Greenspan: This Is The Worst Economy I've Ever Seen

[one...two...tree 2,762]

Curious how you won't acknowledge that the trillion dollars spent on a useless war limits the government's ability to correct the situation ...

not to mention that the rest of the world has no confidence in our liquidity as a result.

the president ALWAYS owns the economy. After 8 years, he owns it lock, stock and barrel.

Well... the "decade of moral hazard" which created the current mess started in 1998

(under Bill Clinton) with the bailout of the LTCM (Long-Term Capital Management

hedge fund).

Since then, banks and other investors have made a lot of irresponsible commitments

in bad faith, knowing that the government would be there to bail them out.

Welcome back...but I'll have a rebuttal for you later.

[GaryC 7]

Curious how you won't acknowledge that the trillion dollars spent on a useless war limits the government's ability to correct the situation ...

not to mention that the rest of the world has no confidence in our liquidity as a result.

the president ALWAYS owns the economy. After 8 years, he owns it lock, stock and barrel.

Well... the "decade of moral hazard" which created the current mess started in 1998

(under Bill Clinton) with the bailout of the LTCM (Long-Term Capital Management

hedge fund).

Since then, banks and other investors have made a lot of irresponsible commitments

in bad faith, knowing that the government would be there to bail them out.

Welcome back...but I'll have a rebuttal for you later.

After an extensive search of all the liberal blogs.

[mawilson 2,133]

eww I'm ignorant here. But that struck a nerve. I'm about ready to borrow 2-3k from my 401k. How is the current economy going to play in on this? Interest rates go up? Well, in my case hopefully I can pay it back before interest kicks in:) (assuming I keep my job that is and dont get washed out by bad economy!!)

Depends.... did you invest your 401k in mutual funds? If you did, it has probably

lost about 15-20% of its value by now, diversified or not.

If you kept your money in safe low-interest money market funds (e.g. US Treasury bills),

you're not affected in any way.

Interest rates you pay on a 401k loan vary by plan, but the most commonly used rate

is the "prime rate" plus one. The prime rate is actually lower today than it was a year

ago, so borrowing is cheaper now than it was then.

[GaryC 7]

eww I'm ignorant here. But that struck a nerve. I'm about ready to borrow 2-3k from my 401k. How is the current economy going to play in on this? Interest rates go up? Well, in my case hopefully I can pay it back before interest kicks in:) (assuming I keep my job that is and dont get washed out by bad economy!!)

Depends.... did you invest your 401k in mutual funds? If you did, it has probably

lost about 15-20% of its value by now, diversified or not.

If you kept your money in safe low-interest money market funds (e.g. US Treasury bills),

you're not affected in any way.

I may add that unless your planning on retiring in the next year and are contributing monthly to your 401K this is really a good thing for you. The cost per share of whatever fund your buying is going down so you are getting more for your money. Later when the market goes back up you will end up with more than if the market hadn't gone down. My advice is to put however much you can afford into your 401K right now. It's bargain time at Wall Street.

Edited September 17, 2008 by GaryC

[mawilson 2,133]

I may add that unless your planning on retiring in the next year and are contributing monthly to your 401K this is really a good thing for you. The cost per share if whatever fund your buying is going down so you are getting more for your money. Later when the market goes back up you will end up with more than if the market hadn't gone down. My advice is to put however much you can afford into your 401K right now. It's bargain time at Wall Street.

I agree. Between 2003 and 2007, the flow of funds had been overwhelmingly out of

the US (almost $400bn into non-US equity funds versus only $7bn into US equity funds.)

Essentially, investors were making a bet against the dollar. What came as a surprise

is that the losses they suffered in the emerging markets (down more than 30%)

and the developed world outside the US (down 25%) turned out to much worse than

the (negative) return on the S&P 500 (down 20%).

The result? Investors are now abandoning the once-popular "decoupling" thesis

(that emerging markets could grow independent of the US and the developed world)

and are sending money back to the US. This has the effect of strengthening the

dollar and puts downward pressure on oil prices and other commodities priced in

dollars.

