Times are tough all over
 

--wailing in the hallways over the stock market

--a friend of mine's mother just lost her job of 37 years, and tried to commit suicide. She is several states away, and can't afford to fly to her bedside

--did you hear about the MBA in finance who lost his job and could not find another, and so shot and killed himself and his entire family?

--lots of layoffs in the real estate, title, and construction industries.

a veritable pall hangs over everything . . .

The only grocery store within 22 miles of my house, a mom and pop place, closed. :( 29 people lost their jobs.

Old lady living 15 min. from me shot herself over home finance troubles.

DooM! DoooM!!! :)

Just putting in my last two cents. lol!!

I hope with all this hardship I develop a sense of humour.

sense of humor, sense of perspective, and love and support to and from one's loved ones.

We're all going to need it.

I'm worried about my sister-in-laws. One has a 1-year-old, the other has a baby on the way. The one with a one-year-old is a stay at home mom, lessening the financial security of her family. As far as I can tell, all three of the wage-earners jobs could be at risk.

My husband and I are intentionally keeping a bigger cash cushion than we normally would, in case they need the help.

Umm. I already have the other stuff, which is why I specified. Thanks for the speech tho'.
:p

Oh and DooooM!!:D

Just found out that my brother was laid off. He's getting married at the end of the month. (Well, they've already been married for a year - they're just having the ceremony now.)

Shawnee and Flint just got newer, better jobs. I just changed jobs a few months ago.

It's not all bad news.

Mega budget cuts for me.

we got a lecture on cash flow problems at my firm; we're being pressured to bill more. I hate that, because we have no clerical support, so lots of my hours are spent doing filing, sending out correspondence, answering the phone, etc., and I feel like they want me to pad our bills. Bad.

Um, not to belabor the point, but Oprah would suggest you all get copies of "The Secret", read in a nice, hot bubble bath (while Enya softly plays in the background) and light your 55 dollar scented candles for some "aromatherapy."

Anyway---that's what she does. And Oprah is very, very, very happy. And smart! Smart and happy.

AND FUCKING RICH.

(Sorry, didn't mean to yell.)

*tilts head towards SD, gives him a sidelong glance*

That's what I meant, Steve. I was being ironically.

.

^^^^ I don't get. ^^^^

????????

There isn't anything there to "get".

Oh, Irony. Another one of those English major things, right?

No steve. It's one of those there philosorgany things. I've seen those types.

Meanwhile, across the Atlantic, European stocks have all just lost 7 to 10% in a day (Germany, France, Britain etc). You are not alone. Banks throughout Europe are suddenly finding themselves needing bail-outs, and being part-nationalised in response. This has a lot of similarities with how the great Depression started.

Although I nearly choked when the TV news announced that Iceland's banking system had "gone into meltdown". :lol:

If I find time, I'll soon make some comments about international currency exchange rate fluctuations. As a teaser, the AU$ has fallen about 33% against the yen in the last two months, and about 15% in the last week. :eek: Since I have a large(ish) stash of yen, this is actually great for me, but changes that big, that fast, are not good for anyone.

There is a period (.) <----like that. That is a "something." Is this some kind of strategery? Or is it a double-secret ironical?


Oh, and Zen? I've a yen for you. :D

See?

After being almost even with the US dollar for the last couple of years, the AU dollar just dipped below 70 cents. Great news for exports from Australia, not so great for imports.

We had a 1% interest rate drop yesterday. Our bank passed on .8% of that. That means about $200 saving for us each month.

Things are tough for some people, and I'm sorry about that. It did have to happen though, and it's going to get much worse before it gets better.

The good thing for me is that if Dazza loses his job and we can't pay our mortgage, we can always go live on Dad's farm and pick mangoes. :) I think we'll be pretty right though. Unfortunately though, I think we're going to have to ride out a loss on our recent purchase for probably 10 years or so.

Oh, and speaking of 'The Secret', I just started reading it after my Dad loaned it to me last week. So far I haven't learned much. I already have a pretty positive view of my life. I'll keep going with it though...just to see what all the fuss is about.

No bubble baths and $55 candles though. Just lonely old me at home alone curled up at night with a book instead of my husband. :(

Ah, but at least you have a husband to miss! Bright side! Bright side!

(I'm told that when the Irish first came over, the only jobs the "decent" girls could get was to be maids for the grand houses. When Madam would point out to Colleen that the dust on the armoire was so thick Madam could write her name in it, Colleen replied, "Ah, what a blessing it 'tis to be able to write!") :)

In good news - I found out my bro got a job!
He's working for The Treasury in Westminster (bloody hell) so hopefully when I am allowed a day off I can go & see him in his lunch break.
It's a heck of a commute for him, but I imagine the money is worth it - he's got a good head on his shoulders and would have sorted that out.

