The economy and your collection.

[big F]

My collecting had slowed up long before the economic fall of started to show to the masses. Mostly just down to space. I stopped buying toys and settled on models, now that I have a several year back log and a whole cupboard full of never gonna builds. I only get the if I dont buy one I will die kits or occasional toys. when I really got going in Macross and TF collecting I was like an over paid salior in a whore shop I just bought everything, but now as I have ticked most of the boxes im happy.

I was doing IT in a large (the largest) media group in the world, got to travel all over the world for my job etc so that funded my buying and often helped it. It is so easy to send stuff home in a flight crate that is half full of work equipment but being laid off 2 weeks before xmas due to the company wanting to artficially inflate the share price for a deal they were doing, sucked a bit although the payoff/bribe would have kept me going till the end of May. I have managed to get another job in a security systems company working in the IT devision who mantains all the production computer systems, Irronically they have been largely recession proof and are making money, mostly down to the fact that they have factories and offices in virtually every country in the world.

On the flip side all my squireled away savings for my pension and house buying fund have taken a masive hit as a lot of the money was tied up in stocks related savings. Add that now to the fact that the U.K goverment now owns the bank and is intent on spending the public money like water to bail out its own cock up and very bad idea.

As of yet I havent had to sell anything yet, and hopefully wont have too as I wouldnt get the price I paid for some of the stuff.

I count myself as very lucky as a few of my friends are now job less or on reduced hours and barely able to make ends meet.

Edited February 26, 2009 by big F

[Vegas]

ive stopped collecting for now. prices are just too steep for me. but i did bought a $80 1/48 a couple of weeks ago ( couldnt resist it was too cheap)

eventhough my hours got cut on my other job......i took advantage of the falling prices of t.v.'s and bought a samsung LN52A650 and a ps3.

Edited February 26, 2009 by Vegas

[atreyu2112]

For me, there are *maybe* 4 more 1/60 Valk's I'd like. A Kaki TV which I just can't afford to p.o. right at the moment, but I will get him! And the Max/Milia 1J's & a 1A CF (when they come out). Iffy on the 1A CF. I already have 4 with 1 more on the way (TV Max) possibly 2. I really hope they DO come out with more enemy mecha but my wallet is thankful they aren't.

The rest of the stuff I collect:

Star Wars - Only new CW figures, new mold Titaniums (only a few left I really want), a few Mighty Muggs and the 2 Animated Maquettes they have planned.

Transformers - I think I am done except for the Animated Arcee (if she comes out) and the Mighty Muggs which I seem to be a sucker for (plus if my son grabs them, no prob).

Maybe the 2nd NECA TMNT wave, if that ever comes out.

But, I am trying to make this stuff IT. Space is limited, money is limited. I might have to skip on some Valks or some of the other stuff. We'll see.

[Jasonc]

In regards to the issues that many of you are facing, I've begun to liquidate some of the toylines I don't collect, i.e. G.I.Joe, Transformers, etc. Also, even within my Macross/Robotech collection, I've started to set aside items that I will be selling to offshoot my collecting during these times. While my job is about as solid as can be (knock on wood), learning to be prudent in these times, and perhaps when/if the economy does pick-up will help stabilize my wallet, and perhaps everyone else's wallet in future. Eating out less, and selling toys of less interest to buy toys of more interest has helped me to spend less, and still keep my sense of joy in buying toys w/o the guilt. I don't know if that'll work for everyone here, but it seems to work for me.

Trust me when I say that I'm pulling for all of you in that hard place. Hope you all get blessed with a proper job, and keep food on the table and roofs over your head... (and valkyries in your collections)

[jwinges]

Sorry to hear that your collections are suffering due to the economy. It really sucks, especially with such great stuff coming out. I too have been thinking about selling off a lot of my collection before I move again. Funny thing with the economy though (and you guys will probably hate me for this) but Business for me has been better then ever. I guess people just obcess too much over their kids athletics. The problem for me is that I purchased a new motorcycle last summer and now have to pay the bills for that...so no macross goodness for me.

[D_Unit]

I've been discussing about a subject (that's been giving me the chills at work) and I guess if I can make the dudes there understand it I might as well discuss them here.

And that's the quadrillion+ in outstanding contracts in the derivatives market.

Here's a definition fro Wikipedia (don't worry, I don't think anyone on Earth truly understands the derivatives market):

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). The underlying on which a derivative is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices, consumer price index (CPI) — see inflation derivatives), or other items (e.g., weather conditions, or other derivatives). Credit derivatives are based on loans, bonds or other forms of credit.

