Thread: Economic conditions

Here in Oz things dont seem to be too bad yet, but our gov appears hell bent on spending money we dont have, ie - following the USA path.

Personally i hate gov bailouts and think unsustainable industries should fail.

Your thoughts?

It's terrible here in the UK. It effects pretty much everything around us!

In the affiliate marketing world, we lost Zavvi and Woolworths recently which shows the impact it's having. Adsense earnings are a little sucky as well.

Should get better soon I hope.

It is pretty bad here as well. (Florida, USA) They are closing like 6 schools, Stores like Circuit City & Sweetbay are shutting their doors and A LOT of people are loosing their jobs because of it. I can honestly say that it is getting pretty bad.

Things aren't good anywhere. When I heard Circuit City was closing I knew things were getting bad. I am kind of sick and tired of these bailouts because I don't want to pay my taxes to the poor business practices of the housing industry and the car industry. Hopefully Obama will pull us out of this, because he said he would.

Maybe we should petition Congress for a Webmaster Bailout!

Is there anything we (webmasters) can do online to try to make the economic conditions a little better?

Any idea?

Originally Posted by kentuckyslone

Maybe we should petition Congress for a Webmaster Bailout!

You know... That's not too far off the mark.
Everyone's talking about bailouts for companies, using tax payer funds.
What about the poor taxpayer whose mortgage will come up for renewal this year and he owes $300,000 on a house that's now worth $200,000. I'm not talking about the guy who bought a house that was obviously priced high. I'm talking about the poor bastard that signed a 5 year term 4½ years ago and has been making his payments faithfully, only to be denied a mortgage this time around because his house value has plummeted.
What are our governments going to do for him (with our money)?

Our govt gave everyone with children and who payed TaxA $1000 each child and it was really good as it didnt go to people on the dole, it went to normal everyday people who worked and had children. And that money they were told to go crazy with to help out the australian businesses. Which I recon was pretty good.

Its about time that normal working people got a break instead of giving it to the dole bludgers.

Originally Posted by Rhiannon

Our govt gave everyone with children and who payed TaxA $1000 each child and it was really good as it didnt go to people on the dole, it went to normal everyday people who worked and had children. And that money they were told to go crazy with to help out the australian businesses. Which I recon was pretty good.

Its about time that normal working people got a break instead of giving it to the dole bludgers.

LOL, so giving it to people who have heaps of kids and are on the dole is ok? but giving it to students isn't?

Isn't it true that those who are students get certain deductions or something like that? I asked mainly because I did my dad's taxes just a few hours ago and they asked if I was a student and I figured if I was, he would get more of a refund. I don't know for sure but that is what I thought is why they asked for the information.

My dad was suppose to get the stimulus check last year, never did. Now they are saying that those who didn't receive one last year, that they can receive a recovery check. Hopefully that works.

Students would have recieved it if they are classed as a dependent and their parents recieve tax benefit A.

Student who are classed as independent recieve nothing...

Well Tester:

I hate to rain on your parade, but I definitely do not see where you got what you got, out of Rhia'a post, for one thing, she mentioned nothing about students, and secondly, she said that for once, the money didnt go to the people on the dole (which I am assuming is the Australian equivalent of welfare), but to actual working families with children.

Then you quote her and ask her:

So giving it to people who have heaps of kids and are on the dole is ok? but giving it to students isn't?

I really do not understand where you are coming from...

Can you enlighten me? Maybe is an OZ thing and I dont get it........

I wouldn't worry too much about it now that Obama's in the White House. Don't you know? He's going to fix everything.

Leenkz,

Technically the payments did go to people on the dole/welfare, but only to those on it that had children. Now im going to stereotype here, but all those "dole bludgers" who have about 5 kids and dont works etc etc would have all got $1k per child for it, while students who work hard etc didnt.

There has been recent reports about how gambling and alcohol purchases increased in the time the payments were made, which indicates the gov targeted the wrong demographic.

I could write a thesis on this but that will do for now

Does anyone think that it will get better before the start of 2010?

Originally Posted by Ryan6

Does anyone think that it will get better before the start of 2010?

More than likely, no it won't. Not that I'm trying to be negative but nothing is helping as of yet.

