Anyone else worried about the economy?

CDN_Merlin · Post by **CDN_Merlin** » Fri Dec 12, 2008 8:45 am

I've been wondering what will happen for a while now. Wondering what impact that the auto industry would have if they all went tits up. Wondering how many people would lose their jobs and how long the economy would be shitty.

Just feeling crappy today about it all and worried about what it will do to North America let alone the rest of the world.

Foil · Post by **Foil** » Fri Dec 12, 2008 8:59 am

It's already hit my wife and I. She was laid off (the auto finance company she was working for went under) while on maternity leave.

We'll be fine and she's really enjoying being at home with our son, so I'm more at a point like, \"Okay, it's here. So, how long before things begin moving up again? (i.e. How long before my 401a quits dropping like a rock?)\"

CDN_Merlin · Post by **CDN_Merlin** » Fri Dec 12, 2008 9:04 am

That sucks. I'm scared because I have no investments and I'm severly underpaid for the work I do compared to \"gov't employees\". I'm on contract and I also don't get paid for time off including holidays. My financial situation sucks right now also which doens't help.

Top Wop · Post by **Top Wop** » Fri Dec 12, 2008 9:58 am

My dad got a task from a customer purely on the bases that the customer went to two other competitor companies only to learn that they were in the process of closing its doors. Even then, work is still very slow and the company he is working for is dying a slow death. Nobody gives a damn about manufacturing in North America anymore.

CDN_Merlin · Post by **CDN_Merlin** » Fri Dec 12, 2008 10:10 am

It's cheaper to send it overseas where they have no labour laws. It's all about greed. Kinda why I dont' care to much if the auto companies go tits up. They asked for it. Same goes for oil giants.

Gekko71 · Post by **Gekko71** » Fri Dec 12, 2008 10:41 am

Things WILL pick up folks - barring monumental disaster, there are still 6+ billion people on the planet. They need cars, they need food, clothing, housing, shelter... demand for goods and services never completely vanishes, it only shifts. People will tend to the necessities (and small luxuries) for a while. Figure out how you can take advantage of that.

Unfortunately I believe things won't pick up for a while yet. While world markets are oversold & under valued (IMHO) they won't be a substantial turnaround for at least eight to twelve months. Look for light at the end of the tunnel around Sept - Nov 09. I feel it will take that long for the markets to find the floor and start to build again.

When I left University in the early 1990's, my country was in a horrible recession with 10+% unemployment nationally, (32% Youth unemployment) and 20% interest rates.

Things will not be *that* bad this time around (neither here nor in the US). This is a bear market - a bad one true, but time have been far worse (to quote a banking friend of mine: \"it's a recession, not a depression!\") Hunker down, save what you can, control your expenses and things will turn around.

Krom · Post by **Krom** » Fri Dec 12, 2008 10:54 am

Yeah they need cars, but they don't need a new car dealership or 5-7 of them in every single town over 500 people... If someone wants to buy a new car, they will be more than willing to drive one or two hundred miles to get it. The sheer number of dealerships just screams of excess in the whole industry.

Even if you build an auto dealership on every street corner, in a sour economy people just aren't going to WASTE money on a new car. People are going to be looking for value in their money and cars on a dealership lot are some of the worst values anywhere. I can't think of any other products that can last 15+ years but still lose 50% or more of their value instantly after you sign your name.

Gekko71 · Post by **Gekko71** » Fri Dec 12, 2008 11:05 am

Krom wrote:Yeah they need cars, but they don't need a new car dealership or 5-7 of them in every single town over 500 people... If someone wants to buy a new car, they will be more than willing to drive one or two hundred miles to get it. The sheer number of dealerships just screams of excess in the whole industry.

Even if you build an auto dealership on every street corner, in a sour economy people just aren't going to WASTE money on a new car. People are going to be looking for value in their money and cars on a dealership lot are some of the worst values anywhere. I can't think of any other products that can last 15+ years but still lose 50% or more of their value instantly after you sign your name.

