Depression - What to do?????

[Glen48]

All indicators point to a depression: IF we do head that way what are your suggestions and ideas?
Will the Fed's send us food stamps, will we have to hock our bodies and sell of our first born.
Is buying Gold/Silver the answer will a bar of Gold buy a Loaf of bread?
Over to you...

 

[Smurf1976]

1. Get out of debt as far as possible. Being in debt is the last thing you want if the economy crumbles and your assets lose value and/or job disappears.

2. Get a job that's a secure as possible. Something in an essential industry that won't likely disappear (eg Police, water or power industries, food etc) rather than discretionary spending like entertainment, tourism etc which will be hit harder.

3. Sell things that are likely to lose most or all of their value before the depression hits. If truly hard times do hit then that V8 Commodore, Skyline or Range Rover is a costly liability that few will want compared to a more economical car (or a bus ticket). Second hand prices will reflect that reality - cars valued according to their cost of providing transport rather than how fast they do it.

And nobody but professional fishers will be wanting boats so they'll be pretty much worthless on the second hand market. Likewise anything else that's essentially a recreational item.

Much the same with investments. Few will risk investing in XYZ exploration that may go bust tomorrow when they don't have cash to risk losing. On the other hand, the likes of Woolworths, BHP etc should survive so ought to retain at least some value.

4. Cut your expenses and reduce your need for cash. Own home if possible, consider growing some food, solar hot water etc to reduce day to day spending. Don't buy in a car-dependent area if possible.

All in my opinion and I could be wrong etc. Note that I haven't answered whether or not I'm expecting a depression, just a few suggestions if that's where we're headed.

 

[nioka]

All indicators point to a depression: IF we do head that way what are your suggestions and ideas?
Will the Fed's send us food stamps, will we have to hock our bodies and sell of our first born.
Is buying Gold/Silver the answer will a bar of Gold buy a Loaf of bread?
Over to you...

ALL indicators do NOT point to a depression. Have a little faith that the economy and the country are handling the situation reasonably well and will continue to do so. Just tighten your belt a little where it is necessary and roll with the punches.

If your cup is half empty remember that it is also half full.( I should post that in the thought for the day)

 

[MrBurns]

I think the US is a likely candidate for extreme hard times, the FED cannot bail out the entire country. If the US goes so do we... like it or not.

IF the financial system collapsed we would not be able to get our money out of the bank so what do you do ? Buy physical gold but not until things look a lot worse than they are now.

AND get out of debt now if you can, things will get worse here.

 

[noirua]

I think the US is a likely candidate for extreme hard times, the FED cannot bail out the entire country. If the US goes so do we... like it or not.

IF the financial system collapsed we would not be able to get our money out of the bank so what do you do ? Buy physical gold but not until things look a lot worse than they are now.

AND get out of debt now if you can, things will get worse here.

I remember depression talk in the early 1960's, 1973 -76 and 1987-1990, AND LOOK, we're still here.

Those who watch carefully and believe the system will survive will be the big gainers here, once again.
Some companies lose out but others gain. Some countries lose out and some gain.

I believe Australia will be the gainer here as commodities come back to the fore after gains that were not sustainable.
Some companies will go bust and loosen up markets for others.
Others will pick at the bones and buy assets dirt cheap.

Gainers and losers. The present market moves are healthy, as the weak are shaken out.

 

[CanOz]

All indicators point to a depression: IF we do head that way what are your suggestions and ideas?
Will the Fed's send us food stamps, will we have to hock our bodies and sell of our first born.
Is buying Gold/Silver the answer will a bar of Gold buy a Loaf of bread?
Over to you...

In my opinion if you pay attention to the markets, there should be plenty of clues before we just suddenly plunge head long into a depression. I'm positive we will have a recession, whether the Fed wants or not, its when not if.

Pay down debt and save your money. Economies like Australia, Brazil and Canada have a good resource base and a productive, healthy workforce. I really cannot see a depression in this downturn, although some indicators ARE at the lowest since the great depression for some things.

I would be concerned for the next recession, driven by peak oil and even larger levels of unpaid debt.

Cheers,


CanOz

 

[pepperoni]

1. Get out of debt as far as possible. Being in debt is the last thing you want if the economy crumbles and your assets lose value and/or job disappears.

2. Get a job that's a secure as possible. Something in an essential industry that won't likely disappear (eg Police, water or power industries, food etc) rather than discretionary spending like entertainment, tourism etc which will be hit harder.

3. Sell things that are likely to lose most or all of their value before the depression hits. If truly hard times do hit then that V8 Commodore, Skyline or Range Rover is a costly liability that few will want compared to a more economical car (or a bus ticket). Second hand prices will reflect that reality - cars valued according to their cost of providing transport rather than how fast they do it.

And nobody but professional fishers will be wanting boats so they'll be pretty much worthless on the second hand market. Likewise anything else that's essentially a recreational item.

