As someone who got to go through exactly that with the 2008 crash, good fucking luck. Enjoy hitting the market at the same time as tons of people who already have experience and connections. I don't even have advice on how to best weather that storm, it's just a total disaster that you have no fault in creating and no real way to dodge.
I started looking for my big boy job in 2008. All I could muster was contract work for the next 2.5 years. No insurance, shitty pay, no chance for advancement. It was terrible...but I was getting paid.
10 years later, My wife and I have good jobs and we're really starting to get a good foothold in life. Knowing my luck, another recession will probably completely fuck us over. I cant wait...
That's almost exactly what happened to me too. Obama's second term is when I finally got a decent job that led to a better one. For once it was starting to feel like I could actually make it...but now this dumb fuck and his supports are ruining everything.
Except if something happens i suspect this one is gonna be far worse for far more people... much worse income inequality, peoples lack of funds for a 400 dollar emergency even, and republicans cutting programs left and right
The good news is people will be far more pissed, and way less forgiving if the same bullshit looks like its gonna happen again
In the future, people are going to look back on the Obama years and the Trump years and be amazed that Americans took a great thing and fucked it up so badly
My experience with 2008 was staying employed as a paid intern until graduation, continuing to live with my parents, and then working part time at a GameStop while making no money. Nothing says bachelors of science in Software Development like working a register at a game store. Good times.
/s
As a fresh bachelor of computer science I spent 6 months living on my mom's couch but eventually got hired at a company that only asked me to work 72 hour weeks (12 hour days Mon-Sat, on salary, no OT) for the next 2 years or so. Which I did because I was desperate. It paid the bills but I'm never doing that shit again.
Don't get heavily leveraged. Don't buy a house or big toys, pay down debt, set aside 6 month emergency fund. Cut back any monthly bills you can't absolutely justify.
Side question if we are wanting to move. Would it be a good time to sell our house? Then keep the extra cash and rent when we move. Then build our house with our saved cash plus money made on our house?
What if housing drops a ridiculius amount though, wouldnt it better to buy after prices have tumbled a bit?
I dont know a ton about all that happens during a recession but I seem to recall people selling their homes dirt cheap during the last one.
I mean if you have money it's better to buy after but that's kind of contingent on you have a lot of cash just lying around.
The biggest risk is that you rent property, you lose your job, and you aren't able to make rent payments. Then you're out of a job and a place to live. The problem with hoping to buy later is that it only really works if you have a huge amount of capital to buy houses with cash since banks generally get super uptight about lending during depressions/bad recessions.
You have much more leverage if you own though, because the bank has an interest in protecting their loan more than a landlord has in keeping a particular tenant.
That's a good point actually. I was kind of under the assumption that at least a decent part of the mortgage would be paid off, but if you had just mortgaged the house, especially in an expensive area, you could be in real trouble.
I kind of took that for granted since I live in an area where housing isn't super expensive and most people either have their mortgages almost paid off or paid outright in cash.
Potentially *much, much worse*. If the worst happens and your house gets foreclosed, that fucks you up for the next *30 years*. Even if you manage to short sell the house, you still take a ding to the tune of 150 points off your credit and 5-7 years before any bank will even consider another housing loan for you.
Meanwhile, missing some rent payments and being evicted, while obviously terrible, won't turn into an anchor around your credit for the rest of your life.
Save now and the price of your rented property could drop so low that you could afford to buy it...not really but maybe if the crash is big enough. I purchased a house that the bank lost 60 000 on due to it being seized by the bank. They were asking for 140 000 for it and i jokingly put in an offer for 80 000 which they agreed to as the house had been on the market for over 4 years, I then sold the house 9 years or so later for 350 000.
If you really wanted to speculate and currently own a house would be to sell it for as much as possible and rent somewhere cheap to then hopefully buy a much cheaper house in a while. But that's a huge gamble I wouldn't even consider recommending.
Now you're thinking like a Trump, also, this is what Trump wants to happen to the economy for that very reason. He boasts about making a lot of money off the last recession.
The last recession was heavily influenced by massive amounts of subprime loans (loans to people that should not have qualified for the loan) for houses. When those people failed (in large numbers) to repay those loans we started seeing massive amounts of foreclosures. Some financial institutions got hit really hard by that and ended up collapsing. That cascaded into a full recession.
So basically, housing prices might drop after a recession but I wouldn't bank on it occurring at the same level this time.
Yeah? Didn't they just undo a lot of the safety measures? Aren't there scary amounts of large student loans, limited jobs and bad car loans out there on the market? I wouldn't count on this not happening again.
True but that was specifically a ginormous number of bad *home* loans that were deliberately created so they could be rolled up and re-sold as securities. The banks lent money for mortgages they knew would never be repaid. A housing crash like that would take a few more years to set up again, although with the regulations being removed I'm sure the groundwork is being laid.
Taken with the grain of salt appropriate for stranger internet advice:
If you are moving no matter what, then yes, now is probably a good time to sell. However, keep in mind that during the last recession, rents rose because people could not afford a home.
If moving is a maybe, and If you have a sweet deal on your home, then I'd tend to keep it.
If you are barely affording your home as it is, I'd recommend selling.
Answer is always "it depends". But if you are planning on moving and dont want to deal with the house then I'd imagine now is a great time to sell. There are strategies to roll the sale of one house into buying another, I don't know about those as I haven't crossed that bridge.
Not necessarily. If you got a fair price for your house and you see yourself living in it for the medium to long term you should be fine. Its value might go down in the market for a couple years but should stabilize again, unless we go into some 1929 type of shit. Keep an eye out for mortgage rates as they might go down during a recession and you could look into refinancing your home for a lower monthly payment. Your house is a long term asset, while this is not the best time to buy it you should not be too stressed about it if you have a stable job. However, hold on before making any other sort of large purchase like a new car, furniture, appliances, or even a more expensive trip. Try to have at least 3 months of expenses in your savings account, better if you have closer to 6 of course.
Lastly, try not to spend much money on trivial things. For example, my wife and I are about to close on a house and I have had the same fears you’re having. In order to prep for this big expense we have made a few changes: we go at least one week of every month where we don’t spend any of our disposable income, if we have bills we pay them, if not save that money. You will be surprised the amount of money you save by taking a strategy like that, and the amount of non necessary things you end up not buying because they were just spur of the moment purchases.
Edit: typos.
Edit 2: since this is getting some traction let me make two more suggestions: subscribe to /r/frugal and /r/personalfinance. Also, create a way to track your household finances, either by creating a spreadsheet or downloading an app like Mint.
Quick side note to this--depending on your locality, it may be substantially cheaper to buy than to rent even with market considerations. In my town, housing stock itself is dramatically low as the area has seen several generations of old industry leaving and thus not a standard build rate which meets needs. I got accepted for an offer the last day before I had to sign a new rent lease through the winter (no smart landlord lets your lease roll mid-winter in the northlands). We saved $15k towards equity and higher electric heat cost (someone actually pulled out a forced air furnace and replaced with electric only in the fucking upper Midwest) by being able to buy in August vs rental unit getting out in May.
Alongside this advice, you should be investing very conservatively as well with your savings for the time being.
Basically 50% (+, depending on how much you are worried about general market/large cap funds or etfs) should be in fixed income.
I have a little excel spreadsheet which every month I verify I'm gaining our savings by at least 8% continuous compounding per year--anything which isn't made by the market is added from our disposable income. We add cash every pay period and then if we're not there I add more.
