Economic Mournings

[Makkin]

Misha,

  I agree with you easily on Rubles.

  No one in there right economic mind would invest in Russian money at this time and at the same time you can see how hard it is to keep that money from slipping fast. It dropped reasonably from 24.25 to 27 plus change but what about 45 days from now or 90?
 
  Probably without oil going up the reserves go down and the people who purchase on the exchange level with also walk away from that money as they have done with a select few others. Probably as we already know that without oil prices going up there will be a point soon when the bottom falls at a more rapid rate for the Ruble.

Makkin

[Andrew James]

AndrewJones,

  You are correct and Russia is not ready for this.


   OlgaH may think otherwise but we shall surely see the Russian economics fall by the road in comparison to the EU and Great Britain. It's not hard to figure but I supose hope springs eternal.

No comfort to be right on such things, if indeed I am (I'm only relying on others' reports, and feel the need to visit FSU before doing more than asking questions on that front). Just think of the amount of misery this is going to bring to people; especially developing nations.
 
I also feel there is a risk (with aspiring husbands like me) of appearing like a cynical opportunist in such times, ready to swoop and save the day when countries (and more significantly, their women) are trouble. Might bring out the White Knight in us, but from what I have read here, this is no foundation for a lasting relationship, especially as Russians are (rightly) a very proud and passionate people, emotions that nonetheless have their dark side! (There is a great Dostoevsky quote on the ramifications of humiliating Russians; wish I could recall it.)

With Russia, it seems Putin may have been more adept at tapping into this desire for respect on the global stage on a short term basis? (I wouldn't want to single out Putin either, because Bush et al. have been doing the same with Americans ever since America's pride was wounded in 9/11) So I ask: what is Putin doing for his people now, and is he still the strong leader he was once perceived to be?

[groovlstk]

Moreover, I feel there is a risk (with aspiring husbands like me) of appearing like a cynical opportunist in such times, ready to swoop and save the day when countries (and more significantly, their women) are trouble. Might bring out the White Knight in us, but from what I have read here, this is a very bad foundation for a lasting relationship, especially as Russians are (rightly) a very proud and passionate people, emotions that nonetheless have their dark side.

This risk runs both ways, if conditions worsen you'll have a wider pool of desperate women eager to relocate to more prosperous countries. While some men will love their new-found ability to date even further out of their league than before, ultimately this is a bad thing once fiancee visas are issued and women who emigrated for reasons other than love discard their foolish suitors for more worthy men.

If economic conditions do worsen in Russia and Ukraine, before even dipping your foot in the pool you should come to terms with the likelihood that if you find and marry a woman, you will very likely be on the hook for supporting her family through difficult times. 

[Mishenka]

Mishenka,

I absolutely agree with Galina and you should also listen to her and not count or discount "chickens" more over if the "chickens" are not your's

What Serdechka moya was saying is not to count on anything at all until after it happens. Don't even speak about it, so not to give false hopes. Only pray in secret. No sense in celebrating to early for what may never take place. "Talk is cheap"  only actions matter. With the coming election November 4th, few people expect change. I'm not one to believe in slanted polls, but I agree with most the country. Neither candidate in this election will be able to do much with the status quo during the next 4 year term. The damage is to extensive, to far and wide to correct in that period of time. Much more drastic measures must take place than what has been spoken of by these two men. Again, talk is ever so cheap, especially from the mouths of politicians.

Mishka

[IAmZon]

The future belongs to those that are flexible in mind, assets, and culture. 

It is evolution, and evolution does not occur in slow, linear, and projectable ways.  Rather, there are evolutionary "bursts" as Biologists call them.  I suspect we are at the beginning of one right now. 

It would be wise to identify all ideas of habit to hold them up to  bright light.  How difficult perspective is to achieve - no matter how much experience, no matter who much knowledge.  There are an excellent series of economic articles published in Harpers Monthly that  I read on my way to South America last week.  Concepts that would have triggered a gag reflex (because of their left leanings), I found myself reading - and GOD - even agreeing with to a degree.

Buckle up.  It is going to get fun.  But only for those that enjoy challenge and something new.  For those that do not perform well under these conditions, or overly play defense, times are going to suck.