It's even hard for those with experience to get a good job let alone those who didn't even graduate from high school. Don't get me wrong though the stimulus check idea is not bad but the only problem I see is that people will be irresponsible with it by buying things they don't need, like mentioned alcohol etc.

Quit propping up the lowest common denominator! Any kind of government intervention into the market is wrong and we are only prolonging the crash and maybe making it even worse when it does happen.

Don't get me wrong, I truly feel for those hurting and losing their jobs. However, I care more about those willing to make a better product, provide a better service, invent, and generally strive to be better and do better, without government intervention. Course, I'm not the one who voted for the Big O.

Originally Posted by cldnails

Quit propping up the lowest common denominator! Any kind of government intervention into the market is wrong and we are only prolonging the crash and maybe making it even worse when it does happen.

Don't get me wrong, I truly feel for those hurting and losing their jobs. However, I care more about those willing to make a better product, provide a better service, invent, and generally strive to be better and do better, without government intervention. Course, I'm not the one who voted for the Big O.

Spoken like a true capitalist.

I hate to sound negative, but 2009 is going to be a tough year. The worst is still to come and when the ecomony does pick up it will take years to pay back all the money that the governments have spent. Things will get better, it's just a question of when. This recession is very different to any other we have before, this time its global and affects everyone.

Originally Posted by cldnails

Quit propping up the lowest common denominator! Any kind of government intervention into the market is wrong and we are only prolonging the crash and maybe making it even worse when it does happen.

Don't get me wrong, I truly feel for those hurting and losing their jobs. However, I care more about those willing to make a better product, provide a better service, invent, and generally strive to be better and do better, without government intervention. Course, I'm not the one who voted for the Big O.

Even if someone voted for Obama they should still understand what you're saying. As a matter of fact, President Obama has mentioned personal responsibility a number of times.

I'm all for making better products and services and backing them with the best customer service possible. That is how the economy booms, when people are being creative and responsible.

You people are not reconizing the real culprit? China. With evertything being imported with zero manufacturing and fixed usd vs Yuan rates. Usa is living on credit how long this credit will continue?

Originally Posted by i13

You people are not reconizing the real culprit? China. With evertything being imported with zero manufacturing and fixed usd vs Yuan rates. Usa is living on credit how long this credit will continue?

I think for a long time:sshhh:

Zero manufacturing? China? No, No, NO, it's time people start taking responsibility, specifically those in congress. This next pork barrel stimulus package is why we are in up to our elbows and the ones before it and the ones before it.

Furthermore, those who have been robbing pensions blind, those giving home loans to anyone capable of drawing an X, need to be fail and thrown in jail where they broke the law. Don't bail them out because you are worried about the little people, we'll be fine, throw those assholes in jail and let the big ones fail because their business model didn't work.

And lastly, we need to start blaiming ourselves, for living paycheck to paycheck. Not having enough food in the cabinets to last a full week and for having average credit card debt into the $30k. I mean, it's our fault too, the little people, who when they do fail aren't bailed out. Quit buying crap we don't need, so if the economy takes a little slump, it doesn't cause panic and then magnify the problem.

It's called cycles people, everything else is just the details. Those who are responsible need to be held accountable.

^^ Great post.

Its a personal gripe of mine, how western economies bail out those in debt (even the little people). Everything (interest rates etc) is geared towards those with home loans or in debt. What about those people who arnt in debt? Where is their reward?

Originally Posted by vectro

I'm all for making better products and services and backing them with the best customer service possible. That is how the economy booms, when people are being creative and responsible.

Spot on - bad business should be left to fail and we should encourage new, better business. Recession can have some benefits and we should all be seeing this as an oppurtunity to improve what we have.

I have to admit that I am very worried this time. In the past 6 months, Google has been going after my sites and my income had been badly affected. I have been through a real depression 10 years during the Asian Financial Crisis and it didn't feel as threatening as now.

What I am really concerned about is the way that the US, UK and other countries are printing and borrowing lots of money to fight this recession. When the economy improves they would have to raise taxes and interest rates quickly and that would snuff any recovery. If they don't, it could end up like Iceland or even worse, like the Latin America criris of the 90's or Zimbabwe. What we could see is hyperinflation with economic collapse.