Very true Krom - if the market is overserviced, uncompetitive and floundering then demand alone won't save it. It needs to reinvent itself (and its financing models!!

) and in this case, that means job losses and plant closures - unpleasant as the proposition may be.

Tunnelcat · Post by **Tunnelcat** » Fri Dec 12, 2008 11:18 am

Being retired, watching my accounts tank and coughing up boatloads of money to the health care system to fix one little bone fracture is really starting to depress and worry me about the future. Now I see how medical expenses could easily lead to bankruptcy.

As for the plethra of dealerships in small towns, it's sure convenient when you need warranty or repair work if you don't happen to live in a big city.

Octopus · Post by **Octopus** » Fri Dec 12, 2008 11:44 am

We live in a different market than our grandparents did. In fact since China and India have entered the picture you'll notice our market changed drastically. Chaos is good for the market. Though I'm still learning about how this global system works, my impression is we're on the right path. Chaos is good because once the market begins to climb so will liquidity. Like rich soil after a volcanic disaster.
Lets say those auto making bastards do go down. There will be new companies to replace them. Companies that don't exist now. They're a bad example. There are many companies that went way this year that will be replaced and go public.
When we did go into a depression our market was based on stability. Today it's not.
Critique my answer, my fellow forum friends. Everyday I learn new things about our global economy.

Krom · Post by **Krom** » Fri Dec 12, 2008 12:34 pm

tunnelcat wrote:Being retired, watching my accounts tank and coughing up boatloads of money to the health care system to fix one little bone fracture is really starting to depress and worry me about the future. Now I see how medical expenses could easily lead to bankruptcy.

Yeah, health care is a nightmare I wish I could wake up from. A week ago or so I got a letter from my insurance saying "...it is always a hard decision to raise premiums..." that I read and immediately yelled "HA! That doesn't stop you from doing it EVERY SINGLE CHANCE YOU GET!". It just about made me sick reading it, I thought I had reached my limit for being disgusted with health care this year but that letter really blew it into a new low.

They said it was because of my age it was going up. I was 25 when I signed up for insurance that they promptly delivered for 16% more than we negotiated promising it would drop to the negotiated level next year when instead it went up another 11% over the previous year and this year again because somehow at 27 I'm just that much older it required an additional 17% increase.

Now because I am two years older apparently it means I have to pay 153% of what I originally negotiated. Seriously, I didn't know turning 26-27 made it that much more expensive for getting my policy that amounts to little more than a 10% discount.

Octopus · Post by **Octopus** » Fri Dec 12, 2008 12:38 pm

Doesn't this fall under \"commentary\" and business \"ethics\"?

JMEaT · Post by **JMEaT** » Fri Dec 12, 2008 6:10 pm

Foil wrote: (i.e. How long before my 401a quits dropping like a rock?)"[/i]

OOOOoooooooooooooh boy do I know what you're talking about.

Octopus · Post by **Octopus** » Sun Dec 14, 2008 2:21 am

So I want to know what people are hearing about our gas situation.
Right now people are saying due to an over production of oil we're seeing a dip in prices. This is linked to people buying less plastic products.
That being said, we should expect to see gas prices shoot back up. Your thoughts?

Gekko71 · Post by **Gekko71** » Sun Dec 14, 2008 9:01 am

Octopus wrote:So I want to know what people are hearing about our gas situation.
Right now people are saying due to an over production of oil we're seeing a dip in prices. This is linked to people buying less plastic products.
That being said, we should expect to see gas prices shoot back up. Your thoughts?

Oil prices will go back up because there has been no shift in the fundamentals of energy supply and demand. People / industry may be using less gas right now, but when the market turn around in (my best guess) 9-15 months or so the demand wil return.

In my opinion, the current dampner on price is related to business confidence and consumer confidence internationally - NOT over production. Over production is "the effect" - reduced demand through low consumer confidence is "the cause". Once confidence returns, so will the demand for oil - though maybe not to the record highs we saw a few months ago (...much of that was speculative investment by hedge funds)

Therefore, if you have any money to invest, now would conceivably be a great time to take a long-term position on blue-chip petroleum / energy stocks.

