Economy Question

[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 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 ins utions 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 ins utions 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. .

[I Love Me Some Me]

Be patient. Don't panic.

[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 ed 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!!

[marini martini]

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

Dayum!!!!

[kris]

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[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 ers 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 ers 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]

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