The Financial Crisis

  • Comments posted to this topic are about the item The Financial Crisis

  • I hope you're right that it only takes 2-3 years to work out. If you can remember the Savings & Loan bailout was close to 10 years to close things out. That bailout was a drop in the bucket compared to this one.

    Our political leaders seem to think that all we have to do is throw money at something and never really hold those responsible accountable. They need to address government involvement with Fannie & Freddie. Bald face lies by both the corporate leaders and their legislative support. Regulatory oversight needs to be improved. To say there was no oversight misses the fact that the credit markets have drastically changed with derivatives, hedge funds, swaps and computer trading. Far to many banks made ninja loans (no income no job) to people that shouldn't have gotten them. Others borrowers were enticed to take on more debt than they should have and were betting that a bigger fool would come along and pay a premium for their overpriced house. Some mortgage brokers were busy generating fees on loans they could package and sell to Fannie/Freddie; who would securitize them for Wall Street; who would fold, spindle and mutilate them for other investors. There doesn't appear to be anybody willing take any responsibility for anything (except good old US the taxpayer). Well, the music has stopped and there were far fewer seats in this game of musical chairs than anybody realized.

    I don't believe this will end in a depression but I do believe the workout period will easily triple or quadruple your estimate.

    --Paul Hunter

  • With regards to getting a car for your son, why not take the tack that my old man said to me viz "If you want a car get a job, save up and buy your own". Makes a man appreciate his stuff when it's bought with his own money 🙂

    Tim Brimelow

  • I have to say I agree with Tim. If your son has to work to buy his car he will have some appreciation for the value of a dollar (whatever that is today anyway....). To me, it seems that far too many young are handed things and have no understanding of what it takes to get it. It all starts with the parents. But I am not trying to tell how to raise your son, just making more of a general statement here.

  • With regards to the financial issues affecting me, although it hasn't yet, I'm almost certain that it will over the next couple of years - I currently work for HBOS who's future is sketchy to say the least.

    I'm hoping though, that I've built some good foundations to carry us through - although we've recently bought our house, we have a 10 year fixed mortgage, tied in for 5 years. And we have no other debt at all.

    I must admit Steve - I agree with the others. My parent's didn't buy my car, don't get me wrong - they supported me in every other way possible. But made it clear that cars and things like that, I had to work for. As a result, I saved up some money and bought an old, battered 1.4i Ford Fiesta.

    It was a heap of junk, but I loved it to pieces because I'd earnt it.

  • Totally agree on the car thing with the others - I got my first real job saved up and then bought my first car. The feeling you get of having earned the money and bought it yourself is overwelming and you appreciate it more than any gift - Its yours, you did it! 🙂

    Ecconomy wise lets cut back on the number of politicians - that'll lower the tax bill! 😀

    Hiding under a desk from SSIS Implemenation Work :crazy:

  • I would hope that my job and my wife's job are fairly secure as we both work in the public sector, but there are never any guarantees. My main concern at this stage is that we have a 2 year fixed mortgage which is due for renewal in Feb 2010, so I hope things are looking a bit more rosy then otherwise I fear we might get slammed by a high variable rate. Also with a 6 week old daughter to take care of now our household income has taken a tumble as my wife is oon maternity leave and looking to go part-time.

    Looks like we'll just have to tighten the belt a bit and ride the waves for a couple of years.

  • Hello

    I'm a bit worried about this situation from where I am. I'm in South Africa, and currently I'm seeing the rand loosing its power against the dollar, so much that I don't miss the news about the latest updates around this issue. At some point we have to blame ourselves about this because taking to much credit that is offered to you was very wrong.

    Currently I'm trying to clean myself from debt so that things can be better with my life but with this now, I think its gonna be a little difficult. II really hope this can go away very quickly.

    But hey lets always look at a bright side and believe that this will end soon or something better will happen in the cost of this situation.

    :unsure:

  • It's not a pretty picture here in the UK, is it?

    Our government lies to us all the time.. generally now, whenever we get some bit of information from the politicians it's best to immediately look for the hook..

    They say inflation is at 2.5%. I say it's more like 11% - and that may be conservative.

    Ok, so how is this crisis affecting me.

    Well, for one thing, I've had to renegotiate our mortgage because the rates shot up way faster than my salary did last year and this year.

    Food bills.. up by around 15% on last year. and rising month on month.

    We've switched to buying fresh fruit and veg from the local farmers market - luckily we live near the countryside - instead of the supermarket.

    Petrol (gas) prices also rose by more than 10% this year.. I ride a motorcycle, so at least it's cheaper than a car would be.

    We have the unbelievable situation here where we pay, say £1.20 ($2 ?) for a LITRE of petrol. 80p of that is TAX. Then we get VAT (Value Added Tax at 17.5%) on top of that. Yes, that's right.. we pay TAX then get TAXED on the TAX. can you smell scam?

    So it's a situation where we have to pull in our horns. No more movies, dinners out, even DVD rentals are cut back. I turned of some services on my ISP account as well, like MySQL Databases I only used rarely.

    It's a good job there's so much entertainment on the Internet.. and almost all of it freely available.

