tensions very high

[muldoon]

I saw this on cnbc this morning and it took some time to track down the video.  just wow. 
http://www.cnbc.com/id/15840232?video=868551308&play=1

Rick Santelli works in the CME in the bond pits, he also co-anchors some of squawk on the street in the morning.  I have never seen him really stressed, even when things are falling apart he usually cracks some smartass comment and keeps a level head.  Read his body language from this morning, before he just walked off camera.  Today he made mention that Macdonalds CDS's were trading less than the US governments.  That means the market feels that McDonalds is more likely to exist and be paying its bills that our government in 5 years.  This is the credit meltdown, and it may be a temporary dislocation that corrects itself in time.  That we are even at this point is unbelievable. 

[peternap]

It's not just Santelli. Everyone seems stretched tight. There have some VERY interesting reports. One even went so far as to say people needed to buy VERY good stocks instead of cash. The reason is if a meltdown happens, cash is no good but the stock will be there even if it drops 50%.

That's end of the world talk.

[muldoon]

I know the tension is everywhere.  I also take no joy in being on the right track with this situation.  I'll try to answer any questions I can, I know everyone is confused and this is looking to shape into something quite serious.  I don't know everything, but I'll try to help by keeping honest answers highlighted and opinions identified as such. 

Important not to panic, try to comfort your neighbors and family.  You will need each other to get through this.  It's not the end of the world, it's not mad max, we have had economic turmoil before.  Even during the great depression 80% of people went to work, police and firefighters still did their jobs.  There may likely be some disruption and some insane actions in the coming 8 weeks, but this too will pass. 

I wouldn't hold a stock here for anything. 

[r8ingbull]

I'll try to answer any questions I can, I know everyone is confused and this is looking to shape into something quite serious.  I don't know everything, but I'll try to help by keeping honest answers highlighted and opinions identified as such. 

I'm young, only 27...I can't remember the recession in the early 90's, way to young to remember the 80's...I've been working in the family business for 15 years...I own my house (I used a mortgage to buy it, even had 30% down, payed off this year)...Why do I hear about catastrophe, and tragedy when talking about a recession?  It seems to me like a natural cycle of any market, we are going to have upswings and down...why do people get so worked up over it...It looks like a bunch of bad companies and a few decent ones might go under...If your business is built on a good financial position it will be fine. 

Same goes for our personal finances.  I bought a house that was equal to one years salary and payed it off ASAP.  I have managed to save $$$ by not spending them on crap I don't need. 

If we get a "crash" the people who work for unsound companies and the people with unsound personal finances are going to get hit hard.  Hopefully it teaches them a lesson.

Maybe youth has caused ignorance, but this really seems like it is overdo.  Maybe it should have happened 5 years ago.

[Sassy]

Good for you, r8ingbull...  I lived through the 70's, 80's & 90's - things were tight but I always made it through... it seems like this is a much bigger meltdown than those...

Muldoon, so from what was said - we'd probably be safer investing in foreign stocks?  Or McDonalds  ?  I'm still debating as to whether to transfer my shares from US gov't treasury to international... the treasury bills keep creeping up, have yet to go down whereas the international funds are up & down - I don't count on the treasuries to continue to climb - it's just artificial...  yep, we're on a roller coaster right now, hold on!  I used to love roller coasters, don't know if I'm so fond of this one, but I know where my strength comes from, so whatever happens...  Just a short while ago I had to face the fact that we might lose everything at the underground complex - it was scary & at the same time sorta freeing to let go...  I talk to some homeless veterans who would rather live on the street than deal with all the hassles of responsibility...  

[peternap]

Next week and especially Monday, will be interesting.

There was a lot of gambling going on near close. People were buying in hopes of a bailout bein worked out over the wekend. It actually drove the DOW up.

If it does happen there are still a world of things to crash it, The SS Maverick is still just a Maverick.
If it doesn't happen, I expect all hell to break out....but then again, I expected it today.

Who Knows!

I'm pretty much where I want to be right now. I'll take some time and see where this goes.

[muldoon]

Why do I hear about catastrophe, and tragedy when talking about a recession?  It seems to me like a natural cycle of any market, we are going to have upswings and down...why do people get so worked up over it...It looks like a bunch of bad companies and a few decent ones might go under...If your business is built on a good financial position it will be fine. 

I said I would answer questions if I could, but stating what will happen this is not something anyone can predict.  To be clear I am stating why people are on the verge of panic - do to the potential of something very bad coming.  I am not saying this is what we have to look forward to.  I do not know specifically what will break, but that part doesn't matter as much.  It is peoples reaction and panic level that will determine how bad the situation truly is.  We have 8000 banks in this country, of those perhaps the biggest 500 may be dead.  If everyone panics they can take the remaining out with them and truly cause huge disruptions.  Like no paychecks, no gas, no groceries, no trucks bringing those things back in because there is no system of commerce.  After 3 days true panic begins and riots and looting starts, after 2 weeks ... and so on.  That is what people are afraid of, that is why our congress critters look so scared and are having food fights and screaming at each other.  There is the potential for it to occur until the underlying problems (fraud) can be worked out.   No one knows what will happen, panic does not help anyone here.  If such a situation were to occur you might be well suited to have studied the situation that occured in Argentina during the 2000-2001 time frame because that is very much what it would look like.   A guy who goes by the name ferfal has outlined the events of that in his 7 part essay, and now blogs at http://ferfal.blogspot.com
..

[r8ingbull]

To me, the only way to correct this is to level the playing field and have rules.  Whatever these rules are, they can't change at the whim of the treasurer, the congress, or a bunch of soon to be retirees protecting their 401k's...

In my business we need to be able to plan and forecast ahead.  We use as much information as we have to make what we feel to be the best decisions.  Those decisions work well sometimes and not well other times.  However, if the rules of the game change all the time, how can we be expected to play it??  If my competitor is bigger and can get his senator to change the rules, this only leads to inefficiencies and cheating...

This bill really stinks to me, it smells like "Atlas Shrugged" when the incapable execs are using the government to shut down the producers...

The economy to me flows like a wave, sometimes up, sometimes down.  The small crest is followed by a small trough.  If we use our government to artificially make the wave go up and up and up, eventually it is going to crash...And crash real hard...

[glenn kangiser]

To me, the only way to correct this is to level the playing field and have rules.  Whatever these rules are, they can't change at the whim of the treasurer, the congress, or a bunch of soon to be retirees protecting their 401k's...

In my business we need to be able to plan and forecast ahead.  We use as much information as we have to make what we feel to be the best decisions.  Those decisions work well sometimes and not well other times.  However, if the rules of the game change all the time, how can we be expected to play it??  If my competitor is bigger and can get his senator to change the rules, this only leads to inefficiencies and cheating...

This bill really stinks to me, it smells like "Atlas Shrugged" when the incapable execs are using the government to shut down the producers...

The economy to me flows like a wave, sometimes up, sometimes down.  The small crest is followed by a small trough.  If we use our government to artificially make the wave go up and up and up, eventually it is going to crash...And crash real hard...

The difference is you are used to dealing with people with scruples. 

Most of these big bankers are guilty of fraud and have no scruples.  They sit in the bank vault at night throwing money up into the air and enjoying the rain.  OK - so I exaggerated a bit....

I guess this is part of why I have an aversion to suits....sorry to any honest people stuck in a suit --- please wear blue jeans when you come to visit.