Much the same with investments. Few will risk investing in XYZ exploration that may go bust tomorrow when they don't have cash to risk losing. On the other hand, the likes of Woolworths, BHP etc should survive so ought to retain at least some value.

4. Cut your expenses and reduce your need for cash. Own home if possible, consider growing some food, solar hot water etc to reduce day to day spending. Don't buy in a car-dependent area if possible.

All in my opinion and I could be wrong etc. Note that I haven't answered whether or not I'm expecting a depression, just a few suggestions if that's where we're headed.

Good depression proofing ideas ... I live like this in booms too which I guess is pretty bearish!

 

[MrBurns]

I remember depression talk in the early 1960's, 1973 -76 and 1987-1990, AND LOOK, we're still here.

Of course we'll still be here but ths boom in everything has gone on so long the corresponding downturn will be just as dramatic, it's happening now, property has dropped 10% over the past 8 or so months and there's probably another 20% to go, 30% down easily.

The share market is now at 2006 levels and it's not over yet, in fact it's hardly started.

 

[noirua]

Of course we'll still be here but ths boom in everything has gone on so long the corresponding downturn will be just as dramatic, it's happening now, property has dropped 10% over the past 8 or so months and there's probably another 20% to go, 30% down easily.

The share market is now at 2006 levels and it's not over yet, in fact it's hardly started.

Come on now, no way are we poor. For most people who don't want to sell their property, there in no problem.
Interest rates are set to go down and reduce payments on mortgages. That's one of the upsides in any downturn.

NSW, QLD and WA are set to receive a massive increase in royalties this year, next and onwards. QLD will get back an increase of close on 200% on coal royalties.
In 2006 they got 5% of coal revenues at US$48 per tonne.
Prices are now from US$125 a tonne an upwards, royalties have been increased to 7% for prices over $100 per tonne. Coal exports have greatly increased with Port expansions coming onstream.

So there are companies and Aussie citizens doing worse now, but don't believe all you hear, most are doing very well.

 

[Calliope]

There can be no depression-proofing for the Y-generation. They have been raised by their baby-boomer parents in the expectation that whatever they want they can have. I was raised in a large family with one income. We were taught 'waste not want not", the value of money and how to save. It has stood us in good stead in bad times.

 

[prawn_86]

There can be no depression-proofing for the Y-generation. They have been raised by their baby-boomer parents in the expectation that whatever they want they can have. I was raised in a large family with one income. We were taught 'waste not want not", the value of money and how to save. It has stood us in good stead in bad times.

Have to love how people and the media lump whole generations into one category...

 

[Calliope]

Have to love how people and the media lump whole generations into one category...

I love it when people say they love something when they really hate it.

Even when they are being sarcastic.

 

[Pager]

Humans are a pessimistic lot arnt we, put on the TV and most news is doom and gloom, accidents, disasters, murders etc etc, same goes for newspapers its all bad news as good news doesnt sell.

If you believe there is an imminent disaster in the financial system then go ahead and buy gold or whatever you believe will protect your wealth, only problem though is that if your right and the world goes t1ts up who is going to buy it when you want to cash in on it ?.

Not long ago our biggest fear was the imminent nuclear war between the west and the soviet block, since then we have been gripped by new fears like global warming, terrorism, Aids, food shortages and now a financial meltdown and depression.

I'm an optimist, things may get worse but as too a full blown 1929 style depression, i just cant see that occurring, maybe the US will suffer more than most country's as every dog has its day and IMO, the US like Britain before it is losing its dominance on the global stage with the emergence of the likes of China and India and Australia is in a very good position to benefit from there growth.

 

[Glen48]

I have sold my house and hope it settles next week, banks paying at present 7-8% is a good return for awhile. China is no different to the rest of the World they are now finding a down turn in house prices, credit control and interest rates.

Only trouble is if they stop buying Nike shoes and other most necessary items that a sane person doesn't need will the rest of us go down as well?
Gold is tipped to hit 3K?? and OZ and Oil to go up USD down to about 65c,
Which bank will go down this week?

 

[Glen48]

I have sold my house and hope it settles next week, banks paying at present 7-8% is a good return for awhile. China is no different to the rest of the World they are now finding a down turn in house prices, credit control and interest rates.

Only trouble is if they stop buying Nike shoes and other most necessary items that a sane person doesn't need will the rest of us go down as well?
Gold is tipped to hit 3K?? and OZ and Oil to go up USD down to about 65c,
Which bank will go down this week?

 

[CanOz]

Which bank will go down this week?

I reckon Lemming brothers, then WM. I'm moving more funds into cash only because i'm with Citibank. Although it may never happen, i'm going to move some anyway as i'm not trading much now anyway and Pestpac gives better interest than Citi.

Roll on crash of 2008! Although i think they will make try and limp through ntil the election is over.

I must say though, this is getting to be very very entertaining watching Hank, Ben and Friends play 'pass to hot potato'!

CanOz