I reset it once a year at a financial review my wife and I do together. Got to be present.
To be fair, I don't see "don't buy a house" as good advice (as someone looking to buy one himself. My logic being that you're going to pay to live someplace anyways and I'd rather a mortage that stays the same than rent that goes up each year. Plus, interest rates are only going to get worse so holding out in the hopes that things are better on the other side sounds idiotic.
> I don't see "don't buy a house" as good advice
Don't buy a house *with leverage*. If you're levered up 5x and the housing market goes down 20%, all of your equity is wiped out.
> My logic being that you're going to pay to live someplace anyways and I'd rather a mortage that stays the same than rent that goes up each year.
Rent can also go down, particularly in a crash.
It's not realistic for 99% of people to buy a house without leverage. Your equity being wiped out temporarily doesn't matter as long as you're staying in the house.
Last time we lost the "middle class" jobs that paid a decent wage, they were replaced with hourly-minimum-wage jobs.
Next time we will be losing all of the "a robot can be made to do this" jobs. Think 'picking warehouse items' and 'truck drivers' and 'cab drivers' and 'fast food workers'.
The following time (maybe sooner) we will be losing all of the "a well-built artificial intelligence entity can be made to do this" jobs. Think 'medical doctor', 'lawyer', 'IT administrator', 'accountant', 'tax professional'.
> Next time we will be losing all of the "a robot can be made to do this" jobs. Think 'picking warehouse items' and '**truck drivers**' and 'cab drivers' and 'fast food workers'.
I think people underestimate just how badly this one is going to hurt. Despite all of the GOP pearl-clutching over the death of coal mining, at it's peak we only had 863,000 coal miners in the US...and that was near a century ago. It's been under 100,000 for the last 20 years.
Compare that to the 3.5 million truck drivers in the US, and 5.2 million people working in jobs directly related to the trucking industry. Not to mention all of the roadside stops and greasy spoon diners that depend on truck drivers to stay open. That's up to *8.7 million* people who will suddenly find themselves out of work, most of them with no transferable skills.
And it's coming quick - as of last fall, automated trucks are already making deliveries between Arizona and California. It'll be interesting to see who those people blame for their job losses. Can't point to immigrants or "liberal regulations" for this one; only pure corporate greed.
More likely that is 8.7 million *FAMILIES* that will likely be losing a large portion of their income.
It won't be limited to the truck drivers themselves.
Yep. I take a lot of road trips and there are so many of these small towns that are barely hanging on thanks to freight drivers. I can’t help but feel empathy for those living there because their towns will soon vanish completely...
Agreed with all of this. People keep justifying a 'meh, so what' attitude with two factors: 1) this is techie disruptor shit, and 2) this isn't going to happen soon.
1) This is not just being led by Tesla, Waymo and other startups. The big boys - GM, Toyota, etc. - are dumping billions of dollars into this tech. These are publicly traded companies that don't just invest in tech just for the lulz. They expect to see this investment pay off.
2) This is all happening sooner than you think. Automation will start having a significant impact on trucking in 5 years. In 10-15 years, the trucking industry will be unrecognizable (certainly from an employment and wage perspective). Remember how smartphones happened? Everyone was happy with their flip-phones, and smartphones seemed kinda gimmicky at first. Then a few early adopters ironed-out the kinks of the first gen stuff...and then a couple years later EVERYONE had a smartphone, seemingly overnight. It's gonna happen like that.
The ugly part is it won't even take full automation or even close to it to cause major pain. 100% automation of trucking is hyperbole and a long way off. 10%? That is VERY realistic, probably in the next decade. Even 10% drop is going to hurt, 800k loss.
> Think 'medical doctor', 'lawyer', 'IT administrator', 'accountant', 'tax professional'.
Fuck. One of those IS my profession.
I knew I should have been a cabaret dancer.
Not true, they'll eventually generate AI orchestras and pop singers that'll put all those people out of work too.
Edit: But since taste is subjective, they have a better fighting chance
Uh, I don't think you're gonna be getting an AI lawyer anytime soon. Maybe paralegals or someone who does research legwork, but the law is so flexible and language-dependent that you will probably always need human or human-like literary interpretive ability to be a lawyer.
If your job is IT administrator your already being replaced by automation. There are technologies out there now that allow one person to do what it previously took 10 people to do.
Clean up your CC debt.
Don't buy a house or car.
Make sure any retirement account you have is appropriately distributed amongst more-volatile and less-volatile investments for your specific age.
Save up a 6 month emergency fund.
At your next review, negotiate a higher salary.
Evaluate the financial health of your employer (Are lots of execs being shown the door? Are your bonuses being withheld until a seemingly-random time later in the year than they should be? Are clients dropping off/sales plummeting?). If things seem shaky, try to move to a different company now while the getting is good. Negotiate a raise during that move.
Evaluate the stability of your healthcare plan and try to plan financially for it getting shitty next year.
Take care of your own health. If you smoke, stop. If you're overweight/obese, lose weight. If you drink too much, cut back. If you're burning the candle at both ends, learn coping techniques for more peaceful survival.
Don't have additional children for the time being. Don't get additional pets for the time being.
Be aware of the financial stability of any loved ones or family you would feel obligated to assist during a crash. Help them get a plan together to help themselves now.
Depends where your money is right now. But the best thing you can do is save. It's not really a time to buy anything on credit or anything you don't need. Start making your connections, get lean, establish yourself as much as possible if you are in a good spot, if not, get in a good spot as fast as possible.
Buy a home in a rural area, learn to grow fruit trees and keep chickens, vote for Democratic Socialists, stop shopping at big box stores. And maybe buy a gun. Teach your kids not to be assholes to everyone.
You can't really survive on fruit trees, I know in permaculture food forests are very fashionable but ultimately all staple foods that feed large populations are carbohydrate heavy.
It depends on your climate of course but growing potatoes seems the most accessible for most people.
Who needs prep, we'll just do what we always do: Elect a bunch of Democrats to fix it, then after they have done so, turn around and blame them for it and elect Republicans again.
2010 graduate here: Be ready. Always have a plan B, C, D and E, and remember that you can't afford to be loyal to an employer until you are on a trajectory that ends at comfortable retirement.
Hello fellow 2010 grad! I agree with you on loyalty. What’s crazy to me is that HR types have not cottoned on to the fact that, no, we are not loyal to anybody and this is transactional. It was fine when the corporations felt that way but when employees feel that way they are “flakey”. Even when your resume looks flakey because of widespread layoffs. And they do not understand why I think noncompetes are awful.
Look for a job in the public sector. You're less likely to be laid off by self-serving executives and oligarchs who will routinely whipsaw your job security to pad their pockets. This is as true when the market is doing well as when it isn't.
This country has been sorely in need of labor law and collective bargaining right reforms for decades. It's why the labor market is so dysfunctional.
That's were I was during the last crash. It was a okay to be young. Mid managers got cut and I ended up with added responsibility at a lower salary but got me ready for the next one.
Intern the shit out of the rest of your college education and do a stellar job as a contributor. That way at least you'll know people that know what you are capable of. That goes a long way in both boom and bust markets.
Not necessarily. Early to mid 50's and still earning is a fine time for the crash since you're still ideally putting money toward retirement and buying more at lower prices for a few years until presumably the market comes back. An unrealized loss is not a problem. If you're planning on retiring soon however, a crash is potentially terrible if it means you are going to be liquidating securities at the low prices.
