Financial Question

[key chain bass guy]

Let me preface this post by stating that my understanding of finances and financial markets is elementary at best.

Here is my question;  Is the government throwing money at and trying to figure out ways to stabilize the market interfering with the fundamental nature of a capitalist system?  It appears that the market is made to go up and down.  Isn't that essentially what "buy low, sell high" means?  When the market gets low enough people start buying,  when it gets too high, people start selling, all in the name of making a profit off of the stock.  

I may be naive but, it seems to me that so much of our current economic problems are psychological.  The sky is falling, is all I seem to hear on the news, so you get nervous and start saving instead of spending.  I still have my job, as do the vast majority of people.  Unemployment is up around 7%.  That means 93% of people still have their job and still have the same money they had a year ago.  It seems to me that if the media would just come on the air and say, "It's over, everything is fine.", people would spend more and the economy would come around.  I know it is not that simple, but am I that far off?  If I am wrong please set me straight, I want to understand.

[roadwarrior]

Well for those with substantial retirement savings,

much of which was accumulated over three or four

decades, those invested "conservatively" in

a broad based equity portfolio have lost 40-50% of

their savings.

In addition, a majority of homeowners have lost

25-30% of the equity in their homes. Some areas

of the country have suffered more.

So, most Americans have significantly less

net worth than they had a year ago. If their job has

been lost, their business is down or gone, then things

are much worse.

The bad news is, the trend is still down and gaining

momentum. Unemployment may reach 10-12% which

effects the entire economy, broadly. This is by far,

the most serious financial crisis the world has faced

since The Great Depression.

[BrianinMD]

Basically, yeah, Economics 101 is it cycles up and down and will do so no matter what the feds do. However, with the money grabbers in the mortage and housing markets caused so much harm this down cycle is a lot worse. Now we have to somehow stop the downward turn, although a major portion of the population is not in bad shape the number that are causes the media to push those stories, when have we ever seen the media not push the bad parts of things. That in itself will cause to get concerned and start saving, which is good but will cause the recovery to be slower.

Just look at all the BS they have people believing about global warming thanks to manbearpig (Al Gore)

[key chain bass guy]

I got off of my own topic in my post.  I guess my question is really more along the lines of isn't this just the way the economy works?  Is there really any way to truly "fix" it or does it just need time to work itself out naturally.?

It wasn't my intention to downplay the serious difficulties facing some people.  I'm just wondering if the system really needs to be fixed or is this downturn just the consequences of capitalism?

[Root beer]

t "buy low, sell high" means? It means buy a stock at an attractive price and sell it when it gets high. Example: I could buy 50 shares of stock at 15.00 for 750.00 if the stock reaches say 30.00 in few months or in 3rd quarter I could make 1500.00

I may be naive but, it seems to me that so much of our current economic problems are psychological. The sky is falling, is all I seem to hear on the news, so you get nervous and start saving instead of spending. I still have my job, as do the vast majority of people. Unemployment is up around 7%. That means 93% of people still have their job and still have the same money they had a year ago. It seems to me that if the media would just come on the air and say, "It's over, everything is fine.", people would spend more and the economy would come around. I know it is not that simple, but am I that far off? If I am wrong please set me straight, I want to understand.

I'm not going go into unemployment and lay off. That has do with something the company did. Investment gone sour or something along the line. Too many variables for anyone to find someone point fingers at. It could be literally ANYTHING. One little thing can lead to economical catastrophe.

Also, the stock price can be misleading, some stocks are down because a mass liquidation took place (where someone sold off a large share for cash), some are down because everything else went down. Some could be down because company is going under (which could also explain why a mass liquidation took place) Before you invest in any stock I would read into company's financial information. Know what you own.

[Root beer]

ALSO! forgot to mention many economist heavily debated how economic systems can be fixed. Some says monetary policies, some says leave it alone, and some say fiscal policies.

Some will say all of the above must play a role. I personally believe it takes all of the above to play a role. the central bank drops interest rate, government cancels spending and delay taxation, while us consumers just spend and save to get things moving again.

[fathom]

I got off of my own topic in my post. I guess my question is really more along the lines of isn't this just the way the economy works? Is there really any way to truly "fix" it or does it just need time to work itself out naturally.?

It wasn't my intention to downplay the serious difficulties facing some people. I'm just wondering if the system really needs to be fixed or is this downturn just the consequences of capitalism?

it's the nature of the beast...all things are cyclical in nature.

there has been a world of books written on the causal effect of governmental intrusion on recessions and most of them, pro or con, will depend on your viewpoint.

bottom line, this country has gone into 22 recessions since 1940.

it has also come out of 22 recessions since 1940.