Thread: Bank failure(s)

Riddle me this oldfogey, or anyone else that can answer. There is still a fairly large amount of money being dumped into 401k and other retirement accounts from the working force. Stocks are down overall so those contributions should technically be buying more shares, yet the markets are in a freefall(nearly 30% down just this year so far). Where is this money going, shouldn't it have some sort of positive effect? Or are there just that many shares on the market?

Originally Posted by ND4SPD

Riddle me this oldfogey, or anyone else that can answer. There is still a fairly large amount of money being dumped into 401k and other retirement accounts from the working force. Stocks are down overall so those contributions should technically be buying more shares, yet the markets are in a freefall(nearly 30% down just this year so far). Where is this money going, shouldn't it have some sort of positive effect? Or are there just that many shares on the market?

Read an article today that billions got pulled in February. Many are pulling funds and going into bonds or money market. I have even been tempted despite knowing that is a bad idea in theory... though I would be up a lot of $$ had I done that prior to the coronation

Originally Posted by ND4SPD

Riddle me this oldfogey, or anyone else that can answer. There is still a fairly large amount of money being dumped into 401k and other retirement accounts from the working force. Stocks are down overall so those contributions should technically be buying more shares, yet the markets are in a freefall(nearly 30% down just this year so far). Where is this money going, shouldn't it have some sort of positive effect? Or are there just that many shares on the market?

I dont know about everyone else but it looked like a no brainer to stop that 401k contribution or have it dump directly to the cash account in the 401k plan. All the stocks are riding a roller coaster and switching them daily is not allowed in most plans.

Quite a few companies are killing of the % match also so what is the point?

A few of the people I know take the money and buy gold and silver and sock that away.

Originally Posted by JohnnyDiablo

I dont know about everyone else but it looked like a no brainer to stop that 401k contribution or have it dump directly to the cash account in the 401k plan. All the stocks are riding a roller coaster and switching them daily is not allowed in most plans.

Quite a few companies are killing of the % match also so what is the point?

A few of the people I know take the money and buy gold and silver and sock that away.

I like to buy low and sell high, but you cant time the market. I'm still buying.

IMO gold and silver are not good investments.

I'm still buying, too. I've upped my 401k contribution as high as I can right now (within company limits). Maybe my thinking is wrong on this but I'm investing for the long haul, and not planning on touching any shares for at least 15 more years. With my increased input, and lowered share pricing my total number of 401k shares has increased more than 10% just in the last six months.

I went as far as to take out an investment loan to top up my RRSP (canadian equivalent to 401k)

Cost of borrowing and price of mutual funds were too attractive. Plus the tax return I'll get will repay a good chunk of the loan.

Originally Posted by JohnnyDiablo

I dont know about everyone else but it looked like a no brainer to stop that 401k contribution or have it dump directly to the cash account in the 401k plan. All the stocks are riding a roller coaster and switching them daily is not allowed in most plans.

Quite a few companies are killing of the % match also so what is the point?

A few of the people I know take the money and buy gold and silver and sock that away.

Now is the time to max your 401k contribution(assuming you are not retiring any time soon). You get more for your money and you reduce your taxable income which is one of the steps for increasing wealth.

I've also upped my contribution a few months ago and I'm thinking about doing it again. I posed the question I did to try and understand where the money might be going since it's obviously not having much of a positive effect thus far.

I upped mine yesterday. Stocks are half-off right now. Buy, Buy!

Originally Posted by davef

I upped mine yesterday. Stocks are half-off right now. Buy, Buy!

...or...are they still overpriced by 50-100%...only time will tell.


FWIW - if I was in a position to buy, I'd be buying.

Originally Posted by slickwill

...or...are they still overpriced by 50-100%...only time will tell.

One example would be GE... it's running at like 6 bucks right now. Seems like a steal, I can't imagine it being much lower.

Originally Posted by ND4SPD

Riddle me this oldfogey, or anyone else that can answer. There is still a fairly large amount of money being dumped into 401k and other retirement accounts from the working force. Stocks are down overall so those contributions should technically be buying more shares, yet the markets are in a freefall(nearly 30% down just this year so far). Where is this money going, shouldn't it have some sort of positive effect? Or are there just that many shares on the market?

Think of it like flows into and out of a reservoir. The stock market is a huge store of value and people today are still moving their portfolios into cash from stock, so the river flowing out is full. There's another river flowing in, the regular stock savings contributions, but this is less in volume than the river flowing out, so the level of the reservoir is still falling.

Wall Street fell 4%, as did Europe before close and Citi's stock fell below $1. Latin America and Japan also down similar amounts. Other Pacific down less, and Europe this morning mixed, balance to the upside.

Insurance companies in Europe fell sharply yesterday, with Aviva in the UK the catalyst. Everyone knew the problems, so the timing of the decline is a mystery to me, but today being hit in the face with a wet kipper seems worse than knowing it's coming. Asset values have declined (surprise, surprise) so there's a p&l loss.

