Uh Oh!
- Thread starter El and Bill
- Start date
Well, it's easy to blame the politicians, but they didn't make people buy houses beyond their means, with mortgages that never paid down the principle. And those easy to get mortgages of a couple years ago made speculators out of average folks who thought they could make an easy profit by buying a couple houses. The housing market, like the boat, RV, and car markets are simply overbuilt... it is going to take a few years to reduce the inventory in those industries and many of the businesses involved are not going to survive that amount of time with very few new sales.
If you own your home, don't have to finance a boat or other major purchase, and can psychologically withstand the current market downturn (and don't have to take funds out now or in the near future), this current economy is going to be a lot of scary headlines. If you are working in an industry that is affected and/or have one of those interest-only balloon mortgages, or have to pull money out of investments, it may be ugly.
I stand by my earlier statements about fuel prices affecting this downturn. While fuel prices have come down slightly, we are still paying a much higher percentage of our income for fuel compared to the last couple years. Whether or not one can afford it, the PERCEPTION is such that people are pulling back their spending... and consumer spending was the one bright spot in our unsteady economy. That perception of fuel prices eating away discretionary income is a killer for all those big ticket items.
We've shipped much of our small item manufacturing overseas (good-bye jobs, hello money flowing out of this country). Politicians spend millions to get jobs that pay thousands... and we seem surprised that they don't know how to deal with our economic woes? If we are depending on those same people to legislate us out of this mess, we deserve what we get. It's up to each family to position themselves to best weather this economic storm.
For us, we are staying liquid, not acquiring any debt, and don't have to depend on our retirement investments for the next few years. Still, it hurts to see those investments drop daily.
If I had all the answers, I'd run for office. :roll:
If you own your home, don't have to finance a boat or other major purchase, and can psychologically withstand the current market downturn (and don't have to take funds out now or in the near future), this current economy is going to be a lot of scary headlines. If you are working in an industry that is affected and/or have one of those interest-only balloon mortgages, or have to pull money out of investments, it may be ugly.
I stand by my earlier statements about fuel prices affecting this downturn. While fuel prices have come down slightly, we are still paying a much higher percentage of our income for fuel compared to the last couple years. Whether or not one can afford it, the PERCEPTION is such that people are pulling back their spending... and consumer spending was the one bright spot in our unsteady economy. That perception of fuel prices eating away discretionary income is a killer for all those big ticket items.
We've shipped much of our small item manufacturing overseas (good-bye jobs, hello money flowing out of this country). Politicians spend millions to get jobs that pay thousands... and we seem surprised that they don't know how to deal with our economic woes? If we are depending on those same people to legislate us out of this mess, we deserve what we get. It's up to each family to position themselves to best weather this economic storm.
For us, we are staying liquid, not acquiring any debt, and don't have to depend on our retirement investments for the next few years. Still, it hurts to see those investments drop daily.
If I had all the answers, I'd run for office. :roll:
Westfield 11
New member
IIRC E Pluribus Unum is Latin for "It's not my fault". There are a lot of wonderful things about the American psyche, but our willful blindness is not one of them. I am not too enthused about our amazing ability to blame everyone but ourselves either.
El and Bill
New member
Yes, Sneaks, perhaps it is sensationalized by the press -- but the Dow broke 10,000 to the downside today, and that doesn't have to be sensationalized -- there are apparently a lot of folks who (perhaps wrongly) think the economy is in trouble. And the drop in the stock market will certainly affect a lot of folks in retirement, thinking of retirement, or thinking of college expenses or buying a new boat or ...
But, then, who knows? Maybe this is the bottom?
Economic conditions did alter our boating this past summer -- we did not do our usual long distance cruising, and opted instead for shorter cruises in the San Juans, a month on Lake Yellowstone (relatively small area to cruise), and a month on Powell. Now thinking about next summer and definitely our economic condition will be a factor in the distances (and regions) we intend to boat (but not the number of days on the boat). The east is generally more expensive boating than west; ocean cruising generally involves greater distances; east requires a major trailering back and forth; ... hmmm ... maybe more of the marvelous lakes in the Rocky Mountain region ... hmmm :roll:
But, then, who knows? Maybe this is the bottom?