(Please note, I am not a financial advisor. None of the comments above constitute investment advice and they should *not* be relied upon in any way. Please consult a professional financial advisor before making any investment decisions.)

(...apologies for the arse-covering.

)

Dedman · Post by **Dedman** » Sun Dec 14, 2008 9:24 am

No, I'm not worried. It will do what it will do and my family and I will be ok. It may be painful for a while but that will only make us stronger. Besides, I have bigger things to worry about; like raising two kids so they'll be good people.

dissent · Post by **dissent** » Sun Dec 14, 2008 10:12 am

hey, this book looks interesting

http://reason.com/blog/show/130555.html

Have a listen to the interview; it goes on for a while, but Samuelson makes a lot of interesting points. If you want to understand where you are, it is helpful to know where you've been.

Spidey · Post by **Spidey** » Sun Dec 14, 2008 12:31 pm

Yea, I admit I’m worried. And this is the first time.

Tunnelcat · Post by **Tunnelcat** » Sun Dec 14, 2008 1:46 pm

Octopus wrote:So I want to know what people are hearing about our gas situation.
Right now people are saying due to an over production of oil we're seeing a dip in prices. This is linked to people buying less plastic products.
That being said, we should expect to see gas prices shoot back up. Your thoughts?

I agree that gas prices will probably go back up due to the fact that Americans tend to lean toward what they are used to doing, so driving around in a big battleship of a car still looks viable and they'll keep driving them for now. The easy way out at the moment.

I do think that the drastic rise oil prices a short time ago was not really due to increased demand, but part of the same derivative trading schemes that brought us the mortgage mess. Those Hedge Fund guys were into trading everything, including commodities and energy.

Octopus · Post by **Octopus** » Sun Dec 14, 2008 2:18 pm

tunnelcat, I see the logic. But wouldn't that be saying the 700billion dollar bail out, lowered gas prices? I've never got that impression.

Tunnelcat · Post by **Tunnelcat** » Sun Dec 14, 2008 2:36 pm

A lot of this speculative trading has been stopped for the moment as far as I've heard. Wasn't that a requirement for the bailout money? Hence the drop in gas prices, for now. Just theorizing here.

dissent · Post by **dissent** » Sun Dec 14, 2008 8:16 pm

tunnelcat wrote:I do think that the drastic rise oil prices a short time ago was not really due to increased demand, but part of the same derivative trading schemes that brought us the mortgage mess. Those Hedge Fund guys were into trading everything, including commodities and energy.

I wouldn't say it was derivatives, which were composed of sub-prime mortgages off-loaded by banks and mortgage lenders. But certainly there were financial speculators involved. Here's an article on the situation from October 2007
http://i-r-squared.blogspot.com/2007/10 ... price.html
which quotes a report as

Regarding speculators, the numbers tell the tale:

Friday's data from the Commodity Futures Trading Commission underscore the difference between mid-October 2007 and the same period a year ago. Data released by the CFTC on Friday show that large "non reportable" positions among long traders increased by nearly 8-million bbl for crude oil. Meanwhile, funds on the short side liquidated about 4.7-million bbl worth of contracts.

The result is a "net long" number that shows funds betting on price appreciation to the tune of a net position of 69.2-million bbl. Interestingly, this came on a day where Energy Secretary Bodman acknowledged that oil prices are no longer the province of energy companies but instead are within the trading rooms of New York, London, and other worldwide financial capitals.

The year-to-year difference in the bias is staggering. The CFTC report from October 13, 2006, showed speculative longs holding about 159-million bbl worth of crude, but speculative shorts were at nearly the exact same number. The net long position of a year ago was just 301,000 bbl. Hence, the big speculators have a net bet on higher prices that is about 230 times the net bet from one year ago.

The thing about speculators is that they can push the price down as quickly as they pushed it up. They greatly increase the volatility of oil prices.

Then this
http://i-r-squared.blogspot.com/2008/01 ... 0-oil.html
and this
http://online.wsj.com/article/SB1199320 ... whats_news
from January 2008. And also this one from the WSJ which details a number of the factors involved in the recent history of oil prices.

