I am seriously worried about this:mad:

Nelly · Mar 18, 2008

Yesterday our money markets took their largest losses since the end of the world war. The exchange rate now for the dollar is as follows:

Live rates at 2008.03.18 18:40:20 UTC
50,000.00 GBP = 100,891.10 USD
United Kingdom Pounds United States Dollars
1 GBP = 2.01782 USD 1 USD = 0.495584 GBP

Now on the plus side I may be able to afford those two brothers from the USA after all.
What is the government going to do about it. The US fedral reserve has already started systems to loan banks momey and it looks like they could have another interest rate cut.
Basic energy suppliers are posting record profits and the cost of living is gettin stupid.
I really fear we are heading for another recession.
Can any of you guys explain the situation in simple terms to me?

fast blue one · Mar 18, 2008

A bit complicated for me; I only know that too many people lent money to poor credit risks and now they seem to want their money back.
This seems to weaken currency and people get scared of their gambles in the stock market.
To me it translates as my £££ aint gonna get me many €€€ this summer.

Cloggy · Mar 18, 2008

fast blue one said:
A bit complicated for me; I only know that too many people lent money to poor credit risks and now they seem to want their money back.
This seems to weaken currency and people get scared of their gambles in the stock market.
To me it translates as my £££ aint gonna get me many €€€ this summer.

But it'll be great when I go visit the parents, it could mean a couple of extra pints :thumbup:

trampld · Mar 18, 2008

In simple terms it is a mess, and to be quite frank, it is a bit scary being here in the States living with the notion that another big depression 'may' be looming right around the corner.

In other news - now is certainly the time to spend your GBP here in the states

Nelly · Mar 18, 2008

fast blue one said:
A bit complicated for me; I only know that too many people lent money to poor credit risks and now they seem to want their money back.
This seems to weaken currency and people get scared of their gambles in the stock market.
To me it translates as my £££ aint gonna get me many €€€ this summer.

Tell me about it mate:

1.00 GBP = 1.28493 EUR
United Kingdom Pounds Euro
1 GBP = 1.28493 EUR 1 EUR = 0.778252 GBP

We are trying to sell up and go to thr Republic of Ireland?

fast blue one · Mar 18, 2008

My local post office was only offering €1.20 this afternoon crazy.

wolfc70 · Mar 18, 2008

I am worried too. You have the general idea of whats going on. Banks had easy and cheap money from the fed (lots of cash in circulation) and made stupid decisions when it came time to lend the money. Throw in America's "I want it now!" appetite for things, and you get people buying things they shouldn't with money they don't have. Lenders took advantage of people by suckering them in to interest only loans on overpriced houses. Once the market started to readjust, people could no longer afford to live there. This started the snowball effect of flooding the market with houses.

The fed is helping the lenders by giving them cash to keep the lending houses liquid or "solvent". I think this is wrong. Aparantly no one in banking remembered the Savings and Loan crisis of the 1980's, as basically the same thing is happening now. The bail out of the S&L's cost us taxpayers $160 Billion dollars, yes that is a b in front of illion. Because of the government help, that made lenders make more risky loans in the subprime financial market. Of course the fed is helping these lenders stay in busisness, at taxpayer cost, adding more to the deficit.

If financial institutions can not make smart loans, the government should not back them up. This creates a false sense of security in lenders leading them to not be held accountable. This should not be funded by people who were smart with their money and did the right thing, live within their means. If you got suckered in to buying a $700,000 home with an interest only loan, you deserve to lose it, harsh, i know, but financial responsibility should be rewarded, and vice versa.

Hellgate · Mar 18, 2008

I think we can safely say we are in a recession now. What I've been hear lately is "Stagflation". ie: wages aren't going up but the cost of living is. Yeah I know recession is two back to back quarters of negative growth, but that is a trailing indicator.

The Bear Stearns failure is scary. It can have a big ripple effect on other businesses, the same business that employ people.

The US Fed Reserve cut the over night rate today by .75%. It now stands at 2.25%. In percentage terms that is a HUGE cut. The good thing is the cost of money is less expensive. The problem is we may not see the positive side of this for 3 to 6 months.

The prime interst rate, the retail level of money if you will, is at 5.25%. So loans, credit cards and home equity lonas should drop in cost.

On the plus side, the company I work for exports 80% of what we manufacture so the cost to our customers is much lower with the cheaper dollar. Our stock has been moving up well the last few weeks. That said many of our suppliers are overseas so the net-net may not be that big, we'll see.

On the bad side what the Fed did today FURTHER lower the value of the dollar, as they are now cheaper to borrow.