Economic conditions did alter our boating this past summer -- we did not do our usual long distance cruising, and opted instead for shorter cruises in the San Juans, a month on Lake Yellowstone (relatively small area to cruise), and a month on Powell. Now thinking about next summer and definitely our economic condition will be a factor in the distances (and regions) we intend to boat (but not the number of days on the boat). The east is generally more expensive boating than west; ocean cruising generally involves greater distances; east requires a major trailering back and forth; ... hmmm ... maybe more of the marvelous lakes in the Rocky Mountain region ... hmmm :roll:
Fun Patrol
New member
Think of this as a buying opportunity.
And have FUN!
Roy
And have FUN!
Roy
El and Bill
New member
The soccer mom in the family sure got a 'kick' out of your quote on the Japanese banks, Sneaks -- thanks.
FYI from The Associated Press:
Retirement accounts have lost $2 trillion
Tuesday, October 7, 2008 2:46 PM EDT
The Associated Press
By JULIE HIRSCHFELD DAVIS Associated Press Writer
WASHINGTON (AP) — Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.
"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."
More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.
Orszag indicated the fear is well-founded. Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — have lost some 20 percent overall since mid-2007, he estimated. Private retirement plans may have suffered slightly more because those holdings are more heavily skewed toward stocks, Orszag added.
"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," Orszag said.
A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works.
Retirement accounts have lost $2 trillion
Tuesday, October 7, 2008 2:46 PM EDT
The Associated Press
By JULIE HIRSCHFELD DAVIS Associated Press Writer
WASHINGTON (AP) — Americans' retirement plans have lost as much as $2 trillion in the past 15 months, Congress' top budget analyst estimated Tuesday.
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement, said Peter Orszag, the head of the Congressional Budget Office.
As Congress investigates the causes and effects of the financial meltdown, the House Education and Labor Committee was hearing from retirement savings and budget analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.
"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."
More than half the people surveyed in an Associated Press-GfK poll taken Sept. 27-30 said they worry they will have to work longer because the value of their retirement savings has declined.
Orszag indicated the fear is well-founded. Public and private pension funds and employees' private retirement savings accounts — like 401(k)'s — have lost some 20 percent overall since mid-2007, he estimated. Private retirement plans may have suffered slightly more because those holdings are more heavily skewed toward stocks, Orszag added.
"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working," Orszag said.
A new AARP study found that because of the economic downturn, one in five workers 45 and older has stopped putting money into a 401(k), IRA or other retirement savings account during the past year, and nearly one in four has increased the number of hours he works.
El and Bill
New member
I guess we're lucky to live a lot of the year on boats -- if the market totally tanks (it's close) and we 'go out the window' it's merely a splash and a little swim to be back to normal . 8)
El and Bill
New member
Perhaps it will be instructive, during this time of economic upheaval and crashing stock markets, to stand back and consider a Black Swan.
http://www.geocities.com/bill_fiero/black.htm
Maybe this essay will provide some worthwhile pondering. Perhaps we should avoid The Great Intellectual Fraud and ponder the extremes , since if we are facing an economic Black Swan it "can result in an extraordinary effect, like a storm sinking your boat and you losing your life. This approach of studying extremes is rarely used. To do this, you start with the understanding that the usual will have little effect, so is really of little interest. The most catastrophic weather one can imagine is all that's really important, and requires intense study and consideration."
Is this a truly "catastrophic storm"? If so, are we prepared? And how do we prepare?
PS - the essay is dated 09/09 -- actually written in 09/07 -- prescient slip?
http://www.geocities.com/bill_fiero/black.htm
Maybe this essay will provide some worthwhile pondering. Perhaps we should avoid The Great Intellectual Fraud and ponder the extremes , since if we are facing an economic Black Swan it "can result in an extraordinary effect, like a storm sinking your boat and you losing your life. This approach of studying extremes is rarely used. To do this, you start with the understanding that the usual will have little effect, so is really of little interest. The most catastrophic weather one can imagine is all that's really important, and requires intense study and consideration."
Is this a truly "catastrophic storm"? If so, are we prepared? And how do we prepare?
PS - the essay is dated 09/09 -- actually written in 09/07 -- prescient slip?
El and Bill
New member
We have a few suggestions during this time of economic recession and possibility of even deeper economic loss.