This morning my colleagues were talking in the office. I heard one of them say, "A friend of mine... Iceland... just got out in time..." I thought, Bloody Hell, someone's bombed Iceland! Thinking it was one of the chain of frozen food shops. I was probably the only person who was relieved to find out the truth. I mean else would I have bought my frozen chicken?

We've been hiring people all summer at my firm and just hired a new person last week for my department.

Edit: And we're looking for IT litigation support people. So if you are good setting up and working with Concordance and Summation databases, and are willing to work in DC, let me know.

Badger and I got new jobs this September. I had 8 positions at two companies to choose from, he had 8 positions at 4 companies.

There is life out there.

The recruiters are filling my mailbox and voicemail with inappropriate offers. And none of them are sexual in nature!

I doubt that.. surely there's at least one where you would get screwed. (Of course they probably don't say that up front--you have to read between the lines.)

What? You think you can just announce that you're out of work and start a sex company right away? Nooooo, my friend. It takes days and days to build up your clientele! There's filthy mags you've got to advertize in, 900 numbers to establish, etc. Takes a good few hours to get yourself firmly ensconced in the sex biz.

I'm going to go back into advertising. I'm going to have beer logos etc. temporarily tattooed to strippers butts and take a cut.....Once I figure out how to write this proposal to budweiser about the "installation"....heh. Or I just have too much time on my hands now.

Here's how many Yen it costs to buy one Australian Dollar, over the last 12 months:

Attachment 19782

Just to help you see that cliff at the right hand end, here is the last 30 days:

Attachment 19783

I doubt this affects any of you very much, but it is pretty damn spectacular. There is some serious stuff going on out there.

What has been ongoing in the Australian economy to cause such a dollar drop? Have commodity exports dropped off sharply? Was the government running massive deficits? What was ongoing four and more years ago to cause that dollar drop?

America's economy drives everyone else's. We are the largest consumer of *everything* there is, and when we cut back our consumption, everyone else takes the hit, too.

Except whale meat.

Dude, it's time we stopped bogarting the bong!
:bong:

My cousin just received notice that all state employees are being forced to take a 6 day furlough. The state needs to save $48 million by the end of the year. It is unclear whether they have to take them all at once or can spread out the loss of income. The latter is the most likely option at this point.

Amazing that not only are we all paying for this bailout, but some people, State/Fed employees, are now losing income too.

A wise old gentleman retired and purchased a modest home near a junior high school. He spent the first few weeks of his retirement in peace and contentment. Then a new school year began. The very next afternoon three young boys, full of youthful, after-school enthusiasm, came down his street, beating merrily on every trash can they encountered. The crashing percussion continued day after day, until finally the wise old man decided it was time to take some action.
The next afternoon, he walked out to meet the young percussionists as they banged their way down the street. Stopping them, he said, "You kids are a lot of fun. I like to see you express your exuberance like that. In fact, I used to do the same thing when I was your age. Will you do me a favor? I'll give you each a dollar if you'll promise to come around every day and do your thing."
The kids were elated and continued to do a bang-up job on the trashcans.
After a few days, the old-timer greeted the kids again, but this time he had a sad smile on his face. "This recession's really putting a big dent in my income," he told them. "From now on, I'll only be able to pay you 50 cents to beat on the cans."
The noisemakers were obviously displeased, but they accepted his offer and continued their afternoon ruckus. A few days later, the wily retiree approached them again as they drummed their way down the street.
"Look," he said, "I haven't received my Social Security check yet, so I'm not going to be able to give you more than 25 cents. Will that be okay?"
"A freakin' quarter?" the drum leader exclaimed. "If you think we're going to waste our time, beating these cans around for a quarter, you're nuts! No way, dude. We quit!" And the old man enjoyed peace and serenity for the rest of his days.

Which state?

Similar things that were happening in the US economy. Citizens had enjoyed lower interest rates for a considerable period of time. The gov was running a surplus and giving out money all over the place. Our dollar was up around 98 cents US for almost 12 months shortly prior to this recent meltdown.