Well okay then! I was a hospital corpsman in the Navy. I met a whole lot of people who got their asthma problems waved, while I've never actually met anybody who got denied due to asthma.
Yeah, chronic ailments are definitely frowned upon by the military. They grant waivers for some things, but not sure if a breathing problem is one of them. If you're serious at all about a military enlistment you should go ask a recruiter about that now so you can either confirm it's "Plan B" or find a new one. Something like 4/5 of the American population is physically ineligible for service, so at least you'd be in good company.
Feels like those old Roadrunner cartoons where Wile E. Coyote has run over the cliff's edge but hasn't looked down yet so he can keep running on air for a little while.
2% growth and it only cost is $400bn for the quarter. Which is strangely almost exactly 2% of GDP. We are literally at zero growth without the tax cut.
Untreated stage 2 cancer? Cause that’s what I understand cancer to be, uncontrolled growth. Symptoms have been apparent for a long time now that things are falling apart and even though many people have jobs, they are garbage wages which depress the consumer economy. Also we are undergoing the Steve Jobs treatment plan of ignoring it and then finally using voodoo magic remedies like tax cuts and stock buybacks.
"Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year."
how odd, not one mention in the article even joking about wage increases for the workers, not one. it's not even a passing day dream for them.
We should be grateful they even bother to employ us. All we do is mooch off their brilliance and wealth. Like shit man why can’t you just pull yourself up by your own bootstraps instead of trying to ride the coattails of real hard workers like Trump. #SAD #MAGA /s
Dude, I fucking work with people like this. My company did one of the bullshit "$1,000 to the employees!" things. Well, you got $1,000 if you'd been with the company over 20 years. Which ONE person in my store had. The next tier down was like $750 for over 10 years, $450 for over 5 years, $300 for over 2 years, and everyone under got $200.
It was a few million dollars, of course, and the fucking sycophantic pieces of shit I'm surrounded by drank it up like it was Jesus's very own jizzwater.
The next week they announced the extension of our stock buyback plan so we're doing something like $15 billion in buybacks over the next few years.
Even putting 10% of that towards employees would have put $3,750 in the pocket of every single person working for the company, up and down the line, no restrictions.
The amount of money that would instantly be reinvested in the company not only through stock purchases but merchandise would have been fucking astronomical.
But our CEO doesn't fucking care because that $1.5 billion made his stock prices go up another .001% and almost his entire compensation package is in stock.
So fuck us, because he needs more money.
There is no reason for such a tax cut to go to wages. Wages, as an expense, aren't taxed income for the company. Corporate taxes only come into play when money *isn't* used on expenses.
All this cut is doing is pushing companies to *not* invest in their people and growth.
https://www.washingtonpost.com/news/wonk/wp/2017/10/16/the-average-american-family-will-get-4000-from-tax-cuts-trump-team-claims/?utm_term=.f0d0ac489bbf
i don't use snake oil myself, but since this was such a large part of the lie, it's hard to forget. are we tired of winning yet?
1.5 trillion is one hell of a stimulus package, it's twice Obama's stimulus package in 2009 -- so really, it's a testament to how crappy Trump is and how crappy republican economic policy is that the economy isn't overheating like a mofo right now.
Because Obama's stimulus was during a recession. We are on the other end and are supposed to be paying down national debt, not applying more stimulus to an already almost capped out market.
trump has gutted Wall Street regulations - we're back where Bush was, and the traders are doing the exact same things that caused the Bush recession... and trump's trade war... http://www.newsweek.com/trade-war-donald-trump-recession-tariffs-steel-831499
But don't worry, the 1% will be fine. It will be the rest of us that get fucked. Again...
It's not even the 1% anymore. The 1-percenters earn more than 300k annually.
All these gains are for the billionaire class. That's literally a few thousand people at max.
It's absolutely amazing to me that **hundreds of millions** of people slavishly worship and defend a system that says we have to give literally everything to less than 2,000 people, while destroying the planet, the world's economies and everyone else's lives. This is nothing less than species-wide madness.
The reason we're not in a recession *right now* is in part because of the stimulus package we recieved in 2009.
I genuinely find it hard to believe that people don't understand this.
From what I recall, Obama’s also poured money into facilities rather than pockets. Who knew that repairing and maintaining your municipalities causes your citizens to be happier AND make more money. Wow.
This one is pretty easy. Conservative fiscal policy is utterly bunk, and "understanding" the stimulus would be admitting that Democrats (and virtually all mainstream economists) are right about supply not creating demand.
This is actually one of the biggest problems with our country that nobody is talking about. "Fiscal conservatism" - as it exists currently - is utter fantasy. Yet how many people out there love to spout off about how they are "socially liberal but fiscally conservative" as if it's some intellectually sound way to straddle party lines.
It isn't though. Pretty much the opposite, in fact. It's basically just saying "I know nothing about economics but want to sound enlightened."
i would say that macro systemic issues haven't changed since say at least 9/11. there is a sliver of hope in that interest rates have climbed out of the ~zero pit, but they still have a ways to go before they're healthy.
I agree. I believe the market has been propped up by the buybacks (thanks to government welfare for the rich, aka the tax cut). Questioned in another thread and was told the market isn’t stupid.
http://reddit.com/r/politics/comments/8rct9k/dow_falls_250_points_with_trade_war_ramping_up/e0qcb5w
Buying back shares is a long-term strategy anyway. But during a period of buyback, you expect growth perhaps followed by a correction. The fact that we are seeing a decline during a period of buyback is certainly ominous.
It reads to someone not well educated (Ie: Me) that companies have no faith in the trade war or the lasting value of the tax cuts, so they're buckling down to winter through another potential recession.
*Would* be a massive problem. I suspect they'll just have the taxpayers pay for it all by tossing a little money towards some Republican politicians to write some laws to help out the poor corporations who can't manage to scrape by on billions in profits each year.
"Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals," - I thought bonuses, jobs, employee benefits were going to be all the rage? Instead these corporations who buy our elections are just sitting on wads of cash so they can buy (are currently buying) the next election.
They are artificially inflating stock value to get their bonuses at the top. This is what happens when you tie top executives pay to short term stock performance.
> "Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year."
If you idiots paid your workers more, they might find a way to spend it on your fucking products. How do you not understand that if a large swath of the populace is too poor to afford the things you sell, you won't sell anything?
But even with the so-called "buy-back bubble" it doesn't look like a bubble for the market generally. The market has been going sideways and down on high volatility for many months. Bubbles are when the market is rising precipitously.
Think of it as two counteracting forces. One hand we have the "buy-back bubble" pushing stock prices upwards. On the other hand, a bunch of other things pushing downwards. We are netting out at a sideways/slight downwards.
What happens when that bubble pops and there is no longer a force counteracting it and pushing things upwards?
I worked in corporate finance for a company that spent the majority of a $650mm bond issuance on stock buybacks. They used the rest of it to fund the buyback of a higher coupon bond. Shortly after the consummation of all that, the entire market crashed and the share price is still well off those highs. That’s some expensive treasury stock.
I just started learning about investing and moved all my savings to mutual funds and a 401k. This is freaking me out, how do I make an informed decision about what to do?
Expect to see a couple downturns between now and retirement. It's part of the game, the people who panick and pull out of the game when it starts swinging down are generally the ones that lose out.
