A capitalists opinion on the current economy and market

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Shop: Unfolding Nature: Being in the Implicate Order

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ZippoZ
Knomadic

Registered: 06/17/03
Posts: 13,227
Loc: Pongyang, North Korea

A capitalists opinion on the current economy and market

#9087158 - 10/16/08 05:09 PM (18 years, 15 days ago)

Well, i have been sitting by watching this market nonsense go on and on for quite some time now. I should state that i do not actively trade stock on the market, i own 4.002 shares of microsoft (~$100) and a small percentage of shares in a private mining company. there fore i think that i have somewhat of a distanced and possibly clearer view of what is currently going on in the worlds financial markets.

I think that the root of this problem, is that people over extended their investments, and left themselves with far too short of a cash flow to weather any hiccups in the market or the collection of their income. Over extending yourself in this nature is a risky game, but allows for very rapid growth of a company or industry, and in the previously extremely strong market, it was a very popular 'safe bet'

I think that this all might have started quite some time ago, during the housing and real estate boom. about 3-4 years ago real estate started to boom nationally. everyone and their brothers starting re-habbing houses, and developing raw land. I myself was part of this boom. The interesting thing about this though, is that for some time the boom was somewhat self fueling, with so much money being made in realestate, it kept bringing new buyers and investors into the market place. However, while everyone was making large sums of money, the artificial inflation of sale prices and market values went ignored and un-noticed.

so fast forward to the present, and what do we have? the artificial prices of these real estate developments and houses, have started to fall, leaving many people who financed their projects houses, and businnesses, out on a limb with little to no cash flow, find themselves in a position where they owe more than they can afford. Or in many other cases, more than their peoperty, or investment is worth.
\
The wide spread effect of so many peoples small and large projects going under is that they were no longer able to make payments, and defaulted on their loans and mortgages etc. Once this started happening, and the market shifted many people with ARM's (adjustable rate mortgages) were also pushed over the edge to the point where they could no longer pay, furthering the consumer debt.

At the end of this slippery slippery slope, are the banks, and in the end, when all of those small bills can no longer be paid, they started to feel the blow. Freddy mac, and fanny mae were some of the first to go, and definately not the last.

While the tide of bad debt finally started to hit home at the end of the road (the banks) the wide spread problems of this nation were finally truly realized, which brought about a large amount of fear, and lack in confidence in the markets. people that were over extended with little cash, started to liquify some of their assets out of fear, and out of necissity. many started cutting their losses. This is where the stock market comes into play. people were selling their stocks, and running for cover, taking a lower sale price just to get out quick. (here the downward spiral starts)

so where does it end?
i suppose once the majority of the banks that are going under finally get to the point of sinking or swimming, and everyone who is going to panic and pull their money out of the market gets it over with, we can start to re-build.

but how low will we go before we hit that rock bottom?

that is the question.

peace kids.

--------------------
PEACE

zippoz

"in times of widespread chaos and confusion, it has been the duty of more advanced human beings - artists, scientists, clowns, and philosophers - to create order. In such times as ours however, when there is too much order, too much m management, too much programming and control, it becomes the duty of superior men and women and women to fling their favorite monkey wrenches into the machinery. To relieve the repression of the human spirit, they must sow doubt and disruption"

"People do it every day, they talk to themselves ... they see themselves as they'd like to be, they don't have the courage you have, to just run with it."

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