    On the car thing, Steve.. the idea of having your son get a job to pay for it, is correct. That's the way I did did it.. but in these uncertain times, he may not get a job at all, and if he does, it probably won't pay very well. Offer to match what he earns, or a percentage of that.

    from a beleaguered nation

    BAzz

    DBA (Dogsbody with Bad Attitude)

  • I have been contracting for the last 4 years with various companies including the Royal Bank of Scotland. I was involved in a large migration project with the bank and was often working in the City offices. What amazed me was the amount of money being lent and borrowed between different banks. 100s of millions being transferred on the stroke of an Enter key. This was one section of 10 floors doing this so you can imagine the amount being dealt with daily. Quite scary.

    Two months ago I was extremely worried about my future as a contractor as there is a massive downturn here in the Uk. Companies are just not spending. Luckily I was offered a permanent job where I am contracting. The future for me personally looks ok as the company is in the healthcare

    sector. For others, including contractors I have worked with, it looks real bad.

  • When the bankers in our own country stop lending to each other, things could go bad for everyone trying to make payroll or fund the inventory to keep the doors open. But when the banks over the entire world stop lending to each other, then it can, and probably will, take a long time to fix. I expect this financial crisis to affect my company considerably since our customers are other businesses who put considerable money into our products both to purchase them as well as maintain the products we sell. The first thing to go will be maintenance budgets, followed by replacement budgets for equipment needed to run the business. We manufacture and sell material handling equipment like fork lifts, etc, etc. That will affect the people in the manufacturing plant first with less hours on the punch clock, followed by (I hope not) layoffs. By then, the velocity of money factor has started kicking in to seriously start slowing everything down (read macro economies here on a global scale), which will by it's very nature, also tighten the credit markets. This is a macro economists nightmare. I am knuckeling down for a long and dreary recession. Hopefully, it won't last as longs as the last one.

  • Before a few weeks ago, I was making plans for early retirement in the next couple years. I had structured my career to do mostly consulting so I could cut back gracefully. Those plans have gone out the window. Like many, my investments were decimated and it looks like many more years in the work force. However, unlike many young people, I have been though tough times before in the mid 70's, 1980-81, and "Black Friday" in 1987, so this isn't a huge shock or a cause for panic - yet.

    I suspect this crisis will follow previous patterns where companies cut back on expenditures that can be delayed. My type of work in designing custom database applications will be hit hard as companies can often delay new projects and keep working with what they have for the foreseeable future. They may stumble along patching up existing systems rather than replacing. There will still be work to be found, but the nature of it will change, and many people complacently rolling along may find they need re-education and a change in plans. There will be turmoil in various aspects of every industry.

    There is one positive that has occurred in every previous recession. The marginal players in an industry are often the first to go away, leaving a bit more opportunity for the best in their fields.

  • The recession (whatever the official definition, I believe we're in one) is hitting our household - out of 3 adults, I'm currently the only earner. My son's new to the employment market and trying (though not hard enough) to get a job preferably in web development. My partner's a builder and the trade's been badly hit both by the lack of mortgages and cutting back on works and by the influx of foreign labour undercutting prices - they don't have our taxes to pay! At least I'm getting my roof fixed at last.:)

    I was contemplating a job move but I'm sticking with my civil service fairly secure job now. The salary's low but survivable especially as I've kept things tight for the last six years and got no debts except a 16% mortgage with an endowment due to pay off most of it (should have been all but underperforming...) in 3 years.

    Good luck to the HBOS staff. I only bank with them, but the cameraderie in the local branch is so good that the day after the merger announcement all the customers were saying how supportive they were of the staff and wishing them well, particularly as the local LLoyds branch comes over as understaffed and unfriendly.

    For everyone - control your finances in case it gets worse. Know your income and outgoings and whether you're paying for things you don't use. Swap the gym membership for a pay-as-you-go version for example. A good UK place for advice and latest deals and savings is

    And no, my son will have to earn for his driving lessons and car.

  • The company I work for was just bought out and we are supposed to hear by early November how IT will be structured. I think we should be OK but when a company is handing out pink slips ya have to be concerned.

    On the car topic... In the Spring I was planning on buying a new car and turning my 9 year old car over to my daughter as she will start driving. The way I figure it is the car will still be ours and our daughter will only drive it. Also, I figured if I trade it in it is work X... if one was to go out and buy this exact same car it is worth quite a bit more. I guess my thought was this has been a solid working car w/o problems so why trade it in and turn around and buy a much more expensive USED car.... I was thinking that maybe we could determine a value to it and she could pay us (when she has a half way decent paying job) so much for it so she would get a reliable used car but also earned it in some way.

  • Apparently I am in a rare situation as I am more positive about the economy than others. While I don't know all the details, I still see help wanted ads and opportunities to work out there. Sure the jobs may not pay as much, but you can still work and pay the bills.

    I also am not sympathetic to people and business who over extended themselves financially and disagree with the govenrment (me) spending billions bailing them out. Teach people to make better decisions. Buy a smaller, less expensive, and more efficient car instead of a $30,000+ SUV or pickup. Do a local vacation instead of a cruise. Has anyone ever heard "Neither a borrower or lender be". It's good advice. I realize that we all probably have to borrow some to get a house/car, but if you can't pay cash don't buy the big screen TV for $3000.

    Also remember that, unless you sell now, your haven't lost any money on stocks. Your portfolio has dropped, but you still have not lost the money. Granted folks living on investments now are taking a hit as they draw them down, but what they don't take out now still has a chance to recover.

    Jack Corbett
    Consultant - Straight Path Solutions
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