[OlgaH]

So I ask: what is Putin doing for his people now, and is he still the strong leader he was once perceived to be?

You can get an answer right on the home page of Russian Public Opinion Research Center 
http://wciom.com/

Hope you will recall the Dostoyevsky quote 

By Great Russian poet Fyodor Tyutchev

         You wouldn't understand Russia just using the intellect
         You couldn't measure her using the common scale
         She has a special kind of grace
         You can only believe in her.

Do you understand why Russia has stood so many wars, crisis's and cataclysms? Because of Russians 


Sculpto has posted a good article 

"Yes Russia is in many ways its own worst enemy," said Vladimir Pozner, a Soviet propagandist during Communist times who is now one of Russia's sharpest commentators.

"But there are far too many things the West does not get about Russia. Most of all it does not want to understand that if you are a country which has never had democracy in its entire history then you cannot expect it in the space of 15 or 20 years to go 'Bingo - we're now democratic'. It's going to take generations. This country is still run by people who grew up in Soviet times."

Nikita Mikhailkov, the most powerful figure in Russia's film industry:

"You don't like me, Englishman," he told Panorama. "You haven't liked me for centuries, but I respect you. I want to engage with you, but on equal terms. I want you to respect me as I respect you."

[OlgaH]

What Serdechka moya was saying is not to count on anything at all until after it happens.

Mishenka, and I'm also talking about what Serdechka tvoya was saying   

[Mishenka]

Da, da, da Olga,  Lodnah

[Makkin]

AndrewJones,

  You should go and see the beautiful countries of Russia and Ukraine. You will be fine and do well.

   Who knows what will happen in your love life? You will never know till you step into the water.

   Wishing you all the best.

Makkin

[Mir]

The 9/11 attack was supposed to have a great symbolic value. I don't think the perpetrators anticipated the collapse of the twin towers and the number of people that died. The purpose was to attack the WTC the most impressive symbol of US led western capitalism. The success achieved by the terrorists has exceeded their wildest dreams. Scared of a collapse in economy due to fear Greenspan and his followers in UK etc forced the interest rates lower thus flooding the system with cheap credit and fueling an unsustainable boom in asset prices. So when the time to pay back came the system collapsed like a deck of cards.

[BC]

The 9/11 attack was supposed to have a great symbolic value. I don't think the perpetrators anticipated the collapse of the twin towers and the number of people that died. The purpose was to attack the WTC the most impressive symbol of US led western capitalism. The success achieved by the terrorists has exceeded their wildest dreams. Scared of a collapse in economy due to fear Greenspan and his followers in UK etc forced the interest rates lower thus flooding the system with cheap credit and fueling an unsustainable boom in asset prices. So when the time to pay back came the system collapsed like a deck of cards.

Mir,

The attacks did have an economic impact far greater than thought, but this was limited to the direct damage, and the costs of trying to protect against new attacks, not to mention the costs of the ensuing wars.. Yes Trillions.. but nothing compared to the underlying causes of the current crisis:

The Bet That Blew Up Wall Street

http://www.cbsnews.com/stories/2008/10/26/60minutes/main4546199.shtml?tag=topHome;topStories

More or less allowing Wall Street to turn the financial backbone of the country and world into the biggest gambling arena ever with no one to blame but greedy, unleashed capitalism.

The actual financial damage done to property and persons was overwhelmed by the amount expended afterwards that was folded back into the economy in form of goods, manufacturing, services, new employment and wages.  Talking net dollar terms, the terrorist acts probably helped more than harmed the economy (esp if Haliburton et al did not forward all their profits overseas).

[kievstar]

BC, really need to blame New York and Washington DC on this.  Would be nice if Wall street was told to close and move it to another part of the country with better oversight.  Also, politicians who received money from wall street firms should have to resign and never hold office again.  Ironic thing is Obama has received more funding from wall street than any other politician in history.  So not sure anything will change since Obama has been bought already.  East coast of the USA has caused a lot of problems for the rest of the USA.

