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Stock Market Drops By 1,000 Points, the Mortgage Crisis, Etc.

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Excuse my rant but ... anybody could have seen this coming. It never ceases to amaze me how people make the same mistakes, over and over again.

I suffered through the real estate crash of '92 so, when I bought my house four years ago ... I learned from my previous mistakes. I bought a cheap house that we could afford on one income if necessary, nothing fancy ... and I locked in a fixed interest rate because I had been burned by adjustables before.

But I couldn't believe the number of people who told me I was crazy ... what was really amazing was people who were burned by the '92 crash like I was were still buying into the hype.

Buy more house, they said, you can afford it ... get an adjustable rate mortgage ... you'll lose money with the supposedly higher fixed interest rate.

They were getting mortgages that ate up 50 percent of their income ... crazy. And, of course, their adjustable interest rates are now going through the roof.

I also can't believe the banks were making these loans ... like duh ... this crash was inevitable. What were they thinking? I guess they weren't thinking at all ...

History repeats itself ... over and over again.

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Credit and monetary inflation don't help matters any either. The Federal Reserve kept artificially increasing the money supply.

What do you think the Fed will do now? Get smart or get cover?

Bernanke is only inheriting Greenspan's legacy.

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Get smart or get cover?
Cover it is! The Fed just bailed out the markets again. :rolleyes:

Why am I not surprised? :stone

Market just rallied about 300 points or so - but I doubt they are fully convinced. Perhaps another rate cut on the horizon is what they desire?

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Well ... now the market's only up 100 points or so ...

The Fed did the same thing back in 2001 when the market started going down yet, it still took six years for the market to get back to its previous levels ... even with lots of liquidity and low interest rates so ...

There's only so much the Fed can do, even when they try to bail out the markets.

I guess we'll see if this is just a correction or a real crash. If it's a real (albeit controlled) bear market with a 30 percent or more drop over the next year or two, then I'll start buying stocks again.

It's funny because I had a gut feeling this was coming ... especially when I heard people bragging about how they were going to become millionaires in the stock market. When there's too much euphoria, it seems like some kind of correction is inevitable.

Personally, I like to get in near the bottom when everybody is really pessimistic and says everything is horrible ... that's actually when you pick up the best bargains and make the most money. I'll probably invest in some real estate too but, right now ... it's too soon.

I don't think we're anywhere near the bottom yet in either the stock or real estate market. Usually it takes at least a couple of years for the whole thing to shake out.

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My personal view is that the Fed is only delaying the inevitable.

Our inflation is not what the government claims it is and we have NO idea how much money is being pumped into the market because the Fed won't reveal M3 figures anymore. Our debt is at outrageous amounts and the dollar value is in shambles.

All the Fed is doing, is making sure that when push comes to shove, it won't be a "correction" but a full blown "crash".

I'm planning on limiting my liquidity and carrying as many hard assets as I can. I just simply don't trust the dollar anymore.

cheers,

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All the Fed is doing, is making sure that when push comes to shove, it won't be a "correction" but a full blown "crash".

Actually ... I hope you're right. I'm ready for a good crash so I can start making some money again ... ;)

It was great when stocks like Corning got down to a dollar a share.

Minimal downside when a stock gets that cheap ... and great upside at 20+ dollars a share.

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My friend has an adjustable rate mortgage that she originated in late 2005, and the rate lock expires in late 2008. She is desperately trying to refinance to a fixed rate, but no bank will finance her due to her checkered credit history and 3-year old bankruptcy filing. Also, she is considered a 'high' financial risk due to her 13 credit card accounts, expensive car payment, outstanding payday loans, and unpaid property taxes.

She is a wonderful person, but most of her financial moves have been silly. She is 53 years old, and this is her first experience with homeownership. I think she's doomed, because she just cannot find a lender who is willing to take a chance on her anymore. I get the feeling that she'll be losing her house within the next couple of years. Also, she owes about $3,500 in past-due property taxes.

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commuter, there are so many people who can make such bad decisions

they work hard for their money but they don't have a brain when it comes to managment

anyone who signs on for a variable rate is goiing to get burned..i am not in favor of the bail out option that congress is trying to push, this just punishes those who work and save their money

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I admit, I don't have much sympathy for people who have been really foolish with their money -- and I certainly don't to pay for letting them off the hook. If they were adults and made decsions of their own free will, they should be prepared to live with the consequences -- unless there is some special circumstance to excuse them of reponsibility for their decisions.

Buying more house than you can afford, "interest-only loans," adjustable rate mortgages ... these are things people should know better than to get involved with.

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I agree, it is sounding a bit like the Savings and Loan crisis of years ago.

I'm a bit discouraged watching my retirement account loose thousands of dollars after some steady gains recently. But I'm trying not to stress about it.

A bit off topic, I remember saying years ago that I didn't understand the sudden upsurge in Americans buying big gas guzzling SUVs and other vehicles saying "don't they realize that eventually gas prices are going to rise again, and perhaps dramatically?" I stuck to buying fuel efficient cars and whine when filling up costs $30, but at least it's not the $50 and $60 some people are paying.

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Actually ... I hope you're right. I'm ready for a good crash so I can start making some money again ... ;)

It was great when stocks like Corning got down to a dollar a share.

Minimal downside when a stock gets that cheap ... and great upside at 20+ dollars a share.

That's of course, assuming the Dollar holds value.

I'm talking "crash" as in "buying a loaf of bread with a wheelbarrow of dollars".

All your "money" will be worthless when it's "value" is worth less than shinplaster. Case in point - the German Reichsmark, the Confederate Dollar etc. Runaway inflation due to deficit spending and easing of credit with no back up will destroy the "value" of money (the monetary unit : i.e. the Dollar).

The monetary system in itself is in jeopardy. At that point, it won't matter if you make a thousand or ten billion. What's the point if you make 1 billion when the price of a pound of sugar is 1 trillion?

What? This can't happen?

60 minutes with David Walker - Comptroller General of the United States

I've been worrying about this for many years now - As a "taxpayer" in the country's workforce. It isn't a question of "who makes a killing" - that is an easy one to decide if you have age on your side...

.... it's the ones who are hitting the workforce now who will inherit the problem of irresponsible fiscal policy.

cheers,

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I agree, it is sounding a bit like the Savings and Loan crisis of years ago.

I'm a bit discouraged watching my retirement account loose thousands of dollars after some steady gains recently. But I'm trying not to stress about it.

A bit off topic, I remember saying years ago that I didn't understand the sudden upsurge in Americans buying big gas guzzling SUVs and other vehicles saying "don't they realize that eventually gas prices are going to rise again, and perhaps dramatically?" I stuck to buying fuel efficient cars and whine when filling up costs $30, but at least it's not the $50 and $60 some people are paying.

$80 for my pickup. ;)

You should see the fuel bill for our logging truck . . .at least you make money with that truck.

Markets rise and fall . . . we should be in it for the long run and not stress over this.

Unless of course we were foolish enough to buy a mortgage in foolish ways.

I'm looking for a new car right now . . . I need a something that drives well in snow (I hate to put on chains) and gets decent gas mileage . ... and is safe in an accident. I don't want something that will crumple like aluminum.

steph

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