Dow drops below 9,000, S&P nearing 900

[GoldenBoy812]

sorry for the doom and gloom, i had just watched the 60min. bit on how the top companies created this whole mess by offering securities on bad investments that they had no money to cover. but since its not called insurance its not regulated. 4 times the national debt 60-80 trillion dollars floating on mathematics and the govt(including the guy who asked for the 700 mill) didnt see this coming? all the while guys being paid 50 mill a year are gonna get bonus checks from us for letting, no making, this happen. disgusts me to where i cant even pay attn. normally.

This is not caused just by the people on Wall street, this is main street
America's fault in equal accordance. Why were people taking mortgages they knew they could not pay? Whey were people taking equity loans based on the value of their houses to buy things? Why were residential mortgage brokers given the green light to pool available finance in housing? Why were investment banks leveraging collateral @ 40:1?

The bigger question is, when will we have actual transparency in the credit markets?

[SnSstealth]

i agree many americans caused this by buying what they cant afford. they are very high on the list. but what about a guy I worked with at my last job. early fifties married both with jobs, 401k, didnt have cable(saw it as a waist of money). 4 years ago hurricanes start passing thru our state. same house, same insurance for 20 years. that year and the three after they doubled his rates each year till he had to get from someone else at a high price. never made a claim for anything in 24 years. now hes in trouble of losing just like the others when hes done nothing wrong. lest hes expected to have a 30 year crystal ball.

db:smokin:

[Dutch Pimp]

232 years of doing things, mostly right...now, we have "screwed the pooch"-(Right Stuff)....:s4:..all empires fall from within.

[Coelho]

all empires fall from within.

Well... Osama Bin Laden already had warned that the empire would fall... but nobody quite believed him...

Anyway... what bothers me most is some rumours i heard about this global financial crisis... ive read that it would be used as a perfect excuse to set up a New Order, with global control, first of markets, then after it of governments, and lastly over people. THAT would be bad...

[Dutch Pimp]

:s4:America?...going out of business sale?...76% off?

[Breukelen advocaat]

Well... Osama Bin Laden already had warned that the empire would fall... but nobody quite believed him...

Anyway... what bothers me most is some rumours i heard about this global financial crisis... ive read that it would be used as a perfect excuse to set up a New Order, with global control, first of markets, then after it of governments, and lastly over people. THAT would be bad...

Bin laden is a subhuman piece of garbage. His extremeist theological opinions have no credibility whatsoever.

Nobody in government is smart enough to run a New Order with global control - they don't even know how to handle the old one.

[JakeMartinez]

I don't think the system is going to last under this pressure. Remember, stocks are indicators of what's going on in the economy, not the economy itself.

These big falls are from shaken investor confidence stemming from a few key causes.

1: The housing bubble crash & subprime loan scandal

Everyone started buying homes that are way beyond their means to pay, and corrupt bankers counted on them to default on these foreclosures to make them filthy rich as they keep turning around the property to new borrowers, etc. etc. It was only a matter of time before that led to a collapse of the housing industry.

2: Costs of Energy and Living

Obviously, these costs have gone way up without a corresponding raise in wages, which (coupled with those being foreclosed on), has made it much harder for the average american to spend money on more than what they need to survive. Thus, the economy slowwwwwwwwws down.

Those are the root causes. They, in turn, triggered these.

3: Credit Crunch.

Banks and people have less money, so banks are less willing to lend money to them. Our system depends on loans to create new money, according to the fractional reserve system, and money therefore is gradually losing its value. With loans slowing down, we could easily see a contraction on the horizon.

4:Consumer confidence, trust, and investor confidence.

Everyone's rattled by what's going on. Investors are hanging on every word the government says, hoping their precious investments are safe. Consumers are afraid of companies they rely on being crippled and the possibility that their employers won't be able to pay them, and gradually our trust in each other is being eroded.

What can we do to fix it?

I believe our system is doomed to collapse eventually, so the sooner it does, the sooner we can make a new, socially relevant system.

I won't say what system could replace ours, but I know socialism, free market trade, and communism aren't the answer.

If we wanted to keep the system, though, the only way we could get it running again is to nationalize a LOT of debt.

I'm not comfortable with that idea. I didn't do anything to deserve such a massive amount of liability.

[thcbongman]

Good analogy.

I pulled all my investments about 3 months ago and have them sitting across 4 interest accounts at the moment. I'm waiting for signs for the market to stabilize; currently I'm at about 12% total YTD, far better than most people I know. I'm curious to see what will happen between Wachovia, Wells Fargo and Citibank. I may want to hop on that early depending on the terms and outcome of the situation.

For people who have no investments; this is a GREAT time for you to prepare to dump some serious money into the market. You will probably be seeing 100% returns or more over the next couple of years (assuming the market stabilizes soon/before end of 4th quarter.).

edit: I should add an addendum, I don't want people blaming me for bad investment decisions so I'll add this. If you are able to determine that a company is more profitable than what it's trading at and you diversify your investments... then it will be a good time to invest.

There are many things to look at when trying to determine if a company is profitable or not. I won't go into details but I'll say these two things....

There is a formula out there to do this

AND

Although it's a bit outdated... pick up The intelligent Investor and Security Analysis. It will teach fairly good basics for stock market investing.

Investing is long term. Look at any one who's been successful in the market.. they ride out the rough times. For instance Warren buffet just dumped 3 billion into GE because he determined it was worth more than it was trading at; however he did it safely... 3 billion dollars is about 1.4% of Buffets net worth. He didn't go crazy and dump all his money into it.

So figure out what's profitable.. and only dump a fragment of your net worth into it.

I'm glad you mentioned Warren Buffett. You can be for sure this guy will keep making money. He didn't take the bait on the tech boom because he didn't understand the business model. People secretly snickers at him at the time, but once the bubble hit, Buffett came out as a genius as usual.

I think the most important thing with investing is to invest in companies you understand. Which is why it's important to do the homework, look at companies financial reports, SEC filings, perform the various calculations you need to determine the financial health of the company, investigate what they do and how they model their business and compare with other companies in the same industry. The more you learn, the more successful you'll be at investing.

Right now it's a gold mine. Personally I'm waiting on whether the market drops further which I think it will. Then it's christmas.

[killerweed420]

We need a good war. America loves a good war and its always good for the economy. I'm thinking France. Certainly we should be able to kick there ass and then we would finally have one in the win column.

[Breukelen advocaat]

Our neighbor to the north would be more convenient, plus it would finally put to rest their preposterous claim to have to have beat us in the War of 1812.