Rolling US Economy Into The Shitbin Thread

we're in new territory here

http://media.npr.org/programs/atc/features/2007/aug/panic_cover200.jpg

Bonus points to whoever finds the first bad political cartoon about all this that features the Cloverfield monster stomping down Wall Street with the word "RECESSION" on its chest.

found on a goldbug blog:

Problems Bernanke Faces

* Falling real estate prices
* Subprime housing mess
* Alt-A mortgage mess
* Pay Option ARM mess
* Sharply rising unemployment
* Rising credit card defaults
* Commercial Real Estate implosion
* Global wage arbitrage
* Falling US dollar
* Overheating China
* Slowing global economy
* Tapped out consumers
* Implosion of $500 trillion in derivatives
* Solvency issues at banks
* Forced unwind of massive Yen carry trade
* Boomer retirement
* Pension plan assumptions in an economy starving for yield
* Rising corporate defaults

LOOKS LIKE A GOOD TIME TO STAY IN HIGHER ED!

I ain't moving anywhere!

I feel pretty stupid for investing in my 401k (actually a 403). I'd had a lot more fun if I had eaten the taxes and spent the money on booze, records and drugs.

I mean, like I lost a thousand dollars on paper this year I think!

I have just called the local banks to start the process of refinancing my mortgage.

I really don't like being a recent college graduate and reading this.
Although I doubt there's anyone who does, really.

anyone think a stimulus plan is a good idea?

anyone think a stimulus plan is a good idea?

absolutely (that's what keynes was all about, yo) -- the chinese and the bond markets may not like it very much, tho'.

I feel pretty stupid for investing in my 401k (actually a 403). I'd had a lot more fun if I had eaten the taxes and spent the money on booze, records and drugs.

you'll be fine, as long as you keep your job and keep making contributions.

Don't pay attention to your 401k or 403b value for the next X years, just max out the matching contributions. A dollar for dollar match gives an immediate return of 100%, doesn't it? And that doesn't take into account tax advantages, or reinvested dividends, or compounding.

I'm convinced that the next channel for promoting consumption will be loans against the value of the 401k, which will result in old people eating rats in 20 years.

At least this tax refund (is that what GWB wants?) is happening when I'm being taxed enough to GET something.

</short-sighted self interest>

Don't pay attention to your 401k or 403b value for the next X years, just max out the matching contributions. A dollar for dollar match gives an immediate return of 100%, doesn't it? And that doesn't take into account tax advantages, or reinvested dividends, or compounding.

Lol we match double at 5% but I'm also contributing another 5% which isn't matched.

pick funds that have really low operating costs, that way the robots and douchebags losing your money aren't charging you to do so.

im no economist, but it seems to me the economy today is radically different than it was in keynes time

Yes and no, money is still borrowed into existence. everything has changed and yet not that much has changed

thats deep.

good analysis

to answer your question as to whether it is a good idea, i'm pretty much at the stage of thinking there are no good ideas, sometimes its just better to let the drunkard be. As to whether it will work, which is a different question, they are totally shot if it doesn't, where next if this doesn't work? real interest rates are already negative even before this. its also election year

also, as the uk is finding out interest rates cuts aren't necessarily passed on the customers at all

http://www.iwillteachyoutoberich.com/blog/the-worst-financial-advice-from-around-the-web-today-only

actually, i think its kind of important the point about money being borrowed into existence, because while more money can be dumped onto the economy, it still has to be borrowed by someone, the question is whether sentiment is holding up enough for people to take on yet more debt and spend, or whether they'll just try pay off what they already have, which returns money to source and is deflationary

Aw man...

President Bush and leaders of Congress joined in a rare show of cooperation in promising urgent action to pump up the economy with upwards of $150 billion in tax cuts and government spending.

http://www.cbpp.org/1-18-08tax-stmt.htm

^ comprehensive dismantling of the president's plan

So I'm a youngish dude. I was in middle school during the dot com crash and didn't have a job in high school during the subsequent recession.

You guys that have lived through this stuff before: how freaked out do I need to be by this talk of "a really bad recession?"

(lol i'm graduating in 6 months, shit.)

graduating into a teaching or a master's program, more like

Yeah I'm going straight into a teaching program this summer I think.

Unless I don't.

GF is moving to NY for grad school next January. Any teaching job I take is gonna require a two-year contract. I might chase her for grad school, who knows. I have about a month to decide lol

Plz read "I might chase her for grad school, who knows" as "damn am I gonna stay with this girl or not?"