So I think probably the best scenerio would be like what happened in Japan, whose economy has been in bad shape for 20 years since their property bubble burst.

I think blaming China misses the point even though there may be some truth in it. It would like like a convicted criminal blaming his parents for spoiling him. This argument is going down very badly in China. Although the housing and credit bubble may be related to China, the lax regulation and greed on Wall Street is not.

I agree with most of what is being said here.
I think bad businesses should be left to fend for their own survival.
If they acted foolishly, they should suffer the consequences of that.

What worries me, is my own situation and others in the same boat.
I bought a house 2½ years ago. 25 Year mortgage with a 5 year term.
I didn't buy extravagantly. My house is enough for me and my family without going overboard.
In other words, there are no jaquzzi tubs, game rooms or 3 car garages here.
I work hard for a living, have never taken a handout and pay my bills on time.
However, because of outside forces, my house value may not be worth what I owe on my mortgage in 2½ years when it comes up for renewal. By that time, I will have faithfully made my payments for 5 years without fail. But, if my home isn't worth what is still owing on it, I probably won't be able to renew my mortgage, all through no fault of my own. My only "mistake" was wanting to own a home, rather than rent one and choosing to take the plunge towards the end of our last economic boom.

If our governments should be bailing anyone out, it should be me and people like me. Instead of giving billions to corporations, I think they should be using our money to guarantee the mortgages where property values are going to fall short. By all means, tie that guarantee to a requirement that there must be no missed payments in the previous term. But there should be some kind of help there to keep responsible citizens in their homes while the economic storm passes.

Zap, I don't really understand. If you have got a 25 year mortgage, surely the bank cannot do anything once the initial 5 year term is up? In Asia where property prices are much more volatile, it is very common for people to go into negative equity but the banks will not do anything about it as long as the payments are met.

Yeah Zap,

I dont understand either. Is it a 25 year note or not? is it fixed or variable? just trying to understand what you mean

Originally Posted by zxpro168

Zap, I don't really understand. If you have got a 25 year mortgage, surely the bank cannot do anything once the initial 5 year term is up? In Asia where property prices are much more volatile, it is very common for people to go into negative equity but the banks will not do anything about it as long as the payments are met.

Originally Posted by LeenkzMike

Yeah Zap,

I dont understand either. Is it a 25 year note or not? is it fixed or variable? just trying to understand what you mean

25 Year Mortgage (At least here, in Canada) means that they take what I owe them (principal + interest) and spread it out over 25 years with equal payments.
But it is only a 5 year term. That means the contract I have with the bank is only 5 years in duration. At the end of that 5 years, it's a whole new ballgame and all bets are off. The only change is that I now have a 5 year history with my current bank that they can use to help them judge whether or not to grant me another 5 year term. But there are no guarantees and banks are very rarely sentimental. They look mostly at the bottom line. And the bottom line is that if house values don't improve enough by the time my 5 years is up, then I will owe more money than my house is worth and banks here are VERY reluctant to lend even 100% of a home's value, let alone 120%.
At the end of my five year term, a home appraiser will come to my home and appraise the current value of it. I will owe (at that time) $267,000. If my home is not deemed worth $267,000 then there is nothing stopping the bank from taking possession of my house, even though I've made my payments faithfully for 5 years. A lot of things come into play and I am going to have to rely on my good record quite a bit, but it is by no means a slam dunk that I will get to stay in my home. After all, the bank owns it (not me) until every single cent is paid off.

And there will be thousands of people in my position between now and the time that house values recover, whenever that is. Because I live just outside Toronto, the economic centre of Canada, the house values around me have been hit very hard. House values in Toronto have dropped about 25% since I bought 2½ years ago. Guessing, I'd have to say my own house has dropped by about 20%. I bought at $305,000, which means guestimates put the current value of my home at about $245,000. That number needs to be over $267,000 in 2½ year's time with room to spare because, again, banks don't like to lend even 100% of a house's value.

