Calculate your financial recovery

The Wall Street Journal has an online tool to help you figure out how long it'll take you to recoup your loses from the financial meltdown.

Warning, it is not for the faint of heart.
WSJ Link

-Blast

When did the Wall Street Journal buy the NY Times?

It is true that the price of one share of NYT stock is less then the price of their Sunday edition...

The Sunday Times sells on a newstand for $4, I think. The share price for the Sunday Times has been around $4 recently. It has been below $4, it might be above $4 right now.

The Wall Street Journal does not own the NY Times. The WSJ was owned by Dow Jones & Co. but was sold to the owners of the New York Post and Fox, Rupert Murdoch. The NYT has not been sold as far as I know.

Oops, you are right. It's the NY Times, not the WSJ.
Hey, I'm on drugs.

-Blast

What rubbish. First of all, it's got a 3% rate of inflation. We've been well above 3% for a while. Secondly, it assumes 4% growth rate - that's both too conservative and too aggressive. For me, it's predicting I'll NEVER get back what I lost, because I'm plugging in real inflation numbers and real return numbers. But that's rubbish too.

The real answer: Nobody knows. Nobody. Not you, not me, not the economists, nobody. There are no scenarios that envisioned the combination of factors we have now, no scenarios for a shrinking first-world population, no scenarios for a reduction in consumption, no scenarios for a global depletion of resources.

Nobody had economic models where the fish ran out, where the zinc would be in short supply, where tantalum for capacitors was all used up, where it cost more to safely dispose of the waste produced by a process than the products made by the process earned. Certainly no economist envisioned the Pozification of the entire system, nor were there any models for describing what would happen when $651 trillion dollars in CDO's turned from assets into toxic waste.

There are no roads here, no maps to guide any of us.


Anyone who proposes a "recovery" to the economy - especially thinking we'll be back to 2006-2007 levels - has their head in a place that's very dark and uncomfotable.

Was the entire economy of the US a bubble? Not just the housing market but the entire economy.

Was the economy growing at an incredible rate because it was being fueled by larger and larger debt on the part of the average American?

If so, is this recession, in large part just a natural adjustment?

Discuss.

(Seriously, I don't know JACK about economics. Just thinking out loud so you smart folks can straigten me out. )

What will it take for me to recover financially? I need to magically discern what the next asset class bubble will be and start stocking up NOW. Other than that, I think most of us in the real world will be nursing our financial wounds for quite a long time.

Demogrpahically speaking, the Baby Boomer generation is just approaching retirement age. For that generation, there really isn't time for them to recover from something as big as this. The fallout from the upcoming swell of Boomers reaching retirement without enough money to support themselves because of the crash in investments and real estate is yet to be felt. If you think the stimulus is a lot of money to be throwing around, wait till the Boomers, as a big group, really start to need help.

Well, assuming that we don't have another crazy bubble to keep everything humming along, that is.

http://www.youtube.com/watch?v=-7ijI-g4jHg

Most Scientists believe that the waggle dance is an attempt to communicate were food can be found to others in the hive. Maybe they were really just observing another biological species actually involved in virtual market trades such as their own form of derivatives trading. And when their equivalent of financial bubbles burst the result was colony collapse disorder.

I think the entire market downturn is engineered by and for those huge evil Aerospace/Defense companies.

Fact (date 2005) - 50% of the current employees will be eligible to retire within 5 years.

Conspiracy- Now they can't :->>>

See how easy that was?

Yes, the whole thing was a ponzi scheme, all of it.

In the most truncated form....

Every dollar of DEBT you - yes YOU - hold is magically and amazingly turned into anywhere from $9 to $30 in assets on the books of a financial institution.

They, in turn, expected to collect your debt payments over time, and the contracts to collect that debt were bought and sold, and packaged and re-sold and re-sold. In case the contracts went bad, the contracts had insurance, sold by companies like AIG, which paid off if the debt stopped "performing" (you stop paying). The premiums on the insurance were based on the risk, and the risk models simply didn't have any ability to deal with the idea that housing prices would fall (among other things).

Well, your default on a loan triggers both a payout on the contract insurance AND triggers a foreclosure action. Remember that $1 in debt becoming $9 to $30 in assets? Whoops! You have a $200,000 house with a 30 year mortgage, the lifetime value of that loan was about $550,000 to the lender, but if foreclosure was needed, they "knew" that there would be no real loss, because if you defaulted after 5 years of interest-only payments, well, the bank didn't really lose any principal, after all they could sell the house for more than the principle of the loan. Except now they can't. And now, that mortgage note - the one that was valued at some dollar amount, contracts on which were valued at some dollar amount, and insurance that would pay out on the (unexpected) default on the loan - all of these "assets" have turned into massive, massive liabilities.

By far, the very best article - it's long but worth it - on this subject is in this month's wired magazine:

http://www.wired.com/techbiz/it/magazine/17-03/wp_quant

Judging from your post, you know more than most of the "experts" making the morning talk-show circuit.

I have just invented a new word which basically covers the scam;

Enrononomics

Edit - Darn just googled it and it looks like I didn't afterall

I'm doing pretty well, I moved my 401K into the money market right before the crap hit the fan. I'm currently timing for when to re-invest it.

Fantastic article. Thanks, Martin!

You'd think that a course in logic would be required for an MBA, wouldn't you?

I would tend to agree with you given the recent parameters of the economy. Most people lost around 40% of their retirement savings (in Canada its RRSPs and pension funds, you have the 401ks and stuff). Thus baby boomers have suddenly decided that they have to work more years to retire financially healthy. I personally worked it out that I can't retire earlier than 65 for the equivalent funds that I thought I could at 61. BBs are just beginning to retire right now but what will happen with other BBs delaying their retirement is that the switch from working to retired will happen over a shorter time period than previous expected. More people will retire in one big bunch!

This is going to have a really wacky affect on the employment figures and social structure of our society. This delayed retirement is also going to frustrate the Gen-X and Gen-Ys because they will want to move up the ladder and will find out that there is less room to go because the BBs are "blocking" their path. Statistically Canada has a higher number and % of BBs than the US does. In the short term this will resolve the current job shortages.

This delayed retirement will have further weird effects on the "unfunded liabilities" of our governements. Social Security for you and OAS for Canada.

You want to know what real pain is???
http://www.iousathemovie.com/