Making sense of the markets..(16 posts)
What do you expect if a whole nation lives on credit only and all the assets were sold to China and Japan. As to my calculation, every man, women and child owes $30.000 to the foreign banks plus what they owe from their own debt. The times of the capitalism American style are probably gone forever. This culture shock is still to come to most people. Earn it before you spend it will be the way it works.
JadeEmperor, What you describe is a real problem too - the American industry is by and large no more competitive ( there are exceptions though). But the current crisis has it's roots in the fact that the people and the country live far beyond their means. Money was replaced by plastic and the goverment sold the country. Now the market realizes that there is insufficient equity in the country and that millions of people will not be able to pay back the money they owe (the same goes probably for the federal goverment). So there is a disruption in the cash flow which led to the current misery. And this is only the beginning because it will require a dramatic change of culture (e.g. pay cash) to heal this problem - and I don't know whether the people are ready for that. So we will probably limp along for a long time.
Yes, all the posters here are correct, but there's another cause, maybe slight now that the shorts are on hold, for this volatility . . . MANIPULATION!!! That accounts for why when some days there's bad news and the market goes up, and other days there's good news and the market goes down.
whs, you've hit the nail on the head. (as usual) I call the united states, IOU Nation. Unfortunately, the younger culture knows no other way. I won't be limping along (at least not financially) because us old folks were raised to save more than we spend and never buy something we can't pay for:) Just had to get that off my chest!
@techgranny, I would think that in your business it is imperative to have credits available. But if the banks have no money to borrow, your business comes to a screaching halt too. And that is the limping part where you may get hit. But in any case, there will be a lot more scrutany of borrowers in the future - and that in itself will narrow the real estate market.
@jack, you are the lucky one. Your home does not get stuffed with useless stuff.
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