Our financial system is crumbling this week.

[phins]

money doesn't grow on trees. if the stock market's the exception to this rule, it just shows that there's something fundamentally wrong there.

i am not an economist, but what i do understand about the current situation scares the crap out of me.

Economies and companies grow, and always have. That's not a bunch of smoke and mirrors. Some of the market is, but that's always been true.

Gas prices have risen and bad loans were approved. That's a had a big impact on everyone, but it's not going to last forever.

The market ALWAYS recovers...the problem is, investing in sound, strong, mature companies, won't gain you a market return above the average normally. As far as picking the right companies to invest in, if we were all as good as Warren Buffet at choosing stocks, we'd all be on the board at Berkshire Hathaway...

[phins]

money doesn't grow on trees. if the stock market's the exception to this rule, it just shows that there's something fundamentally wrong there.

i am not an economist, but what i do understand about the current situation scares the crap out of me.

Economies and companies grow, and always have. That's not a bunch of smoke and mirrors. Some of the market is, but that's always been true.

Gas prices have risen and bad loans were approved. That's a had a big impact on everyone, but it's not going to last forever.

I agree ghost, about the history of US markets. But if you look at the history of World economies. None of them have always been on the increase. Its not always up. I view countries as having an economic life cycle. The US was in the upward expansion mode for 100+ years. But in some regards, we've passed our peak as an economy. As someone here just wrote - money doesn't grow on trees.

I still think we need to be careful. The globalization may be the US savior - So many nations have a vested interested in our economy.

I'm not saying it can't end, but I think we'd need a bigger catastrophe. It looks like there's a lot of growth coming in green technology. It's becoming more popular and it's also necessary, which is a nice combination. Much of it will fail, but some of it ought to skyrocket if it can deliver.

My point was looking at the long long history - dynasties like Roman empire and Great Britain were knocked back because they were overextended. I keep thinking of a book I read most of (too complex, I couldn't finish) called Wealth and Democracy by Kevin Phillips. He takes the long view, and points out a lot of current US economic trends that mirror former dynasties that passed their peak.

Older economies in Europe maxxed out on their potential long ago - they used up their natural resources and developed most of their space. Now their economies aren't as powerful. I guess, what I'm getting at - the US economy based on brain-dead consumerism and endless expansion is not sustainable. But something slightly less could be, and actually wouldn't be all that bad.

I don't think the sky is falling by any means. as you mention - there are so many factors and variables to weigh - like potential growth in green tech, globalization, world sharing of risk. We're talking about stuff that makes heads spin.

Good post.

[Gashouse]

I just don't understand why the Fed bailed out Bear Sterns and Fannie Mae/Freddie Mac, but left Lehman to go bankrupt. The market wants consistency and predictability, and now the message is: maybe you get bailed out, maybe not.

Well I'm glad they didn't repeat the first mistake. When the federal government starts bailing out private companies on a regular basis, we might as well move to Canada so we can have a socialist government that actually works fairly well.

My understanding is that the threats posed by a Bear bankruptcy could have toppled the entire financial system, thus the Fed felt they had to act. Who knows who truthful this is/was.

I sure hope the Fed makes a clear policy statement about its involvement in private sector risk and reward--or lack of involvement. I don't want a penny of my tax dollars insuring bankers who think asset prices will always continue to rise, or at least long enough so that they can flip whatever exotic securities they want to purchase with shareholder dollars, and the implicit backing of the government.

right - the Bear bankruptcy came on sort of suddenly and a complete failure would have sent larger shockwaves than are currently going through the system. however, there was plenty of writing on the wall about the Lehman bankruptcy, so the market had time to anticipate it. i think the Fed definitely made the right decision about Lehman. Did they do the right thing with Bear? I dunno. I guess time will tell.

it's only been in the past year that i've tried to become more of an active investor - trying to pay attention to the news; learn about what's going on with companies; figure out how to value stocks - instead of passively dripping into mutual funds. What an interesting year it's been - with some good lessons.

[thrill]

Nouriel Roubini.

http://www.rgemonitor.com/roubini-monit ... depression

Cheery.

[Popeye_Card]

Nouriel Roubini.

http://www.rgemonitor.com/roubini-monit ... depression

Cheery.

Yeah, he must be a barrel of laughs at parties.

He never really gave much detail as to how this will affect the porn industry. Specifically, safe and approved websites.

[sighyoung]

NSFW

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[thrill]

NSFW

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HAHA

[TimeForGuinness]

NSFW

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That's funny..and probably SFW

[GatewaySnayke]

I just watched Paul Krugman on Olbermann.

First, doesn't he look weird?

Secondly, he thinks that if McCain wins, Phil Gramm is the favorite to become treasury secretary and he's the guy who could push us into a depression. Take it for what it is.

[GatewaySnayke]

Does the fun ever stop?

As the markets closed, its stock slid to $4.76 a share, down from a 52-week high of $70 a share, representing the evaporation of $176 billion in market value in less than one year. While regulators were racing to find some kind of capital infusion that could keep the company standing, ratings agencies slashed AIG's credit rating, making it much more expensive for the insurer to do business. AIG—a company with $110 billion in revenues last year and $1 trillion in assets—has suddenly gone from being the gold standard in its industry to fighting for survival. The sheer speed of its descent has stunned employees, customers, and many in the industry.