Economy Question

[PeterBurns]

WTF happens if the Dow Jones just continues to plummet down to 6000, 2000, or just puts up the big Gooseegg?

What real world things happen?

Besides people losing a S*** load of money in their 401K...retirement..etc.
Anybody have an idea?

[BacktoBasics]

I believe there is a breaker that clicks if it drops too much in one day.

[PeterBurns]

If the economy is built with such importance on the DJIA, and it continues to drop a duece on everything. Do all of their business just lose their net worth, and start firing everyone?

[traitoravery]

yes

[Trainwreck2100]

poor Pete, he gets his own show and then his company goes under

[CosmicCowboy]

It will stop somewhere. I don't see 2000, but I could see 6000. Large corporations will have to cut way back because they won't have the net worth to borrow on the scale that they could before, even if credit is available.. There could be wholesale job losses in the 20% range. The construction industry would implode taking another 10% of the economy with it. Bankruptcies from people overloaded with debt that lost their jobs will skyrocket making even more "money" disappear from the system. The "service industry feeding the service industry" economy we live in now will implode taking all but the most financially solid (read as no debt) small businesses with it...This is just in the US.

Don't forget this is a global thing. It will knock emerging markets back into the stone age and people in third world countries will starve by the hundreds of thousands. War in Former soviet Republics/Eastern Europe/Balkans is a distinct possibility dragging the rest of the world with them.

When it all finally shakes out a prolonged worldwide inflationary recession is quite possible

Have a Nice Day!:)

[timvp]

WTF happens if the Dow Jones just continues to plummet down to 6000, 2000, or just puts up the big Gooseegg?

What real world things happen?Ordo ab chao ensues.

:hungry:

[Trainwreck2100]

Ordo ab chao ensues.

:hungry:

is that some code?

[ORION]

Its going to be like Mad Max

[timvp]

is that some code?

Ordo ab chao? Nah, that would be reality if the stock market hit zero.

[CosmicCowboy]

Holy Shit. Just in the time it took to write that post the market dropped another 2%. It's down 6%+ in one day, the market is dropping like an anvil and theres still 5 minutes left.

[angel_luv]

Ordo ab chao ensues.

:hungry:

Order out of Chaos? - and if yes, how so?

[Viva Las Espuelas]

It will stop somewhere. I don't see 2000, but I could see 6000. Large corporations will have to cut way back because they won't have the net worth to borrow on the scale that they could before, even if credit is available.. There could be wholesale job losses in the 20% range. The construction industry would implode taking another 10% of the economy with it. Bankruptcies from people overloaded with debt that lost their jobs will skyrocket making even more "money" disappear from the system. The "service industry feeding the service industry" economy we live in now will implode taking all but the most financially solid (read as no debt) small businesses with it...This is just in the US.

Don't forget this is a global thing. It will knock emerging markets back into the stone age and people in third world countries will starve by the hundreds of thousands. War in Former soviet Republics/Eastern Europe/Balkans is a distinct possibility dragging the rest of the world with them.

When it all finally shakes out a prolonged worldwide inflationary recession is quite possible

Have a Nice Day!:)

......is that all.

[PeterBurns]

poor Pete, he gets his own show and then his company goes under

No shit, I better steal all the swag I can right now. Load up on Q101.9 Koozies, and Mix 96.1 T-Shirts

[hater]

cool. maybe it drops so much that i can buy the entire market by myself!

[MannyIsGod]

You have to think about it. While these stock prices have gone down, what of real value have we lost since this crisis started? Do you still own everything you did? Do we still have the best infrastructure in the world?

While I think things can get pretty bad, we will not see a repeat of the Great Depression in this country due to the actual material wealth - and I don't mean TVS and Playstations - that we have in this country is immense.

[Trainwreck2100]

No shit, I better steal all the swag I can right now. Load up on Q101.9 Koozies, and Mix 96.1 T-Shirts

Do me a favor, if you happen to meet Kid Craddick at the big Clear Channel farewell bar b q. kick him in the nuts for me.

[balli]

Order out of Chaos? - and if yes, how so?

Fascism, more or less.

[PeterBurns]

You have to think about it. While these stock prices have gone down, what of real value have we lost since this crisis started? Do you still own everything you did? Do we still have the best infrastructure in the world?

While I think things can get pretty bad, we will not see a repeat of the Great Depression in this country due to the actual material wealth - and I don't mean TVS and Playstations - that we have in this country is immense.