Basically everyone was spending money like it was going out of style (which ironically it has) which injected more and more money into the economy so of course it kept growing. Housing prices inflated as more and more people decided to get into the market, so the construction industry boomed about 10 yrs ago. Then all of a sudden, someone realized that inflation was getting out of control (this was about 3 yrs ago), so the reserve bank started putting up interest rates. They went up really only about 4% in the end over that period...maybe 5%, but it took the average mortgage rate up to nearly 9%. More in some cases. This of course put a huge amount of financial pressure on mortgagees who had in many cases taken out 100% loans in the last few years. So, people started trying to sell their big expensive houses.

At the begining of this year during the months of January and early February, people were selling within 2 days of putting their house on the market, and often getting more than the list price, but that was the last gasp as our economy reached the top of the hill. After that, there were too many houses on the market, and not enough buyers. People who had been thinking about buying started getting picky. They didn't want to pay the inflated prices created by our inflated economy so they started making crazy low offers, and mortgage holders in trouble had no recourse but to accept those offers.

Lower the median house price and your economy starts to slow.

Basically, the interest rate rises brought down inflation to a managable level, but they hurt the citizens who had high mortgages.

Anyone with half a brain to watch what was happening should have seen this coming. Some didn't though, so our dollar continues to fall as people continue to keep their wallets closed in order to try and hang onto what they have now.

Increased fuel costs during this period have also contributed. Not only to household budgets at the fuel pump, but the cost of groceries and most other utilities has risen considerably also.

That's a very simple explanation. Obviously government policy contributed to the problem also along with world markets and a healthy trading market for Australia.

That's not the reason for problems in Iceland. Apparently Iceland's three biggest banks invested heavily in American mortgaged backed securities - helping to fuel an America that was spending massively (like all Republican administrations do) and using the incoming investments to deny how large the deficit had ballooned.

In another post, described was how China (in trying to be a close American friend) was inadvertently making Americans ignore the costs of “Mission Accomplished”. China’s massive investments also contributed to the ponzi scheme of tax cuts and spending increases.

Eventually economics takes revenge – including revenge on those who invested in America NINJA style.

But again, why has the Australian dollar dropped so far and so fast (Brianna xxxxx Aliantha answered after this was asked)?

Brianna? You didn't like my answer tw?

Increased central bank interest rates should have no affect on a mortgage even if the mortgage is 100%. However, with bean counter mentality, something new was created - rate adjustable mortgages. Nobody with basic financial knowledge would take out an ARM.

For your reasoning to be valid, ARMs must have been widespread in Australia. Otherwise higher central bank interest rates would have left mortgage payments low. One reason to own a house: inflation and the necessary higher central bank interest rates make life easier for the holder of a fixed mortgage. His mortgage payments remain unchanged and the house value increases. Just another reason why no informed home owner should even take out an ARM.

We call them variable rate mortgages, and in Australia, a variable rate is the most common mortgage you'll get and pretty much always has been.

I note tw, that having fixed rate mortgages hasn't saved the US economy, or any other country's economy.

Also, regardless of whether mortgages are fixed or variable, you surely must realize that as interest rates go up, more people are locked into higher mortgage repayments for the same thing their neighbour has at a lower price. And of course with an inflated economy which Australia has had for many years now, housing prices are inflated which of course means that people have been paying even more on the capital aside from the interest at whatever rate it's at.

As I said, it's not just housing interest rates which have contributed to this issue. It's fuel costs also. Every household in Australia has much higher expenses than it did 3 or 4 years ago. Do you think fixed rate mortgagees should have realized that was going to happen?

You asked for an explanation and I've given you one. Personally we have a fixed rate mortgage which is now lower than it would have been if we'd taken a fixed rate mortgage out six months ago when we bought this house. The recent interest rate drops means we're saving over $250/month which goes a long way towards paying our utilities.

It doesn't matter what sort of mortgage you have if you haven't allowed yourself some breathing space for fluctuations in the market.

American is chock full of ARMs - variable rate mortgages - sub-prime mortgages. ARMs are one reason why mortgage backed securities all went crashing at the same time. America 30 years ago did not foolishly market or apply for ARMs.

The way I read it, Australians were doing the same irresponsible mortgaging that Americans were doing - ARMs - sub-prime loans.

Fuel prices also contribute. However, to subvert responsible action as a result of higher energy prices, America mortgaged itself (ie 0% car loans) to avoid and ignore the necessary recession. While whining Americans complained about high gas prices (ie $1.80 per gallon), Americans continues to say to industry, "Make the most stupid vehicles that only an accountant would design." Americans complained about high gas prices, then bought even more SUVs. Gas had to go to $4 per gallon before Americans said, “Oh, energy not something to waste.”