The main types of derivatives are forwards, futures, options, and swaps.

Derivatives can be used to mitigate the risk of economic loss arising from changes in the value of the underlying. This activity is known as hedging. Alternatively, derivatives can be used by investors to increase the profit arising if the value of the underlying moves in the direction they expect. This activity is known as speculation.

Because the value of a derivative is contingent on the value of the underlying, the notional value of derivatives is recorded off the balance sheet of an institution, although the market value of derivatives is recorded on the balance sheet.

Hedging

Derivatives allow risk about the value of the underlying asset to be transferred from one party to another. For example, a wheat farmer and a miller could sign a futures contract to exchange a specified amount of cash for a specified amount of wheat in the future. Both parties have reduced a future risk: for the wheat farmer, the uncertainty of the price, and for the miller, the availability of wheat. However, there is still the risk that no wheat will be available due to causes unspecified by the contract, like the weather, or that one party will renege on the contract. Although a third party, called a clearing house, insures a futures contract, not all derivatives are insured against counterparty risk.

From another perspective, the farmer and the miller both reduce a risk and acquire a risk when they sign the futures contract: The farmer reduces the risk that the price of wheat will fall below the price specified in the contract and acquires the risk that the price of wheat will rise above the price specified in the contract (thereby losing additional income that he could have earned). The miller, on the other hand, acquires the risk that the price of wheat will fall below the price specified in the contract (thereby paying more in the future than he otherwise would) and reduces the risk that the price of wheat will rise above the price specified in the contract. In this sense, one party is the insurer (risk taker) for one type of risk, and the counterparty is the insurer (risk taker) for another type of risk.

Hedging also occurs when an individual or institution buys an asset (like a commodity, a bond that has coupon payments, a stock that pays dividends, and so on) and sells it using a futures contract. The individual or institution has access to the asset for a specified amount of time, and then can sell it in the future at a specified price according to the futures contract. Of course, this allows the individual or institution the benefit of holding the asset while reducing the risk that the future selling price will deviate unexpectedly from the market's current assessment of the future value of the asset.

Derivatives traders at the Chicago Board of Trade.

Speculation and arbitrage

Derivatives can be used to acquire risk, rather than to insure or hedge against risk. Thus, some individuals and institutions will enter into a derivative contract to speculate on the value of the underlying asset, betting that the party seeking insurance will be wrong about the future value of the underlying asset. Speculators will want to be able to buy an asset in the future at a low price according to a derivative contract when the future market price is high, or to sell an asset in the future at a high price according to a derivative contract when the future market price is low.

Individuals and institutions may also look for arbitrage opportunities, as when the current buying price of an asset falls below the price specified in a futures contract to sell the asset.

Speculative trading in derivatives gained a great deal of notoriety in 1995 when Nick Leeson, a trader at Barings Bank, made poor and unauthorized investments in futures contracts. Through a combination of poor judgment, lack of oversight by the bank's management and by regulators, and unfortunate events like the Kobe earthquake, Leeson incurred a $1.3 billion loss that bankrupted the centuries-old institution.

Basically derivatives is like a play on a play, a bet on a bet (just in many multiples more)... to put a number on it would be that the current outstanding derivatives contracts in the world would equal to about 25 years of the world's entire GDP... but no one can really put a definite number on it.

Allan Greenspan facilitated the use of derivatives after the crash of the 80's when he explored ways of negating the negative effects of a catastrophic event to the markets. So instead of massive bankruptcies and years of suffering leading to an eventual rebound... we get these new fancy vehicles that will grant us "salvation". It's not as bad as the massive printing of money by Germany in the 20's, only because people can't see derivatives for what they really are.

Historically, 2 "solutions" have worked successfully in dealing with dire economic situations:

The purely capitalist solution had be for businesses to fail and bankruptcies to occur. Many people will suffer, stave, etc... but a bottom will be reached and growth will return.

The purely communist solution would be to confiscate all the money that the Wall St. M.F.'s has swindled and return it to the economy. A few people will suffer, starve, etc... but a bottom will be reached and growth will return.

OK, maybe a third... start World War 3.

I have a feeling all this bailout is doing is to prevent the derivatives market from collapsing. Saving a few million people from loosing their jobs aren't worth a trillion dollars of stimulus money, but saving the world from economic Armageddon is. A budget in the trillions is still comprehensible and (maybe) manageable. But when we get to the quadrillions, money stops having any of its effectiveness... jobs won't matter and no money that the world can infuse would make a difference, because if hyperinflation is world wide... money might as well not exist.

