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linklings, economic end game edition

Started by Steve @ bripblap · 10 months ago

photo credit: Shiny Things
I have been working in the financial services industry for several years now, and times are getting grim. Bear Stearns is probably days away from disappearing into a division of another bank, despite Federal efforts to prop them up; other grizzly old banks ... Continue reading »

7 comments

  • Mrs. Micah

    1 year ago

    If only a bear market were as cute and cuddly.
    reply
  • LC

    1 year ago

    Yes, polar bears are going extinct, and all the governmnet wants to do is drill for more oil in Alaska.
    reply
  • Curmudgeon

    1 year ago

    A lot of things to comment on here, Steve. Let me pick one. I've lived through Black Tuesday, the S&L crisis, the real estate meltdown and recession of 1990 (not as bad as the current one, I suppose, but it depends on where you live), the Asian currency crisis, the dotcom bust, and 9/11 (although two of my colleagues didn't live through that one). And that's just in the last 20 years. Somehow we'll get through this one, too. There seems to be a natural predilection for us to exhibit irrational exuberance, and only a very limited ability of the government to detect and do anything about it.

    I think this crisis all boils down to an excessively large number of people who came to believe that their house was an investment, rather than a place to live. That made it a Smart Thing to leverage it, spend it, and flip it. Conversely, paying off your mortgage was derided as an extremely poor use of capital. But it wasn't an investment, and it wasn't a poor use of capital. Today, I don't have to care what my house is worth, because I still have 100 percent equity in it.
    reply
  • Steve (Brip Blap)

    1 year ago

    @Curmudgeon: Oh, sure, I am sure the US economy will recover, albeit weakened. I think after Black Tuesday, the S&L; crisis, etc. the US economy suffered from a series of weakening blows. For the individual, things will probably continue apace - homes will be bought and sold, index funds will ebb and flow, etc. But I do think that the growing debt, the weakening dollar and the lack of a sensible economic strategy (health care, entitlements and the Iraq war) spell long term gloom for America. I don't see America being stronger 10 years from now than it is today. It will be weaker.
    reply
  • Curmudgeon

    1 year ago

    Steve, I've heard that message before, in the 1970s (now I'm really dating myself), with the messy aftermath of the Vietman War, stagflation, gas shocks (I remember the mild form of rationing we practiced just about the time I was learning to drive), and the rapid decline of the steel industry that was the life of my community and region. Yet a decade later the inevitable decline claimed at the conclusion of that decade was forgotten. I suspect that we may be destined to lurch from one crises to another, showing both our fundamental weaknesses and strengths only in the face of disaster.

    That said, I also agree that America's economic power and influence will lessen over time. It's the way of history. But it's not a foregone conclusion, and it's probably not going to happen, or perhaps even be noticeable, in ten years. And it's not so much a decline as it is other nations of the world becoming richer and more influential. And in the grand scheme, that's a Good Thing. Wealth makes nations more stable. Wars and humanitarian crises, already on the decline, will continue to do so.

    Of course, there's this oil thing that's the joker in the deck . . .
    reply
  • Pinyo

    1 year ago

    Yeah, the economy looks really bad right now. It's incredible that a company that just built their brand new high rise in midtown Manhattan not long ago is being sold for $2 a share.

    I also don't like the fact that the dollars is going down the drain.

    Do you have any thought on what to do to protect wealth in this situation?
    reply
  • Steve (Brip Blap)

    1 year ago

    @Pinyo: I'll tell you what I'm doing to protect my wealth: nothing. The market drops 300, then it's up 400. I'm staying invested in index funds, keeping a nice pile of cash like I did when the market was going great, and concentrating on keeping my spending down and paying for everything in cash. Can't go wrong with that formula....
    reply

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