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U.S stock market
Alright guys, I'm a bit confused as to what exactly is going on with the stock market. Like i know we're in a shithole right now and the government isn't helping much. But some terms like bailouts and even how the stock market works are just unknown pieces of data to me. So can anyone help, cause I think that this is important to know and I don't want to be looked upon as another ignorant teenager. Anyhelp will be much appreciated. Smile
(Quote from Men In Black)
: Why the big secret? People are smart. They can handle it.
Kay: A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.
Dude, I'm 22 and I don't have a clue how it works.
All I know is that the company I work for isn't traded publicly so my stock and 401(k) is safe. Till people stop buying food and our stock goes under.
And my mortgage is a fixed rated so it will never change unless I refinance.
"I'm the body with the coroner, Many friends yet still a loner."

"Black then white are all i see in my infancy. Red and yellow then came to be, reaching out to me."
I am The Giver. Thank you Tool.
All right, so I'll try and do this to the best of my abilities but I'm no expert.

The reason the stock market has gone to shit is a couple of things:
1. Banks invested in housing and real estate, lots of it.
2. People don't know how to ****ing spend, and anyone using a credit card while in debt is an idiot, there are a LOT of idiots.
3. Banks got greedy and also gave out loans to high risk people.

How are those three things related? Well, in a nutshell, when people are crushed under the weight of their own stupidity and spending, they get loans from banks, these people also have houses. When the banks not only give out loans for money they'll never get back, but also invest in housing and real estate growth, they're going to get ****ed.

Of course that's seriously condensed, and I'm sure there's a hell of a lot more to it, but as a business student that's what I've gotten out of it. Banks get ****ed by their own greed in trying to make people sink in debt, people are stupid and eventually file for bankruptcy (not having to pay their debt in the process), and the stock market goes to shit. Tons of bad investments from all the wrong places.

So what's a bailout? Well, that's the government helping companies that aren't government entities. Fannie Mae and Freddie Mac, other banks, etc. These companies really have no inherent right to the money the government is likely to give them, but they'll get it anyway.

Why would we give money to a bunch of morons who didn't spend it right in the first place? Well, if the banks collapse everything collapses. If people and business aren't getting their money from somewhere everyone gets ****ed. The good news is the government will likely own a good majority of these banks and other companies receiving a bailout, at least that's the hope. The bill hasn't been passed yet or anything, but if it does I'll imagine the government will control a lot of decisions and will have all of these companies's balls in a vice.

The bad news is that the American people will be paying for those $700 billion. If you ask me, we're just as guilty of it as the corporations. America is such a gluttonous country when it comes to spending like crazy and it's finally caught up to us. After 9/11 the stock market wasn't quite the same, and with rising gas and food prices people just cannot afford to live their way of life anymore. Needless to say, the morons in this administration have done NOTHING to prevent this in the form of rebuilding the foundation of our economy.

Ask an economy teacher at your school, I'm sure they'll be able to explain it better than me. I'm just going to say that this is the last straw for me, I'm going to get my college education and I'm out, I refuse to live in the US. It's going to shit and there's nothing out there pointing to an upwards trend.

Any economist will tell you that they simply have no idea what is going to happen. You can ask them to guess but your guess is as good as theirs, we have no idea.

PS: Now is a great time to invest in some of these companies that have gone down the tubes. Lehmann Brothers, Fannie Mae and Freddie Mac, etc. If you pump in lots of money short term your chances of a gain are pretty damn good. The smart people out there who have saved their money will be the billionaires of our generation. The golden rule of "Buy low sell high" is in full effect and there could not be a better time to buy property or invest in certain stocks that you think will rebound in the next couple of years.

Something very important and significant to note about the Dow Jones crashing 700 points. While it is awe-inspiringly bad (the worst EVER), it is not that great of an indicator of how the stock market is doing. It's only 30 companies, some of the richest, but only 30 companies. They are also not weighed according to value, so a point of a much more valuable company is the same as a point of a lesser company on the index. It pretty much happened because the government bailout plan got declined and that really screwed the market. A better look might be at the S&P 500, which is a much broader list of companies.
The rates of interest charged on debt by greedy banks has also contributed to the problem. If those in debt were charged a fairer rate of interest there would now be less people defaulting on payments.
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Superjew seems to have the gist of it. As far as I'm aware the banks have spent a lot of time and effort trading in money that doesn't technically exist and relaxed the criteria for giving out loans to high-risk people, which worked so long as more people managed to pay (or had assets worth seizing) than those who didn't. It all kind of spiralled into a big collapse and without some sort of rescue by the government it would be incredibly devastating.

I don't know if it's changed much now but the original bailout was horrendous. $700 billion with no accountability to stop huge chunks going to the people at the top, the people closely tied to those in congress (ie. those voting on the bailout) on both ends of the political spectrum, instead of spending the money where it's needed most. It isn't even the best idea I've read for how to fix it, but if properly managed it seems like it should work.
Superjew kind of nailed it, but failed to mention that the employment rate in the US is the lowest it's been in a long long time. These things go hand in hand.

