Where do you think the economy is heading?

Nowhere with a scenic view...

Thank you for posting to Point Whore! Wishing everyone many, many points!

I really hope that people don't start yanking their money out because that will absolutely cause a collapse. It will only make everything everyone is worried about really happen. I am waiting still. Though I am screwed if everyone else decided to start yanking...

I worry about the stability of banks. Not that I have that much money but what I have , I'd like to hang on to. It seems that this recession is the worst I've seen in my lifetime. Give me back the 1960s and 1970s. Jobs were plentiful and people could make a go of it. Today, there are too many people hanging on by a thread.

I just pulled $ out of the market to clean up debt...I am concerned with the banking crunch that all debt could be next.
http://politicalchatter.today.com/

Where ever it's heading, it doesn't look too good.

The economy seemed worse to me in the late 70's early 80's, but a little different. My 401K has taken a beating too, and I also remember the big tech dive in stocks some time back. I just hope it regains in time for me to pull it out and call it a day, LOL. I'm not quite old enough yet....

I don't think things are as bad as the media is making them look. The media is doing a poor job, and is instilling fear and trembling into everyone. They way I see it, now is the time to invest and now is the time to buy a house with prices so low. It is bargain time. There will be a few people who capitalise like I do - and when this current slowdown is over we will come out on top.

My personal economy already collapsed earlier this year with the loss of my leg and I'm just barely getting by now...but I'm making it. I don't have any savings so I don't care what happens with the banks. Prices continue to go up but the only thing that's affecting me is the increase in grocery prices...and that isn't a lot for what little I eat. I don't buy gas, so I'm not affected there. I only pay for electric at home and haven't noticed any increase. I use Gather for cash and Boomertowne for Visa cards to get a little extra each month. I know others have it worse off than I do. I don't see how some are even surviving.

We are heading down the track and it appears that we will be going over the cliff soon. Since we can't see the track that far ahead, I hope it veers one way or another. When a new president is selected maybe the hope that a new presidency will bring economic stability will that track we can't see.

Who knows.

i read a news article the other day on AOL saying some people are predicting if our economy doesnt get better it could be eclipsed by chinas economy by 2035....

Everything is cyclical. Always has been always will be.

its bad...but I am poor.....no savings, let alone retirement fund

The toilet ...

Depression

Pulled mine out as soon as the supreme court put bush in office. That seemed to be the writing on the wall to me.

Chuck - I work in the investment business. If you have a well-diversified portfolio like the ones we manage, it is not down that much. And, this is the time to buy into the market if you can. Buy low, sell high, remember? Selling out now is a very imprudent idea.

Stock prices are considered to be cheap when their price is trading at a low value compared to their company earnings. Currently, stock prices around the world are trading at an average price multiple of 13 times their earnings for 2008, which is considered a value. The last time the U.S. stock market headed into a significant downturn (the period 2000 to 2002) the average price earnings multiple was twice this level (around 26). This is a strong indication that the worst may be over.

People we speak to in the industry (the professionals - not the Jim Cramers of the world) think that we will see the market slowly going back up at the end of this year. A lot depends on the leaders in DC. If they decide to do something stupid like bomb Iran, and there is retaliatory action on terrorists' parts (like sinking some oil tankers) we will definitely see that up-turn delayed.

That depends on what the government does to set the country right - whether it is perceived as a band-aid more of the same fix, or they really do something to change things. The rich are still so greedy that they will not give anything away, like a Monopoly game where one guy has all the money but wants everyone else to keep playing so he can enjoy his superior position - it is like the well off Americans care nothing for everyone else and make excuses to keep going on along the same even when all can see it is not good for anyone and is leading to disaster.

Sheryl, I am invested in the market too, most of it in the last year, but it is folly to think that the American public can all be expected to be experts in financing. There is no one they can trust, that is certain, and the dollar depreciates daily.

The way this country is set up financially is to keep people in this situation and use them as a source of wealth to suck up ... now the whole world is like vampires on the American worker's jugular and it just will not sustain this, easy as it seemed to be for everyone else to make money off.

Bombing Iran, if it led to the stabilization of the Middle East in a reasonable amount of time might be the best course of action. I cannot support it yet based on the incompetence of the current administration and their uncertain loyalties as to whether they want to accomplish something with the military or just suck more money out of the taxpayers for military hardware and contractors.

I'm tempted to pull everything out and put in my mattress. At least I'd quit losing more on a daily basis. But, it's not a good idea to sell in a panic and so I will maintain my investments and avoid looking at how much I've lost over the past several months.