One change that needs to happen is when you buy a stock you have to hold it for 1 year or pay 100% tax on profits and no loss carryforward.  Between 1 to 2 years pay 75% tax profit.  Day trading needs to go away because 99% of the people have no clue on how to invest and this is how wall street and someone like myself takes advantage of the system. 

[Makkin]

Kievstar,

  How can you force someone to have limitations on how long they hold a stock? That's not free enterprise but more like communism at it's worst..lol

  I suppose you could offer incentives to invest but when you force people to take a large penalty then it wont work on a scale large enough to make a difference right?

  A certified deposit for one year has no 100% or 75% penalty if you withdraw early and they seem to work fine.

  Makkin

[Gator]

Kievstar, 

I do not understand your logic.  Even "shorts" have a rightful place in the investing world.

In fact, even subprime loans are acceptable, provided there is a larger down payment and a higher interest rate, neither of which were required by most lending institutions over the past few years

What is unacceptable?  CDS's whose exposure is not backed by hard assets.  Read the 60 Minutes link provided by BC.  Spot on.

[Misha]

BC, really need to blame New York and Washington DC on this.  Would be nice if Wall street was told to close and move it to another part of the country with better oversight.

Do you really think that having the American stock markets in the corn fields of Kansas would have made a difference. I have my doubts. You qualify your statement by saying that "better oversight" is needed. Why couldn't this be done with the stock markets staying where they are?

One change that needs to happen is when you buy a stock you have to hold it for 1 year or pay 100% tax on profits and no loss carryforward.  Between 1 to 2 years pay 75% tax profit.  Day trading needs to go away because 99% of the people have no clue on how to invest and this is how wall street and someone like myself takes advantage of the system. 

Well, perhaps we are simply going through a necessary correction. Stocks prices had risen too high in relation to dividends and returns on stocks. In  a recession, stocks go down. Trying to stop or manipulate the inevitable would likely cause more harm than good IMHO. Call it the band-aid approach: is it better to tear it off rapidly and get it over with quickly or to drag out the pain. A massive drop in stock prices is not pretty, but much better than the Japanese who tried to avoid any pain and their economy is still moribund a decade or so ofter their housing/credit bubble imploded.

[Makkin]

  Three more months of falling markets is what I see. We will see it go up and down and back again until the G8 summit is over and the action chosen is implemented.

  I doubt much can be done in 90 days except to clean up the mess of the economic hurricane. After the mess is cleaned then we will see still low numbers until the jobs are again created.

  Soooo..what to do and expect until then is what you see now but worse. IMHO

Makkin

[BC]

Well, perhaps we are simply going through a necessary correction. Stocks prices had risen too high in relation to dividends and returns on stocks. In  a recession, stocks go down. Trying to stop or manipulate the inevitable would likely cause more harm than good IMHO. Call it the band-aid approach: is it better to tear it off rapidly and get it over with quickly or to drag out the pain. A massive drop in stock prices is not pretty, but much better than the Japanese who tried to avoid any pain and their economy is still moribund a decade or so ofter their housing/credit bubble imploded.

..and one heck of a correction it will be.  You are likely correct that in the long run better to just let what ever happens happen without the band aids that seemingly only prolong the inevitable.  Better to use all those funds to directly support the true 'backbone' of the economy (the workforce) get through a very tough period. - that alone will suck up a couple trillion.  The banks should learn to reap what they sow.

Airlines have been in trouble for decades, auto makers following close behind and now the banks going nuts for handouts..  House, car and ATM on 'tilt'.. can't get much worse than that.

I wonder when the operative word will be 'rebuild' instead of 'support'.

[Mishenka]

With 2 million jobs lost and as many homes in forecolsure, and double this in the next 6 months with more jobs lost and double the forecolsures, we are at least 6- 18 months before reaching bottom of this sink hole and 2- 3 years before gradually coming back to some kind of normalcy in finances. IMO the US congress is doing it all backwards, rewarding banks for corruption when they should be giving this $Trillion to the taxpayers to make their mortgage payments, Now the tax payers pay twice, they lost their homes, jobs and then have to pay again this huge debt that congress has bought us into. Bank of America who doesn't even need this money received 25 Billion just to make loans with,  this is like paying the mafia to rob banks. 9 Banks were given 150 Billion for what? To loan other banks money and get cash flowing by tomorrow. Will it work?