Yeah Manny, that's was I was thinking originally. If people expenses are inline with their earnings, should they see a big difference?

The entire Credit Card - Charge Now play later is now F'n with everyone.
It's like these companies said, "Hey, I know you can't pay for this now, but I trust ya" And now they got so greedy, and no one is paying them back, so they are F'd.

[timvp]

Order out of Chaos? - and if yes, how so?

If the market hit zero (which it won't [I'm guessing it'll bottom out at 6500 in the worst case scenario]), it'd become a survival of the fittest situation where the governments of the world would have to be rebuilt. If the US crashes, they'd take down everyone else. Interesting to think about but in reality, all of this will have limited affect on the average American. Massive job losses may occur but I think it'd be relatively short term.

It won't be all bad. Big ticket items will be cheaper and so will gas.

[angel_luv]

Fascism, more or less.

As I suspected.



All this is just the precursor to Revelation. I bet you before too long the Anti Christ comes on the scene to "save" the day.
I wonder if he's been born yet?

[MannyIsGod]

If the market hit zero (which it won't [I'm guessing it'll bottom out at 6500 in the worst case scenario]), it'd become a survival of the fittest situation where the governments of the world would have to be rebuilt. If the US crashes, they'd take down everyone else. Interesting to think about but in reality, all of this will have limited affect on the average American. Massive job losses may occur but I think it'd be relatively short term.

It won't be all bad. Big ticket items will be cheaper and so will gas.

If the market were to hit anywhere near zero you'd see our military actually get put to crazy use. Southern Iraq would probalby become the 51st state and I promise you we'd actually guard the Southern border because if you think we have immigration problems now you have no fucking idea what shit could be like.

Canda would also become a really really really close friend. The US would actually come out OK considering how much food we produce but I feel really fucking bad for the Euros cause the Russians would pretty much fuck them out of oil and food.

[101A]

What this means is that those of us young enough to take advantage can buy into stocks of blue-chip companies that are WAY undervalued right now. Company's that are profitable enough to be paying nice dividends are plummeting in the market. "Buy when others are selling" and you'll do just fine. Fortunes are being lost on this, and fortunes WILL be made, as well.

[101A]

For Instance:


IBM, one of the 30 stocks that make up the Dow industrials, posted third-quarter results that beat forecasts and affirmed its full-year earnings forecast.

Buy big Blue.

[nkdlunch]

at this pace i will be able to buy the internets... .Mwahahaha!

[Extra Stout]

As a young person, the best thing that can happen for my retirement would be for stocks to stay low throughout my career, then jump way up as I approach retirement.

So it sucks for me that I didn't jump out of the stock market at 13,000, since therefore I have lost $25,000, but on the other hand I'm getting more shares for my money right now.

[Slomo]

...much fuck them out of oil and food.

Europe doesn't depend on Russia's food or oil. Natural gas is another story, but it's not nearly as important as food and oil.

Actually I would be worried about Russian military action because they do depend on Europe for food and chemicals/drugs.

Also while the collapse of the US economy is by no mean something anybody in the world is looking forward to, its impact gets smaller the further away from the states you go (OK I'm over simplifying but there's a lot of truth in it too).

Please understand me correctly it would play havoc with our economies and it would create a serious crisis, but we would be rather well off compared to the US for the sole fact that our respective economies are not based on the same foundations.

The credit situation outside the US is very VERY different. The hardest hit euro institutions are those that have/had big stakes in the US economy (ie UK banks), and the UK's economy has been strong enough to catch those before it became catastrophic.

Investors are panicking and the market is taking a BIG hit. Governments and the EU are taking steps to mitigate the effects as much as possible (like in the US), but have you looked at the figures over the last week or so? The numbers are not even remotely comparable to what we're seeing in the US.

Again nobody is looking at the current situation with satisfaction and confidence, but for an American to feel sorry for us, right now, is a bit much (condescending would also be a good word).

[MannyIsGod]

Europe doesn't depend on Russia's food or oil. Natural gas is another story, but it's not nearly as important as food and oil.

Actually I would be worried about Russian military action because they do depend on Europe for food and chemicals/drugs.

Also while the collapse of the US economy is by no mean something anybody in the world is looking forward to, its impact gets smaller the further away from the states you go (OK I'm over simplifying but there's a lot of truth in it too).

Please understand me correctly it would play havoc with our economies and it would create a serious crisis, but we would be rather well off compared to the US for the sole fact that our respective economies are not based on the same foundations.