I would hope that the world can get a new system to guild our economies... or (selfishly) we get to kick the can further down the generations till I'm long gone... 'cause I ain't into living in an "apocalypse". Man... I sure hope I'm just being paranoid. Anyways, I think we should all practice being kind to one another... we may need other people's help when times get worse.

Edited February 27, 2009 by D_Unit

[ron5864]

Well with all the gloom and doom, think of it this way...

This EPIC global recession cannot be any worse than an all out Zentraedi attack on Earth. Seriously, I would take being poor than having a laser cannon barrage from space.

So I am confident that all of us will live through this to collect another Macross item.

[jenius]

The economy naturally jumps up and then falls down. Every single time there's a new reason why it speeds up and a new reason why it slows down. Every single time we learn from our mistake only to learn a new way to (essentially) repeat it. The policies put in place by institutions like the US' Fed are simply meant to slow down the economy when it's speeding up unsustainably and then to speed it up when it starts slowing (reduce the height of the peak and the valley). It's because of these natural cycles and our ability to (when things aren't completely FUBAR) influence these cycles (and/or severity) that makes economists so important. When Wall Street gets into excessive gambling there isn't much the world can do about it so long as Wall Street keeps winning. Maybe now that the current crunch is happening the government will be able to stay a step ahead of Wall Street for a while but when there are such huge rewards that can be reaped from gambling the incentive is always too high and the world's most brilliant minds will always come up with ways to get beyond government control and engage in huge risks for what are deemed even more huge returns. Pull through this, hope for the best, and then don't be shocked when the next downturn comes. Don't get crazy though, this is a natural cycle. Don't hide your money in a box. Don't fall for conspiracy theories. Don't start blaming immigrants for taking jobs. Hard times call for an excess of rational thought, not a dearth of it. (None of this is directed at anyone in particular).

[nghia59]

Well with all the gloom and doom, think of it this way...

This EPIC global recession cannot be any worse than an all out Zentraedi attack on Earth. Seriously, I would take being poor than having a laser cannon barrage from space.

So I am confident that all of us will live through this to collect another Macross item.

I don't think the world is so much poor. I think the banks are poor and the lack of cashflow is the issue. Not that there isn't a profit potential out there for businesses.

So where did the money go if the banks are poor? To the guys that own them bleeding out the cash from the rest of us. The world isn't done by any degree but it sure as hell makes it lame for collecting. I'm OK as long as I don't spend frivolously, but dammit all to hell Macross was the reason why I had a job to begin with. Not because I necessarily love making games. I like making games just not love.

Hey Graham, is there anyway that Yamato can slow down releases at all? They seem to be putting out too much too fast for peeps to keep up with, and it also seems that they are dumping stock because HLJ has new restock at clearance prices.

- Nghia

[jenius]

Where did the money go? Here's a real simple example of how it simply vanished...

Bank 1 buys $100Billion in Mortgage backed Securities. These securities pay the bank 7% per annum and have a market value of $120BIL if split up and sold 8 ways of Sunday (all just hypothetical stuff here).

Bank 1 goes to Bank 2 and pledges that $100BIL MBS for a $100BIL Line of credit. Bank 2 makes 5% plus a ton of fees loaning $200BIL to Bank 1.

Joe Blow can't pay his mortgage... neither can roughly 10% of the people in the security. The Security is no longer profitable.

The agency rating that originally said the MBS was as safe as government paper now sees their valuation model is wrong. They warn that their ratings on MBSs are now entirely suspect.

The market for MBSs vanishes. MBSs are affectively worthless in the eyes of Wall Street and thus worthless as collateral on debt obligations.

Bank 2 sees that the best Bank 1 can do is fire sale their MBS to some schmuck investor (who isn't really a smuck since there's still 90% of MBS people paying their mortgages) for $50BIL.

Bank 2 calls Bank 1 and says "Your collateral is only worth $50BIL by our calculations. Please repay us $50BIL today. Oh yeah, and since the market is heading down, we won't renew your line of credit in six months so even if you have $50BIL to keep you alive now, you better have another $50BIL to give us again in six months so we can get out of this relationship."

Bank 1 says "We don't have $100BIL lying around, we used it to buy MBSs and now there's no market for them."

Bank 1 goes bankrupt.