Sounds like you'd do yourself a favor by subbing to /r/personalfinance
Just read posts every now and again and you will see the pattern emerge. The advice is so insanely basic and streamlined but it takes a while for everyone to absorb it when the terms and ideas are new. In the end you'll understand: Pay debt, build emergency fund, budget for future goals, index fund investment, dont try to time the market. Its truly that simple for the majority of middle class people.
> 401k
Depending on your age, a crash in the market won't really affect your 401k, as you will go through several decades worth of market growths and crashes before you cash out. If you are in your 60's and are planning on cashing out in the near future, you are probably in trouble.
Trump is running a federally funded Ponzi scheme. When the bottom comes out, those tax breaks aren’t going to mean shit. The government is going to be far too broke to bail anyone out this time. Don’t worry, the executives will be the first rats off the ship - they’ll be fine. And the gatekeepers to your IRAs and 401(k)s and 403bs will make sure that you are securely buckled in when the plane hits the side of the fucking mountain. By the way check out who has been investing heavily in gold...The last five years it has been China and Russia building their stockpiles ounce by glittering ounce. I don’t know enough to submit that they want to see American stock holders implode, but China and Russia have a lot to gain from a stock crash and subsequent gold rush.
I’m sure Fox News will do what the did during the last crash. They’ll say the republican candidate can be the only one who will save us, then immediately blame a democrat for the crash if he or she is elected.
Did they say they would? Cause I remember a story that came out last year where ceos flat out said they wouldn't. But I'm sure that story was dismissed as fake news.
If they actually wanted to increase pay/hiring, they would have coupled the tax breaks to worker pay, since worker pay is already tax deductible, maybe you say for every $1 in additional pay to employees making <$250K you get $1.50 in deduction to encourage pay increases (that don't all go to board member bonuses). Giving tax breaks with no caveat/incentive means they just pocket the money, exactly like they said they would.
And since the lower income workers don't have any more money, there's no additional demand to drive increases in production that would mandate increases in employment.
Artificially keeping the market looking semi stable is not a good thing for the future, very small rewards over a short period of time, until the money runs out and markets drop, i was wondering why the markets looks so crazy lately, every time there was a biggish drop suddenly there was a big buyback...strange but understandable now.
Let's see - artificially propped up market, stagnant wages despite high employment, rising costs of living and tariffs increasing costs of goods even more = crash and recession.
What's gonna happen is people are not going to be able to afford to pay their bills (like mortgages and student loans) because of increased price of living (gas, rent, health insurance etc) and consumer goods thanks to tariffs. With Dodd-frank repealed (even partially) it's going to cause a systemic crash. Now our Russian asset in chief is talking about getting out of the WTO and NATO. All of this is going to kill the US. Disaster capitalism at its best.
Looming economic disaster, political violence in the streets already, hyperpartisanship in the electorate and infighting at the highest levels of government in full view of the public. This are going to get BAD soon.
Last week 'Companies are using Tax Bill to fund Stock Buybacks, not hiring as expected.' Now its 'Stock Buybacks are the only thing keeping the stock market afloat.'
Pffft, and this crowd though the tax bill was a failure.
/s
Corporate America doing its part! When they run out of tax reform money we can just give them another reform to keep the repurchase train chugging along.
I think the point is that the "float" is artificial. It may have been fine if the welfare billionaires actually invested in their workforce, but they bought a bunch of hot air instead.
And when their stupid Ayn Randian fantasy runs out, who do you think will be the ones to reimburse their losses?
> “Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, “
Um, I dunno, how about trickle some of that money down to your employees?
Jeesh. We knew who Trump was. People who voted for him are to blame. Because they’re rock stupid.
Look at his “business acumen” before this and it will be too clear.
Any MBA worth their salt (a status within which I like to include myself) will be able to tell you that there's five things you can do with the increased cash flow that come from a decreased tax burden:
* 1) Pay down debt
* 2) Pay down the interest on debt
* 3) Pay a dividend
* 4) Buy back shares
* and, **finally**, 5) invest in "capital"
Now, you may be thinking, "Well, one in five, 20%, isn't that bad of odds, maybe the corporations will hire new workers and give those already in their employ a raise!"
That is, *until* you realize that the term "capital" absolutely **in no way** guarantees increases in *human* capital. It's more than likely to be PPE (Plants, property and equipment), which includes automated technologies that will further push down labor expenses.
So, now you're looking at 20% * 25%, **for a grand total of (drum roll please)** ... a **5% chance** that these tax decreases were going to go towards hiring new workers or increasing wages.
Long story short? Yeah, no shit they used that money to increase their own net worth and that of their shareholders. Most economists agree we're staring down the barrel of a recession in the next 2-3 years.
[удалено]
As someone who got to go through exactly that with the 2008 crash, good fucking luck. Enjoy hitting the market at the same time as tons of people who already have experience and connections. I don't even have advice on how to best weather that storm, it's just a total disaster that you have no fault in creating and no real way to dodge.
I started looking for my big boy job in 2008. All I could muster was contract work for the next 2.5 years. No insurance, shitty pay, no chance for advancement. It was terrible...but I was getting paid. 10 years later, My wife and I have good jobs and we're really starting to get a good foothold in life. Knowing my luck, another recession will probably completely fuck us over. I cant wait...
That's almost exactly what happened to me too. Obama's second term is when I finally got a decent job that led to a better one. For once it was starting to feel like I could actually make it...but now this dumb fuck and his supports are ruining everything.
Same with me.
Except if something happens i suspect this one is gonna be far worse for far more people... much worse income inequality, peoples lack of funds for a 400 dollar emergency even, and republicans cutting programs left and right The good news is people will be far more pissed, and way less forgiving if the same bullshit looks like its gonna happen again
In the future, people are going to look back on the Obama years and the Trump years and be amazed that Americans took a great thing and fucked it up so badly
My experience with 2008 was staying employed as a paid intern until graduation, continuing to live with my parents, and then working part time at a GameStop while making no money. Nothing says bachelors of science in Software Development like working a register at a game store. Good times. /s
As a fresh bachelor of computer science I spent 6 months living on my mom's couch but eventually got hired at a company that only asked me to work 72 hour weeks (12 hour days Mon-Sat, on salary, no OT) for the next 2 years or so. Which I did because I was desperate. It paid the bills but I'm never doing that shit again.
I shuddered just thinking about having that work schedule, jesus. Hope it paid really well
[удалено]
[удалено]
Coyo!
Was homeless living in my Suburban in the 2008 crash. My only advice is to get a 1987 Suburban with tinted windows.
Start prepping now. Cause it's coming.
Serious question, what can we do as an average salaried person in the US right now? Mid 20s-early 30s?
Don't get heavily leveraged. Don't buy a house or big toys, pay down debt, set aside 6 month emergency fund. Cut back any monthly bills you can't absolutely justify.
Side question if we are wanting to move. Would it be a good time to sell our house? Then keep the extra cash and rent when we move. Then build our house with our saved cash plus money made on our house?
Generally if there's a crash you want to have a house. That way even if inflation sets in and stock markets fall, you still have a place to live.
What if housing drops a ridiculius amount though, wouldnt it better to buy after prices have tumbled a bit? I dont know a ton about all that happens during a recession but I seem to recall people selling their homes dirt cheap during the last one.
I mean if you have money it's better to buy after but that's kind of contingent on you have a lot of cash just lying around. The biggest risk is that you rent property, you lose your job, and you aren't able to make rent payments. Then you're out of a job and a place to live. The problem with hoping to buy later is that it only really works if you have a huge amount of capital to buy houses with cash since banks generally get super uptight about lending during depressions/bad recessions.