The credit situation outside the US is very VERY different. The hardest hit euro institutions are those that have/had big stakes in the US economy (ie UK banks), and the UK's economy has been strong enough to catch those before it became catastrophic.

Investors are panicking and the market is taking a BIG hit. Governments and the EU are taking steps to mitigate the effects as much as possible (like in the US), but have you looked at the figures over the last week or so? The numbers are not even remotely comparable to what we're seeing in the US.

Again nobody is looking at the current situation with satisfaction and confidence, but for an American to feel sorry for us, right now, is a bit much (condescending would also be a good word).

I didn't mean to be condescending, and my thoughts were on what would happen in a doomsday scenario where the world markets completely collapsed. I'm fairly certain that if the US market collapsed every single world market would follow suit. That being said, I'm not a market expert so I could be way off on this.

Does Europe get more oil from the North Sea than it does from Russia? Also where is the largest area of food production in Europe? My understanding was that it was Ukraine. I just see Russian overrunning Ukraine in a heartbeat in any type of situation like the one outlined, but if Europe is not reliant on Ukraine for a good deal of food then my point is moot.

In any case, this is all some hypothetical doomsday scenario which I severely doubt would happen.

[Slomo]

I didn't mean to be condescending, and my thoughts were on what would happen in a doomsday scenario where the world markets completely collapsed. I'm fairly certain that if the US market collapsed every single world market would follow suit. That being said, I'm not a market expert so I could be way off on this.

Does Europe get more oil from the North Sea than it does from Russia? Also where is the largest area of food production in Europe? My understanding was that it was Ukraine. I just see Russian overrunning Ukraine in a heartbeat in any type of situation like the one outlined, but if Europe is not reliant on Ukraine for a good deal of food then my point is moot.

In any case, this is all some hypothetical doomsday scenario which I severely doubt would happen.

Your assumption about food and oil are wrong. Ukraine is a huge producer of food, but sells most of it to Russia and not Europe (although since we are able to pay more it had changed in the past years).

We get most of our oil from the middle east and north sea. Natural gas is another story all together and we are quiet dependent on Russia for it (although new pipelines in Northern Africa are being built to mitigate that fact, but it's not in the immediate future and it would only help with a certain percentage of the natural gas consumption) as I said Natural gas is important and its shortage would literally kill millions, but not nearly as much as food and oil in a doomsday scenario.

The economy as we know it now would collapse worldwide if for no other reason than government not honoring international treaties and obligations in an effort to protect their home economies. But there are levels to how much it would impact life in different countries/continents (ie New Zealand vs. Germany).

The biggest food producers in/for Europe are France, Italy and Germany (Hungary is pretty important too) so the real danger in your scenario would actually be Russia using military means to seize those resources since Ukraine alone can not feed Russia (look at the soviet union. They sacrificed everything to be independent from outside food sources since they considered it a weakness - they never succeeded and famine was common in the USSR. Russia is not as strong as the USSR was).

[Anti.Hero]

As a young person, the best thing that can happen for my retirement would be for stocks to stay low throughout my career, then jump way up as I approach retirement.

So it sucks for me that I didn't jump out of the stock market at 13,000, since therefore I have lost $25,000, but on the other hand I'm getting more shares for my money right now.

Yep.

But I think SS implodes around 2047? Just when I would be able to start withdrawing w/o penalty. Shit.

[I Love Me Some Me]

Be patient. Don't panic.
http://img405.imageshack.us/img405/4216/djije9.png (http://imageshack.us)

[MannyIsGod]

Your assumption about food and oil are wrong. Ukraine is a huge producer of food, but sells most of it to Russia and not Europe (although since we are able to pay more it had changed in the past years).

We get most of our oil from the middle east and north sea. Natural gas is another story all together and we are quiet dependent on Russia for it (although new pipelines in Northern Africa are being built to mitigate that fact, but it's not in the immediate future and it would only help with a certain percentage of the natural gas consumption) as I said Natural gas is important and its shortage would literally kill millions, but not nearly as much as food and oil in a doomsday scenario.

The economy as we know it now would collapse worldwide if for no other reason than government not honoring international treaties and obligations in an effort to protect their home economies. But there are levels to how much it would impact life in different countries/continents (ie New Zealand vs. Germany).

