What Does the Liquidity Crisis Mean to the Average Joe?

Same experience. However, I still think you are a delightful crank !

What are you buying?

Well, I'm tracking the Bay Area real estate market very carefully. Too soon to jump in, but there will likely be a few bargains before long.

With stocks, I am only doing my 401K contributions.

mostly global manufacturing /industrial

crank·y1 /ˈkræŋki/ Pronunciation Key - Show Spelled Pronunciation[krang-kee] Pronunciation Key - Show IPA Pronunciation
-adjective, crank·i·er, crank·i·est.
1. ill-tempered; grouchy; cross: I'm always cranky when I don't get enough sleep.
2. eccentric; queer.
3. shaky; unsteady; out of order.
4. full of bends or windings; crooked.
5. British Dialect. sickly; in unsound or feeble condition; infirm.

The real estate investment, waiting for the market to hit bottom when all the foreclosures get on the market, is pretty much what I was thinking about when all of this started hitting the news.

Those that have the cash will be able to grab up the land, and I've always considered land to be the ultimate investment. This can result in a considerable amount of land being in the hands of a few, furthering the class / wealth divide.

As McGentrix's cartoon suggested... Someone knew.

Sir
A similar subject is being discussed in WP and here is one cut and paste from that source which reflects my views .

"The problem is not with regulation but with irresponsible practices of some of the companies. Just look at the housing market crunch. The reason is that any Harry, Tom, and Dick were able to get a loan with or without any guarantee or putting down a single penny. You just walk into a real estate dealer's office and everything was taken care, no questions asked.
So it had to come down flat on the floor. The taxpayers have taken care of so many irresponsible lending practices from S & L onwards. Here comes another one, and it will be followed by credit card crunch.
I feel sorry for the poor American taxpayers who have to bail out so many crocodiles, but do not have the money to pay for the health or college of their children. When they ask for this, there is a simple answer: Don't you know you are living in a capitalist country. Or how in the world can we socialize our healthcare system, as if socialism starts and ends at healthcare.
Sometimes I just wonder if McCarthyism is really dead. I personally feel it is alive and well standing in every corner of life and gazing at poor middle class.
If there is anything that is hated in this country, it is Keynesianism, but when it comes to bail outs of fat cats, everyone starts looking towards Mr. Bernanke, Chair, Federal Reserve. So why don't they oppose those doses. Is that not Keynesian economics at work?


http://newsweek.washingtonpost.com/postglobal/william_gumede/2007/08/regulate_irresponsible_banks_f/all_comments.html

And, what will the Feds do about that?

I'm just sitting on the sidelines for now; too early to know which way things will swing during the next several weeks.

I agree with engineer's explanation of what's happening with the banking sector; we still don't know which ones are in real trouble.

The biggest surprise so far in real estate is that our area is still showing increase in value even though sales numbers are down. It seems the higher cost areas are still in high demand in Silicon Valley with the average now over $800,000.

There will certainly be depressed markets with some good bargains to be had out there, but I think a little waiting will be the right thing to do. I see prices going lower as more people fail to meet their mortgage payments.

We're about to buy a house, and it's certainly got us thinking hard about what a place is going to be worth down the road, since it's going to be a much more expensive mortgage than it would have been five years ago, even though our credit is better now.

Aw, well, it's just a good excuse to buy something beat up and ugly but with a good foundation and a dry basement and in a good location. I've got a feeling that gas prices are going to start driving people closer to town here where there's been a bunch of hideous overbuilt and underbought construction at the outskirts lately.

So, like dys, I'm buying. But real careful like.







Dunno if that has **** to do with liquidity...

Cramer, the guy that goes crazy talking about this stock market stuff on one of the news channels, was on MSNBC talking about how we're gonna have all these squatters. His number was 14 Million foreclosures.

I was thinking all of these people are gonna lose their homes and be on the streets, flooding the housing market, lowering housing prices and allowing the wealthy to buy up property.

He's thinking there will be all of these people in foreclosure, but... if the banks go under there won't be anyone to take them to court and kick them out. They'll just squat AND not pay.

HA! That would be justice.

Anyone know what the effect on the global markets will be long term? I get the impression that our debt issues have thrown everyone into a panic. But I don't have any direct knowledge or education in the subject.

patiodog, Have an expert inspect the house you are considering to buy. They'll see things we won't. Also, don't buy at the bottom of hills or on the side of hills with no rock to support your house. Flooding and sliding are ignored when people look at homes, because they usually have "good" view locations. Good luck.

Some of the wealthy can't even get a mortgage these days. So, who's dealing in cold cash when buying a $400,000+ house?

Free Duck, Do you remember how the Thai baht rocked the financial world a few decades back? This is much worse!

The economy of today is tied to world markets as never before; when one has a problem, especially the largest economy in the world like the US, everybody will be impacted.

The economy in the US will hurt; loans for consumer spending and purchasing homes will be more difficult and more expensive in the future. As we all know, the consumer debt in the US is at the highest point in history, and very few are saving for their retirement. Most people are depending on their 401k's and social security, but that's hardly sufficient to carry most people through a life span of some 80 years - or 20+ years in retirement. That's the reason we see more seniors working after retirement age (65) today.

There are also conflicting economic activity from my vantage view. We still see how some people still continue to eat at more expensive restaurants (it's packed with people during lunch every day), such as we have in San Jose called Santana Row, and shoppers still buying some expensive clothes. Auto sales doesn't seem to be hurting too much either.

This mixed bag of economic activity is daunting to decipher, but we can be sure some millions of families will be losing their homes in the coming months. Many still live from paycheck to paycheck, and those are the people who will leave their homes without notifying the bank - just to get away from their unaffordable mortgage.

Oil prices are now over $72 a barrel; that's going to impact gas prices in the future. Food prices are also going up, because delivery cost will go up (fuel cost).

I believe the feds will drop interest rates to alleviate the cost of short-term funds, but that won't help most consumers that have credit card debt.

It's a mixed bag, but consumer buying will be hurt which represents about 75 percent of our economy. I expect the stock market to yo-yo for the next few weeks.

Many of these families should never have tried to buy a house/condo in the first place. If they can't afford a 20% down payment, that should tell you something.

There seems to be another problem in the real estate market too. While houses are on sale, around the USA, renters are still hard to find. Why do you suppose?

WOW! The market with less than two hours of activity has already shown a swing of 320 points.

Watch real-time quotes for selected stocks and you'll see many will have price changes of at least $3/2 minutes.

The feds cut the banking system discount rate from 6.25% to 5.75% - a whopping .5 percent! That's what give the market a bounce up - for now. We'll have to see how the short-term effect of that rate cut will have, because unless the rate affects consumer loans, it won't mean much to the economy.

According to my brokerage, I'm ahead by 37%, comparing the value of my portfolio today, with that of exactly one year ago.

That account has only stocks in it, no mutual funds.