Bank 2 receives a $50BIL MBS and lots of other MBSs in repayment of the $100BIL line of credit it had. Unfortunately, those aren't cash, and people are calling Bank 2 to repay their debts since Bank 2 also was using MBSs as collateral.

Bank 2 goes bankrupt.

The vicious cycle continues until you reach a bank that either held only MBSs backed by the government (as there's still an active market for them) or a bank that had enough cash on hand to wait out the MBSs and survive on the monthly remittance of borrowers.

The perceived value of a security vanished, so did it's value as collateral, that freaked out everyone, everyone called their debts due, no one could repay them 'cause they were all in the same boat, and that's how you get where were at.

[Graham]

Heh, I have zero understanding of anything financial, even trying to read Jenius's "simple" explanation in the post above, my brain zones out and goes all Homer Simpson on me after reading the first sentence.

Hmm........donuts!

As for D Unit's post (several post's above), trying to understand it nearly made my brain melt down.

To me a hedge fund is where you hide your money in the garden hedge, instead of under the matress!

Graham

(the financial idiot)

[ruskiiVFaussie]

same as above! v.2s have taken the back seat, cept for the vt-1 (yay!) and ve-1, which are must haves.

Edited February 27, 2009 by ruskiiVFaussie

[m0n5t3r]

same as above! v.2s have taken th back seat, cept for the vt-1 (yay!) and ve-1, which are must haves.

yeah... if one v.2 VF-1 is approx. $100, then just cross out 5 or 6 on your to buy list and get the SDF-1 instead...

[m0n5t3r]

Graham

(the financial idiot)

anybody who has money (to spend on "toys") cannot possibly be a "financial idiot"... if you're financially secure, you must be doing something right even if you don't understand what it is you're doing

[nghia59]

Where did the money go? Here's a real simple example of how it simply vanished...

Bank 1 buys $100Billion in Mortgage backed Securities. These securities pay the bank 7% per annum and have a market value of $120BIL if split up and sold 8 ways of Sunday (all just hypothetical stuff here).

Bank 1 goes to Bank 2 and pledges that $100BIL MBS for a $100BIL Line of credit. Bank 2 makes 5% plus a ton of fees loaning $200BIL to Bank 1.

Joe Blow can't pay his mortgage... neither can roughly 10% of the people in the security. The Security is no longer profitable.

The agency rating that originally said the MBS was as safe as government paper now sees their valuation model is wrong. They warn that their ratings on MBSs are now entirely suspect.

The market for MBSs vanishes. MBSs are affectively worthless in the eyes of Wall Street and thus worthless as collateral on debt obligations.

Bank 2 sees that the best Bank 1 can do is fire sale their MBS to some schmuck investor (who isn't really a smuck since there's still 90% of MBS people paying their mortgages) for $50BIL.

Bank 2 calls Bank 1 and says "Your collateral is only worth $50BIL by our calculations. Please repay us $50BIL today. Oh yeah, and since the market is heading down, we won't renew your line of credit in six months so even if you have $50BIL to keep you alive now, you better have another $50BIL to give us again in six months so we can get out of this relationship."

Bank 1 says "We don't have $100BIL lying around, we used it to buy MBSs and now there's no market for them."

Bank 1 goes bankrupt.

Bank 2 receives a $50BIL MBS and lots of other MBSs in repayment of the $100BIL line of credit it had. Unfortunately, those aren't cash, and people are calling Bank 2 to repay their debts since Bank 2 also was using MBSs as collateral.

Bank 2 goes bankrupt.

The vicious cycle continues until you reach a bank that either held only MBSs backed by the government (as there's still an active market for them) or a bank that had enough cash on hand to wait out the MBSs and survive on the monthly remittance of borrowers.

The perceived value of a security vanished, so did it's value as collateral, that freaked out everyone, everyone called their debts due, no one could repay them 'cause they were all in the same boat, and that's how you get where were at.

This reminds me of a story that my friend Toren Smith told me in the early 90's.

He was bidding on some manga licenses with another company who was pretty shady and lost the bid to the higher bidder. Well, it turns out that when the other guy finally made all the sales, he never coughed up the high license fee he promised the Japanese publishers that won him the bid. So according to my friend, the moral of the story is that it's easy to promise unreasonable sums of money if you have absolutely no intention of paying it in the first place.