The biggest food producers in/for Europe are France, Italy and Germany (Hungary is pretty important too) so the real danger in your scenario would actually be Russia using military means to seize those resources since Ukraine alone can not feed Russia (look at the soviet union. They sacrificed everything to be independent from outside food sources since they considered it a weakness - they never succeeded and famine was common in the USSR. Russia is not as strong as the USSR was).

I agree that Russia would be a huge worry in any kind of scenario like that. I do think that Europe's armed forces are a head and shoulders above Russia's though. Ukraine would still be fucked and I'm not sure how much Western Europe would defend Eastern Europe but I'm confident Western Europe could kick the crap out of Russia if it came anywhere past Ukraine.

[CuckingFunt]

As I suspected.



All this is just the precursor to Revelation. I bet you before too long the Anti Christ comes on the scene to "save" the day.
I wonder if he's been born yet?

Dun dun DUN (http://www.spurstalk.com/forums/showthread.php?t=106743)!!

[marini martini]

I guess this means this is the last season of "ANTM":depressed

Dayum!!!!

[kris]

.

[RuffnReadyOzStyle]

WTF happens if the Dow Jones just continues to plummet down to 6000, 2000, or just puts up the big Gooseegg?

What real world things happen?

Besides people losing a S*** load of money in their 401K...retirement..etc.
Anybody have an idea?

It may drop to 6000, or even 5000, but it simply can't drop to zero because that would imply that there were no assets or productive capacity backing the stocks, and that is simply not the case. At the very core of it all, people need food, water and energy to live, so the assets that produce those things must have value.

The market will eventually reach a level where all the "fake" money, that is bad debt secured by nothing, will be purged, and that is the true value of the market. It will then rebuild itself from this "true value" base.

What you will see is discretionary consumption taking a big hit - in other words, people will stop buy things they don't need like TVs, meals out, travel, new cars, etc. They will hunker down and do their best to pay their mortgages, feed themselves and simply survive. Unemployment will rise significantly, and with it homelessness and crime.

The world is in for a tough ride, but it will eventually recover. The sad thing is that the ultra-rich fuckers who caused the meltdown by scamming each other and the public will mostly be insulated from the fallout, while Joe Average who works at the Hilton will lose his job.

[baseline bum]

It may drop to 6000, or even 5000, but it simply can't drop to zero because that would imply that there were no assets or productive capacity backing the stocks, and that is simply not the case. At the very core of it all, people need food, water and energy to live, so the assets that produce those things must have value.

The market will eventually reach a level where all the "fake" money, that is bad debt secured by nothing, will be purged, and that is the true value of the market. It will then rebuild itself from this "true value" base.

What you will see is discretionary consumption taking a big hit - in other words, people will stop buy things they don't need like TVs, meals out, travel, new cars, etc. They will hunker down and do their best to pay their mortgages, feed themselves and simply survive. Unemployment will rise significantly, and with it homelessness and crime.

The world is in for a tough ride, but it will eventually recover. The sad thing is that the ultra-rich fuckers who caused the meltdown by scamming each other and the public will mostly be insulated from the fallout, while Joe Average who works at the Hilton will lose his job.

It's kind of scary to think how much of this economy is just built on promises. We really need to stop trading with China and try to get the rest of our allies to do the same if we want any hope of saving our economy.

China is nothing more than an arbitrage opportunity for companies here that allows them to get away with not having to do anything innovate. Why worry about having to make a better widget when you can just make more money by building your factory in China?

[RuffnReadyOzStyle]

It's kind of scary to think how much of this economy is just built on promises. We really need to stop trading with China and try to get the rest of our allies to do the same if we want any hope of saving our economy.

China is nothing more than an arbitrage opportunity for companies here that allows them to get away with not having to do anything innovate. Why worry about having to make a better widget when you can just make more money by building your factory in China?

...and that is a comparative wage rate/business costs problem. You can produce things cheaper in China because they essentially allow slavery (ultra-low wages), and costs for regulatory compliance are negligible (little concern for work safety, pollution, etc.).

I would add that you don't have to STOP trading, just balance it.

The one factor that will probably keep the world economy going through all of this is domestic expansion in China and India. They have burgeoning middle classes who haven't yet had unfettered access to credit, so their demand is real, as is the money used to pay for it. That will keep their economies chugging along, and primary product exporters like Canada and Australia will chug along with them as a consequence.

None of which will help the US one whit. The credit bubble had to burst sooner or later, and this is it. It will be interesting to see how the US economy restructures itself coming out of this crash.

[kris]

.