Wall Street Bailout - Just how screwed are we? - FMVperformance.com : The site for all your Ford Mazda and Volvo needs
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post #1 of 22 (permalink) Old 09-22-2008, 04:02 PM Thread Starter
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Wall Street Bailout - Just how screwed are we?

I'm not much of a finance guru. I read what I can on things that interest me, but I dont follow the market nor do I have any major investments other than the pension I will receive from my government job, and the defered compensation plan I am enrolled in (like a 401K but for government workers - its a 457b)

I knew basic things about the housing market and its relationship with the banking industry - but I just read this on MSN http://www.msnbc.msn.com/id/26837854 and it kind basically put all the little bits and pieces I knew into perspective. My husband works for a global bank in Manhattan and everything I hear from him is doom and gloom.

Just wondering what some of your thoughts are...

Right now we rent. I dont forsee myself buying property in the next few years, but it seems like the mistakes that have been made over the last several years are just going to make it more difficult for people who are just starting out.


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post #2 of 22 (permalink) Old 09-22-2008, 04:16 PM
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Re: Wall Street Bailout - Just how screwed are we?

call me and we can talk about how screwed up the world is

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post #3 of 22 (permalink) Old 09-22-2008, 04:42 PM
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Re: Wall Street Bailout - Just how screwed are we?

If you can afford to buy a house right now would be a good time. The only obstacle you would have is being creidtworthy for a home. Banks have really cracked down on that type of thing and is making things very difficult for people with less than stellar credit to get approved for a home loan. Another thing to understand is not all banks are doomed. If you look at Citi, Bank of America, and JP Morgan they are considerably in better shape then the other big banks. What happens is bad news comes out for one bank and it drags all the other banks down with it. When the bad banks start to recover some losses the banks in not so bad shape recoup their gains quicker than the banks that are really struggling. I don't like that we had to be bailed out by the gov't, but in the same breath the dollar is gaining some strength and they couldn't risk losing that strength again. If they risked that they would have to deal with oil going up again like it is now. Last I looked it was at $108/barrel, which is considerably higher than $92 or 91/barrel that it hit briefly last week.

I work in a banking institution and we are no where near as affected as the banks you see on tv. What really helps us is that we are a privately owned bank, so we don't get all the negative publicity that the banks get on the Dow. We have our assets that are bad, but our stock doesn't get beat up like publicly traded banks do just because some bad news about another bank goes public. If things start to level out in 1Q '09 then I think everything will start to get better, but if it doesn't then I would think it's a time to worry.

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post #4 of 22 (permalink) Old 09-22-2008, 04:47 PM
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Re: Wall Street Bailout - Just how screwed are we?

Yeah things aren't good right now but they aren't THAT bad. The media will have you think you have to go sell your kids so you can feed yourself or something.

The problem, as weezer said, is that stockholder's get all panicked when a bank fails...partly due to reidiculous media coverage...and go on a selling rampage. All of a sudden the entire financial market is in turmoil. Its kind of dumb in the first place since everyone has sustained enough losses that it makes more sense to stay in place and hope for a rebound than sell.

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post #5 of 22 (permalink) Old 09-22-2008, 04:53 PM
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Re: Wall Street Bailout - Just how screwed are we?

Media sells panic because panic causes people to watch. They want to see how much worse it's going to get. It makes me sick. Ever since the housing market dropped, then the lending companies, then the gas prices skyrocketed, and now real estate companies are falling I have let go of VERY LITTLE investments (aside from what was in real estate). Sure I'm not making the money I was at this point last year but its a tough market right now. If everyone would calm the hell down, it would save a lot of time on the rebound.
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post #6 of 22 (permalink) Old 09-22-2008, 05:00 PM
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Re: Wall Street Bailout - Just how screwed are we?

If you feel your investments are sound Mica this would be a good time to stock up on some stocks you feel have been beat down. I was in the market over the summer, but I got out because I needed my money for school. I still look at it, but I'm not that focused anymore, because too much is happening for me to keep up. If your portfolio has some stocks that you feel have been grossly overcorrected I would stock up. The only reason why I'm out of the market is because of school and I also had commodity stocks that had taken a beating. I lost $400 in gains the first time and $250 in gains the 2nd time. During the entire process I kept saying the 2nd time if it crossed $8/share it would be ok, but it only got as high as $7.99 and then it just fell from there. I sold at about $130 loss at $6.42 and then it continued to stumble to $5.31. Now it's around $7.50/share, but the market is too unsure for me to try and get back in now.

Hopefully we as taxpayers will see the benefit of this bailout in the 1Q of 2009.

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post #7 of 22 (permalink) Old 09-22-2008, 05:12 PM
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Re: Wall Street Bailout - Just how screwed are we?

here is a good analogy for the market:

The 18 wheel truck represents the banks (ie private firms with well compensated individuals)

The tow truck represents the government and your tax-dollar.

http://www.youtube.com/watch?v=_vE9Zq7Gs-U


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post #8 of 22 (permalink) Old 09-22-2008, 05:44 PM
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Re: Wall Street Bailout - Just how screwed are we?

I won't lose a nickel until I cash out I'm leaving things well alone, for the time being. Once I feel I have a better idea which way the market is heading, I'll jump on the buying bandwagon. Right now, I'll just pocket the money I usually put back into investments. That way, I'm making "more" than I was and my investments are still marinating in a mutual fund/stock stew pot.....
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post #9 of 22 (permalink) Old 09-22-2008, 05:47 PM
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Re: Wall Street Bailout - Just how screwed are we?

We ended up offering a checking account paying 5.15% apy with a month to month rate of 5.03% so I have the majority of my money invested in that. The rate isn't fixed, but I believe it will hold through the rest of 2008. I need all the guaranteed money I can get. It has some criteria that we have to meet but it isn't that bad. My g/f opened up one as well and she'll be making roughly $65 in interest per month. The catch is that you only make 5% up to $15k and then 1% on any balance over that. If it had no high balance limit we would have a bunch of checking accounts opening with $250k plus. I only put in $2.5k because I kept a grand at Citi and then I have some money that I put back in my safe as solid cash that makes no interest, but I know I won't spend it.

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post #10 of 22 (permalink) Old 09-23-2008, 08:52 AM
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Re: Wall Street Bailout - Just how screwed are we?

If you're a first time home buyer, now's a good time to buy (depending on where you live, of course). Hello massive tax credit....

We're building a new home, just hope the mortgage actually goes through in 4 months once it's time to close.

The current mortgage market is how it should have been the whole time. Have poor credit? Then save up a larger down payment. Zero down loans should have never been allowed.
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