Ethan, I agree with your comment ... it is not that things are not bad, it is that there is not other choice but to bet on the American economy for us. It is the only game in town, and unless there is a huge global catastrophe and even if there is we all have to eventually get this together and make it right. There is not alternative. The alternative so far has just been to play games and ignore the problems, talk about gay marriage and patriotism. At some point we have to deal with the problems, it will be hard for those who have a lot of wealth to put a limit on it, but think of everyone else for God's sake.

Sheryl - everyone knows you need a well diversified portfolio. But, when you have factories and job cuts left and right. People don't have the job security to gamble with their money right now. I don't know alot, but I do know the people I talk to daily are hurting and hurting bad right now. Every day I'm hearing more and more stories of how my friends don't have money to pay their basic bills - even though they are living frugal and not doing stupid things with their money. They are responsible, work hard, and at the end of the day they are treading water with no life raft to count on if they can't keep the pace up.

...another thing I want to add. A few years ago the so called professionals (the fed and Alan Greenspan) never, never, never should have raised interest rates repeatedly before Greenspan left office. When he did that, all I could think of was what planet this guy was living on because our local economy wasn't good at all. Many people were out of work because of factory closings, etc. and that was the nail in the coffin for their adjustable mortgage rates. Everyone wants to point the finger at irresponsable homeowners, but those homeowners were doing ok until they raised those rates. People simply couldn't keep up with it. Now I have foreclosed homes literally every mile or two in my area. We never ever had foreclosures here. The fed didn't have their ear to the ground then and they don't have a grasp of reality now. I feel bad for Burnake (if that's how you spell his name) because he has to clean up the huge mess that Greenspan created.

Okay, first of all, I'm not talking about people who are homeless, or on the verge of selling their children to survive. I understand that there are some people who are just not in the position to invest, whether it be poor health, loss of job, etc.

I am talking about the people who are simply getting frightened by a downturn in the market. We had one client who got totally spooked and insisted that we sell everything. She has since regretted it. If you are globally invested, over the entire array of asset classes, you will not see your total portfolio going into the toilet like some investors have who have literally invested in a small number of "sure bets" based on poor broker advice or, well, basic greed in wanting consistent 20% returns on their investments.

I could show you how much investors lost when they sold out low during the last downturn in the market in early 2000's. It is not a wise thing to do. It would be better to cut back and continue to invest proportionately or as much as you can in these times. Believe me, historical data proves this out.

The problem I see with many Americans is that they don't want to sacrifice anything NOW for the good of their future. How many people do you hear whining about how bad their finances are, only to find out that they own two new cars, everybody including their 5-yr-old has a cell phone, they eat out twice a week, etc, etc.

The best thing this country could do for themselves would be to cutback seriously and trash their credit cards. You think we have a problem with sub-prime mortgages right now? That's small potatoes compared to what's coming next - the credit crisis. People have just forgotten how to say "No" to themselves and their families. That's what is going to really do many people in. And you are going to really need your retirement funds after that happens - so don't even think of taking retirement money out of the market. Or, people are really not going to have anything left to live on.

If everybody pulls out, we will all go down in flames. I think that if we ride out this first hysteria, we will make it.

and I have to second what Sheryl said!!!!!!!!!!

I don't think it's doing very well. Not sure where it's going, but pulling out isn't the answer. That creates panic.

Yanking money out will cause what happened in 1929 with the stock market crash. I hope people don't start doing that, but at the same time people are losing money, why lose what you have? I've been tempted since my interest rates have went from .5 (pretty poor a year ago) to .1, that's just ridiculous. I'm optimistic though, I hope a solution is found and things do improve.

The average recession lasts 18 months, but retirement funds are supposed to last 18 years or more.

Sheryl I'm curious about something. (disclaimer)(I know very little about investing.) Aren't many peoples 401's partially invested in the oil stocks? And how would the increased taxes proposed on the oil companies effect those peoples 401's? Wouldn't those kind of proposals be a big problem for those peoples 401's who invest partially in oil?

I think people need to sit on the stock market. Not yank all their money. We have seen things much worse than what they are now.

I'm keeping my 401k as is. It's better to buy low now then sell high later on, but I have quite a ways to go before retirement.

I'm very worried that the economy is on a worse path than the great depression.

"And how would the increased taxes proposed on the oil companies effect those peoples 401's? "

First off, Charles, a well-diversified portfolio is not impacted by any one stock or sector of stocks if invested properly. Secondly, I do not think taxing oil companies - who have reported record high PROFITS this past year, would do much to harm them. Maybe they could be incented to actually exercise all those oil leases they currently hold that they are not doing anything with, or use some of their capital to invest in energy sources that are not mostly located under countries that are or could be hostile to us.