The flip side to this system is that it's a new ballgame every 5 years. My mortgage is currently a 25 year mortgage. At the end of my first 5 years, normally I would go for a 20 year mortgage with a 5 year term and so on. But, if I feel I can handle the higher payments, there's nothing stopping me from removing 5 years of my payments and negotiating a 15 year mortgage with a 5 year term at that time. All of that depends, of course, on the value of my home in 2½ years and the lender's decision about whether or not to lend me the money. It should also be noted that even if my house is worth more than I owe at the end of my current term, there is still no guarantee that a lender will grant me another term. It's very rare, but it still does happen. Banks here are very shrewd. They're in the business of making money, not investing in houses or people. We don't have any sub-prime crisis because of that. Our banks would never do that.

I guess I have just not heard about that kind of mortgage, quite interesting

Originally Posted by LeenkzMike

I guess I have just not heard about that kind of mortgage, quite interesting

I currently have a five year term, but you can get terms as small as 6 months or as large as ten years. You can use different length terms to your advantage too.

For example, someone who is thinking of changing houses soon but wants to ride out the economic storm first can sign a 1 year term now and see how things are in a year. If house prices haven't come back up, they can sign another 1 year term or change houses if prices have come back up. You can also use terms to your advantage if you're anticipating interest rate changes. I can keep getting a 1 year term until I think interest rates have gone as low as they're going to go and then I would lock into a 5 year term to keep my rate low for the full 5 years.

Current rates at one of our cheaper banks...

5 Year Variable 3.80%
1 Year Fixed 4.50%
2 Year Fixed 4.99%
3 Year Fixed 4.75%
4 Year Fixed 4.39%
5 Year Fixed 4.49%
7 Year Fixed 6.25%
10 Year Fixed 6.45%

Although the U.S. is at the heart of a struggling global economy, it's not a BAD economy -

it's a changing one.

Every so many years there are economic booms and busts, and they are either results of or agents for economic restructring (usually some of both). Industries grow, die, evolve. Usually the working class is the last to know and the first to be negatively affected. However, somehoor another, because of human nature and ingenuity, economies bounce back and move on.

When you learn how economies work, you can predict and survive economic busts, even thrive in spite of them.

With insight and education, I plan on thriving...

Originally Posted by Zap

25 Year Mortgage (At least here, in Canada) means that they take what I owe them (principal + interest) and spread it out over 25 years with equal payments...

The mortgage sounds similiar to the terms of a commerical loan in the US. I wondering why the bank would want to forclose on you if the house is worth less than what you paid. It would be better for them to keep on getting the payments.

What caused the problem in the US what that people couldn't afford t make the payments. Worse, people were living off the incease in equity by taking out home equity loans.

Bogart, a bank would foreclose because they would think the house may not go back up to value within an acceptable timeframe. Its all about risk management. Also remember the customer has been paying interest on it so the bank has made profit that way.

Remeber there is no assurance things will always bounce back, despite what economists and pliticians say. Look at Japan for a case in point. Their stock market was 40000 in the early 90's, now its 8000 and has never returned anywhere near its highs

This money crisis is really bad where I live at the moment, there is no jobs I finished college a few months ago hoping to be able to start my career but theres nothing available at the moment

Originally Posted by tester23

Bogart, a bank would foreclose because they would think the house may not go back up to value within an acceptable timeframe. Its all about risk management. Also remember the customer has been paying interest on it so the bank has made profit that way.

Remeber there is no assurance things will always bounce back, despite what economists and pliticians say. Look at Japan for a case in point. Their stock market was 40000 in the early 90's, now its 8000 and has never returned anywhere near its highs

It pays for the bank to keep the borrower in the house if they are making the payment. But you are right that the bank may forclose.

The US however is no way similiar to Japan. We have a $2 trilion budget deficit, $825 bilion trade deficit and the average American has no savings other than their home.

here in Los Angeles economic conditions are becoming very bad, I have never seen it this bad before. Also where is OZ?
our unemployment rate is becoming 15 years high

Well here in OZ things are still ok and the housing market seems very stable or even going up due to the 14K - 21K that the gov i giving out.

The labor goverment allways have way of puting the country in the red.

Business is ok but not as good as last year this time.

Originally Posted by shahab6

here in Los Angeles economic conditions are becoming very bad, I have never seen it this bad before. Also where is OZ?
our unemployment rate is becoming 15 years high

Its going to get worse. Unemployment is a lagging indicator and usually peaks after the recession is over. We have just started this one.

Until home prices correct to the historic ratio of median income to home prices, the crash will continue.