The crisis on Wall Street - Is all in your head?

Reaganomics started it back in the 1980s with Phil Gramm and John McCain leading the pack - end government regulation to encourage a free market, reduce taxes to the movers and shakers, and wealth would trickle down to all of us.  We've had Republican control of the Whitehouse or Congress or both for 26 of the past 28 years and these policies have held.

Now we have news of a major financial disaster that Alan Greenspan called the worst he's seen. 

Phill Gramm said that the current crisis is all in our heads - we are a nation of whiners  http://www.youtube.com/watch?v=1mHsuL6FfY4

McCain temporarily distanced himself, but now Gramm is back full force as McCain's economic advisor.  Can we expect more of the same failed economic policies that got us into this mess?  where does McCain really stand on the economy?  Do his recent statements like this one at Townhall.com point to him abandoning the policies he's adhered to for decades and advocating regulation? 

"Our economy, I believe, still, the fundamentals of our economy are strong, but these are very, very difficult times, so I promise you: We will never put America in this position again. We will clean up Wall Street," McCain said."

What do you think?  How's this all working out for you so far?  Do you believe the economy is strong?

Now see, you took the one argument that I didnt use, that illegals are taking jobs that Americans wont do anyway.  I didnt use that argument for a reason-- the very reasons that you just stated.  I dont think that we should leave it as is, all of your arguments bring up good points, I just dont think that guarding the border with dogs and guns will be either effective or productive.

I am honestly not sure that there is a good solution for the immigrant problem.  I am not sure that we can convince the farmers that hire illegals to pay 10 x the amount that they pay now to get others to do the job-- there are plenty of nonillegal workers doing those jobs as well, working for a paltry wage.  I just really dont know what the answer is there.  I just firmly dont believe in guns at the gate.  Thats not the image I want for my country nor the actuality.

There has to be a better way.

You want to know the solution to illegal immigration?  Expensive fines and jail time!  There, I just solved the whole issue.

If the government would place some large penalties (millions of dollars worth of fines and/or significant jail time) on corporations that hire illegals, we wouldn’t have much of a problem.

But what does that fix?

If companies are too scared to hire illegals because of potential jailtime/crippling fines there wouldn't be any jobs for the illegals.  They wouldn't be pouring into the country because the chance of getting a job would be minute.

No fences, no guns, no border dogs, no immigrants being beaten trying to cross the border, no Coyotes sucking anyone dry.

Well, this thread has gone off on a tangent.

Back to the OP

Have you checked your own share prices today?  I know I did check my mutual fund and they are down a few cents a share.  I haven't talked to my friend with the Merrill Lynch stock though. 

 

This morning they are calling it "Melt Down Monday" Shares this morning aren't as bad as they were yesterday but still down 1.5%. Share values 100-billion knocked off the biggest companies.

This morning the Asian market is down 5% the lowest in years.

Bank of England say they have no choice but to raise interest rates currently up 2% set to rise to 4.6%.

because of yesterday by the end of this year for the area I live my cost of living will have risen 6.4%.

edit: the information I gave here has changed already and is lower. 08.31am UK

here

here

Original Post by jewelsmcblah:

You want to know the solution to illegal immigration? Expensive fines and jail time! There, I just solved the whole issue.

If the government would place some large penalties (millions of dollars worth of fines and/or significant jail time) on corporations that hire illegals, we wouldn’t have much of a problem.

The number of illegals has actually dropped in the last year.  Seems the lack of jobs is starting to drive them back home in droves.

*is all for raising interest rates*

*has variable-rate savings and pathetically low fixed-rate debt*

:>

looks like the fed is deciding whether or not to lower the interest rate.

*mutters under his breath derisively about debt-ridden people that force the Fed to lower the interest rate*

*agrees with muttering* Time to let the thing play out.

Interest rates were lowered to stave off the .com collapse. All those financial institutions then pounced on the lower interest rates to start selling mortgages. Interest in the subprime market ballooned because of higher interest rates than the rest of the mortgage sector. It was the segment with the best return, thus offsetting losses in .com investments.

So the question begs: Did the investors in the subprime market think that somehow, suddenly, people on shaky financial ground were going to simply be able to change their financial personalitites? Or were they arrogant enough to assume they would be able to 'get out in time'? Or was it simply that they didn't care that the loans they were selling were dangerous and would lead to the very crisis in which they now find themselves?

There's plenty of 'stupid' to go around, IMO.

Original Post by obigmcveyo:

I know this may be a little off topic, but how are money markets affected by the general stock market?  I have some money in one of those (along with personal investments and company 403b) rather than a savings to get a little more interest on it, but was just curious how the rate of return on those are affected by the stock market and such.  Do money markets ever actually loose money? 

Any insight would be greatly appreciated :)

 Money market accounts are essentially just savings accounts with more rules, and because of those rules, you get a higher interest rate than a regular savings account.

