might think about parking some of it in safer funds for the time being.

[NYadgal]

Posted: 10/6/08 at 12:21pm

Borstal, that's (sadly) excellent.

[best12bars]

Posted: 10/6/08 at 12:27pm

PJ, are you panicking?

And Borstal---That really does sum it up.

It's the Pyramid Scheme exposed.

[Li'l_Devil]

Posted: 10/6/08 at 12:41pm

this is why i keep my money "under a mattress". the interest rate accrued on that original amount is the money i keep adding to it.

[PalJoey]

Posted: 10/6/08 at 1:36pm

No, besty. Panicking would be withdrawing the money and putting it under Li'l_Devil's mattress.

I'm just shifting within the 401K itself. I try to look at it once a month or so.

[javero]

Posted: 10/6/08 at 2:01pm

I'm thinking of buying a 10-yr Treasury bond at the next auction just to help out.

[Mistress Overdone]

Posted: 10/6/08 at 2:01pm

Oh, the luxury of being 24 and knowing that it doesn't matter because I'll never be able to retire anyway.

[Mamie]

Posted: 10/6/08 at 2:30pm

-737

Updated On: 10/6/08 at 02:30 PM

[PalJoey]

Posted: 10/6/08 at 2:42pm

Here's a stunner from today's London Telegraph:

"We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars."
Germany takes hot seat as Europe falls into the abyss