Compliments of companies being deregulated which the Bush Administration has allowed to become far worse than ever, there as been nothing in place that would have normally kept this in check. Yes, politics play into this, and the Republican party which is naturally sided with rich, big business, etc, you could say went through the efforts to let these companies free of their bonds from control. This lack of control allowed companies to make investments far beyond their own values, with the idea they would profit. As I heard it explained about Leman Brothers... Say you had $10 in your pocket... For every $1 you took out a $2 loan. You now have $30, but $20 of it is a loan. Now put that idea into the billions of dollars.

Then you have another huge problem. Employment. Again, politics play here, as Republicans are completely pro big business, and completely against things such as unemployment, welfare, etc. Most Republicans I know believe in "survival of the fittest" ideals, weeding out the weak, while the strong thrive. Things that keep some money in the wallets of those who are not so fortunate or skilled. People whom might been down on their luck or whatnot. Big business also saves money by outsourcing jobs overseas. Lets face it, it's cheaper labor to build a car in Mexico or China. The US isn't the only country that does it either though. The job market gets smaller and smaller, and has been getting smaller for the last 8 years.

If you look at the highs/lows, the Clinton Administration saw many of the all time lows... Many of the all time highs was during the Regan administration. Now, it's not to say 'outsourcing' is the only cause here, but it definately has an impact. Plus you also have the rising costs of living. Exxon mobile raises the costs of gas getting filthy rich, a gallon of milk isn't even that cheap anymore. All these costs of living that are getting higher have nothing to balance them out. The federal minimum wage in the US is set at $5.85. Once you take taxes out of that... Well, you're not left with much. On the topic of taxes, the Democratic party which is often accused of trying to raise that taxes which would make things obviously worse, targets the insanely rich... ie... Exxon execs, Bill Gates, where for middle/lower class pay less.

Here in Connecticut, the state minimum wage is 7.65. I'd also like to point out that Connecticut is one of the most well off states in the country, it's home to the richest town/city in the country, New Cannan, which... Holy hell, lived there for about 10 years. Childhood. Just in general though, the cost of living in Connecticut is about as high as it can get. But then, I also think it eventually averages out. Sure, Virginia might be cheaper to live in, but they follow federal minimum wage. Working at a warehouse @ $10/hour, 40 hours a week, take out 20% for taxes... Left with $1280. Rent, $900/month... Gas, $200 a month... Now try to balance the rest between electric, food, other things with $180... Good luck!

The point being though, the cost of living does not match up with the wages people on the low end of the spectrum are paid. Sure, if you're a dentist, lawyer, or own six mcdonalds (such as my neighbors do), then you're stupidly rich and the costs of things don't really get to you. If these lower end spectrum people can't make it, and with the middle class being stretched thin... There's no spending, companies start to lose money, cut backs and lay offs begin, more people become jobless... So not only do you have the middle class stretched thin struggling to pay for things, the lower class really screwed, but a rising cost in living. Now can't make ends meet, you default on your mortgage... And we return to where we started... Big businesses being unpaid and the loans they gave out going bad, etc.

The real joke in all this is, Paulson, the bald treasurer guy on TV all the time who wants the $700 billion to inject into these businesses... Should pay attention to what he says. He wants to get these companies back on track so they can get credit and trade rolling again... CREDIT AND TRADE. The very thing that got us here in the first place. More credit loans and so on will only make things worse. Until the stretched middle and lower classes are no longer stretched, only the upper classes have money to spend.

Cliffs Notes?

Big business is allowed to do what they want without monitoring. They make huge risky investments, give out loans to people, etc.

Cost of living goes up, cost of gas sky rockets, unemployment rates go up, companies continue to outsource jobs over seas taking away jobs from american people. Fat cats get richer, the poorer get poorer.

Middle and lower class are stretched thin, unable to pay their bills, they default on loans, credit, etc.

Big businesses lose on their investments on a large scale, economy goes into collapse.

The $700 billion bail out failed, fortunately. While were headed straight at a second 'great depression', I see no reason every man woman and child should pay $2000 to businesses that brought this on themselves. Let it go belly up, it deserves to. Why should people who are struggling let their tax dollars go to keeping the rich in their big executive offices? Doesn't make sense to me, but hey... Perhaps the world can learn something from this if they're allowed to go belly up. Otherwise, nothing will be learned. Problem is though, if they do go belly up, the economy will collapse... Which yes, I just said I want to see it collapse. I see as damned if we do, damned if we don't though.