BTW, the same stupidity occurred in 1970s America. Then when patriotic Americans with Japanese citizenship provided superior products, Americans put up tarrifs and other corporate welfare to protection the problem. Deja vue.

Then America said the economy is no longer is dependent on energy. Well, those energy bills have yet to start causing job losses - another lesson from the 1970s.

Essentially, you are saying Australians were doing the same money games that business school graduates were promoting in America. As I read it, Australians are not suffering due to events in the American economy. Australians are suffering because they did exactly same as Americans.

Meanwhile, Australia is far more attached to commodity exports. Have economic changes in commodity markets also contributed to problems in Australia? If so, how?

If done properly and house bought within ones means with either a fixed or adjustable rate mortgage was purchased... Where is the issue?
The abuse comes into play when one is sold more house than one can afford and convinced that one can by utilizing an ARM.

In the 1970s, the same reasoning is why interest rates were kept low. Therefore the economy only got worse. Of course. A mismanaged economy that throws money at problems (ie tax cuts without spending cuts, tax rebate checks, excessively low interest rates, etc) only gets worse years later.

How did America finally fix the housing market and all other problems? Housing interest rates were jacked up to 20% because central bank interest rates rose well above 10%. Only then was the American economy fixed in the early 1980s.

High interest rates do not create the problem. High rates and the resulting hardships may be necessary to fix the problem now. Otherwise economic forces take further revenge later.

ARMs were designed to give you a house that you otherwise had no business owning. What made possible those 4000+ square foot houses with three car garages? A more productive America? Of course not. Variable rate mortgages, NINJA, and the ponzi scheme found in Enron style accounting.

Let's see. All those homeowners, expecting to be there only five years, suddenly got stuck with what? Suddenly they can't move? Economics takes revenge many years later on an economy that plays such money games.

I think it's pretty fair to say that most economies in the world have been doing the same as America. These types of trends do tend to be global which is why recessions and depressions do tend to be global. I would suggest that if the US economy had remained stable, many other economies world wide would have done also. obviously that's simply because the US economy is so large and effects all other economies, particularly those running under the same rules.

Having a conservative government that was living out of Bush's pocket definitely contributed to our problems here.

Fuel prices have been much higher in Australia than the US for a long time, as have interest rates. Where your reserve bank dropped interest rates to try and avert the crisis in order to prop up the economy, ours increased them in order to gain some control.

I'm not a financial expert. I simply pay attention to what's going on. Not all of our issues here are because of the US market, but you'd be a fool if you didn't agree that it was part of the problem.

I think we'll come out of this ok in the end, mainly because we do have a huge export industry linked to energy resources, and we all know the world needs energy.

If done properly and house bought within ones means with either a fixed or adjustable rate mortgage was purchased... Where is the issue?
The abuse comes into play when one is sold more house than one can afford and convinced that one can by utilizing an ARM.

That is part of the question. How much intertwined? We know Iceland banks foolishly invested heavily in the American ponzi scheme - mortgage backed securities. And we know some European banks are at risk for doing same. But I have heard very little that suggests Australians had any significant attachment to America's mistakes.

But again, are those exports to China diminishing so much as to harm the Aussy economy? Not just energy (coal). Other exports (grains, meat, metals) are also a major part of the Aussy economy. Have these industries suffered due to Asian downturns?

ARMs made possible that abuse. If homeowners had to buy homes they could afford, then housing prices would not have skyrocketed, the minor recession would have corrected economic mismanagement (ie force out bad management in GM), and homeowners would not have been slapped by the double whammy of a recession AND skyrocketing mortgage payments.

ARMs are equivalent to what George Jr was doing - tax cuts with massive spending increases. ARMs are just another of many examples that explain the 35% stock market downturn - and we have no idea how much lower it may go. But again, economics always takes revenge many years later when finance games rather than product innovation creates a booming economy.

To get people into houses they could not afford – to avoid a necessary recession – the bean counters marketed another money game – ARMs (also called variable rate mortgages or sub-prime loans).

So do you feel richer now that George Jr gave you another $600 tax rebate check? Just another example of an idiot doing things so that you *feel* better rather than addressing the problem - excessive spending.

The cost of money is higher for us now. That's one problem. If we want to borrow it costs more. Our big banks generally are fairly strong though. A couple of our smaller ones have been a bit wobbly because of their ties to the US, but in general, so far so good for Australian banks. I can't tell you exactly what's making them stable, but we've had no big banks even look like folding, as opposed to those from larger economies.

This is a good thing for Australians. At least there is that stability.