I feel the banks were loaning money to people that they never had and knew how to get out of it without having to pay. There's always someone making a decision at the top of the ladder and there's always a plan or at least a plan of escape. The creation of money by the Federal Reserve is exactly that. Devaluation of currency is exactly that. By loaning out cash that is printed out of thin air is in an underhanded way of loaning bits of money from everyone to borrowers. We pay about one third our wages in taxes to an agency who runs the banking system and in return tells us that we make money from it all by paying back only 2% in annual interest rates. Pretty good racket for those cooking the books but not for the rest of us on the recieving end.

- Nghia

Edited February 27, 2009 by nghia59

[ruskiiVFaussie]

yeah... if one v.2 VF-1 is approx. $100, then just cross out 5 or 6 on your to buy list and get the SDF-1 instead...

They'll be around for years, the SDF-1... will not, and will cost more than a monthly car payment when they are sold out and Yamato

had a slow, long stock run and decides not to make any more.

Edited February 27, 2009 by ruskiiVFaussie

[VFTF1]

I would just add one element to Jenius's example - which is a GREAT illustration of what HAPPENED.

Now here's what's HAPPENING:

Screw Up Banks and Businesses: Help! Help! We're going bankrupt and if we go down the world will end! We're too big to fail!

Solvent Conservative Prudent Banks and Businesses: Dag, we aren't doing too well either. We hope we'll be able to weather the storm that those idiots above caused.

Government: Actually - since you guys aren't going under we're going to take your money and give it to those first guys.

Solvent Conservative Prudent Banks and Businesses: Huh?

Screw Up Banks and Businesses: Yeah! Help us save us!

Government: Ok - We've taken lots of money from taxpayers and productive businesses and banks - here - you guys who are screw ups can have it.

NEXT WEEK

Screw Up Banks and Businesses: HELP HELP! Even though we just got 50 gazillion billion trillion million dollars we still can't run a business! Help! Save us!

Solvent Conservative Prudent Banks and Businesses: Good god...why can't those bozos just go bankrupt so we can buy up their assets for 25 cents and kick start the economy?

Government: Hey screw ups - thanks for existing and making it look like businesses can't function without us. We'll be sending you a check for another gazillion dollars in the morning. Oh - and can we now buy 55% of your assets and tell you how to run things?

Screw Up Banks and Busineses: Whatever! Just keep giving us other people's money PLEASE! And now - we've got a plane to catch to Vegas for a conference about the economy...

Government: Funny - so do we - see you in Vegas friends.

Solvent Conservative Businesses: Warning: soon we will have no money to hand out because you two guys are killing us.

Government: Don't worry - we have a printing press.... We got it cheap from Zimbawbe.

The End (of the World)

Pete

[edwin3060]

For those of us who don't understand all the economic gibberish, like me, the simplest way to put it is that the economy will always have it's ups and downs. A simple rule of thumb (that works for Asia and as someone has said, South America as well) is that this cycle takes about 10 years So now we are in a down period, but things will look up again (and of course, eventually crash again).

[Kid_Robot]

What's strange about this whole economic situation is that it's not really a "recession;" from the research and consulting I've done (with economists), the majority of the problem is attributed to nation-wide panic, and then poor decision making.

Please don't anyone try to dispute this to make me look like a fokker lol (get it??? lol geez i crack myself up ), i'm just regurgitating some notes i took at a recent econ brown bag session.

Anyway, the smart people say that there is nothing "wrong" with the economy, and it's still growing bit by bit; just not as much as it was in the past... I haven't looked at recent stats but i'm told there has been no negative growth for a 6 month period or greater which is what defines a recession...

Any experts in the area feel free to chime right on in...

Peru, on the other hand, seems to be blossoming at the moment; and they are about to enact a trade agreement to strengthen their economy even more...

Since i don't live stateside i don't really feel too many of the affects, so i probably shouldn't even be saying anything, but... i can say that the dollar needs to strengthen its lil george washington arse back on up... Exchange rates are doing me some damage at the moment, i heard it's going to be up at 95 yennies to the dollar tomorrow though, so looks like we are making some strides in comparison to the 85 it was at last week ...

[Bri]

For those of us who don't understand all the economic gibberish, like me, the simplest way to put it is that the economy will always have it's ups and downs. A simple rule of thumb (that works for Asia and as someone has said, South America as well) is that this cycle takes about 10 years So now we are in a down period, but things will look up again (and of course, eventually crash again).

That's the one thing I really dislike about the financial sector. There is more techno-bable going around then on a Star Trek Convention. I started of as a student in Aerospace engineering before switching to economics when the whole Fokker collaps and aftermath killed the chance to work in the sector in my country. In engineering it's an art to keep things simple and clear. In finance it seems cool to make easy math look complicated by adding tons of abreviations and silly conventions. It's not exaclty helping in amking people understand what this crisis is all about or what can be done. I pity the people who have to explain to the politicians what has happened.