The energy picture is odd. You have to remember that in the '90's energy companies struggled to make a profit so exploration and development slowed to a crawl. Gas was .89 cents a gallon in 1999 in Texas. Now that they are making money exploration has EXPLODED. My ex works for a small oil and gas company and they are totally ramping up for 08. They have bought about $25 million in oil rights and properties and are drilling like crazy.

Also the price of oil is weird. The cost of oil is measured in US Dollars so as the value of the dollar drops, the amount of dollars required to purchase the oil increase. And that price is a FUTURE valve, think Ed Murphy in "Trading Places". A oil producer may acctually get paid 50% of current future for each barrel they produce, then they pay a whole bunch of people with that 50%, pumpers, haulers, operators, investors. Yeah they are still making a metric butt load of money.

So does this answer your question Neil??? I'm sure it doesn't.

I'd love to hear what the other countries are doing.

I will now return from the rock from wince I came.

trampld · Mar 18, 2008

it is all of this that leads me to believe that staying 'cautiously uninformed' is the way to go. I avoid the new stations and the newspapers...if I need to know, someone generally tells me. It is scary out there and I like my little world inside my helmet...

Nelly · Mar 18, 2008

Hellgate said:
I think we can safely say we are in a recession now. What I've been hear lately is "Stagflation". ie: wages aren't going up but the cost of living is. Yeah I know recession is two back to back quarters of negative growth, but that is a trailing indicator.

The Bear Stearns failure is scary. It can have a big ripple effect on other businesses, the same business that employ people.

The US Fed Reserve cut the over night rate today by .75%. It now stands at 2.25%. In percentage terms that is a HUGE cut. The good thing is the cost of money is less expensive. The problem is we may not see the positive side of this for 3 to 6 months.

The prime interst rate, the retail level of money if you will, is at 5.25%. So loans, credit cards and home equity lonas should drop in cost.

On the plus side, the company I work for exports 80% of what we manufacture so the cost to our customers is much lower with the cheaper dollar. Our stock has been moving up well the last few weeks. That said many of our suppliers are overseas so the net-net may not be that big, we'll see.

On the bad side what the Fed did today FURTHER lower the value of the dollar, as they are now cheaper to borrow.

The energy picture is odd. You have to remember that in the '90's energy companies struggled to make a profit so exploration and development slowed to a crawl. Gas was .89 cents a gallon in 1999 in Texas. Now that they are making money exploration has EXPLODED. My ex works for a small oil and gas company and they are totally ramping up for 08. They have bought about $25 million in oil rights and properties and are drilling like crazy.

Also the price of oil is weird. The cost of oil is measured in US Dollars so as the value of the dollar drops, the amount of dollars required to purchase the oil increase. And that price is a FUTURE valve, think Ed Murphy in "Trading Places". A oil producer may acctually get paid 50% of current future for each barrel they produce, then they pay a whole bunch of people with that 50%, pumpers, haulers, operators, investors. Yeah they are still making a metric butt load of money.

So does this answer your question Neil??? I'm sure it doesn't.

I'd love to hear what the other countries are doing.

I will now return from the rock from wince I came.

Thanks Pete,
I have a general understanding of how it works. It all seems to stem from consumer borrowing here to.
I am gutted, yes I was stupid in the past and had way to much credit. I payed it off and learnt my lesson. We live within our means, what feks me off is that large corporations are robbing us blind for fuel and electricity. I am a professional person supporting a young family and I am getting screwed for the "I want it now generation". [edit] Our government is failing to recognise the fact that we are also entering a recession.

Hellgate · Mar 18, 2008

perryn said:
Thanks Pete,
I have a general understanding of how it works. It all seems to stem from consumer borrowing here to.
I am gutted, yes I was stupid in the past and had way to much credit. I payed it off and learnt my lesson. We live within our means, what feks me off is that large corporations are robbing us blind for fuel and electricity. I am a professional person supporting a young family and I am getting screwed for the "I want it now generation". [edit] Our government is failing to recognise the fact that we are also entering a recession.

I have that same problem at times, and the FZ ain't helping matters! Living within one's means is the best thing they can do.

The California electricity problem was a weird example. Calf refused to build any new power plants (not in my back yard syndrome) and had to get transfers of power. Yeah Enron didn't help matters at all but if one doesn't plan for future demand you get hit hard when the future arrives. In the US we haven't built any new gas refineries in about 30 years so much of our bottleneck is getting oil refined into gas. It not so much a total capacity issue but what we have from day to day, and season to season. When a refinery closes to pull maintence it puts a big kink in the pipeline. Once that happens is become a supply and demand issue.