I think you have a very biased view towards ARM's tw. Long term variable rate loans can be a big advantage if you take out your loan while rates are high. Then during the normal course of economic cycles, rates drop, and you find that the loan you could afford before, now becomes a breeze and you pay your loan off quicker.

If however, you take out a high mortgage when rates are low, not leaving yourself room for rate increases, you deserve what you get imo.

The problem is, banks allow people to take out a mortgage they can afford today without thought to what they can afford tomorrow. If people are too stupid to realize what's coming down the road, whose fault is that? The lender that knows? Or the borrower who's ignorant? Some say that ignorance is not excuse. I agree. If you're going to borrow money from anyone, you should know how you're going to pay it back.

tw - sorry bout the deletion - I thought I double posted it. I think I still did. Anyway, I took you off ignore today - did you address my point at all? Here I'll quote it for you.

Higher cost of money today means the economy will fix its problems now. In America in early 2000, when the economy needed fixing, instead George Jr threw money at the economy. His people (ie Harvey Pitts of the Security and Exchange Commission) made ponzi schemes easier (ie Enron accounting is now rampant). To mask the resulting debts, George Jr restored the massive government debts that had been eliminated by Clinton. And then promoted myths such a lower taxes to the common man (who never saw lower taxes) while lowering the rich man tax rates to 3% below everyone else.

America desperately needed to correct fiscal mismanagement. Even the $trillion for "Mission Accomplished" has been mortgaged. Americans will pay for that debt years later. Rather than address inflation (that George Jr said did not exist using another money game), America pushed interest rates lower. That means current economic problems were only made worse.

No problem. This economic downturn was not obvious until after the mental midget leaves office. BTW, Nixon did the exact same thing. Problems were corrected during Carter's time by finally running interest rates to 14% and 20+%. Guess who got blamed for Nixon's economic mismanagement.

Your higher interest rates today would only force the economy to fix its problems before jobs are lost and before those problems fester.

I see. So Icelandic banks invested heavily in our mortgage banking, but that isn't America's economy driving theirs in any way?

I gotta learn more about economics.

Then explain this. The greatest economic problems exist where more ARMs were promoted. If you think ARMs solve problems, then the government printing money also solves problems. ARM is simply a money game to avert what is needed - a house that the homeowner can afford rather than larger and more homes that nobody would otherwise buy.

This is not bias. Where ARMs were mostly used (ie Stockton CA), now $million+ homes sit abandoned - cannot even be sold for $70,000. More trophies to people who think such money games (ARMs) make people wealthier. The only reason a person should even afford that more expensive house - he is more productive in his job. Instead we created ARMs - money games - to get him in that house. No bias. These same lessons are found all through history.

The only innovation that should make a larger house affordable is product innovation - not money games. My only bias is found in facts of fundamental economics. If finance games make someone richer, eventually economics takes revenge years later. No way around that reality.

There is not free money. Even free money – printing more – results is far more severe consequences years later. That reality is again being demonstrated. Why do we need recessions? To even create the threat of bankruptcy so that the money gamers get exposed and severely harmed.

Another example is GM who should have been in bankruptcy in 1991. Instead they played money games (ie short the pension funds) rather than fix GM’s only problem (some of the world’s worst products). Now GM is even worse and taking more of the US economy with it. Back then, we could have solved GM’s problems by replacing grossly overpaid bean counters with car guys. Now the average American must suffer because GM was not fixed by bankruptcy in 1991. Just another example of why money games only makes economic revenge more severe later.

BTW, did anyone notice? Separate from the $700billion bailout was another $25billion to automakers. George Jr also gave the airlines $8billion for free bad in 2002. Notice how that corporate welfare fixed the airlines. So what will $25billiion do for GM, et al? Protect the #1 problem such as Rick Wagoner - GM's president and a lifetime bean counter.

Sidebar. The entire MI delegation voted for $25billion in corporate welfare. But most of that same delegation voted against the $700billion bailout. Throwing money like a grenade at a problem does not fix the problem - whether it is corporate welfare or easy money using ARMs. The only solution to houses that people cannot afford - smaller and less expensive houses. The only solution to GM's problem is elimination of management that routinely stifles innovation. Neither problem is solved by using money games. Not a bias. A reality proven repeatedly in history.

tw, an arm is not free money. Australia has been going through the exact same financial cycles as the rest of the world, even though historically, more Australians have always chosen variable rate mortgages.

You're trying to blame a crisis on a particular facet of the mortgage market, and that's just not the answer. Maybe it's part of it, but it's not the root cause.