Global Financial Crisis (9 Viewers)

Raphaël

Senior Member
Apr 17, 2013
1,861
The Fed will cut rates again once the large banks say it's not enough. And then once the markets tank again, they may even go to negative interest rates. That is the ultimate central bank mandate of stupidity.
They can lower rates as much as they want, but until they find an answer to coronavirus, the global economy is at a standstill.
 

Bjerknes

"Top Economist"
Mar 16, 2004
101,575
You have a plan for what to do if they go to negative rates?
Not one I'm confident in, never really experienced that. But negative rates basically mean you pay banks to hold your money. Conventional wisdom says gold and hard assets are what you want in that sort of environment because central banks will print, but other central banks have tried it and I don't think it ever worked for their supposed intentions. It just allows banks to make more money, while we get fucking screwed as usual, charging us a fee to enter in a deposit.
 

AFL_ITALIA

MAGISTERIAL
Jun 17, 2011
18,286
Not one I'm confident in, never really experienced that. But negative rates basically mean you pay banks to hold your money. Conventional wisdom says gold and hard assets are what you want in that sort of environment because central banks will print, but other central banks have tried it and I don't think it ever worked for their supposed intentions. It just allows banks to make more money, while we get fucking screwed as usual, charging us a fee to enter in a deposit.
Well that's exactly it, you'd be punished for doing the right thing by saving money. Maybe online banks would have even slightly positive rates? I don't exactly want to physically horde money in my home, and throwing it all into the market would be foolish at best in this climate. I truly don't know what I would do.
 

Kyle

Senior Member
Contributor
Sep 4, 2006
71,909
Well that's exactly it, you'd be punished for doing the right thing by saving money. Maybe online banks would have even slightly positive rates? I don't exactly want to physically horde money in my home, and throwing it all into the market would be foolish at best in this climate. I truly don't know what I would do.
convert your dollars to ponies
 

Bjerknes

"Top Economist"
Mar 16, 2004
101,575
Well that's exactly it, you'd be punished for doing the right thing by saving money. Maybe online banks would have even slightly positive rates? I don't exactly want to physically horde money in my home, and throwing it all into the market would be foolish at best in this climate. I truly don't know what I would do.
That's what makes it so ridiculous -- everybody already has enough debt. Yet they want folks to go into debt even more. Sheer stupidity of the highest order.

I think this is why I would lean towards something like gold, or other commodities that have already been wrecked. I may be wrong, but gold has seemingly always withstood market forces and time. I also like oil, too, but not the stocks yet. There's no way in hell oil goes to zero, so $20 a barrel is probably a bargain long term. Once the market for stocks is priced out and the virus is controlled, that's when the companies that are still left in the market might be a good play, those with decent dividends.

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Gold and real estate.
Land maybe, houses no, IMO.
 

AFL_ITALIA

MAGISTERIAL
Jun 17, 2011
18,286
That's what makes it so ridiculous -- everybody already has enough debt. Yet they want folks to go into debt even more. Sheer stupidity of the highest order.

I think this is why I would lean towards something like gold, or other commodities that have already been wrecked. I may be wrong, but gold has seemingly always withstood market forces and time. I also like oil, too, but not the stocks yet. There's no way in hell oil goes to zero, so $20 a barrel is probably a bargain long term. Once the market for stocks is priced out and the virus is controlled, that's when the companies that are still left in the market might be a good play, those with decent dividends.

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Land maybe, houses no, IMO.
How would one invest in commodities like this? I'm generally VERY risk averse but I can't sit by and watch my money wither away.
 

Bjerknes

"Top Economist"
Mar 16, 2004
101,575
How would one invest in commodities like this? I'm generally VERY risk averse but I can't sit by and watch my money wither away.
It's not easy, people say physical gold is always the best, but storing it sucks. You could use an ETF that tracks gold or oil, which is like a stock. GLD isn't too bad and doesn't have wild swings for the most part. But having a mix of various things is always best. Don't take it from me though, need to research these things.
 

Raphaël

Senior Member
Apr 17, 2013
1,861
I'm expecting real estate to take a hit as well.
Land maybe, houses no, IMO.
ECB keeps interest rates at 0% since 2016. Because of its low rates, life insurance no longer worth anything.
I do not know the real estate situation in the United States but in France, banks to attract and keep customers offer historically low rates, I borrowed 1.25% over 20 years for rental investment. Prices go up in tense areas, but after that, it's about choosing good products (yield 7-10% after taxes).
 

AFL_ITALIA

MAGISTERIAL
Jun 17, 2011
18,286
ECB keeps interest rates at 0% since 2016. Because of its low rates, life insurance no longer worth anything.
I do not know the real estate situation in the United States but in France, banks to attract and keep customers offer historically low rates, I borrowed 1.25% over 20 years for rental investment. Prices go up in tense areas, but after that, it's about choosing good products (yield 7-10% after taxes).
To buy in New York at the moment is almost impossible for the average person. I truly wish I could but it's just not possible for me right now.
 

Kyle

Senior Member
Contributor
Sep 4, 2006
71,909
It's not easy, people say physical gold is always the best, but storing it sucks. You could use an ETF that tracks gold or oil, which is like a stock. GLD isn't too bad and doesn't have wild swings for the most part. But having a mix of various things is always best. Don't take it from me though, need to research these things.
Are you familiar with slopeofhope.com?
 

Ronn

#TeamPestoFlies
May 3, 2012
12,195
ECB keeps interest rates at 0% since 2016. Because of its low rates, life insurance no longer worth anything.
I do not know the real estate situation in the United States but in France, banks to attract and keep customers offer historically low rates, I borrowed 1.25% over 20 years for rental investment. Prices go up in tense areas, but after that, it's about choosing good products (yield 7-10% after taxes).
That’s insanely low. I’m in the process of buying a house right now, but the rates although historically low are not that low. 30 year loan is ~3%
 

Ronn

#TeamPestoFlies
May 3, 2012
12,195
That's still really good though. Once the debt bubble bursts, rates will go a lot higher.
Oh yeah I’m not complaining. The catch is if state decides to close the banks I’ll be stuck in limbo, and my rental contract ends at the end of April. I might be the newest proud member of hobo community :D
 

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