Money Market Account - often has a higher min. balance (might be $500, might be $1000 - depends on the bank)
Savings Account - usually has a very low min. balance if at all (like around $25)

Money Market Account - usually has limits on number of withdrawals you can make per month (like 2 or 3 per month and not such that your balance would go below the required minimum)
Savings Account - usually doesn't have any limit on withdrawals (often they don't even care if you go below the initial require deposit)

Money Market Account - often allows you to write up to 2 or 3 checks off the account per month, making it a little like your checking account
Savings Account - does not allow you to write checks from the account, except if you have balance transfer protection on your checking account, you might be able to automatically suck money into your checking from your savings if you accidentally write too many checks - but you have to set that up specifically

Both Money Market Accounts AND Savings Accounts benefit from higher interest rates, but Money Market Accounts pretty much always give you a higher interest rate than regular savings accounts, mostly because of the requirement to keep a higher balance.

The only way your money market account would be affected by the stock market is if 1) the Fed raises interest rates - that would be good for you! or 2) your bank fails - that would be bad for you, except that the FDIC insures your bank accounts up to $100,000 per institution.  So unless your money market account has more than that, you're good.

Failed Bank List

Original Post by kathygator:

*agrees with muttering* Time to let the thing play out.

Interest rates were lowered to stave off the .com collapse. All those financial institutions then pounced on the lower interest rates to start selling mortgages. Interest in the subprime market ballooned because of higher interest rates than the rest of the mortgage sector. It was the segment with the best return, thus offsetting losses in .com investments.

So the question begs: Did the investors in the subprime market think that somehow, suddenly, people on shaky financial ground were going to simply be able to change their financial personalitites? Or were they arrogant enough to assume they would be able to 'get out in time'? Or was it simply that they didn't care that the loans they were selling were dangerous and would lead to the very crisis in which they now find themselves?

There's plenty of 'stupid' to go around, IMO.

 i partially agree

i think a large share of the 'problem' is short term thinking -- the finance industry only cares about the next quarter's performance.  turning people's mortgages into securities that could be traded gave the illusion of taking the risk out of the loan, while actually increasing the risk -- if you're a mortgage lender and you know that after you sell this mortgage it's going to be securitized and sold to investors, then you've just lost your prime incentive to make sure the borrower can pay back the loan.  i dare say that lending under those circumstances would never work out -- of the three parties involved (the borrower, the mortgage dealer and the investment bank that buys the securitized mortgage) two of the three are going to get soaked, maybe all three

we do need to reform our entire system so that somehow long term performance and security matters to investors

Nomo. You so smart. :)

Bah! you get lowered interest rates and ours will definitely go up to (think) 4.6% def 4.?% what's with that?! :(

Did the securities brokers lie to investors about the source, hiding the fact that they were based on subprimes? If so, why then they should have been jailed, if not, let the buyer beware, you know?

Original Post by nomoreexcuses:

Original Post by obigmcveyo:

I know this may be a little off topic, but how are money markets affected by the general stock market? I have some money in one of those (along with personal investments and company 403b) rather than a savings to get a little more interest on it, but was just curious how the rate of return on those are affected by the stock market and such. Do money markets ever actually loose money?

Any insight would be greatly appreciated :)

Money market accounts are essentially just savings accounts with more rules, and because of those rules, you get a higher interest rate than a regular savings account.

Money Market Account - often has a higher min. balance (might be $500, might be $1000 - depends on the bank)
Savings Account - usually has a very low min. balance if at all (like around $25)

Money Market Account - usually has limits on number of withdrawals you can make per month (like 2 or 3 per month and not such that your balance would go below the required minimum)
Savings Account - usually doesn't have any limit on withdrawals (often they don't even care if you go below the initial require deposit)

Money Market Account - often allows you to write up to 2 or 3 checks off the account per month, making it a little like your checking account
Savings Account - does not allow you to write checks from the account, except if you have balance transfer protection on your checking account, you might be able to automatically suck money into your checking from your savings if you accidentally write too many checks - but you have to set that up specifically

Both Money Market Accounts AND Savings Accounts benefit from higher interest rates, but Money Market Accounts pretty much always give you a higher interest rate than regular savings accounts, mostly because of the requirement to keep a higher balance.

The only way your money market account would be affected by the stock market is if 1) the Fed raises interest rates - that would be good for you! or 2) your bank fails - that would be bad for you, except that the FDIC insures your bank accounts up to $100,000 per institution. So unless your money market account has more than that, you're good.

Failed Bank List

Thanks for the info everyone!  For some reason I was thinking the money market wasn't FDIC insured, so while a lot safer than the stock market,  I thought there was a chance it could loose money.  Thanks for the info though, I appreciate it, and no, there is definitely not over $100k in there (I wish).  And it is with Vanguard, and I haven't heard anything about them so hopefully it will be safe.  I know no bank is really safe right now, but hopefully lack of news from them is a good thing? 

andie-joe:  I'll trade you.

aw p'shaw

:)

 

no, Doc. If we suddenly lost a full percentage point, we'd be thrown into chaos!! massive inflation, bread lines, dogs living with cats...

no wait.