The problem is that we have been rewarding these companies with tax subsidies and breaks for a very long time now, and they have been reaping the rewards with very little effort towards moving our economy ahead over the long term. What you are seeing now is smart investors and mutual fund managers looking outside the US economy, towards other markets who ARE investing in the future. The oil execs and the government leaders who are reaping the benefits in the short term are simply causing us to lag behind the rest of the world in future economic development.

As an example, we met with Wisdom Tree recently - they are developing new funds based on the new emerging markets - the ones who are using their capital wisely and investing in technology and industries that are going to lead in the future. They are not the only fund groups who are abandoning oil and looking towards the future. Oil is a limited resource - the US is way behind the eight ball right now, and slipping by the day as we reward bad behavior, both in the industries we subsidize and idolize, and in the social behavior we continue. But, what would you expect with oil men running the country and padding the pockets of our Congress?

We seriously need to wake up as a nation. The investment leaders see it...and the smart investors are following. But, the wealth is going in larger proportion into outside development, not back into our country.

I know that hubby's 401K has taken a hit. This is scary and I think we've just seen the beginning of it. Other than that, we have no other retirement funds. Our house was purchased for that very reason. We got it $55,000 below market value as a foreclosure. We're shaking in our boots here, retirement is in the future but not the far off future. It's getting closer by the minute.

I heard on a news special here in this area last week that 'normal' recessions last around 10 months on average. However, in the same breath they said this recession picked up on the last one of a few years back so it seems never ending. Housing in this area has dropped like a rock. A house across the street from us has been for sale for 2 1/2 years. They've dropped the price from $219,000 to $169,000. The scary thing, it was well worth the $219,000 and was priced below market value at the time they listed it. There are tons of homes for sale and we are in small town USA here. (9,000 people in the largest town in our county).

Unemployment is another issue but a serious one here. What jobs there are barely pay minimum wage and the average rent is $895 here. Where/How can people pay that on minimum wage and still eat and support a family?

UGH, I have to stop. I'm getting angrier by the minute. :)

This is a great article Chuck. Thank you.

A bank a block away from me collapsed earlier this week, Washington Mutual (Wa Mu). The thing that scares me about this is that they were advertising like crazy on television for months and months telling people how great they were and made it sound as if nothing bad would ever happen to them. I was stunned when I heard the news. I was thinking of opening an account with them and now I'm glad I didn't. Wa Mu told depositors that they shouldn't worry and that they have enough funds to pay back their depositors. But, this is the first time in my life that I've seen banks fail. Another was in California.

I'm frightened! Food, gas, oil, and rents are sky high. Car companies are practically ready to go under, people are losing their jobs and their homes. I see a big disaster in the making.

And what did Bush say this morning? He said the economy is strong. I guess I live in a different country than he does.

Alright...this turned interesting. I realize the need for a diversified portfolio. But, at the same time, it would be wise to shift all your funds into the bond market until the bleeding is done on Wall St. Why lose thousands when you get earn a little and then jump back in after it gets better? We are no where close to the bottom yet. Here's an example...The recent closing of Johnson Rubber and the big layoffs at Kraftmaid in Middlefield, OH are now starting to impact the smaller businesses there who relied on those companies employees to buy their products. Business is down across the board and every one of them said they have never seen it like this. Johnson Rubber was around for 99 years I believe. Someone might want to double check that, but I think I'm in the ballpark. When you start taking out these big companies that were the lifeblood of a comunity, it trickles down and other businesses suffer. People are scrambling for work. Out of the 500 people that worked at Johnson Rubber, only 70 of them lived in the immediate Geauga Co. area surrounding Middlefield. A large number traveled from Warren and Youngstown, OH to work there. So right off that bat that's 420 people who no longer coming to Middlefield to spend their money. On top of that, the reason why they came to Middlefield was because there were no jobs in their areas. So now where are those people going to go for jobs now? ...and what's to become of Middlefield and the lost tax revenue...the small businesses who can't stay open because they don't have their customer base any longer? Darn near every school district is hurting really bad. My school system shot down the last 2 tax levies and the current tax runs out at the end of this year and you know what? They will have no income tax dollars coming in after Dec. A huge hit to the school. People want to support the school but the bottom line is people don't have the money. These are just a few warning signs of where the economy is heading.

