Black Monday?

[mikepepler]

I dont hold many and they were options from work. I got them at around half of there current value , but i cannot sell the damn things until november!

I agree with you - PO awareness and shares dont mix!

Fair enough, hope you get a good price for them in Nov! I do actually own some shares myself, but it's more for novelty value - it's about ?200 worth in the company I used to work in until 6 months ago. I can't be arsed arranging to sell them, and while I have them I get to see what all my ex-bosses get paid! I still have friends working there, so it's interesting to get the shareholder's brochure and see how they're doing.

I suppose my pension is in shares, but at least they're "ethical" ones, whatever that means.... I don't expect to ever reach a point where I get the pension anyway, so I couldn't really care less what it's in, as I can't get my hands on the cash. At least it was all company contributions and not my own!

[Totally_Baffled]

I dont hold many and they were options from work. I got them at around half of there current value , but i cannot sell the damn things until november!

I agree with you - PO awareness and shares dont mix!

Fair enough, hope you get a good price for them in Nov! I do actually own some shares myself, but it's more for novelty value - it's about ?200 worth in the company I used to work in until 6 months ago. I can't be arsed arranging to sell them, and while I have them I get to see what all my ex-bosses get paid! I still have friends working there, so it's interesting to get the shareholder's brochure and see how they're doing.

I suppose my pension is in shares, but at least they're "ethical" ones, whatever that means.... I don't expect to ever reach a point where I get the pension anyway, so I couldn't really care less what it's in, as I can't get my hands on the cash. At least it was all company contributions and not my own!

I must admit the occupational pension is a difficult issue for me.

Over the last 10 years my contributions are in excess of ?12,000 with the companies I work(ed) for paying more than that again.

Now I know , you know and every PO'er knows that this money is down the toilet.

The problem is that I have my wife 100% convinced of PO , but only 95% convinced of its consequences.

This means I have most of my way financially, ie we are out of debt , we are saving like mad to clear the mortgage etc etc

Now she has stopped her occupational payments (which is good news, thats ?100 notes saved per month) , but she wont let me drop mine(thats 170 a month down the toilet ) We could justify the former because she doesnt intend working in her "career" job much longer (which she thinks is for one reason, but I know its for others if you know what I mean!)

But in order to keep all the other things in place , that I have all my own way on , I have to sacrifice this ?170 "just in case"

Ah well , you cannot have it all , I know its daft , but on the whole Im lucky, most peoples girlfriends and wives would run a mile if they heard about PO (and had to drive 1 car thats beaten to death , save like mad , and skip all the luxuries to do so!)

[aliwood]

and skip all the luxuries to do so!

You mean skip everyone else's idea of a luxury. My neighbour feels sad for us because we don't have a tv. That's ?100+ per year we don't have to find, I now have the luxury to not have to buy up to date fashion that doesn't suit me, not to have to flick through 47 channels to find out there's nothing on and not to have to run the gauntlet of kids outside the off-licence to get my wine and beer. Poor old me.

[Totally_Baffled]

and skip all the luxuries to do so!

You mean skip everyone else's idea of a luxury. My neighbour feels sad for us because we don't have a tv. That's ?100+ per year we don't have to find, I now have the luxury to not have to buy up to date fashion that doesn't suit me, not to have to flick through 47 channels to find out there's nothing on and not to have to run the gauntlet of kids outside the off-licence to get my wine and beer. Poor old me.

Good for you! I actually find myself watching very little TV these days. Although I do like the History channel , I love history , I can never remember much of it though grrrr!

But back to your point of "luxuries", isnt amazing what you get used to when you do it for a little while?

A lot of the things I do now to "try and do my bit" (for example recycling) and also to save money , I couldnt of been arsed to do a couple of years ago, but now its a habit it doesnt bother me at all!

[mikepepler]

Another black Monday? FTSE down another 107 points / 1.89% at 9:30am... this is becoming a bit of a theme.

Do falling stock markets reduce economic growth? My instinct would be to say yes, but I don't have the knowledge or experience to know if that's true or not. Just wondering what the effect on oil prices will be.... but at the moment they're still about $20 (40%) up on 1 year ago, according to the spreadsheet I'm maintaining...

[Pippa]

Gold is down again too!

[dr_doom]

Gold is down again too!

A great buying opportunity.

[skeptik]

Another black Monday? FTSE down another 107 points / 1.89% at 9:30am... this is becoming a bit of a theme.

Do falling stock markets reduce economic growth? My instinct would be to say yes, but I don't have the knowledge or experience to know if that's true or not.

I'm in the same position and of the same opinion. A falling stock market would tend to discourage sources of capital from investing in IPO's, aka floatations on the stock market. This would inevitably be a drag on growth if startups cannot raise the capital they need to grow through the difficult transition from the R & D stage (where a novel product has been successfully demonstrated) to full production.

[Totally_Baffled]

index change % 52 wk-h 52 wk-l
5532.70 -124.70 2.20 6132.70 4971.50

Ooo another bad day !

[tristan]

Another black Monday? FTSE down another 107 points / 1.89% at 9:30am... this is becoming a bit of a theme.

Do falling stock markets reduce economic growth? My instinct would be to say yes, but I don't have the knowledge or experience to know if that's true or not.