[VFTF1]

Well - the definition of a "recession" is supposedly two months of negative growth - but it's not like there's some "economics rule book" like in basketball where they define a foul and what's not a foul - and it's not like there's an umpire who says "recession!". Statistic also depend on who's counting and what they are factoring in.

I personally agree - we are not in a recession.

We are in a DEPRESSION. It's the worse Depression - for the USA - since the Great Depression. With this much - in terms of popular wisdom/conventional wisdom - I do agree.

Bernarke said recently that it'll all be over in six months. I was shocked that he said that. I don't believe it. I think the worse is still to come.

Exchange rates are going crazy right now because nobody knows what to expect of the future. Everyone wants to find a "safe" area - a safe industry, a safe bank, a safe currency, safe real estate...

But nothing is safe - and no country is safe. Every single one of us is going to feel this thing and feel it hard and it will not be pretty.

I think that the only event that we can compare it to from recent history is the fall of the Soviet Union.

We're talking the implossion of a major power.

I'm not saying this because I "want" it to happen - I don't. But I believe - and go ahead and laugh at me - but I believe America is going to fall apart within my life time. I'm an American and I'm not happy to be thinking this or believing it and if it doesn't happen I will be happy.

But I remember how people laughed at the few who saw what was happening to the Soviet Union and how NOBODY except the few people who had a clue predicted that one...

Well - if you look at what the USA is doing and has been doing for the last 30 years - it's a sad sad sight - and if you cut through the fluffy talk and just look at the numbers and look at the data - it does not look good.

Again - if I'm wrong: I'll be happy.

But it just looks bad and I'm sad for the country I grew up in

Pete

[wizartar]

Let’s have some fun with conspiracy!

I’m sure we all know about prophesy, but in short: 2012 in Mayan culture is the end of the world; then we have the Book of Revelations that also talks about aforementioned times. So onto the conspiracy!

There are two types of prophesy, those that unfold and those that are self fulfilled. The second of these meaning someone sets out with intent to do what’s required for fulfillment of the prophesy. Banks as we all know are controlled by a few powerful groups, well when it comes to conspiracy they always are. The Knights Templar engineered this instability in the banking sector to bring about Armageddon! By destroying money it makes it possible for our current system to crash and a New World Order oversight committee to come into existence which promises stability and total control over world finances.

Now, what most people don’t realizes is that the Celtic Tiger came about from reverse-engineering alien technology from a giant space ship that crashed on our island back in 1989. We’ve been systemically rebuilding with money borrowed under the guise of subprime mortgages. Our new and improved ship will be known as Super Dimension Leprechaun-1, in Ireland at the moment under every rainbow sites a pot of deculture! Previously the Irish would head off to Britain or the US of A. But now we’re getting on our ships and heading for the stars! Leaving you all in global ruin! So long and thanks for all the pints!

[CF18]

Come on guys this is an anime fan site. You gota use animation to explain it:

http://vimeo.com/3261363

of

http://www.crisisofcredit.com/

For more education, these videos are good:

http://marketplace.publicradio.org/videos/...king_cdos.shtml

[edwin3060]

Well - the definition of a "recession" is supposedly two months of negative growth - but it's not like there's some "economics rule book" like in basketball where they define a foul and what's not a foul - and it's not like there's an umpire who says "recession!". Statistic also depend on who's counting and what they are factoring in.

I personally agree - we are not in a recession.

We are in a DEPRESSION. It's the worse Depression - for the USA - since the Great Depression. With this much - in terms of popular wisdom/conventional wisdom - I do agree.

Bernarke said recently that it'll all be over in six months. I was shocked that he said that. I don't believe it. I think the worse is still to come.

Exchange rates are going crazy right now because nobody knows what to expect of the future. Everyone wants to find a "safe" area - a safe industry, a safe bank, a safe currency, safe real estate...

But nothing is safe - and no country is safe. Every single one of us is going to feel this thing and feel it hard and it will not be pretty.

I think that the only event that we can compare it to from recent history is the fall of the Soviet Union.

We're talking the implossion of a major power.

I'm not saying this because I "want" it to happen - I don't. But I believe - and go ahead and laugh at me - but I believe America is going to fall apart within my life time. I'm an American and I'm not happy to be thinking this or believing it and if it doesn't happen I will be happy.