Sorry for the poor grammar here and there. I'm trying to rattle off everything fast. I pointed out the Middlefield economy because it's like an infectious disease that will jump to the surrounding communities and spread from there. I'm watching it go down and it doesn't look promising at all. We're starting to get these large pockets where there are no jobs. Those people from within those pockets are driving further distances for work. For the Warren people who worked at Johnson Rubber, there may be a ray of light because GM will add a little over 1,000 jobs at it's Lordstown plant. However, GM closed 3 other plants...one was in Dayton, OH and I can't remember where the other 2 are. So, that little ray of hope in Lordstown came at the price of other job losses in other parts of the country. Job losses outnumbered the "new" 1,000 jobs created in Lordstown, so the overall economy is taking a hit.

The housing market in Cleveland has crashed and burned as well. Last year the average median price of a home at this time was $72,000. This year..are you ready for this...$15,000 is the average median price! If anyone wants to search it out, the Cleveland Plain Dealer did a front page story on it last Sunday. People are flocking to Cleveland scooping up the foreclosed homes for as little as $1,000 to $4,000 and that's what caused the average median price to tumble. These people are buying these homes site unseen (some in bad neighborhoods) with the hopes of putting them back on the market as handyman specials for $20,000. The only problem is that there are no people to move in and buy these homes - either due to credit problems or they can't afford to be shot and killed if they move there. The foreclosure mess not only hit the people who lost homes...but now it's also hitting entire neighborhoods of people who worked hard all their lives just to see the values of their homes plunge.

"Maybe they could be incented to actually exercise all those oil leases they currently hold that they are not doing anything with"

Sheryl I heard about and wrote about leases that companies have tried to use and that after they did the drilling and found the gas and tried to start the progress of recovery the government blocked them at every opportunity. I think that it shows that our government as played a role in creating the energy crisis.

http://www.gather.com/viewArticle.jsp?articleId=281474977399046&nav=MyGather

George...have you been watching the news? IndyMac bank just went down this week. They had 16 billion in holdings and about 1 billion dollars is not FDIC insured. They only insure up to $100,000. That's why people were lining up outside the banks out there to get their money.

Agreed George W. As I said before, the media is doing a very poor job covering this. All you see is how "bad" things are getting or how "bad" things are SUPPOSED to get.

What really gets at me is when the tell us how bad things are supposed to get. This desensitizes people and leads them to expect the absolute worst. All I long for right now is a bit of honesty - which I will get by listening to reports directly from companies and the government rather than ANY media outlet.

Oh yeah...I don't belong to a bank. I belong to a small credit union by me. I cut all ties with banks a few years ago. I got sick of pathetic interest rates, all kinds of little fees where they would nickel and dime you for money (like ATM fees), and waiting a long time in line whenever I went in. I joined the local credit union and I have been nothing but happy ever since. I would give it 5 gold stars - great customer service, I'm literally in and out every time, they don't nickel and dime you, and interest rates are higher than regular banks for savings accts, cds, etc.... and if you wanted to get a loan their rates are lower than the big corporate banks.

Hey Ethan...don't listen to the media. Just look at what's going on around you. If you live in one of these areas, where everyone is out of work and home values have plunged you will know what I'm talking about. Those things I wrote above are all facts and what's really going on in blue collar america.

The US economy will stabilize.

The only problem is that folks won't like the time frame it will take to stabilize which probably will be around the end of 2009, or where the Dow Industrials will be which I have expected to be somewhere around 9,000 or so, and have said so before.

However, the real problem will be the value of the US Peso and what value it will have.

"But, at the same time, it would be wise to shift all your funds into the bond market until the bleeding is done on Wall St."

The bond market is suffering as well, Chuck. And some municipalities are actually defaulting on their bond obligations.

One thing to remember here is that people who are looking long=term are buying right now, but buying wisely. We keep forgetting the buy low, sell high mantra. We also seem to forget the very thing you illustrate in your comments above. Keeping jobs in the US, and paying livable wages is good for the entire economy.

I've gotten so sick of hearing Republicans bashing unions over the past decades. We were much better off in this economy when we had more union jobs. As you point out, the more a worker gets, the more he/she spends in the economy, both locally and nationally. The more that worker saves, too, which goes into investing in other businesses. The Republicans have basically managed to shoot us all in the foot/feet with this senseless bashing of the worker and their attempt to instill fear of unions in everyone. Look where it has gotten us - less jobs, with lower pay and benefits, all the while the top execs are raking in obscene salaries and bonuses. Again, stupid, stupid Americans fall for these fear tactics over and over to their own detriment.