Wolfc70 hit the nail on the head with the sub-prime problem. I hope I don't offend anyone but that is why they have apartments! Save your money a few more years, put more down and get a better, lower cost loan.

For the speculators, sorry no sympathy here. I've lost a tons in the stock market and no one bailed my ass out. Only invest what you can afford to lose, invest in proven companies or properties, don't go for the easy kill.

One other plus is with the markets down I am able to buy more shares each pay period with my 401k. I won't need this money for another 20 years so I look at the down times as away to sock more away for the furture when I can ride my FZ6, generation 8, all day, everyday!

wolfc70 · Mar 18, 2008

Hellgate said:
One other plus is with the markets down I am able to buy more shares each pay period with my 401k. I won't need this money for another 20 years so I look at the down times as away to sock more away for the furture when I can ride my FZ6, generation 8, all day, everyday!

This is the good side of a "recession" or as my economics teacher called it, a market adjustment. Though, if you are planning on retiring in six months, this could be a scary time to watch your investments. If you start pulling out of your 401k, IRA, et cetera, now you loose your leverage of monthly contrubutions buying more stock or shares in your portfolio. I think the economy will pull through, provided inflation stays under control and food prices stay the same (thanks big ethanol :banghead

and mortgage crisis can be ended fairly quickly, as harsh as that may be to those involved.

Scorphonic · Mar 18, 2008

I know most of you guys are from the USA and you will not agree with me, but why on earth does the rest of the world suffer so much when the US market is weak?

I have always wanted oil to be traded in euro, and i know that it is just around the corner. At least then the market in Europe will get better but I do have fears for the US market when this happens...

I want it to trade in Euro simply because we are paying sooooo much per Liter of petrol...and my bike commuting is painfully expensive.

Hellgate · Mar 18, 2008

Scorphonic said:
I know most of you guys are from the USA and you will not agree with me, but why on earth does the rest of the world suffer so much when the US market is weak?

I have always wanted oil to be traded in euro, and i know that it is just around the corner. At least then the market in Europe will get better but I do have fears for the US market when this happens...

I want it to trade in Euro simply because we are paying sooooo much per Liter of petrol...and my bike commuting is painfully expensive.

Great question. The US Economy is the number one driver of business in the world. China, for example, would not be in the situation they are in today if we didn't buy all their crap on our credit cards. I'm sure Europe is the same way, it is next to impossible to buy things not made in China.

Also much of the world buys our goverment bonds because the US bonds are a sure bet, and very safe. So if the US dollar declines there is less value and the rest of the world get nervous.

The company I work for has locations in Ireland. If things get bad enough for us, and our customers that we support there, we may have to lay people off. This directly effects Ireland and there are now people added to the unemployment roles.

We are all one big global business family now.

trailblazer87 · Mar 18, 2008

All the markets are now so intertwined that when one has a hiccup they all feel the belly ache. The money markets are all based on trust. There is no precious metal standard of any kind any more. Theres not enough gold or silver in the world to cover the sheer size of the worlds economies. This one can be tracked back about 5 years to when the housing market here was going crazy, and the government decided to devalue the dollar against the euro. Ever since it has been a bit of a roller coaster ride, we are now just on one of the down hill slopes, and in time we will start rising again. The matter of when depends on the decisions made by the central banks and governments.

VEGASRIDER · Mar 19, 2008

I think the Euro is the greatest currency ever made. It's the latest and greatest.

Gotta love those purple colored € 500 notes, wish we had larger denominations here in the states.

Davop · Mar 19, 2008

The billions going to the war in Iraq isn't helping matters. The US is borrowing money from the Chinese to pay for it, and a tax rebate. Also, the rich are paying less taxes,percentage wise, than the middleclass. All leading to big budget shortfalls.

Hellgate · Mar 19, 2008

Davop said:
The billions going to the war in Iraq isn't helping matters. The US is borrowing money from the Chinese to pay for it, and a tax rebate. Also, the rich are paying less taxes,percentage wise, than the middleclass. All leading to big budget shortfalls.

Excellent point Davop, I am pretty sure that China and the UK are the number one and two buyers of US bonds. Perhaps someone will correct me if I am wrong here.

I don't want to go down the tax path too far as we all are in different situations and everyone has different things that are important to them and their sitution.

I always tried to tell my EX it is not how much we make, but what we spend out money on that really matters. The US goverment and US people are in a similar situation, we simply spend too much for what we bring in. The Catch 22 is if the US wasn't the spending machine, the rest of the world would really hurt. Japan is a good example. They have really struggled as an economy for the past 10 to 12 years. They just aren't able to get back to where they were in the late 70's, 80' and early 90's.

I am seriously worried about this:mad:

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