First, it might be a good idea to read something about concepts behind investing:
http://www.geocities.com/bill_fiero/invest.htm
Second, and following-up on the first, have no debts. This is a ridiculous idea in modern-day society in America -- since most individuals, businesses, cities, and our country have lived way beyond their means and have large debt. Consequently, we are undergoing the current economic crisis - debt and it's related lack of confidence in paying back debt and therefore a credit confidence default. Easy to blame greedy "Wall Street" but how about all of us greedy ones who have been living beyond our means?
Third, it is now especially important to spend primarily on needs, not wants. Prioritize the wants (they can add pleasure to life) and pay for them only in cash.
Fourth - Enjoy life! most of the best things in life ARE free (or almost free). A beautiful sunset, a child's smile, an evening in front of the fire shared with spouse or good friend, a good library book, time on the boat in a beautiful cove swinging on a hook with a sundowner in hand ... we all have our favorites.
First, it might be a good idea to read something about concepts behind investing:
http://www.geocities.com/bill_fiero/invest.htm
Second, and following-up on the first, have no debts. This is a ridiculous idea in modern-day society in America -- since most individuals, businesses, cities, and our country have lived way beyond their means and have large debt. Consequently, we are undergoing the current economic crisis - debt and it's related lack of confidence in paying back debt and therefore a credit confidence default. Easy to blame greedy "Wall Street" but how about all of us greedy ones who have been living beyond our means?
Third, it is now especially important to spend primarily on needs, not wants. Prioritize the wants (they can add pleasure to life) and pay for them only in cash.
Fourth - Enjoy life! most of the best things in life ARE free (or almost free). A beautiful sunset, a child's smile, an evening in front of the fire shared with spouse or good friend, a good library book, time on the boat in a beautiful cove swinging on a hook with a sundowner in hand ... we all have our favorites.
Bill,
Thank you for bringing up the Black Swan theory. I heard the author on a radio program this summer. It was fairly dense going and your explanation helps to simplify it.
It reminded me of our conversation when we were boating together this summer. You asked me about retirement plans. I said that our business still gave me an adrenalin rush, so it would be 7-8 years. You asked what gave me the rush and I said putting plans together and seeing them come to fruition. Of course those plans are based on "normal" conditions. I have to laugh at myself because I should know better. I was looking back at the prior 7 years and basing my assumptions of the future on past conditions. Similar to Generals always preparing to fight the last war.
Sooo, all of my projections of business and personal financial worth 10 years out are out the window. We live conservatively and have kept some cash, so that's ok, it just gives me new data to work with. Our business is based on selling a basic commodity to people who produce food, so I think we can ride the rollercoaster. But, changing conditions do make me think that just working a plan may not be the best. "Man plans and God laughs."
Lyle
Thank you for bringing up the Black Swan theory. I heard the author on a radio program this summer. It was fairly dense going and your explanation helps to simplify it.
It reminded me of our conversation when we were boating together this summer. You asked me about retirement plans. I said that our business still gave me an adrenalin rush, so it would be 7-8 years. You asked what gave me the rush and I said putting plans together and seeing them come to fruition. Of course those plans are based on "normal" conditions. I have to laugh at myself because I should know better. I was looking back at the prior 7 years and basing my assumptions of the future on past conditions. Similar to Generals always preparing to fight the last war.
Sooo, all of my projections of business and personal financial worth 10 years out are out the window. We live conservatively and have kept some cash, so that's ok, it just gives me new data to work with. Our business is based on selling a basic commodity to people who produce food, so I think we can ride the rollercoaster. But, changing conditions do make me think that just working a plan may not be the best. "Man plans and God laughs."
Lyle
. El and Bill
New member
Yep, gas prices are definitely dropping since the need for oil-based fuel is dropping fast -- not necessarily because of our driving less. More important is that industry is not producing as much so doesn't need as much energy in the scaled back production.
And that brings up an interesting point -- recessions and depressions generally bring sharp devaluation in prices since demand falls when folks don't have the money to buy. BUT, this time around it is also the government sinking big bucks into bailouts -- will that create an excess of money printed, and hence inflation? Sure makes a difference in how we all view the future and our preparation for a changing economic world.
And that brings up an interesting point -- recessions and depressions generally bring sharp devaluation in prices since demand falls when folks don't have the money to buy. BUT, this time around it is also the government sinking big bucks into bailouts -- will that create an excess of money printed, and hence inflation? Sure makes a difference in how we all view the future and our preparation for a changing economic world.