By April 2008, why aren't oil prices going down?
http://i-r-squared.blogspot.com/2008/04 ... -down.html

And now, towards the end of 2008, we are starting to have some perspective on what happened.
http://i-r-squared.blogspot.com/2008/10 ... ubble.html

Like a number of other commodities, oil’s move went from a steady ascent to a vertical bounce in the spring of 2008, topping out near $150 a barrel before speculative excess started to drain from the market. And those who believed that the oil price was justified by fundamentals — being, as it is, an actual product, rather than an Internet company’s vague promise of revenue — are smarting.

“This is a market that is basically returning to the price level of a year ago which it arguably should never have left,” says Tim Evans, energy analyst at Citigroup. “We pumped up a big bubble, expanded it to an impressive dimension, and now it is popped and we have bubble gum in our hair.”

and http://i-r-squared.blogspot.com/2008/11 ... spike.html

NEW YORK -(Dow Jones)- Oil prices could fall as low as $40 a barrel next spring as an overhang of new, efficient refineries come on line, an analyst at Deutsche Bank said Wednesday.

Calling it the "mega-bear" case for oil, analyst Paul Sankey said the combination of weak demand for gasoline and other products, coupled with the start-up of 2 million barrels a day of processing capacity at a new generation of refineries in India and China and expansion projects in the U.S. will combine to depress oil prices.

Sankey's stance, while pessimistic, still anticipates slightly higher oil prices than the bank's commodities analysts, who on Friday said that oil futures prices could fall further to $30 a barrel under their worst-case scenario.

Ferno · Post by **Ferno** » Sun Dec 14, 2008 8:19 pm

I just keep a full tank, a ferry fare and enough food for a week. also have a knife and can probably get a hatchet.

I also have a sleeping bag, air mattress, and plenty of glue for repairs.

so i'm not worried.

Sedwick · Post by **Sedwick** » Sun Dec 14, 2008 11:36 pm

I was laid off from my software development consultant job 2 1/2 months ago, and it's definitely affected our cash flow. My wife's taken some overtime, so that's helped. Despite falling into the occasional downer mood, I am hopeful. I've had 7 in-person interviews and am waiting to hear back from at least 3 companies, and companies usually start hiring once they work out their budgets at the beginning of the fiscal year, so maybe it won't last much longer. My biggest fear is being unemployed for another 3 1/2 months and seeing the benefits dry up--I don't know how I'll keep the bills paid then, unless I scramble for whatever $#!? job I can take at that point...

Kilarin · Post by **Kilarin** » Mon Dec 15, 2008 9:58 am

Sedwick wrote:I was laid off from my software development consultant job 2 1/2 months ago

Sorry to hear it. The Software industry is in a bit of a mess. I just got re-employed after a layoff myself.

Foil · Post by **Foil** » Mon Dec 15, 2008 11:07 am

Fortunately, the software development company I work for is pretty well established, and I have good job security.

After Michelle being laid off, that's a good thing. We can handle losing one of our incomes, losing both would be disasterous.

Herculosis · Post by **Herculosis** » Mon Dec 15, 2008 1:19 pm

Sedwick wrote:I was laid off from my software development consultant job 2 1/2 months ago...

It just might be that I might be hiring soon, and between Waukesha and Milwaukee. PM me if you'd like to explore further.

Canuck · Post by **Canuck** » Mon Dec 15, 2008 3:22 pm

Ferno wrote:I just keep a full tank, a ferry fare and enough food for a week. also have a knife and can probably get a hatchet.

I also have a sleeping bag, air mattress, and plenty of glue for repairs.

so i'm not worried.

I changed my business focus to service Industrial, business, and wealthy clients. They all need things fixed and want things also they generally pay. I charge $150.00/Hr. for Industrial troubleshooting and they don't bat an eye.

