Grooveon Forums

Anyone who has a clue whats going on, please explain.

Ha ha i am glad someone posted this cause i feel the same

Not totally sure but some of my key take-aways are

1. The Greed of the large banks O/S (and maybe locally) has come back to bite them

2. Anyone planning retire in the next 12 months based on past superannuation projections will need to work an additional 3 years based on current events

3. The best place to put your cash at the moment is in a term deposit with one of the big 4 banks. Returns are reasonable (7% - 8%) and you can bet if NAB go bust the Aussie Govt will bail them out

4. If you’ve got money and balls its probably a brilliant time to day trade based on all the speculation around collapse vs bailout. Logic says the US Govt will eventually come to the party and if you get the timing right you can make some fast cash - you could equally lose a lot quickly if you be the wrong horse

B-Love

i wasnt even going to click on this thread as i am not educated on whats going on at all, just been hearing on the radio that its going to impact on australia and the government may be too confident on our financial system to be worried about anything impacting on our economy…

in the library atm studying, was logging on grooveon to get away from this…

anyway, quick run down:

pre 07 - large banks giving loans to people who probably couldn’t pay them: called sub-prime loans (as opposed to prime)
These mortgages are wrapped up with other ones (including prime) and sold as securities to large institutional & individual shareholders
These security investments are underwritten (insured in case of default) by the investment banks like Lehmann Brothers & Merrill Lynch
Nov 07 - the people who couldn’t pay stack up and heaps of defaults
Investment banks lose money and investors write down assets = Lehmann & Merrill collapsing
Key problem was: do not know who and how much is exposed to these mortgage-backed-securities
As a result the investors pull out all money in shares, market drops, no-one is willing to lend money
US gov was going to inject $700b to bail out the banks, but that was rejected, and now investor sentiment is even lower

worst case scenario: global banking system collapses and we go back to putting money under our beds

hope that helps

B-Love - 01 October 2008 05:09 PM

Not totally sure but some of my key take-aways are

1. The Greed of the large banks O/S (and maybe locally) has come back to bite them

2. Anyone planning retire in the next 12 months based on past superannuation projections will need to work an additional 3 years based on current events

3. The best place to put your cash at the moment is in a term deposit with one of the big 4 banks. Returns are reasonable (7% - 8%) and you can bet if NAB go bust the Aussie Govt will bail them out

4. If you’ve got money and balls its probably a brilliant time to day trade based on all the speculation around collapse vs bailout. Logic says the US Govt will eventually come to the party and if you get the timing right you can make some fast cash - you could equally lose a lot quickly if you be the wrong horse

B-Love

I don’t think young aussies should be that concerned about this.. after all if the Herald Sun has it on the first page…

Super: People on this site will probably another 30 years till you will see this money, and have the time to ride out economic downturns

I doubt our banks will collapse. We are not that exposed to the sub-prime loans as a product but they have dealings with the big financials which are affected. Our “four pillar” banks have different growth strategies.

I would not day trade if you don’t know what you’re doing, especially worse in the current circumstances. I dont think this crisis has bottomed out just yet, but personally i have some funds waiting to be invested in cheap equities for the long run.

At the end of the day Aus is well placed to ride out this crisis. We still have China, India, & other emerging countires in Asia hungry for our commodities & propping up our economy

Thanks guys, that clarified things a bit.... so i guess the ultimate danger is that local banks will end up packing it in, which is bad for us.

Ant1 - 01 October 2008 06:15 PM

Thanks guys, that clarified things a bit.... so i guess the ultimate danger is that local banks will end up packing it in, which is bad for us.

Highly unlikely - Our Banks are generally conservative and pretty sound - And if one of the big 4 go you can bet your life on Govt intervention (funded by increased taxes of course)

B-Love

the way i see it is that we wont get hit that hard compared to america and europe
-
most of our money comes from asia

I was waiting for you to post this thread Nick lol.

I remember when the economy in Argentina fell on its ass. It’s all kinda scary to me. People get crazy when it comes to money.

I feel so simple now thanks guys

My thought and opinion from what I’ve read etc;

We’re going to feel it. In some industries there is already a strain from exports to the US etc (i.e Wheat) Also insurance companies that are being hammered are having an influence on the market here. Peoples jobs in Australia are in question etc.

And what about all the money the US put into other countries. Without money there is no/less power. This could possibly influence the way the world is controlled in the decades to come.

Also you think the US is the type of country that are going to just take it on themselves, nope they will need world help and assistance.  Its already affecting share prices which Australian companies and Individuals put their investments into.

This is huge and will have a ripple effect.

No man is an island.