Market crash: are we there yet ?

[SteveSouthwood]

Originally Posted by PBzeer

That presupposes they were acting rationally in the first place.

There's plenty on this board who seem to think they were.

[SanderO]

I don't presume to know a thing about the market... but it appears to be a ponzi scheme where the emperor has no clothes... but as long as everyone says he does... he does.

What seems to have happened is that building an economy driven by credit means that like musical chairs.. someone can and will be left without a chair when the music stops.

If I understand correctly... there was some serious money missing in all these instruments... paper really, but just the same, the central banks lent some more paper money to help some banks meet their obligations. It will not really help.

The economy is built on a sea of credit and not enough product/production tangible wealth.. Even real estate value is not reality based.

It's all based on fractional lending and cannot be sustained.

Oh well...

[sailaway21]

Sorry SanderO, but that's just horsefeathers. Is a Ferrari "worth" a million bucks? As transportation, hell no? As an investment, possibly. Real worth is what the marketplace says it is. In the first energy crisis of the 1970's VW bettles started selling at inflated prices, as people perceived they were very economical. Never mind the fact that that they got 20 mpg and there were dozens of cars available that would do much better. Former big car owners perceived value in the VW and paid a premium for a used one. Smart bug owners sold high and bought a newer Honda! A couple of years later, VW's were back down to their previous value. Something is only worth what you can sell it for. Sometimes that amount is high; tomorrow it could be far less. Nothing has intrinsic value since we went off the gold standard. Your $500,000 Ferrari may be worth a million this fall. If you're interested in doubling your money, you might wish to sell; because by next summer it might be only a $250,000 gas guzzler in the markerplace.

As we conclude the 25th year of the Reagan Recovery i think sustainability is far from the issue. Most of us are sustaining quite nicely, thank you!

[uspirate]

READ STORY!
One thing i never understood, why do we elect a bunch of high paid officials to run the government that dont accomplish squat over a four -eight year period when we can put six buddies around a campfire with a couple of cases of beer, and they can solve all of the worlds problems in a few hours?
and you all know you've been around that campfire

[SteveSouthwood]

Originally Posted by SanderO

What seems to have happened is that building an economy driven by credit means that like musical chairs.. someone can and will be left without a chair when the music stops.

That's not a bad analogy really. It's just that there were a lot of chairs and when the dancers found out there weren't kind quite as many chairs as they thought a significant section of them started panicing, running round in circles thinking that if some chairs had gone, maybe more had gone - despite the fact they're all there in full view.

[SteveSouthwood]

Originally Posted by uspirate

READ STORY!
One thing i never understood, why do we elect a bunch of high paid officials to run the government that dont accomplish squat over a four -eight year period when we can put six buddies around a campfire with a couple of cases of beer, and they can solve all of the worlds problems in a few hours?
and you all know you've been around that campfire

Absolutely. Isn't that why we go camping? Or chilling out on the hook for that matter.

[wind_magic]

Originally Posted by sailaway21

Sorry SanderO, but that's just horsefeathers. Is a Ferrari "worth" a million bucks? As transportation, hell no? As an investment, possibly. Real worth is what the marketplace says it is.

Sailaway21, you more than most should know the difference between price and value. Stocks for example do have a real value. But most are over-priced.

[SteveSouthwood]

Originally Posted by wind_magic

Sailaway21, you more than most should know the difference between price and value. Stocks for example do have a real value. But most are over-priced.

Now watch the sparks fly : http://money.cnn.com/2007/08/17/news...ion=2007081708

Half a point is a big change.

Will the market collective see this as the response needed or will they see this as a desperate measure? It all depends on whether this is seen as a reaction to an unseen fundamental problem or simply a measure to restore confidence. Who knows - the one thing that won't go down today is volatility.

The initial reaction from UK markets and US futures is pretty positive.

If you took your cash out from under the mattress at 1pm yesterday then you deserve a pat on the back.

[Rickm505]

The market will climb 500 points today with this cut to the discount rate. Why? Because the larger brokers have been clamoring for a cut and now they have it. The market climbs on good news.

At least the Fed is attempting to address the problem. This will ease the pressure in my industry today, but won't fix the underlying issues. We will have to see if the credit markets return as I'm having a hard time imagining that a rate cut is going to restore confidence in MBS.

[Sapperwhite]

Well I just woke up this morning to some interesting headlines..... it appears that the FOMC had a little pow-wow yesterday. Shortly after that, all in the financial sector started kicking some serious ass. Thanks to all of you that said, hey you were right, that upswing didn't just happen on its own.

"Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward," the FOMC said.