Dow is down about 700 points today. We live in a time period where most Americans who plan on retiring are not just counting on social security to get by in theri golden years. 401K, deferred comp . . . vehicles such as these are used to help people retired at a certain age. Well for all those baby boomers who are looking to retire in the next 5-10 years and have been playing aggressive mutual funds to attain that goal, they have to ibe n trouble. I'm not a wall street guy and maybe there is some kind of bounce back, but to recover from the drops we are seeing is going to take a lot of time, IMO. This country (and the global economy) is all messed. We have a record deficit, high unemployment, in the middle of a costly war, citizens retirement accounts are way below what most figured they would be at by this time and we have a glut of baby boomers who were planning on retiring within the next decade. I'm guessing things are going to be different in the US for years to come . . .
They will be. I kind of laugh now when I look back and listen to all these people tell me instead of enjoying all of my cash in the present, to "save it for retirement". Now a good portion of that money is wiped out, while me? I have great memories, travels and have been able to live life. They lose thousands per day now, while I'm just getting better. Same thing with "real estate". My friends who bought their "investments" are now struggling to make ends meet and can possibly lose their houses if something goes wrong. I'm renting cheaply, rent controlled and am cash-rich. hoody hoo. But I hope it all works out for all. But fuck them, these peeps were bugging me about buying houses and getting retirement accounts. Most of them are likely in the red for all of it.
http://www.telegraph.co.uk/finance/...-hot-seat-as-Europe-falls-into-the-abyss.html Germany takes hot seat as Europe falls into the abyss We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars. By Ambrose Evans-Pritchard Last Updated: 11:05AM BST 06 Oct 2008 Investors will learn today whether the Paulson bail-out - fattened to $850bn (£480bn) by Congress - can begin to halt the death spiral in the credit system. So far, the response looks terrible. Germany is now in the hot seat. The collapse of a rescue deal for Hypo Real Estate on Saturday threatens a €400bn (£311bn) bankruptcy that nearly matches the Lehman Brothers debacle for sheer scale. Chancellor Angela Merkel has been forced to pull her head out of the sand, guaranteeing all German savings, a day after she rebuked Ireland for doing much the same thing. Reality intrudes. During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement. The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default. As the unflappable Warren Buffett puts it, the credit freeze is “sucking blood” out of the economy. “In my adult lifetime, I don’t think I’ve ever seen people as fearful,” he said. We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough. Drastic rate cuts would be a good start. Central bankers still paralysed by a misplaced fear of inflation – whether in Europe, Britain, or the US – have become a public menace and should be held to severe account by our democracies. The imminent and massive danger is now self-feeding debt deflation. The lesson of the 1930s is that any country trying to reflate in isolation will be punished. The crisis will ricochet from one economy to another until every one is crippled. We are seeing it play again in this drama as our leaders fail to rise above their narrow, parochial agendas. The European Central Bank – which raised rates into the teeth of the crisis in July – has played a shockingly destructive role in this enveloping slump. Its growth predictions this year have been, and still are, delusional. Neglecting its global role, it has vastly complicated the fire-fighting efforts of Washington. It could have offered “cover” to the US Federal Reserve this spring when Ben Bernanke was forced by events to slash rates to 2pc. It could at least have signalled an end to monetary tightening. That is how an ally ought to behave. Instead, it stuck maniacally to its Gothic script, with equally unhappy consequences for both sides of the Atlantic, as well as for China, Japan, and India. The euro rocketed yet further, which it turn set off an oil shock as crude metamorphosed into an anti-dollar with leverage. The ECB policy was self-defeating, even on its own terms. It merely drove headline inflation even higher, while deeper forces of underlying debt deflation pulled the real economies of Germany, Italy, France, and Spain into a recessionary vortex. Far from offering reassurance, the weekend mini-summit of EU leaders served only to highlight that nobody is in charge of this runaway train. There is still no lender of last resort in euroland. The £12bn stimulus package is risible. Angela Merkel has revealed her deep limitations. It was she who vetoed French efforts to launch a pan-EU rescue package, suspecting that any lifeboat fund would prove to be Trojan Horse – a way of co-opting German taxpayers into colossal