Gotta agree with Superjew on the college part. I for one don't have college education, and although it can heavily depend on the degree you get, there are markets that have weathered this falling economy and for good reasons. I will definately be siding with one of those areas of work.
9/2/2010 - Leaving PSXE. The site imo has become a breeding ground for fanboys and extemists. I can get my PS3 news anywhere, and PSXE does not breed a community that is exactly welcoming.

Some of you shall be missed though! I think you few know who you are Smile
A few of you are actually on my PSN list at that! Cool
Pretty much agree with everything everyone said.

I gotta say, I cannot find a job. I applied at a grocery store, I'm so desperate for a job right now to pay for gas it's not even funny. NHL 09 is likely my last game purchase for the year.

I was going to get paid a ****ing pathetic $8.10 or so (my lowest paying job ever, $8.00 is minimum wage here I believe) so I can do something I'll be miserable at. But I need the money. Yet I can't get this job because they cannot afford to hire me at a pathetic wage. A grocery store, a place where everyone is going to go. I didn't get a job all summer despite applying with absolutely open availability, all the flexibility in the world can't get an unskilled worker a job right now. I don't have a lot of experience, but I'm 19 and my job history dates back to after the start of this mess, so it's not exactly my fault.

This 'depression' follows the path of most every other collapse in the history of countries. It always starts with
1. Corruption
2. No middle class
3. Greed

As in, if somebody doesn't get all our congresspeople that are corrupt and all our other government reps we will all be screwed and this nation will collapse. And even the richest of *******s are gonna get hit because no one will buy their crap. Of course they have more money than they know what to do with, but everyone will be screwed sooner or later I think. The bailout got denied anyway, so hopefully they come up with something better.

If I were a betting man, I'd bet against this place being a world power in 10-20 years. If people want our country to rebound it's going to have to start with handcuffing corporations, it's not very capitalist but our system does not work. If it did I don't think gas would cost so much. And we'd already have electric cars, but big oil bought that idea out a while back (watch a movie called 'Who Killed the Electric Car?'). Everyone is to blame, people for letting this shit happen and for spending irresponsibly, banks for raising interest rates to obscene amounts, and for republicans letting it all happen while in office. It's all disgusting, and thinking about it makes me feel nauseous.

As far as outsourcing it's a lose-lose in the short term, and a win-lose in the long term. If you stop outsourcing things go up in price, but people get more jobs. People can't exactly afford price hikes on anything right now. However, long term it's a definite win. It revives our economy and spending somewhat, we actually have exports, we aren't dependent on 3rd world countries, etc. It's a lose in the long term because if China, Mexico, Taiwan, Guam, Pakistan, wherever decides to stop working for American companies our economy comes to a standstill. They really don't need us as badly as we need them, and that's very dangerous.

In my eyes, we are China's bitches and it's our fault. This is a completely different topic though, sorry for getting off on a tangent.
Heh, I know how the employment thing goes. When looking for employment, I've gone to agencies, gotten referals from friends, etc... Funny how I had a friend in management, but failed to get a job as a phone rep. Years ago, I had a job with ADT Security, the office closed, and I was laid off. Struggled to get a new job, but never got anywhere. My credit got f***ed up, and still is. Amazing what a lay off can do. I went from making $2000/month in early 2000, to making $500/month at a grocery store. Full time employment is impossible without a profession since nobody wants to pay for insurance. I haven't had health insurance since before I was laid off in 2000, and most jobs I've had are temp and seasonal. Just about every customer service job I've applied for demand college education. I would really like to know why I would have to require a bachelors degree (yeah, I'm not f'in kidding, a bachelor's degree) to answer a phone. I mean, I know people can be stupid, but even a monkey can answer a phone.

I nearly had a full time permanant job in accounting ($13/hour for accounts payables) with ThermoSpas, and the day before I was supposed to take a permanant position, pay raise and all, I was basically setup by my dept. manager. I later found out that not only was I setup, but I was setup because she had a friend who wanted the position I was about to take. That's fine though, I'm glad I'm not working for them. If companies that deal with ThermoSpas knew what I knew, they might not deal with them at all. Very shady company despite it's national and partial worldwide sales.
9/2/2010 - Leaving PSXE. The site imo has become a breeding ground for fanboys and extemists. I can get my PS3 news anywhere, and PSXE does not breed a community that is exactly welcoming.

Some of you shall be missed though! I think you few know who you are Smile
A few of you are actually on my PSN list at that! Cool
Wow, like really wow. That suddenly all makes sense. I was watching the news and I got it. Thanks guys. And @zapix, i'm sorry man, that must really really suck.
(Quote from Men In Black)
: Why the big secret? People are smart. They can handle it.
Kay: A person is smart. People are dumb, panicky dangerous animals and you know it. Fifteen hundred years ago everybody knew the Earth was the center of the universe. Five hundred years ago, everybody knew the Earth was flat, and fifteen minutes ago, you knew that humans were alone on this planet. Imagine what you'll know tomorrow.

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