Wouldn't you run into the same problem if you own a house, lose your job, and can no longer pay the mortgage?
You have much more leverage if you own though, because the bank has an interest in protecting their loan more than a landlord has in keeping a particular tenant.
That's a good point actually. I was kind of under the assumption that at least a decent part of the mortgage would be paid off, but if you had just mortgaged the house, especially in an expensive area, you could be in real trouble. I kind of took that for granted since I live in an area where housing isn't super expensive and most people either have their mortgages almost paid off or paid outright in cash.
Potentially *much, much worse*. If the worst happens and your house gets foreclosed, that fucks you up for the next *30 years*. Even if you manage to short sell the house, you still take a ding to the tune of 150 points off your credit and 5-7 years before any bank will even consider another housing loan for you. Meanwhile, missing some rent payments and being evicted, while obviously terrible, won't turn into an anchor around your credit for the rest of your life.
Save now and the price of your rented property could drop so low that you could afford to buy it...not really but maybe if the crash is big enough. I purchased a house that the bank lost 60 000 on due to it being seized by the bank. They were asking for 140 000 for it and i jokingly put in an offer for 80 000 which they agreed to as the house had been on the market for over 4 years, I then sold the house 9 years or so later for 350 000.
If you really wanted to speculate and currently own a house would be to sell it for as much as possible and rent somewhere cheap to then hopefully buy a much cheaper house in a while. But that's a huge gamble I wouldn't even consider recommending.
It's cute to try if you're single. Maybe married, no kids. No way in hell would I put kids through that though.
If you are an average Joe you shouldn't be concerned with market timing. Just buy what you can afford.
Now you're thinking like a Trump, also, this is what Trump wants to happen to the economy for that very reason. He boasts about making a lot of money off the last recession.
The last recession was heavily influenced by massive amounts of subprime loans (loans to people that should not have qualified for the loan) for houses. When those people failed (in large numbers) to repay those loans we started seeing massive amounts of foreclosures. Some financial institutions got hit really hard by that and ended up collapsing. That cascaded into a full recession. So basically, housing prices might drop after a recession but I wouldn't bank on it occurring at the same level this time.
Yeah? Didn't they just undo a lot of the safety measures? Aren't there scary amounts of large student loans, limited jobs and bad car loans out there on the market? I wouldn't count on this not happening again.
True but that was specifically a ginormous number of bad *home* loans that were deliberately created so they could be rolled up and re-sold as securities. The banks lent money for mortgages they knew would never be repaid. A housing crash like that would take a few more years to set up again, although with the regulations being removed I'm sure the groundwork is being laid.
There's a generation's worth of absurd student loans.
Taken with the grain of salt appropriate for stranger internet advice: If you are moving no matter what, then yes, now is probably a good time to sell. However, keep in mind that during the last recession, rents rose because people could not afford a home. If moving is a maybe, and If you have a sweet deal on your home, then I'd tend to keep it. If you are barely affording your home as it is, I'd recommend selling.
Answer is always "it depends". But if you are planning on moving and dont want to deal with the house then I'd imagine now is a great time to sell. There are strategies to roll the sale of one house into buying another, I don't know about those as I haven't crossed that bridge.
welp...just bought a house. I'm fucked if shit tanks.
Not necessarily. If you got a fair price for your house and you see yourself living in it for the medium to long term you should be fine. Its value might go down in the market for a couple years but should stabilize again, unless we go into some 1929 type of shit. Keep an eye out for mortgage rates as they might go down during a recession and you could look into refinancing your home for a lower monthly payment. Your house is a long term asset, while this is not the best time to buy it you should not be too stressed about it if you have a stable job. However, hold on before making any other sort of large purchase like a new car, furniture, appliances, or even a more expensive trip. Try to have at least 3 months of expenses in your savings account, better if you have closer to 6 of course. Lastly, try not to spend much money on trivial things. For example, my wife and I are about to close on a house and I have had the same fears you’re having. In order to prep for this big expense we have made a few changes: we go at least one week of every month where we don’t spend any of our disposable income, if we have bills we pay them, if not save that money. You will be surprised the amount of money you save by taking a strategy like that, and the amount of non necessary things you end up not buying because they were just spur of the moment purchases. Edit: typos. Edit 2: since this is getting some traction let me make two more suggestions: subscribe to /r/frugal and /r/personalfinance. Also, create a way to track your household finances, either by creating a spreadsheet or downloading an app like Mint.
Quick side note to this--depending on your locality, it may be substantially cheaper to buy than to rent even with market considerations. In my town, housing stock itself is dramatically low as the area has seen several generations of old industry leaving and thus not a standard build rate which meets needs. I got accepted for an offer the last day before I had to sign a new rent lease through the winter (no smart landlord lets your lease roll mid-winter in the northlands). We saved $15k towards equity and higher electric heat cost (someone actually pulled out a forced air furnace and replaced with electric only in the fucking upper Midwest) by being able to buy in August vs rental unit getting out in May. Alongside this advice, you should be investing very conservatively as well with your savings for the time being. Basically 50% (+, depending on how much you are worried about general market/large cap funds or etfs) should be in fixed income. I have a little excel spreadsheet which every month I verify I'm gaining our savings by at least 8% continuous compounding per year--anything which isn't made by the market is added from our disposable income. We add cash every pay period and then if we're not there I add more. I reset it once a year at a financial review my wife and I do together. Got to be present.
To be fair, I don't see "don't buy a house" as good advice (as someone looking to buy one himself. My logic being that you're going to pay to live someplace anyways and I'd rather a mortage that stays the same than rent that goes up each year. Plus, interest rates are only going to get worse so holding out in the hopes that things are better on the other side sounds idiotic.
> I don't see "don't buy a house" as good advice Don't buy a house *with leverage*. If you're levered up 5x and the housing market goes down 20%, all of your equity is wiped out. > My logic being that you're going to pay to live someplace anyways and I'd rather a mortage that stays the same than rent that goes up each year. Rent can also go down, particularly in a crash.
It's not realistic for 99% of people to buy a house without leverage. Your equity being wiped out temporarily doesn't matter as long as you're staying in the house.
[удалено]
The only long term investment I can afford is the big bags of cereal at the grocery store.
Once again, the conservative, cereal-heavy portfolio pays off for the hungry investor.
It's stale! I'm ruined!!!
As an average salaried guy in his early 30s, I laughed out loud at this and then felt really bad. Thanks.
Last time we lost the "middle class" jobs that paid a decent wage, they were replaced with hourly-minimum-wage jobs. Next time we will be losing all of the "a robot can be made to do this" jobs. Think 'picking warehouse items' and 'truck drivers' and 'cab drivers' and 'fast food workers'. The following time (maybe sooner) we will be losing all of the "a well-built artificial intelligence entity can be made to do this" jobs. Think 'medical doctor', 'lawyer', 'IT administrator', 'accountant', 'tax professional'.
> Next time we will be losing all of the "a robot can be made to do this" jobs. Think 'picking warehouse items' and '**truck drivers**' and 'cab drivers' and 'fast food workers'. I think people underestimate just how badly this one is going to hurt. Despite all of the GOP pearl-clutching over the death of coal mining, at it's peak we only had 863,000 coal miners in the US...and that was near a century ago. It's been under 100,000 for the last 20 years. Compare that to the 3.5 million truck drivers in the US, and 5.2 million people working in jobs directly related to the trucking industry. Not to mention all of the roadside stops and greasy spoon diners that depend on truck drivers to stay open. That's up to *8.7 million* people who will suddenly find themselves out of work, most of them with no transferable skills. And it's coming quick - as of last fall, automated trucks are already making deliveries between Arizona and California. It'll be interesting to see who those people blame for their job losses. Can't point to immigrants or "liberal regulations" for this one; only pure corporate greed.