transfers of wealth to Latin Europe. In that she is right, but it is too late now for dysfunctional EU political games. By demanding that those who caused the damage should pay for it, she crossed the line into caricature, or worse. Her comments echo word for word the “we’re alright Jack” attitudes of Euro-pols during the first US banking crises in 1930-1931, until the storm hit Europe and the entire cast was swept away by furious electorates, or simply shot. Thankfully, this EU stupidity is at last drawing serious criticism. “We have to make sure Europe takes its responsibilities, like the US: action must be taken quickly and in a concerted manner,” said IMF chief Dominique Strauss-Kahn. As for the US itself, it has not yet exhausted its policy arsenal. It can escalate further up the nuclear ladder. The Fed can cut interest rates from 2pc to zero. If that fails, it can let rip with the mass purchase of US debt. “The US government has a technology, called a printing press,” said Fed chief Ben Bernanke in November 2002. (His helicopter speech). In extremis, the Treasury/Fed can swoop into any market to shore up asset prices. They can buy Florida property. They can even buy SUV guzzlers from the car lots in Detroit, and mangle them in scrap yards. As Bernanke put it, the Fed can “expand the menu of assets that it buys.” There is a devilish catch to this ploy, of course. It assumes that foreign creditors will tolerate such action. Japan entered its Lost Decade as the world’s top creditor, with a vast pool of household savings to cushion the slump. America starts its purge with net external liabilities of $3 trillion, and a savings rate near zero. Foreigners own over half the US Treasury debt, and two thirds of all Fannie, Freddie, and other US agency bonds. But the risk of a dollar collapse is one for the distant future. Right now the world faces the opposite problem. There is a wild scramble for dollars as a $10 trillion pyramid of global lending based on dollar balance sheets “delevers” with a vengeance. This is a “short squeeze” on those who have used the dollar for a vast global carry trade. International banks are facing margin calls on their dollar leverage. It is why the Fed is having to provide $1.25 trillion in dollar liquidity for the entire global system, according to estimates by Brad Setser from the Center for Geoeconomic Studies. The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again. The Fed can now hope to pursue monetary stimulus “a l’outrance” without being slapped down by the currency, debt, and commodity markets. Take comfort where you can.
Clearly, the solution is to allow individuals to invest their personal social security accounts into the stock market. That's the only way out of this mess.
Dollar cost averaging is still a good thing. Right now and if the market does hit 8000, people investing their SS accounts bi-weekly (or whatever) will be buying at bargain prices.
I beleive you need a balance in life. It's not spend each dime of every paycheck the day you get it, but you can't pinch pennies either. -Petey
that's the way I see it. Personally, money that I think I will have to access within five years is sitting in no-risk CDs and (relatively) safe, "balanced" funds that invest a third of their assets in bonds and CDs. Although, to be honest, that was my wife's doing. The people who are really screwed are those who have dutifully been contributing to a college fund for their children, and they are just a year or two away from graduating high school. How can they afford the price of college now? You can't put off college for five years (like you may be able to w/r/t retirement).
I believe you can put off college for a few years in many cases. Good to get life experience after high school.
I'm probably weird, but I think society has been socking away way too much money for college. Tuitions are rising drastically faster than inflation because so many people have saved for it. There's a limited supply of good schools and there's been a ridiculous surplus of cash people have been willing to invest into going into those schools. Low supply + high demand = higher costs. A big dump like this could be a great thing for colleges. They will either have to find ways to cut tuition or drastically cut enrollment/teachers. My guess is they cut tuitions.
Amen. I knew so many people in college that floundered from one major to the next. Get some life experience and then go back to school. I wish I had. I'd have really appreciated my time there more.
They can be, but they don't have to be. A lot of people get satisfaction jut with the pride of owning a piece of property and the satisfaction knowing they can do whatever they want on that porperty (within the law). They aren't subject to the landlord's rules or wondering if the rent will increase after the lease is up. But I do think most owners consider it an investment. I look at it as an investment . . . not the best investment out there by any means, but something to have in the portfolio. Plus you get a yearly deduction on the interst you pay on the mortgage.