There is a fundamental flaw in the world's financial system. That flaw is the law of infinite expansion. In order for the economy to succeed, or for any individual business to succeed, it must expand. You cannot flatine your profits, you must expand your profits. Expansion translates into all of the problems we are experiencing today: increased use of the world's natural resources, increased debt, increased need for social services, increased size of government, etc. Even if all individuals conserve, you still do not solve the problem. Why? Because the world's population is increasing plus underdeveloped countries are coming online to this flawed expansionist economic system.
Take this example. The State of California's per capita energy consumption today is the same as it was 30 years ago. This is taken from a Dept of Energy report I read within the past year. However, California's overall energy consumption has risen exponentially during the past 30 years because of population expansion. We as a country have been conserving our butts off for the past 30 years and it has gotten us no where. During the recent debate, the presidential candidates kept saying, "we need to start conserving". Where have they been the past 30 years? We have been conserving!
Take this example. The State of California's per capita energy consumption today is the same as it was 30 years ago. This is taken from a Dept of Energy report I read within the past year. However, California's overall energy consumption has risen exponentially during the past 30 years because of population expansion. We as a country have been conserving our butts off for the past 30 years and it has gotten us no where. During the recent debate, the presidential candidates kept saying, "we need to start conserving". Where have they been the past 30 years? We have been conserving!
El and Bill
New member
The international economic situation is vital to our economy also. For our Canadian friends, have you looked at your exchange rate with the Canadian dollar to the US dollar? We used to be invested in Canadian securities, in part to take advantage of the $Can rise from 85 cents to 1.07. We sold our Canadian assets a year ago. Just last August it was about par with the $US -- Friday it was down to 85 cents again!
The G-7 ministers are meeting this weekend to try to co-ordinate their efforts in stemming the tide - and the last report I saw they couldn't even agree on a joint press release.
Letters of Credit (LOC) are essential for international trade -- a seller won't load goods on a ship (90% of goods [by volume] traded are by ship) unless he holds a letter of credit from a prime bank to support the payment of the buyer on the other side. It is now difficult to get a LOC. The buyer won't release his payment to the shipper until he knows the goods are shipped. Bingo! If we think our credit crises with banks is bad, wait until this spreads via Letters of Credit to international trade!
It is now generally agreed by economists (not politicians, of course) that we fell into recession last January. The Leading Economic Indicators show that we probably won't be out of the doldrums until late next year, at the earliest, and that only if everything works right in the gov't reactions to the crisis.
We have lived through two recessions (1973-74 and 1980-1982) and hopefully we will live long enough to experience a few more. We were investors during those times and survived and we'll survive this one, also, in all probability.
For now we are not selling our reliable assets - we anticipated trouble and moved most months ago. And one of our favorite assets -- Halcyon, our C-Dory -- we have definitely been moving for the past few months and intend to continue moving around next year. The sun will rise tomorrow, and this too shall pass. And if it is a Black Swan, you'll find us happily at anchor in a pretty cove, out of our rental condo, 12-month liveaboards again and fishing for dinner.
The G-7 ministers are meeting this weekend to try to co-ordinate their efforts in stemming the tide - and the last report I saw they couldn't even agree on a joint press release.
Letters of Credit (LOC) are essential for international trade -- a seller won't load goods on a ship (90% of goods [by volume] traded are by ship) unless he holds a letter of credit from a prime bank to support the payment of the buyer on the other side. It is now difficult to get a LOC. The buyer won't release his payment to the shipper until he knows the goods are shipped. Bingo! If we think our credit crises with banks is bad, wait until this spreads via Letters of Credit to international trade!
It is now generally agreed by economists (not politicians, of course) that we fell into recession last January. The Leading Economic Indicators show that we probably won't be out of the doldrums until late next year, at the earliest, and that only if everything works right in the gov't reactions to the crisis.
We have lived through two recessions (1973-74 and 1980-1982) and hopefully we will live long enough to experience a few more. We were investors during those times and survived and we'll survive this one, also, in all probability.
For now we are not selling our reliable assets - we anticipated trouble and moved most months ago. And one of our favorite assets -- Halcyon, our C-Dory -- we have definitely been moving for the past few months and intend to continue moving around next year. The sun will rise tomorrow, and this too shall pass. And if it is a Black Swan, you'll find us happily at anchor in a pretty cove, out of our rental condo, 12-month liveaboards again and fishing for dinner.