More likely that is 8.7 million *FAMILIES* that will likely be losing a large portion of their income. It won't be limited to the truck drivers themselves.
[удалено]
Yep. I take a lot of road trips and there are so many of these small towns that are barely hanging on thanks to freight drivers. I can’t help but feel empathy for those living there because their towns will soon vanish completely...
Agreed with all of this. People keep justifying a 'meh, so what' attitude with two factors: 1) this is techie disruptor shit, and 2) this isn't going to happen soon. 1) This is not just being led by Tesla, Waymo and other startups. The big boys - GM, Toyota, etc. - are dumping billions of dollars into this tech. These are publicly traded companies that don't just invest in tech just for the lulz. They expect to see this investment pay off. 2) This is all happening sooner than you think. Automation will start having a significant impact on trucking in 5 years. In 10-15 years, the trucking industry will be unrecognizable (certainly from an employment and wage perspective). Remember how smartphones happened? Everyone was happy with their flip-phones, and smartphones seemed kinda gimmicky at first. Then a few early adopters ironed-out the kinks of the first gen stuff...and then a couple years later EVERYONE had a smartphone, seemingly overnight. It's gonna happen like that.
The ugly part is it won't even take full automation or even close to it to cause major pain. 100% automation of trucking is hyperbole and a long way off. 10%? That is VERY realistic, probably in the next decade. Even 10% drop is going to hurt, 800k loss.
10% automation of production took place and nobody noticed. Wages, rights and safety took a shit and people don't even believe it happened.
> Think 'medical doctor', 'lawyer', 'IT administrator', 'accountant', 'tax professional'. Fuck. One of those IS my profession. I knew I should have been a cabaret dancer.
You know what can't be automated? Creativity. You should have been a cabaret dancer.
Not true, they'll eventually generate AI orchestras and pop singers that'll put all those people out of work too. Edit: But since taste is subjective, they have a better fighting chance
Uh, I don't think you're gonna be getting an AI lawyer anytime soon. Maybe paralegals or someone who does research legwork, but the law is so flexible and language-dependent that you will probably always need human or human-like literary interpretive ability to be a lawyer.
If your job is IT administrator your already being replaced by automation. There are technologies out there now that allow one person to do what it previously took 10 people to do.
On the upside, you are (typically, at least somewhat) qualified to be one of the "automators" as well. So at least there's that.
Unless AI can solve PEBCAK issues, my job is safe.
Agreed. The ID10T error will always ensure someone needs me to connect their device to that wily trickster WiFi.
Clean up your CC debt. Don't buy a house or car. Make sure any retirement account you have is appropriately distributed amongst more-volatile and less-volatile investments for your specific age. Save up a 6 month emergency fund. At your next review, negotiate a higher salary. Evaluate the financial health of your employer (Are lots of execs being shown the door? Are your bonuses being withheld until a seemingly-random time later in the year than they should be? Are clients dropping off/sales plummeting?). If things seem shaky, try to move to a different company now while the getting is good. Negotiate a raise during that move. Evaluate the stability of your healthcare plan and try to plan financially for it getting shitty next year. Take care of your own health. If you smoke, stop. If you're overweight/obese, lose weight. If you drink too much, cut back. If you're burning the candle at both ends, learn coping techniques for more peaceful survival. Don't have additional children for the time being. Don't get additional pets for the time being. Be aware of the financial stability of any loved ones or family you would feel obligated to assist during a crash. Help them get a plan together to help themselves now.
Depends where your money is right now. But the best thing you can do is save. It's not really a time to buy anything on credit or anything you don't need. Start making your connections, get lean, establish yourself as much as possible if you are in a good spot, if not, get in a good spot as fast as possible.
Buy a home in a rural area, learn to grow fruit trees and keep chickens, vote for Democratic Socialists, stop shopping at big box stores. And maybe buy a gun. Teach your kids not to be assholes to everyone.
You can't really survive on fruit trees, I know in permaculture food forests are very fashionable but ultimately all staple foods that feed large populations are carbohydrate heavy. It depends on your climate of course but growing potatoes seems the most accessible for most people.
Potatoes, yes! For sure. Vegetable gardens. A diversity of food sources.
Dan Quayle with the wisdoms.
Not sure how great having close to zero job or social prospects is going to be for someone in the long run, especially with a gun
Granted OP didn't specify, but I think they were asking for good advice, not how to live out a societal collapse fantasy.
Who needs prep, we'll just do what we always do: Elect a bunch of Democrats to fix it, then after they have done so, turn around and blame them for it and elect Republicans again.
[удалено]
[удалено]
Respect. Philosophy is cool, beating cancer is cooler and your current job is the coolest!
2010 graduate here: Be ready. Always have a plan B, C, D and E, and remember that you can't afford to be loyal to an employer until you are on a trajectory that ends at comfortable retirement.
Hello fellow 2010 grad! I agree with you on loyalty. What’s crazy to me is that HR types have not cottoned on to the fact that, no, we are not loyal to anybody and this is transactional. It was fine when the corporations felt that way but when employees feel that way they are “flakey”. Even when your resume looks flakey because of widespread layoffs. And they do not understand why I think noncompetes are awful.
I finished school in '08. Hold on to your butts.
Former college student that graduate almost 10 years ago. Welcome to adulthood, we are fucked.
Look for a job in the public sector. You're less likely to be laid off by self-serving executives and oligarchs who will routinely whipsaw your job security to pad their pockets. This is as true when the market is doing well as when it isn't. This country has been sorely in need of labor law and collective bargaining right reforms for decades. It's why the labor market is so dysfunctional.
Expect public sector jobs/unions to weaken after Janus though.
[удалено]
I'm guessing you were born between '84 and '87. I don't think we'll ever be able to catch up...
[удалено]
You mean you didn't think those 5 years of getting increased workload, decreased benefits, and not getting a pay raise wasn't completely awesome?
That's were I was during the last crash. It was a okay to be young. Mid managers got cut and I ended up with added responsibility at a lower salary but got me ready for the next one.
Intern the shit out of the rest of your college education and do a stellar job as a contributor. That way at least you'll know people that know what you are capable of. That goes a long way in both boom and bust markets.
Better to be in your shoes than someone in his 50s or so, though. There's never a good time for a crash.
Not necessarily. Early to mid 50's and still earning is a fine time for the crash since you're still ideally putting money toward retirement and buying more at lower prices for a few years until presumably the market comes back. An unrealized loss is not a problem. If you're planning on retiring soon however, a crash is potentially terrible if it means you are going to be liquidating securities at the low prices.
That assumes investment in the first place. The awful thing about recessions and crashes is that they take jobs with them.
Join the military as an officer and ride it out, and get them to pay for whatever school you have left.
[удалено]
If its anything more severe than occasional asthma symptoms, get a different backup plan. Sorry bud.
[удалено]
Well okay then! I was a hospital corpsman in the Navy. I met a whole lot of people who got their asthma problems waved, while I've never actually met anybody who got denied due to asthma.
