Are we in the middle of a financial meltdown?

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Money is also a unit of exchange and a store of value.

The current situation and a quick look at Zimbabwe would suggest the second bit is not true.

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That is all money has ever been, doesn't matter what economic system is in place.

Apparently tantric sex that isnt really sex at all is taking over from money.

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I bet there are investors buying up stocks which have dived - so that when the rescue package (hopefully) comes in and the prices recover they make a profit.

I had another idea why the stock market would seem to recover relatively fast: if I were someone who owned a lot of US-Dollars and would expect the $ to go into free fall, because of the lack of trust in the system, I would try to use it to buy stocks. At least there is some real worth behind some of them and they are easy and cheap to get. Buying commodities would be a even better way, but their price in $ would go up fast, I assume. Could be if the bailout plan actually fails again, we might wake up a few days later and find that the US industry belongs to China now.

 

This is just a crazy theory. I dont claim to know much/anything about the international flow of funds or US regulations to prevent something like this. I just enjoy a good catastrophy plot. ;)

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The current situation and a quick look at Zimbabwe would suggest the second bit is not true.

You have to admit that such an extreme case of hyperinflation is an outlier today. ;) When a government deliberately debases its national currency, of course it becomes necessary to find another store of value.

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Well historically speaking, looking back to the 1930s USA - > Economic collapse, war, global dominance

 

So i guess historical analogies are pretty useless.

That's the bad analogy. Despite the despression, 1930's US was still economically and resource self-sufficient, had a giant manufacturing base, was politically isolated, and with few overseas commitments.

 

The UK was the leading power, with a declining industry, vast military over-stretch, resource dependent, inflation and discontent...

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And the structure of the world economy was fundamentally different than it is today with a lack of globalism. The UK empire was also fundamentally different than the US 'empire'. All of these historic comparisons are vast oversimplifications. Are we on the verge of a restructuring of world powers? Very possible. Is it going to bear any more than a superficial resemblance to past restructurings? Probably not.

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Love means never having to say you're sorry. Evidently, that applies as well to greed, deception, and stupendous stupidity.

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Banks entire remit is the genertation of profit through the manipulation of cash. Be under no illusions that they will do anything they are allowed to do, so long as the risks are manageable, to generate income. Now you could argue that one or two financial institutions took risks that were not manageable and when these did not pay off it has set up a domino effect across the worldwide financial sector. Many of the companies failing now were not the same who took the original risks. And at the end of the day it ws legislators who provided a regulatory framework that allowed these mistakes to be made.

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http://www.economist.com/blogs/freeexchang...ll_bailouts.cfm

 

 

First, the largest European banks are too big to fail, but may also be too big to be saved by their national governments.

 

 

Gros and Micossi argue:

 

olutions for the largest {European} institutions can no lounger be found at the national level it is apparent that the ECB will need to be put in charge as it is the only institution in the euro area that can issue unlimited amounts of global reserve currencies.

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im looking at getting a massive load of RBS shares next week after we hear more about fortis etc, should be a good long term investment I reckon.

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Do International Banks owe us an apology?

Does it matter if they do or don't? The US Federal Reserve is neither US ,Federal ,Reserve, but a group of international banks . Do you really think they would be apologizing about an ensuing financial mess they created? 99% of the masses don't even know that fact, nor their names , nor the people behind them.

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So, hubby proposes to buy stock on margin today, leveraging against our savings. Good idea, or not?

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Great little paragraph by Thomas Friedman in his column today:

 

 

I’ve always believed that America’s government was a unique political system — one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.
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Anyone know about Michael Moore. You should check out his website. He's Bush's most hated enemy and has been since day 1.

 

This is a snippet of something he has on his site today.

 

EVERYBODY NEEDS TO TAKE A DEEP BREATH, CALM DOWN, AND NOT LET FEAR RULE THE DAY. Turn off the TV! We are not in the Second Great Depression. The sky is not falling. Pundits and politicians are lying to us so fast and furious it's hard not to be affected by all the fear mongering. Even I, yesterday, wrote to you and repeated what I heard on the news, that the Dow had the biggest one day drop in its history. Well, that's true in terms of points, but its 7% drop came nowhere close to Black Monday in 1987 when the stock market in one day lost 23% of its value. In the '80s, 3,000 banks closed, but America didn't go out of business. These institutions have always had their ups and downs and eventually it works out. It has to, because the rich do not like their wealth being disrupted! They have a vested interest in calming things down and getting back into the Jacuzzi.

 

As crazy as things are right now, tens of thousands of people got a car loan this week. Thousands went to the bank and got a mortgage to buy a home. Students just back to college found banks more than happy to put them into hock for the next 15 years with a student loan. Life has gone on. Not a single person has lost any of their money if it's in a bank or a treasury note or a CD. And the most amazing thing is that the American public hasn't bought the scare campaign. The citizens didn't blink, and instead told Congress to take that bailout and shove it. THAT was impressive. Why didn't the population succumb to the fright-filled warnings from their president and his cronies? Well, you can only say 'Saddam has da bomb' so many times before the people realize you're a lying sack of shite. After eight long years, the nation is worn out and simply can't take it any longer.

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So, hubby proposes to buy stock on margin today, leveraging against our savings. Good idea, or not?

Buy the stocks, but not on Margin. There are some great buys and if managed well over the next few weeks you can come out ahead.

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