Global Crisis?

[JimF]

To explain it in terms that I (as a non-economist) could understand, she dumbed it down for me, saying in part that this could be expected after burying hundreds of billions of dollars in the sands of the Iraqi desert, but removal of leverage restraints would change the "could" to "should".

That was Bin Laden's whole purpose. W. sure fell for it.
http://www.newsweek.com/id/165952

But it worked on the Soviet Union in the 80's, so it was not the first time. Bringing down two world super powers is not a bad record for a guy who lives in caves.

[stu8080]

Looks like a surprisingly lively thread! lol. Im a banker, and so know all about the woes of this credit crisis (however overhyped!)

Deusmachina is very right, lack of regulation in the banking sector has led to the credit bubble and its inevitable burst, but we are a long way away from a depression last seen in the '30's. I personally think that (britons certainly) need to get back to the days were credit was never certain or easy, and we learn to live within our means. I reguarly get pleas for help from customers who owe over 120% of the value of their assets, and given the average house price here is ~£100,000 thats scary!

As for the run on the banks, with a few exeptions, most banks have around 40% of their value in cash deposits, the ones that are suffereing are those demutualised institutions that wanted to expand quickly and inflate their new share prices.

Every cloud has a silver lining though, if its a bad time for borrowers, its a good time for savers. It a great time to invest in shares and especially given the UK's decision to borrow heavily to stave off this recession there will likely be some very lucrative guilts available.
Oil prices have dropped which should reflect in our grocery and fuel budgets too.
Interest rates are set to fall, including the LIBOR rate which kick started the run on the banks in the first place, which will mean my mortgage will drop plenty soon too. :-)
The most important thing in a recession is to not panic - if you stop spending, you starve the businesses that provide your jobs and that drains the welfare pot further.

[JimF]

The most important thing in a recession is to not panic - if you stop spending, you starve the businesses that provide your jobs and that drains the welfare pot further.

In previous slowdowns, Americans have continued to spend as though money were going out of sight. We were the wonder of the world. Maybe it will carry us through this time, but how you spend without credit will be a problem. But I am sure we will think of something.

[pcostanza]

In the 90's when I bought a home, I was told I could get X amount of money based on my (and my wife's) salary and credit. I knew right away it was over my means. And, the realtor kept telling us, the banks know what they're doing and "you're sure to get raises each year and can afford more than this". I didn't buy it then and don't know.
I did end up paying off a 30 year mortgage in 17 years but it was part luck and much more saving and doing without. You young whipper-snappers can learn alot from us old guys.

[Deusxmachina]

Jim Rogers. http://www.youtube.com/watch?v=mBVC3H8Pgc4

"What would you like the fed to do right now?"

"Abolish the Federal Reserve and then resign."

He also bashes Paulson and Bernanke and "the idiot at the New York Fed." "These guys are never right. Why do people listen to them?" lawl. Love Jim Rogers.