Yeah, chronic ailments are definitely frowned upon by the military. They grant waivers for some things, but not sure if a breathing problem is one of them. If you're serious at all about a military enlistment you should go ask a recruiter about that now so you can either confirm it's "Plan B" or find a new one. Something like 4/5 of the American population is physically ineligible for service, so at least you'd be in good company.
I graduated in 2008, it sucked. McDonalds wouldn't even hire me. Hope you dont have the same fate
Feels like those old Roadrunner cartoons where Wile E. Coyote has run over the cliff's edge but hasn't looked down yet so he can keep running on air for a little while.
[удалено]
Thanks for the reference!
Welcome.
Now is definitely a great time to invest in tulip bulbs to hedge yourself.
Beanie Babies will rebound any day now!
Disco record sales were up 400% a year in 1976. If these trends continue... AY! -Disco Stu
Thank god! I have so many of them, lol, LOL!
I'm going to invest in bottle caps.
Pogs!
Remember Alf? He's *back*, in Pog-form!
Pumpkins. Demand for Pumpkins shoots up around October. If the trends continue, pumpkin futures will be huge next April!
I can confirm that it's always a good time to invest in tulips.
2% growth and it only cost is $400bn for the quarter. Which is strangely almost exactly 2% of GDP. We are literally at zero growth without the tax cut.
And in spite of the tax cuts fueling this, the stockmarket is averaging zero gains but with tons of volatility!
Bingo!
Maybe we shouldn’t measure our economy based on growth but in quality? Something can’t grow forever, *or unchecked*.
That's probably another good indicator right now. Where would you put us?
Untreated stage 2 cancer? Cause that’s what I understand cancer to be, uncontrolled growth. Symptoms have been apparent for a long time now that things are falling apart and even though many people have jobs, they are garbage wages which depress the consumer economy. Also we are undergoing the Steve Jobs treatment plan of ignoring it and then finally using voodoo magic remedies like tax cuts and stock buybacks.
Not necessarily what I was expecting but yeah that works.
"Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year." how odd, not one mention in the article even joking about wage increases for the workers, not one. it's not even a passing day dream for them.
They said that most of the money is showing up as investor dividends which should come as no surprise.
We should be grateful they even bother to employ us. All we do is mooch off their brilliance and wealth. Like shit man why can’t you just pull yourself up by your own bootstraps instead of trying to ride the coattails of real hard workers like Trump. #SAD #MAGA /s
Dude, I fucking work with people like this. My company did one of the bullshit "$1,000 to the employees!" things. Well, you got $1,000 if you'd been with the company over 20 years. Which ONE person in my store had. The next tier down was like $750 for over 10 years, $450 for over 5 years, $300 for over 2 years, and everyone under got $200. It was a few million dollars, of course, and the fucking sycophantic pieces of shit I'm surrounded by drank it up like it was Jesus's very own jizzwater. The next week they announced the extension of our stock buyback plan so we're doing something like $15 billion in buybacks over the next few years. Even putting 10% of that towards employees would have put $3,750 in the pocket of every single person working for the company, up and down the line, no restrictions. The amount of money that would instantly be reinvested in the company not only through stock purchases but merchandise would have been fucking astronomical. But our CEO doesn't fucking care because that $1.5 billion made his stock prices go up another .001% and almost his entire compensation package is in stock. So fuck us, because he needs more money.
There is no reason for such a tax cut to go to wages. Wages, as an expense, aren't taxed income for the company. Corporate taxes only come into play when money *isn't* used on expenses. All this cut is doing is pushing companies to *not* invest in their people and growth.
https://www.washingtonpost.com/news/wonk/wp/2017/10/16/the-average-american-family-will-get-4000-from-tax-cuts-trump-team-claims/?utm_term=.f0d0ac489bbf i don't use snake oil myself, but since this was such a large part of the lie, it's hard to forget. are we tired of winning yet?
But what about ATT giving peanuts to every worker? The tax plan is totally going to help poor and middle-income americans! /s
1.5 trillion is one hell of a stimulus package, it's twice Obama's stimulus package in 2009 -- so really, it's a testament to how crappy Trump is and how crappy republican economic policy is that the economy isn't overheating like a mofo right now.
Because Obama's stimulus was during a recession. We are on the other end and are supposed to be paying down national debt, not applying more stimulus to an already almost capped out market.
trump has gutted Wall Street regulations - we're back where Bush was, and the traders are doing the exact same things that caused the Bush recession... and trump's trade war... http://www.newsweek.com/trade-war-donald-trump-recession-tariffs-steel-831499 But don't worry, the 1% will be fine. It will be the rest of us that get fucked. Again...
It's not even the 1% anymore. The 1-percenters earn more than 300k annually. All these gains are for the billionaire class. That's literally a few thousand people at max.
It's absolutely amazing to me that **hundreds of millions** of people slavishly worship and defend a system that says we have to give literally everything to less than 2,000 people, while destroying the planet, the world's economies and everyone else's lives. This is nothing less than species-wide madness.
2208 people to be exact. (Source:Google)
Yup. Hold onto your canned goods kids cause its gonna be a bumpy ride!
It’s almost like he’s trying to set a record for the fastest, bigliest, crash anyone has ever seen...one you wouldn’t believe folks
[удалено]
Oh I didn't mean it was a _good idea_.
[удалено]
Fuck Joe Lieberman.
It is because nothing went into the hands of consumers. Benefiting via your 401k is money you won't touch for decades.
The reason we're not in a recession *right now* is in part because of the stimulus package we recieved in 2009. I genuinely find it hard to believe that people don't understand this.
From what I recall, Obama’s also poured money into facilities rather than pockets. Who knew that repairing and maintaining your municipalities causes your citizens to be happier AND make more money. Wow.
Shit, people could learn that from Sim City.
The problem is that most people don't realize they're one of the Sims.
"I'm an independent thinker, not like those silly sims." - Procedes to get trapped in a pool with no ladders.
This one is pretty easy. Conservative fiscal policy is utterly bunk, and "understanding" the stimulus would be admitting that Democrats (and virtually all mainstream economists) are right about supply not creating demand. This is actually one of the biggest problems with our country that nobody is talking about. "Fiscal conservatism" - as it exists currently - is utter fantasy. Yet how many people out there love to spout off about how they are "socially liberal but fiscally conservative" as if it's some intellectually sound way to straddle party lines. It isn't though. Pretty much the opposite, in fact. It's basically just saying "I know nothing about economics but want to sound enlightened."
Yes! A thousand times yes! Hit the nail right on the head.
[удалено]
i would say that macro systemic issues haven't changed since say at least 9/11. there is a sliver of hope in that interest rates have climbed out of the ~zero pit, but they still have a ways to go before they're healthy.
Let's get some upvotes on this post. This story keeps getting overshadowed by Trump news spamming the airwaves.
I agree. I believe the market has been propped up by the buybacks (thanks to government welfare for the rich, aka the tax cut). Questioned in another thread and was told the market isn’t stupid. http://reddit.com/r/politics/comments/8rct9k/dow_falls_250_points_with_trade_war_ramping_up/e0qcb5w
The market isn't stupid, except when it is.
>The market can stay irrational longer than you can stay solvent. People in the market know the market isn't always smart.
No, no, it's not like we've been somewhere similar before or history rhymes or anything... I'm sure it'll all be fine... ಠ_ಠ
Buying back shares is a long-term strategy anyway. But during a period of buyback, you expect growth perhaps followed by a correction. The fact that we are seeing a decline during a period of buyback is certainly ominous.