But I remember how people laughed at the few who saw what was happening to the Soviet Union and how NOBODY except the few people who had a clue predicted that one...

Well - if you look at what the USA is doing and has been doing for the last 30 years - it's a sad sad sight - and if you cut through the fluffy talk and just look at the numbers and look at the data - it does not look good.

Again - if I'm wrong: I'll be happy.

But it just looks bad and I'm sad for the country I grew up in

Pete

Well that's straying abit too much into politics I think so we'd probably steer clear of that!

Still, I find it amusing (and a little sad) that despite all the years of research and study and practice of economics, we are still no better off than we were say 50 or 100 years ago. I mean, as a science, economics has had very little results to show. Even in meteorology, they can now predict whether it will rain in the next day pretty accurately, but in economics you can't even tell what is going to happen tomorrow!

[Bri]

Still, I find it amusing (and a little sad) that despite all the years of research and study and practice of economics, we are still no better off than we were say 50 or 100 years ago. I mean, as a science, economics has had very little results to show. Even in meteorology, they can now predict whether it will rain in the next day pretty accurately, but in economics you can't even tell what is going to happen tomorrow!

Nice try , you hippy

[blacklotus]

Where did the money go? Here's a real simple example of how it simply vanished...

Bank 1 buys $100Billion in Mortgage backed Securities. These securities pay the bank 7% per annum and have a market value of $120BIL if split up and sold 8 ways of Sunday (all just hypothetical stuff here).

Bank 1 goes to Bank 2 and pledges that $100BIL MBS for a $100BIL Line of credit. Bank 2 makes 5% plus a ton of fees loaning $200BIL to Bank 1.

Joe Blow can't pay his mortgage... neither can roughly 10% of the people in the security. The Security is no longer profitable.

The agency rating that originally said the MBS was as safe as government paper now sees their valuation model is wrong. They warn that their ratings on MBSs are now entirely suspect.

The market for MBSs vanishes. MBSs are affectively worthless in the eyes of Wall Street and thus worthless as collateral on debt obligations.

Bank 2 sees that the best Bank 1 can do is fire sale their MBS to some schmuck investor (who isn't really a smuck since there's still 90% of MBS people paying their mortgages) for $50BIL.

Bank 2 calls Bank 1 and says "Your collateral is only worth $50BIL by our calculations. Please repay us $50BIL today. Oh yeah, and since the market is heading down, we won't renew your line of credit in six months so even if you have $50BIL to keep you alive now, you better have another $50BIL to give us again in six months so we can get out of this relationship."

Bank 1 says "We don't have $100BIL lying around, we used it to buy MBSs and now there's no market for them."

Bank 1 goes bankrupt.

Bank 2 receives a $50BIL MBS and lots of other MBSs in repayment of the $100BIL line of credit it had. Unfortunately, those aren't cash, and people are calling Bank 2 to repay their debts since Bank 2 also was using MBSs as collateral.

Bank 2 goes bankrupt.

The vicious cycle continues until you reach a bank that either held only MBSs backed by the government (as there's still an active market for them) or a bank that had enough cash on hand to wait out the MBSs and survive on the monthly remittance of borrowers.

The perceived value of a security vanished, so did it's value as collateral, that freaked out everyone, everyone called their debts due, no one could repay them 'cause they were all in the same boat, and that's how you get where were at.

Thanks for the explanation for the newest crisis. Sounds similar to the Tulip/South Seas/Dotcom scams then. I guess we stupid humans never learn. I'm whistling the Monty tune now...

[edwin3060]

Nice try , you hippy

The ironic thing is, I'm about as different from a hippy as you can get!

[ron5864]

Wow! My state, California, had a 10.1% unemployment rate in January. That is high.

What I worry more about are the byproducts of a deep recession; crime and social unrest. The crime statistics so far have not shown any dramatic increases. However, I do worry that California and the whole US can end up like Robocop's version of Detroit.

[505thAirborne]

Wow! My state, California, had a 10.1% unemployment rate in January. That is high.

What I worry more about are the byproducts of a deep recession; crime and social unrest. The crime statistics so far have not shown any dramatic increases. However, I do worry that California and the whole US can end up like Robocop's version of Detroit.

One of many reasons I moved here to Kansas, I was born an raised in the San Fernando Valley for 30 years. I did live in Temecula, CA for about year and a 1/2, but the bubble there already burst and they were letting teachers & teacher assistants go, not to mention closing down some schools. I can still be an assistant here in KS & my home business.