I trust not.
Mishenka

[Ronnie]

The 9/11 attack was supposed to have a great symbolic value. I don't think the perpetrators anticipated the collapse of the twin towers and the number of people that died. The purpose was to attack the WTC the most impressive symbol of US led western capitalism. The success achieved by the terrorists has exceeded their wildest dreams. Scared of a collapse in economy due to fear Greenspan and his followers in UK etc forced the interest rates lower thus flooding the system with cheap credit and fueling an unsustainable boom in asset prices. So when the time to pay back came the system collapsed like a deck of cards.

The Fed only affects short term borrowings.  Natural laws of supply and demand affect long term rates such as mortgages.  Rising prices of homes has been fueled in large part by lower interest rates.  A lower rate will allow a buyer to afford a higher price and thus prices rose.  But rates can only decline so much and that point was reached a few years ago.  It's interesting that we hear that there is no money to loan yet rates remain low.  That's not how it works...if there was truly a shortage of mortgage money, car loan money, rates would be going through roof like they did in the early 80s when the baby boomers were borrowing to buy homes, cars appliances.  Now the boomers have laid up capital to loan creating a surplus of capital that has allowed rates to fall.

There are no mysteries here as to the root causes of the current situation.  But the reaction to the situation by those in government and the media who can't understand basic economics has fomented the current crisis of confidence.

[jj]

One average guy on the  street who was interviewed when asked what he thought about the 700 billion bail out.  He reponded by saying , that his plan would only cost the tax payers over 300 million.  Just give each citizen 1 million dollars.  With that they could pay off their mortgage and put one half the remainder into a retirement plan, and the balance to use wisely.  If your mortage was still over a million, well, you probably don't need it anyway. 

[Misha]

One average guy on the  street who was interviewed when asked what he thought about the 700 billion bail out.  He reponded by saying , that his plan would only cost the tax payers over 300 million.  Just give each citizen 1 million dollars.  With that they could pay off their mortgage and put one half the remainder into a retirement plan, and the balance to use wisely.  If your mortage was still over a million, well, you probably don't need it anyway. 

I don't quite understand. There are what 330 million people living in the United States IIRC. Just to simplify the math, I will round up to 350 million people. 700 billion divided by 350 million works out to $2,000 for each man woman and child (give or take).

[daveyj]

One average guy on the  street who was interviewed when asked what he thought about the 700 billion bail out.  He reponded by saying , that his plan would only cost the tax payers over 300 million.  Just give each citizen 1 million dollars.  With that they could pay off their mortgage and put one half the remainder into a retirement plan, and the balance to use wisely.  If your mortage was still over a million, well, you probably don't need it anyway. 

And with financial savvy like that out there, we wonder how we got into this mess...

ps. his "plan" would cost 300 trillion

[Ronnie]

Regrettably...most the world's population can't do basic math let alone understand interest.  You have people out there who have been making money trying to tell people their house would cost them less if they made an extra payment each year.  Given that mortgage interest is low and tax deductible paying extra payments is foolish.  People don't understand the time value of money.

[kievstar]

Regarding what I posted people like myself make more money now than before as we bet on panic investors and shorting stocks.  Were not betting longterm on growth.

Day trading is part of what is causing this recession.  Personally I do not care as I will make money either way.  But daytrading is not about companies growing longterm.  More to it than what I wrote but smart investors are doing very well right now.  But they want stocks to go lower and more foreclosures of homes.  Do you guys like this type of market.  If so, keep the day trading alive.

[Mishenka]

One average guy on the  street who was interviewed when asked what he thought about the 700 billion bail out.  He reponded by saying , that his plan would only cost the tax payers over 300 million.  Just give each citizen 1 million dollars.  With that they could pay off their mortgage and put one half the remainder into a retirement plan, and the balance to use wisely.  If your mortage was still over a million, well, you probably don't need it anyway. 

The problem with his math is, there are more than 300 people in America.!

The bail out is costing less than 4280 oer tax payer