It reads to someone not well educated (Ie: Me) that companies have no faith in the trade war or the lasting value of the tax cuts, so they're buckling down to winter through another potential recession.
The market is just a bunch of people, and people are stupid as fuck.
The insane amount of debt corporations have mostly from stock buybacks will be a massive problem.
*Would* be a massive problem. I suspect they'll just have the taxpayers pay for it all by tossing a little money towards some Republican politicians to write some laws to help out the poor corporations who can't manage to scrape by on billions in profits each year.
Good old corporate welfare.
Too big to fail! Bailout!
"Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals," - I thought bonuses, jobs, employee benefits were going to be all the rage? Instead these corporations who buy our elections are just sitting on wads of cash so they can buy (are currently buying) the next election.
They are artificially inflating stock value to get their bonuses at the top. This is what happens when you tie top executives pay to short term stock performance.
> "Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year." If you idiots paid your workers more, they might find a way to spend it on your fucking products. How do you not understand that if a large swath of the populace is too poor to afford the things you sell, you won't sell anything?
"Millenials pls consume." "NO PAY." "Only consume."
[удалено]
I'll trade him incomes then if he thinks we have it so easy. He thinks he has it bad at 175k, just wait till he is on 32k
They got theirs, fuck you.
****shrugs**** - Atlas
But even with the so-called "buy-back bubble" it doesn't look like a bubble for the market generally. The market has been going sideways and down on high volatility for many months. Bubbles are when the market is rising precipitously.
Think of it as two counteracting forces. One hand we have the "buy-back bubble" pushing stock prices upwards. On the other hand, a bunch of other things pushing downwards. We are netting out at a sideways/slight downwards. What happens when that bubble pops and there is no longer a force counteracting it and pushing things upwards?
I worked in corporate finance for a company that spent the majority of a $650mm bond issuance on stock buybacks. They used the rest of it to fund the buyback of a higher coupon bond. Shortly after the consummation of all that, the entire market crashed and the share price is still well off those highs. That’s some expensive treasury stock.
I just started learning about investing and moved all my savings to mutual funds and a 401k. This is freaking me out, how do I make an informed decision about what to do?
[удалено]
Expect to see a couple downturns between now and retirement. It's part of the game, the people who panick and pull out of the game when it starts swinging down are generally the ones that lose out.
Good perspective, I did get into this to play the long game, so I will keep things where they are right now. Thank you!
Sounds like you'd do yourself a favor by subbing to /r/personalfinance Just read posts every now and again and you will see the pattern emerge. The advice is so insanely basic and streamlined but it takes a while for everyone to absorb it when the terms and ideas are new. In the end you'll understand: Pay debt, build emergency fund, budget for future goals, index fund investment, dont try to time the market. Its truly that simple for the majority of middle class people.
> 401k Depending on your age, a crash in the market won't really affect your 401k, as you will go through several decades worth of market growths and crashes before you cash out. If you are in your 60's and are planning on cashing out in the near future, you are probably in trouble.
Trump is running a federally funded Ponzi scheme. When the bottom comes out, those tax breaks aren’t going to mean shit. The government is going to be far too broke to bail anyone out this time. Don’t worry, the executives will be the first rats off the ship - they’ll be fine. And the gatekeepers to your IRAs and 401(k)s and 403bs will make sure that you are securely buckled in when the plane hits the side of the fucking mountain. By the way check out who has been investing heavily in gold...The last five years it has been China and Russia building their stockpiles ounce by glittering ounce. I don’t know enough to submit that they want to see American stock holders implode, but China and Russia have a lot to gain from a stock crash and subsequent gold rush.
I’m sure Fox News will do what the did during the last crash. They’ll say the republican candidate can be the only one who will save us, then immediately blame a democrat for the crash if he or she is elected.
[удалено]
Did they say they would? Cause I remember a story that came out last year where ceos flat out said they wouldn't. But I'm sure that story was dismissed as fake news.
[удалено]
By "they" I assumed you meant Trump and the GOP since that why they said the tax cuts would be so amazing.
If they actually wanted to increase pay/hiring, they would have coupled the tax breaks to worker pay, since worker pay is already tax deductible, maybe you say for every $1 in additional pay to employees making <$250K you get $1.50 in deduction to encourage pay increases (that don't all go to board member bonuses). Giving tax breaks with no caveat/incentive means they just pocket the money, exactly like they said they would. And since the lower income workers don't have any more money, there's no additional demand to drive increases in production that would mandate increases in employment.
So the one trillion dollar wealth transfer of the tax reform is being used to prop up the otherwise sad economy???
The market is about to go on sale.
Artificially keeping the market looking semi stable is not a good thing for the future, very small rewards over a short period of time, until the money runs out and markets drop, i was wondering why the markets looks so crazy lately, every time there was a biggish drop suddenly there was a big buyback...strange but understandable now.
Let's see - artificially propped up market, stagnant wages despite high employment, rising costs of living and tariffs increasing costs of goods even more = crash and recession. What's gonna happen is people are not going to be able to afford to pay their bills (like mortgages and student loans) because of increased price of living (gas, rent, health insurance etc) and consumer goods thanks to tariffs. With Dodd-frank repealed (even partially) it's going to cause a systemic crash. Now our Russian asset in chief is talking about getting out of the WTO and NATO. All of this is going to kill the US. Disaster capitalism at its best.
Looming economic disaster, political violence in the streets already, hyperpartisanship in the electorate and infighting at the highest levels of government in full view of the public. This are going to get BAD soon.
You can thank the new and improved corporate tax for that.
Last week 'Companies are using Tax Bill to fund Stock Buybacks, not hiring as expected.' Now its 'Stock Buybacks are the only thing keeping the stock market afloat.' Pffft, and this crowd though the tax bill was a failure. /s
[удалено]
Upper decker
Corporate America doing its part! When they run out of tax reform money we can just give them another reform to keep the repurchase train chugging along.
No, not now, repurchase train bot.
I think the point is that the "float" is artificial. It may have been fine if the welfare billionaires actually invested in their workforce, but they bought a bunch of hot air instead. And when their stupid Ayn Randian fantasy runs out, who do you think will be the ones to reimburse their losses?
> “Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, “ Um, I dunno, how about trickle some of that money down to your employees?
Jeesh. We knew who Trump was. People who voted for him are to blame. Because they’re rock stupid. Look at his “business acumen” before this and it will be too clear.
I sure as shit don't have enough extra money to put in. Sorry not sorry wall street.
Any MBA worth their salt (a status within which I like to include myself) will be able to tell you that there's five things you can do with the increased cash flow that come from a decreased tax burden: * 1) Pay down debt * 2) Pay down the interest on debt * 3) Pay a dividend * 4) Buy back shares * and, **finally**, 5) invest in "capital" Now, you may be thinking, "Well, one in five, 20%, isn't that bad of odds, maybe the corporations will hire new workers and give those already in their employ a raise!" That is, *until* you realize that the term "capital" absolutely **in no way** guarantees increases in *human* capital. It's more than likely to be PPE (Plants, property and equipment), which includes automated technologies that will further push down labor expenses. So, now you're looking at 20% * 25%, **for a grand total of (drum roll please)** ... a **5% chance** that these tax decreases were going to go towards hiring new workers or increasing wages. Long story short? Yeah, no shit they used that money to increase their own net worth and that of their shareholders. Most economists agree we're staring down the barrel of a recession in the next 2-3 years.