Almost No crime at all here, everyone here loves to drink, 20+ bars just on Mass. St alone (St. Patty's day rules here!!) with no stabbings and as long as your cool the KU Jayhawks, your as welcomed as anyone. And thankfully our unemployment rate is quite low, the University here employ's a boat load of people. Not to say its perfect here, but were small enough to not be overwhelmed!!

And your reference to a Robocop version of Detroit. One more reason I chose not to stick around. But I do miss the beaches.....

I give it a few more months before things start to pick up again, Since No here has said it, I will. If your a MW member & you don't live in the US you may be in dark, but our U.S. economy and yours , All are due to G.W. & DICK Chenney. 2 of the biggest A**Holes on the planet. Our new president will help us make new jobs and save the ones we got and make this a better world!!

And more macross toys for me to collect in the future. To those who think my last few lines were out of line, too bad, they ruined us all badly!! And you still think I'm wrong then vote Jindle & Palin in a few years!! See where that take us....

505th Airborne.

[jenius]

Well we're not supposed to get political. I can say that all politicians, not just the two at the top, share their fraction of a percentage for not being able to see the writing on the wall. The various lobbyists had everyone convinced that this wouldn't happen because they would always play it safe enough to survive... in the end we all saw that they were way too confident and everyone was suckers for believing them. There are plenty of reasons to blame Bush for the way money was spent and such but this problem was way too insidious to say its his fault... it's his fault, the congress' fault, the house's fault, Wall Street's fault, the bank's faults, the rating agency's faults, the lenders' faults, the borrowers' faults, etc. etc.

[Vifam7]

I give it a few more months before things start to pick up again, Since No here has said it, I will. If your a MW member & you don't live in the US you may be in dark, but our U.S. economy and yours , All are due to G.W. & DICK Chenney. 2 of the biggest A**Holes on the planet. Our new president will help us make new jobs and save the ones we got and make this a better world!!

Sorry, I don't think it's gonna happen. Raising taxes, racking up huge deficits, bailing out idiots, and mega-sizing the government is no way to get out of an economic downturn.

VFTF is probably right. Watch America go down the tubes folks. At least for the next several years.

Ofcourse I'd like to be wrong.

Edited February 27, 2009 by Vifam7

[jenius]

This isn't the end folks, the economy was fine but it got kicked in its nuts. Just like we all survive a kick in the nuts so will the US. It's just a kick, not cancer. Putting ice on your balls doesn't necessarily feel good either but it might help the swelling. In the end, all it takes is time. Again, tough times call for rational thought people, now's no time to grab your tin foil helmet and start expecting the end of days.

[Vifam7]

This isn't the end folks, the economy was fine but it got kicked in its nuts. Just like we all survive a kick in the nuts so will the US. It's just a kick, not cancer. Putting ice on your balls doesn't necessarily feel good either but it might help the swelling. In the end, all it takes is time. Again, tough times call for rational thought people, now's no time to grab your tin foil helmet and start expecting the end of days.

The way how the politicians and media talk, you'd think it was the end of days.

I certainly don't see much rational thought from Washington! X(

Edited February 27, 2009 by Vifam7

[blacklotus]

Sorry, I don't think it's gonna happen. Raising taxes, racking up huge deficits, bailing out idiots, and mega-sizing the government is no way to get out of an economic downturn.

VFTF is probably right. Watch America go down the tubes folks. At least for the next several years.

Ofcourse I'd like to be wrong.

Much as I dislike the USA I see now, I have no hatred for Americans. Actually, if it's not for the Americans, I'll be speaking Japlish right now. Or worse, I might not even be around right now, seeing how the Japanese massacre the Chinese in Singapore. (Yes, I'm ethnic Chinese)

I was just wondering, what happen to the good old American values? You remember right? Your grandparents/parents save for the future, spend within their means, ensure their children have a good education, and have a good home environment to raise kids. You know, the Waltons/ Brady Bunch/Family Ties/Cosby Show values? Or are those values just TV fantasy?

I'm sadden at how in just less than 3 generations, USA has gone from the World's Biggest Creditor nation to the World's Biggest Debtor nation.

[Bri]

This isn't the end folks, the economy was fine but it got kicked in its nuts. Just like we all survive a kick in the nuts so will the US. It's just a kick, not cancer. Putting ice on your balls doesn't necessarily feel good either but it might help the swelling. In the end, all it takes is time. Again, tough times call for rational thought people, now's no time to grab your tin foil helmet and start expecting the end of days.

Well said.