Today two British companies (BT and British Airways) cut their dividends due to the pension funding rules (money to pensioners before money to shareholders). If the markets haven't figured out by now that insurance companies are a problem, perhaps they haven't figured out pension funds are also a problem.

Hungarian industrial production fell 21% year-on-year in January. US Chain Store sales fell 0.1% year-on-year in February compared to expectations of -1.6%. January factors orders in January fell 1.9% month-on-month compared to expectations of -3.5%. German retail sales fall 1.3% year-on-year in February compared to expectations of -0.7%.

Oh, and Geithner is still having problems recruiting his staff: Picks for 2 high Treasury jobs withdraw: sources | U.S. | Reuters

Originally Posted by slickwill

...or...are they still overpriced by 50-100%...only time will tell.


FWIW - if I was in a position to buy, I'd be buying.

We're both rather young, now's the time to be aggressive. By the time we're ready to retire we "should" be in a much better situation.

Originally Posted by oldfogey

Oh, and Geithner is still having problems recruiting his staff: Picks for 2 high Treasury jobs withdraw: sources | U.S. | Reuters

not enough tax cheats that know banking

Originally Posted by oldfogey

Oh, and Geithner is still having problems recruiting his staff: Picks for 2 high Treasury jobs withdraw: sources | U.S. | Reuters

Nit picker...

This is small potatoes compared to the important business of the day on Capitol Hill...

Capitol Hill goes gaga over Brad Pitt

Originally Posted by oldfogey

US Chain Store sales fell 0.1% year-on-year in February compared to expectations of -1.6%. January factors orders in January fell 1.9% month-on-month compared to expectations of -3.5%.

Does that look like a glimmer of hope or just a false sense of security?

Congress to examine mark-to-market accounting: source - Boston.com

A guy at the clinic today said that he read that the FDIC is running out of money. Any truth to that?

Great tagline...."Treasury Island"...

Treasury island: Geithner's lost crew

Treasury Island: Geithner's lost crew

Jeanne Cummings, Lisa Lerer Jeanne Cummings, Lisa Lerer Fri Mar 6,
3:27 pm ET

If President Barack Obama wants to boost confidence in his economic recovery plan, he's going to have to assure the markets that there isn't just one guy working on it.

Treasury Secretary Timothy Geithner is trying to stabilize the nation's banking industry, implement a housing rescue plan and prop up a plunging stock market – all with about 18 vacant senior positions, virtually the entire upper echelon of his department.

The staff is so faceless that lobbyists have begun trading jokes about a "ghost" bureaucracy, given the many empty picture frames hanging on the department's walls. (TRIMMED)

Originally Posted by slickwill

A guy at the clinic today said that he read that the FDIC is running out of money. Any truth to that?

Yes.

Based on the reserves they need, for the number of failed, or projected to fail banks, they don't have enough money.

They've been assessing banks extra fees.

Originally Posted by luvtolean

They've been assessing banks extra fees.

Extra fees that will make it even harder for banks to do well, which will push more banks under, meaning that even more will go out of the FDIC...great.

Originally Posted by slickwill

Extra fees that will make it even harder for banks to do well, which will push more banks under, meaning that even more will go out of the FDIC...great.

Those fuckers won't be getting much sympathy from me. Sounds like the right people are paying for once.

After a flat close to Wall Street on Friday, Asia is down 1-2% today and Europe -1%/+2% this morning. Edit: evening out around -2% in Europe midday.

Talks over GM Europe's bankruptcy and government support continued over the weekend with the several governments involved. Lloyds Banking agreed to insure $360bn with the UK government scheme but in return the government will now own up to 75% of the bank. The "insurance premium" is 5.2% of the assets transferred, payable in non-voting ordinary shares over seven years. 82% of the "bad assets" being transferred came from HBOS, the bank the UK government persuaded Lloyds to bail out late last year.

US Unemployment on Friday was 8.1%. US consumer credit grew $1.8bn in January, rather than the $5.5bn contraction expected. Brazilian industrial output fell 17.2% year-on-year in January. The World Bank reduced their growth forecast for the world economy to -0.5%, the first contraction since WWII. EU governments announced their support for a doubling of the IMF's reserves ahead of the G20 meeting.

Michigan's reported unemployment is 11.6% - in all probability much higher, when you consider those who no longer qualify for MESC benefits, those who are experiencing rolling layoffs, and those who have moved to a warmer region of hell where Starbucks is said to be hiring...

Originally Posted by CBRVFR

Michigan's reported unemployment is 11.6% - in all probability much higher, when you consider those who no longer qualify for MESC benefits, those who are experiencing rolling layoffs, and those who have moved to a warmer region of hell where Starbucks is said to be hiring...

Warren Buffett says economy fell off a cliff

There was $11 trillion out in mortgages. (If you have 15 minutes, watch his vid, he makes some really great analogies...)

I love a comment he makes, "we've been telling people for years to save money, now they're saving it and we're telling them to spend it"...

Federal Reserve Bank of NY comments:

Financial Market Turmoil: The Federal Reserve And The Challenges Ahead - Federal Reserve Bank of New York