I'm with you.
I have some funds in a guaranteed interest account - am glad of it.
Everything else is going the "wrong" direction.
I'd hoped for a fun retirement with lots to do. Now part of what I'll have to do is work!

Times are already tough for many, but we are not done by a long shot.

We saw it coming and made some good decisions, we lost nothing in the 401 K. Some of his co-workers lost half their retirement and there is no time to make it up, because things will not improve any time soon.
We made several investments our broker did not agree with, but it all turned out well. We also invested a bit against the market which is profiting between 20% and 40% for us at present - like someone said above - it is always a time to make money.

It is up to us to keep on top of what is happening in the US and in the world and not wait till the crisis is here. Having an account in a swiss bank in swiss currency may not be a bad idea. Our currency is losing ground and I agree with Doyle, diversification is important.
We are just little people, but we really stay involved in our mini portfolio and our 401K. It will take all our skill and a lot of luck to have a decent retirement. We have no debt, our small house is paid off, but still we know we have to stay vigilant to protect what little we have.

If you are going to sit and passively watch your funds and stock go down as if you are married to them, then yes you are going to lose. If you are losing in your 401k as most people are then you should look at changing your contributions to something that is making gains. I understand that all 401k's are different and there are sometimes fees involved in changing funds. Also most 401k plans have a money market fund or some kind of "bank account " fund where you can safely put your money when things are tough or you aren't sure where you want your money.

I would also advice you investsome time learning where you can get more time sensitive technical data about the funds in your plan. Typically the information available is to old to act quickly on. Most 401k's are set up for the old style of investing that you would use if you were wealthy and living off the funds long term growth or divedends. This is typically not the case. Once you have invested four or five hours learning the basics of technical charts it can be a matter of just 15 -20 minutes a monthmaintaining the optimum gain for your plan. This often includes putting the cash in the moneymarketlow interestfund. Remeber + 1.5% is way better than-10% on something that was good yesterday.

smae applies for the stock market but you have more options. Don't fall prey to the common error of marrying a stock. Find a loss limit you are good with and sell losers to get money to buy winners. If you havelostmoneyon a stock that is trending down with no hope insight, cut your losses and forget you ever had that stock. Take the moneyand buy a winner.

"We were much better off in this economy when we had more union jobs."

I'm in a union and it's definitely better than not having the union. Though I think there's little doubt the unions did become bloated and corrupt as time wore on, but now more than ever we need the kind of protection you get with collective bargaining. Except now with all this "outsourcing" the unions have little leverage--it's either play ball or someone in India or China will at a fraction of the cost with zero benefits.

The future of labor unions is bleak.

It is getting worse. What happens this winter when milions of people cannot afford to heat their homes? Giving us tax rebates from borrowed money only make the federal deficit worse.

What's a Labor Ubion?

> the unions did become bloated and corrupt as time wore on

Not as corrupt as the bosses or we would not have half of the major problems we have today.

William, your little rah rah session about the stock market is interesting. you seem to imply that anyone can save enough to retire and take care of themselves, and if they have problems it is their own fault.

The problem is that when I saw anyone can become rich, that is true. Like anyone can win the lottery as well. Anyone can, but not everyone. The stock market has winners and losers, and we seem now to have a public that has turned away from these things in order to speicalize in whatever useful productive work they do.

Most people do not have time to become financial planners.

We have a whole industry centered around taking advantage of them and fooling them into not noticing. The US financial industry is like a big Dracula, they are sucking the blood from Americans while staring everyone in the eye and trying to mesmerize them.

I'm 55 and my 401k has been hemorrhaging money all year. I finally quit looking at it, I can't take it. I think it's allocated correctly and changing it up all the time feels like the wrong thing to do--besides, I have no idea what to do differently. I'm going to let it ride and pray a lot.

Bruce K. you sure it was my post you read ?

How are things going for you now? I recently heard something that makes me think that we should hold on until after the 1st quarter -- March 2009 will look better maybe.

I have always been a total optimist. But there is something different about the climate here. I am not trying to get religious on everyone but I was having coffee with a friend and we ended up doing some biblical research and what I read has been keeping me up at night. I made notes on the sign of the end times and it's so right on. I have never really read the Bible befire but this is scary. I also logged onto COP.SENATE.GOV the congressional oversight committee and what they say is they are so damn worried. I just feel like this is bigger than all of us this is like nothing I have ever seen and my 100 year old grand mother said it too. She was shaking her head at Obama saying I can tell he knows in his heart that he cannot solve this. Theres a look about him that was not there before he was elected. I think he has really realized the depth and scope of the trouble were in and it's much more than Washngton will ever tell.