As for supplies I have enough for a few months, I use a hatchet often, and I have a friend that has a considerable amount of legally owned firearms within a short distance from me. Plus I can McGuiver up some pretty lethal HV cap packs and electroshock devices... Deer eat in my backyard and are pretty dumb nowadays, also the rabbits in the South part of Town would be good eating and dumb too.

shaktazuki · Post by **shaktazuki** » Mon Dec 15, 2008 8:19 pm

Canuck wrote:
Ferno wrote:I just keep a full tank, a ferry fare and enough food for a week. also have a knife and can probably get a hatchet.

I also have a sleeping bag, air mattress, and plenty of glue for repairs.

so i'm not worried.
I changed my business focus to service Industrial, business, and wealthy clients. They all need things fixed and want things also they generally pay. I charge $150.00/Hr. for Industrial troubleshooting and they don't bat an eye.

As for supplies I have enough for a few months, I use a hatchet often, and I have a friend that has a considerable amount of legally owned firearms within a short distance from me. Plus I can McGuiver up some pretty lethal HV cap packs and electroshock devices... Deer eat in my backyard and are pretty dumb nowadays, also the rabbits in the South part of Town would be good eating and dumb too.

Don't forget Soylent Green!

Ferno · Post by **Ferno** » Tue Dec 16, 2008 1:23 am

shaktazuki wrote:Don't forget Soylent Green!

I see what you did there.

Capm · Post by **Capm** » Tue Dec 16, 2008 6:44 am

They say there is another wave of foreclosures on the way with the option a loans and stuff where the intrest rate is going to jump, they expect 70% to default.

Tunnelcat · Post by **Tunnelcat** » Tue Dec 16, 2008 10:46 am

Oregon's unemployment rate rose to 8.1% in November. They're now predicting it to go to 9% by the end of the year. Just lovely!

Thanks for the oil price info. dissent. I wasn't quite sure whether it was derivative commodity trading, although I had my suspicions, or other nefarious machinations going on. The whole $140 a barrel oil price rise due to the increased demand in China the press was spouting every night just didn't pass the smell test.

Anybody want to comment about the Feds MAYBE? lowering the interest rate by a half a point again today? I personally think it's a bad idea. It really screws retired people that depend on treasuries or savings accounts for income and it will probably end up devaluing the dollar.

CDN_Merlin · Post by **CDN_Merlin** » Tue Dec 16, 2008 11:19 am

News states that upto 600,00 Canadians could lose their jobs if the Auto industry doesn't get a bailout package in Canada. Thing they don't say is they will likly all get re-hired once the 'new\" companies start up and take over.

Testiculese · Post by **Testiculese** » Tue Dec 16, 2008 1:09 pm

Foil wrote:401a quits dropping like a rock

And people scoffed at me not signing up...

My area is recession-proof, as everyone has to have insurance.

Gekko71 · Post by **Gekko71** » Tue Dec 16, 2008 6:01 pm

tunnelcat wrote:Anybody want to comment about the Feds MAYBE? lowering the interest rate by a half a point again today? I personally think it's a bad idea. It really screws retired people that depend on treasuries or savings accounts for income and it will probably end up devaluing the dollar.

You called it Tunnelcat - the Fed just cut their federal interest rate target range from Zero to 0.25 percent. While this will hurt retirees on fixed incomes, it's good news for the world economy at large. It should drastically reduces the possiblitiy of additional forclosures and encourages businesses to invest again. This means more jobs and more spending by consumers. If they keep their word and purchase Morgage securities in bulk, that will also help a bit too. The markets here in Australia reacted favourably, but I can't comment on the rest of the world yet.

trey · Post by **trey** » Wed Dec 17, 2008 2:03 pm

CDN_Merlin wrote:That sucks. I'm scared because I have no investments and I'm severly underpaid for the work I do compared to "gov't employees". I'm on contract and I also don't get paid for time off including holidays. My financial situation sucks right now also which doens't help.

Yeah but aren't you the guy who's wife paid for your education and then you dumped her and left her to pay all the debts while you live expense-free with your folks? Are we supposed to feel bad for people like you?? Stop whining and grow a pair of balls!

Anyone else worried about the economy?

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