[GaryC 7]

I may add that unless your planning on retiring in the next year and are contributing monthly to your 401K this is really a good thing for you. The cost per share if whatever fund your buying is going down so you are getting more for your money. Later when the market goes back up you will end up with more than if the market hadn't gone down. My advice is to put however much you can afford into your 401K right now. It's bargain time at Wall Street.

I agree. Between 2003 and 2007, the flow of funds had been overwhelmingly out of

the US (almost $400bn into non-US equity funds versus only $7bn into US equity funds.)

Essentially, investors were making a bet against the dollar. What came as a surprise

is that the losses they suffered in the emerging markets (down more than 30%)

and the developed world outside the US (down 25%) turned out to much worse than

the (negative) return on the S&P 500 (down 20%).

The result? Investors are now abandoning the once-popular "decoupling" thesis

(that emerging markets could grow independent of the US and the developed world)

and are sending money back to the US. This has the effect of strengthening the

dollar and puts downward pressure on oil prices and other commodities priced in

dollars.

Interesting, I have about 1/3 of my 401K invested in international growth funds. I have been thinking that I may need to reduce or eliminate that fund. What do you think?

[symbiosis 0]

Welcome back...but I'll have a rebuttal for you later.

After an extensive search of all the liberal blogs.

What an odd accusation coming from gary -- king of cherry picking the right-wing blogs. On the contrary, the "liberals" i see posting here more often than not post only reputable, mainstream sources. In fact, in my case, i challenge you to find a single case where i have cited a "left wing blog"

[IAMX 3,055]

I'd say the best investment is to get yourself a gun, a chest, a shovel, and secure it with mother nature until you need it.

[GaryC 7]

What an odd accusation coming from gary -- king of cherry picking the right-wing blogs. On the contrary, the "liberals" i see posting here more often than not post only reputable, mainstream sources. In fact, in my case, i challenge you to find a single case where i have cited a "left wing blog"

To bad I wasn't talking to you. Get over yourself already.

[mawilson 2,133]

Interesting, I have about 1/3 of my 401K invested in international growth funds. I have been thinking that I may need to reduce or eliminate that fund. What do you think?

Current market trends are working against international (especially emerging) markets

and will probably continue to do so for a while. That said, when we do hit bottom,

they are likely to trade at a big discount and be a bargain.

[GaryC 7]

Interesting, I have about 1/3 of my 401K invested in international growth funds. I have been thinking that I may need to reduce or eliminate that fund. What do you think?

Current market trends are working against international (especially emerging) markets

and will probably continue to do so for a while. That said, when we do hit bottom,

they are likely to trade at a big discount and be a bargain.

I have about 12 years before I want to retire. I am thinking that the international growth market will come back along with our economy next year. Despite all the political noise and the current banking problems I realize that the economy is cyclical and will come back regardless of who is in power. Right now I am invested in 1/3 established domestic funds, 1/3 domestic growth funds and 1/3 international growth funds. I want to take advantage of the coming recovery so do you think I have my money in the right places?

[morocco4ever 63]

What do you mean? Our economy is just fine. Isn't that what McCain just stated?

And for once, and probably the only time, I agree with Gary. Now is the time to invest in your 401K plan. It will go back up. Right now you can purchase for dirt cheap.

As for a 401k loan, and the interest. Please tell me if I am wrong, but doesn't the interest go back into the account?

[Ban Hammer 13,352]

On the contrary, the "liberals" i see posting here more often than not post only reputable, mainstream sources.

like the carpetbagger?

[HAL 9000 96]

On the contrary, the "liberals" i see posting here more often than not post only reputable, mainstream sources.

like the carpetbagger?

more often than not.

[GaryC 7]

On the contrary, the "liberals" i see posting here more often than not post only reputable, mainstream sources.

like the carpetbagger?

I like the ones from the huffingtonpost. Very reliable and unbiased sources.