It's been a good 4 years and I'd love to continue it, but wtf do I do with a bachelors in English without a teaching cert or any contacts in publishing etc?

work in a record store, duh

learn to pour beer

make the noize bored more fun

re: fears about 401k's etc - I contribute dutifully to my IRA (our co. doesn't match. dicks.) and will likely continue to do so. The low-fee stock index funds I bought 3 or so yrs prior to the "correction" in 2000 and have occasionally contributed to since have weathered the storms pretty well. The key is making sure you're not socking away money in these things that you will likely need in the short term (& obv w/ IRA & 401k you prob don't want to even think about it until your nearing retirement in order to avoid penalties). I guess it's important to remember that the market has averaged something like right over 9% since 1927 - which has includes the Great Depression as well as several nasty recessions.

of course it's entirely likely that I don't fully understand the intricacies of the current economic climate and that we are, in fact, all DOOMED.

learn to pour beer

-- El Tomboto, Wednesday, January 23, 2008 2:08 AM

yeah there are these obnoxious "Texas School of Bartending" commercials on the radio every day and i occasionally consider actually dialing

one-EIGHT HUNNID- bar- TEND!

i was in college during the 1991-1992 recession -- i coped by moving back with my parents, getting a full-time job and finishing up undergrad as a part-time student. it was not fun, but i survived. also, i was very lucky in that my employer at the time had a VERY generous tuition reimbursement policy so my undergrad debt was minimal (i understand that that may not be realistic, and i admit that i was very fortunate in that regard). i ended up graduating in 1997, right when the dot.com thing took off and was able to get a good job. also, my BA is in english/poli. sci. (though i started out as an economics/poli. sci. student) & my undergrad job was in accounting and benefits administration (which may have made me somewhat more marketable when i finally got the BA than the typical english BA).

i survived the dot.com crash/post-9/11 NYC-economy-in-the-shitbin by being in law school during the worst of that -- though those days were financed by student loans (for which i am paying dearly now). i survived that, too, but i would hesitate to recommend doing any kind of post-grad (including law school -- ESPECIALLY law school) if you'll end up deep in student loan debt.

and re IRA investments -- learn the term "dollar cost averaging" (it means make regular deposits into the IRA account at a set time interval [weekly, biweekly, monthly, whatevah). it won't totally prevent losses if you are investing in equities, but it will mitigate them to some extent. dollar-cost averaging is how you invest in 401(k)'s, anyway, so if you do that then you already know the drill.

i also heart low-fee/no-load funds ... paying a load is throwing your money away.

im no economist, but it seems to me the economy today is radically different than it was in keynes time

that is true -- but the basic idea remains the same: put money in the hands of those who are most likely to spend it (pref. lower-to-middle class folks), who then do just that (and thereby put money in the hands of merchants, who then spend THAT money, etc.). if anything, it may be MORE effective now since (as is repeated ad nauseum in the press) our economy is so strongly dependent on consumer spending.

the problem, though, is funding such a stimulus program -- we've got deficits now to worry about (and freaking out the bond traders and the chinese by running the debt even higher) (and thanks to dubya and his stupid tax cuts/even stupider Iraq war). and dubya (and ANY GOPer) WILL veto anything that raises taxes (the ghost of ronnie reagan still roams the land!)

"I might chase her for grad school"

NYC has been a not very good place for those who don't already have jobs or high-demand skills and aren't willing to go into (high?) debt.

And soon (now?) it will be a TERRIBLE place for same. There won't be new jobs outside the service economy, and there will be huge financial layoffs, so you better hope the Europeans learn to tip.

"how freaked out do I need to be by this talk of 'a really bad recession?'"

Incidentally I got my BA in the early 90s recession, and our commencement speaker at my Big State University was the Postmaster General. He told us "there are a lot of good jobs with the post office."

Now that the NYC economy is basically all financial and service (serving the needs of the financial workers), I'm curious to see what happens now, especially since it looks like Europe and Asia are having problems of their own.

will: why would you contribute to a 401K if your company isn't matching?

http://www.nytimes.com/2008/01/23/opinion/23stiglitz.html

short version: "if we had democratic policies in place we wouldn't be in this mess"

Yes and no, when everything is 'booming' people have a tendency not to want any measures that might stop the good times rolling, even though they are the very measures that would stop it falling off the edge of a cliff down the line

um, kinda off-topic, but who made that dolly parton/robert armani mashup?

will: why would you contribute to a 401K if your company isn't matching?

-- Jimmy The Mod Awaits The Return Of His Beloved, Wednesday, 23 January 2008 04:06 (10 hours ago) Link

yeah poor wording on my part. I meant to say that since my company doesn't match 401k I try to max out my Roth IRA instead.

there are tax benefits even if your company doesn't match. You can sell low performing funds and buy into better performing ones or switch over to bonds etc within your 401(k) and not have to pay capital gains on it. You're only taxed when you actually cash out.

Roth IRAs are taxed on the way in but not on the way out, which I think is better. But there's a contribution limit.

also, assets in 401(k)s and IRAs are off-limits to creditors in case of bankruptcy (yes, even after bankruptcy "reform"). not that anyone here is planning on going bankrupt, but it's nice to know that if you do then at least your retirement money won't be on the block.

http://www.stock-market-crash.net/images/ftse.gif
http://etftrends.typepad.com/photos/uncategorized/2007/03/13/japanski.jpg

we gonna die

xp
ah I see

yeah ideally you have the disposable income to do both. Contributing to your 401k reduce your taxable income and (have capital gains benefits as brownie points out), plus, if your company matches, hey! free money!

IRA's don't get taxed when you cash out at retirement (...at least not for now, muahahahaha)