Some help, please?

[Infinity]

Some good stuff here guys. Marco_Polo, that was an excellent synopsis.

Amateuraficonado, good highlight on the Reserve Bank

I believe I am in the same room as you are financially, I may be just too dumb to understand it all, but that is how I see it. I think things may be tight for 12-18 months but in our position we should not let media scare us with its fanatacism, that is how the market moves (both ways) so they can turn a moving market into money while having no real product.

Herein lies the problem. Not the financial problem, I mean THE problem. We have to start thinking for ourselves and have an open mind.
For example, it's always a good idea to read press in other countries for a broader perspective of world affairs. A good place to read diverse news is www.firstpost.co.uk

Very good thread you started Alan. By asking means that you are the opposite of ignorant, people who just accept should carry the label of ignorance.

Brian

 

[Marco-Polo]

All of the banks and investment brokers did everything that ANY Finance counselor will tell you NOT to do.

I think that this is true, but understandable. In a low-inflation, low-growth scenario, coupled with de-facto currency devaluation (the USD has lost about 40% of its value against world currencies since 2002), low-risk investments that do well (in terms of real interest rate, i-r) are hard to find. They therefore searched for investments with a higher tolerance for risk. Structured finance and CDOs offer an "out", by cutting debt into appropriate risk tranches, which can then be valued independently.

However, this was coupled with a move to deregulation of the financial sector that began in the 104th Congress, continued with the repeal of Glass-Steagall by Gramm-Leach-Bliley in 1999 (the same Phil Gramm who has been in the news lately, in fact), and continued through the early 2000's, which rendered false the underlying assumptions and safeguards against misuse of these techniques. In other words, it created an environment where you had plenty of perverse incentive (lots of reasons to do the wrong thing) and moral hazard (heads I win, tails you lose).

it. I think things may be tight for 12-18 months but in our position we should not let media scare us with its fanatacism, that is how the market moves (both ways) so they can turn a moving market into money while having no real product.

If anything, the Media has been guilty of understating the problem over the last 2-3 years. This is partly due to a lack (almost total lack) of economic literacy among journalists, and partly due to the modern concept of balanced journalism, where a reporter seeks out two opposing voices to flesh out a story without providing guidance or context.

 

[MX]

Well, I am just glad that as of Friday, I will not have to make a house payment of a house that I do not live in. I feel that I have been pretty lucky, the house went on the market in Feb. and in April I moved to Brussels. Making the house payment has not put me in a huge bind, but just kept me from being able to do the things I wanted, unless I changed my savings habits (which I was not willing to do). So after only 3 years of equity, we are selling the house for approx 30k more than what we paid for it. Of course we will see only about 1/2 of that in profit. All I can say is that in this market, I am glad that I did not lose money on the house, and I do not have to make the note anymore.

The profits will be invested in a short term something or another, and will be rolled into a new house when I get back to the states.

Alan, Marco and the rest that added, this has been a great read. Thanks

Tim

 

[Infinity]

If anything, the Media has been guilty of understating the problem over the last 2-3 years. This is partly due to a lack (almost total lack) of economic literacy among journalists, and partly due to the modern concept of balanced journalism, where a reporter seeks out two opposing voices to flesh out a story without providing guidance or context.

I think you are been very kind to the US media. They know a lot more then they let on or, are allowed to let on.

Brian

 

[Marco-Polo]

Hanlon's Razor: Never attribute to malice that which can be adequately explained by stupidity.