I'm in the same position and of the same opinion. A falling stock market would tend to discourage sources of capital from investing in IPOs, aka floatations on the stock market. This would inevitably be a drag on growth if startups cannot raise the capital they need to grow through the difficult transition from the R & D stage (where a novel product has been successfully demonstrated) to full production.

Falling stock markets do not in themselves reduce economic growth, rather they are an expression of a reduced faith in future earnings - stocks are worth money because they earn money. Remember the stock market falls of 2001? They didn't mean we entered recession then and they may not mean we will now. The point is not to confuse correlation with cause - because two things sometimes happen at the same time does not mean one causes the other.

I wouldn't worry about IPOs, this is a relatively small part of the market (and new products aren't financed by IPO's). There are many other ways to get hold of capital.

The current fall in the equities and commodity markets might be a correction, of course we know that peak oil will eventually precipitate a series of deepening recessions, but this current fall may be a blip and we could climb out of it. Who knows.

If you want to worry yourself then look at debt, especially America's public and private debts. When the rest of the world stops financing this spending spree then we will be in trouble, the Fed will raise interest rates to save the dollar (we will follow suit) and spending will crash, as may the housing markets, further depressing consumer spending.

[Totally_Baffled]

Hi Tristan

You seem to know a thing or two about economics, I have a question.

Peak oil aside, how would the "imbalances" of the world economy corrected even if we had cheap energy for, say , another 100 years?

What I mean is, all manafacturing seems to be slowly (but surely) relocating to south east asia, China and India.

Now this makes sense since it will always be cheaper to produce in that part of the world and then export to the rest of the world.

But what I dont inderstand is that these countries are relying on the demand of consumers in the west (for the most part the US, UK and others).

What happens when most/all production of everything (even services?) are in these countries? How are the consuming nations affording to buy these products? If they cannot afford them , then who is buying these products?

Any ideas?

The reason I ask is , that this seems to be one of the primary sources of our ecomonic woes at the moment, ie high interest rates are on the way to help fund ours (and the US) debt positions. (current account and trade deficit)

[andyh]

Re:pensions and feeling you wont be able to get hold of the cash.

We had a number of very good discussions on here about this some months ago - Paul S I think led the way. Basically most of us felt that because the large pension funds were exposed to around 80% general equities when things really start going tits up most folk stand to lose all the inherent worth. However as Paul pointed out at the time you can now I think take back control of your own pension via the SIPPS mechanism. Once you have done so it may be possible to redirect it towards investments that might hold their value rather better than equities.

I have been trying to do something similar here in NZ. Till that dratted pension change day in April it used to be possible to transfer your UK pension direct over here into a NZ scheme (some of which allowed you to take up to a 50% immediate lump sum - or at the very worst allowed you to take it all when age 50.). My pension is with USS - a very good scheme but one which is exposed 70% to general equities ( I only have to look how it took a whack in 200-2003 to see what could happen again). As it stands it now looks as tho I will be able to move it over here into a fund of my own choosing (I will go 20% equities, 80% fixed income as the most conservative fund on offer) and then get it when 5 years have elapsed.
So the message is - you can wrestle control back of your pension rights - and I would personally make it a high priority

[snow hope]

Yes, but the FTSE has just dropped from 6,100 to 5,500! Probably not the best time to cut and run.... although if you have the view this is the first of the big crashes then it may still be the right time to get out.

Personally I think it will recover most of this loss and we will see the first major markets crash later this summer. Depends on the Hurricane season and US/Iran situation. And of course don't forget the Wild card that can occur any time.....

I am pretty confident by the Autumn we will have seen some major re-adjustment in the markets.

Of course I could be completely wrong.

[tristan]

Hi Tristan

You seem to know a thing or two about economics, I have a question.

Peak oil aside, how would the "imbalances" of the world economy corrected even if we had cheap energy for, say , another 100 years?

What I mean is, all manafacturing seems to be slowly (but surely) relocating to south east asia, China and India.

Now this makes sense since it will always be cheaper to produce in that part of the world and then export to the rest of the world.

But what I dont inderstand is that these countries are relying on the demand of consumers in the west (for the most part the US, UK and others).

What happens when most/all production of everything (even services?) are in these countries? How are the consuming nations affording to buy these products? If they cannot afford them , then who is buying these products?

Any ideas?

The reason I ask is , that this seems to be one of the primary sources of our ecomonic woes at the moment, ie high interest rates are on the way to help fund ours (and the US) debt positions. (current account and trade deficit)

Not sure I know an awful lot about economics but certainly you have asked the million dollar question. (aside from the other trillion dollar question). I'd like to look into it further but an exam tomorrow looms. If you can wait till next week it would be fun do some research as I don't really know the answer, and I suspect nor does anyone.

[dr_doom]

Peak oil aside, how would the "imbalances" of the world economy corrected even if we had cheap energy for, say , another 100 years?

Revalue the yuan upwards against the US dollar. Or simply ban trade with China, but that would probably just lead to a huge black market.

Only slightly disturbing problem with this solution, is that it means the US standard of living will fall to the same, or lesser, level than the chinese. Something that might not go down too well.