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How is the crisis affecting you?

By Reuters Staff
October 8, 2008

london-bridge.jpg

A London businessman may have to put off his wedding. A baker in Paris fears customers will disappear. A student in Slovenia sees an automobile loan fall out of reach. A real estate agent in Chicago says she’s just plain scared.

And in France, more Parisians appear to be storing their money the old-fashioned way : in a safe.

What are you doing differently due to the meltdown in the world financial markets? Leave your answer in comments. If you’d like us to include your comments in a Reuters wrap-up, please include your name, location and profession.

Comments

I feel very uneasy. I am a server and bartender. Our business has been down the last couple of weeks. Is this a result of the economy going sour? Probably to early to tell for sure but the economy is certainly not helping. I have gone from 600-700/week in tips to 400-600/week. That is a huge pay cut and I am very worried about how this holiday season. Our busiest time of year is coming during the holidays or maybe it wont.

Not hitting the panic button yet but I have flipped the cover and I am at the ready.

Posted by leigh | Report as abusive
 

Reuters: What are you doing differently due to the meltdown in the world financial markets?

That’s a rather simplistic and one dimensional question…considering that for every 1% drop in the Dow, the typical middle class individual retirement account (401(k), IRA) invested on Wall Street in a conservative (i.e., “safe”) mix of stock & bond mutual funds has also been disappearing at a rate of negative 1%.

Reuters might as well ask a gambler what he or she is doing differently now, after losing more than 40% of what he or she started with at the roulette table of a casino. One cannot bet against the house when the odds are stacked in favor of the house. And when are the odds stacked in favor of the house? Always. That house is Wall Street.

Even if one had a modest $100,000 when the Dow was at 14,000…what remains of one’s retirement nest egg is simply shocking.

In effect, what is left of any similar retirement account is less than what one started with 8 years ago when George W. Bush came on the national scene and resumed the excessive government borrowing and unrealistically low top marginal income tax rates made infamous by Ronald Reagan and George H.W. Bush during their 12 years at the helm of the ship of state. In other words, the root of the problem can be directly traced to the U.S. national debt of some $12 Trillion ($12,000,000,000,000). Yes, that’s 12 million millions.

Unlike you, does a corporate executive with before-tax compensation of say, $10 Million, have any financial worries while your middle class retirement savings is evaporating? Of course not. Even after taxes (assuming any are paid), he or she still has $Millions to manage an alternate-universe type lifestyle that you can only imagine. Imagine your lifestyle if you had even one of those net $Millions to keep for your very own each year. That’s right. Like Fred and/or Frederica $Millionaire, you would never have to depend on a 401(k) or IRA in the first place.

Let’s say for the sake of conversation that you are one of the hard working middle class losers of late…and that it takes another 8 years before the Dow once again reaches 14,000…and that your retirement account just happens to increase dollar-for-dollar what it lost dollar-for-dollar during the past year.

That means that at best you’ll have a 0% ROI (return on investment) after 16 years. Actually, because of inflation your overall return will be negative (say, -30%) due to the time value of the dollar, i.e., the dollar’s lower purchasing power as time wears on.

If you still don’t think that the national debt should be paid off by surcharging the only folks who can afford to do it, i.e., privileged class $Millionaires and super privileged class $Billionaires…then vote to keep Ronald Reagan/Bush economic policies just the way they are. If you think that John McCain is going to change what has made him part and parcel of the $Multi-Millionaire privileged class…well…that’s your “privilege” to think that way.

OK Jack

P.S. It could be that by sheer luck, Mr. & Mrs. Reader, that you happened to roll your retirement account balance out of the stock & bond mutual funds market (e.g., into one or more FDIC insured bank CD’s) just as the Dow was peaking at 14,000 a year ago. If so, congrats! You’re one of the lucky ones to be sure.

 

Our country; the Philippines primarily exports to the US and a lot of filipinos work and live there, filipinos who work in the US and in other countries may actually lose their jobs and go back home with less opportunities. Hopefully everyone will realize that money is not almighty and we have to be thankful for what we have and for the worse that we don’t have. This crisis made me pray more for my country and for the US because I have a big number of American relatives, and I’m keeping as much of my savings intact for any eventualities and think more before I spend and make sure it’s only for something I really need and save on small things like utilities, gas etc.

 

I keep a budget, I didn’t take a loan for a large house or a fancy car, and I live close to work. I also saved some money on the side in case of trouble ahead.

I have never been doing better! Because I avoided the temptation to show off my wealth by having nice things (the American way), the recession affected me very little. Now I’m working aggressively toward having all my debts paid off in case I am laid off in the futre. Always think one step ahead!

Posted by alexander | Report as abusive
 

Well, the only thing I am worried about is work; as a freelancer, I am far more flexible, but a contracting economy could bring problems. Otherwise I don’t see any real problems.

Luckily, I studied history and was a spectator at the .bomb bubble burst, so I have always been very conservative in my investments: Only things that are useful, no gambling. I was blackmailed once by a bank, and that taught me never to trust bankers, they are as a CEO friend called them “gangstars with neckties”. so I now live comfortably without debt. I purchased one absurdly cheap house cash 8 years ago, so if everything really hits the fan, I have a roof over my head.

Posted by Talleyrand | Report as abusive
 

I am a hard working peruvian citizen working in Tokyo. I had saved twenty seven thousand dollars along eight years. Last year I deposited my life savings in a pension fund plan in Lima. Until today, my life and retirement savings have gone from US$ 27,000 to only $ 2750. I am depressed, very very depressed and I wonder, citizens of the world, who are we going to make responsible for such huge losses in our livings? WHO?

There are demons and among them I know I can call some by their names: greedy guys at Wall Street. Damn Wall Street!!!

Posted by Walter Stucchi | Report as abusive
 

Other than loosing about $30,000 worth of investments, the crisis has not affected me. I still have a job, still drive to work, still eat out, still go to the movies, still do everything I use to do. I don’t have any debt, my 2 cars are paid for, no credit car debt, and I have a rental home which is paying for itself. I might make future investments more conservative but that’s about it.

Posted by benibiker | Report as abusive
 

I knew I was losing my job in Jan – if a dr can’t make it and closes down – you know things aren’t that great! So I had 6 months to save. Plus the fact that we don’t have any debt (ty the financially fiscal parents!)

I drive a bomb, rent, can always cut out the tv, use a washing line (dryer broke down about 3 years ago), grow my own veggies in containers (as well as a large number of papaya trees), don’t go to the dr (except yearly exam), don’t take meds or vitamins, loan dvd’s from the library, cook “restaurant quality” meals at home and kayak fish.

Well .. I have been doing this for the last 20 yrs! I have only lived in the US for the last 5 yrs (Naples – Florida), before that – was in Australia.

I can move back if things get too bad here .. I have the cash saved for such an emergency. Sure I still have lots of stuff I don’t need or use .. but you can always offload them for something.

If things get really tight – well, that’s the time to get inventive and give people a product that they will really need as opposed to want.

And as for the whole health insurance industry here .. I would definitely not buy stocks in them in a downturn. People won’t be able to afford the ridiculous fees to stay in the plan.

How has it affected me? Not really that much and I am still unemployed (husband still works for a dismal wage.)

And if the US needs a weight loss plan – this may be it! As inflation has gone through the roof in the last 5 years here. When a gallon of milk goes from $1.90 to over $4 in a couple of years (is it pegged with petrol?), people should start to worry. Funnily enough – everyone is pretty quiet about the whole inflation thing.

I remember 17.5% interest on home loans in the late 80′s in Australia, as well as 14% unemployment in Hobart (though I did learn to process fish at Safcol also abalone and crayfish).

But unless the US can provide jobs that pay a living wage (and $8-9 ph is not), then people will really suffer here.

And I am at a total loss as why no one has said anything about changing the foreclosure laws here is beyond me. People in the US can just walk away from their home and not owe the bank the rest of the money! What is that all about???? If you foreclose in Australia and the bank sells your house for less than you owe – YOU STILL OWE THE BANK THAT MONEY.

People in Australia clean their houses and spruce them up in a foreclosure – as they want the best possible price. In the US, they trash the houses and rip out everything of value .. so the house is essentially worthless. C’mon Reuters – why don’t you address this problem?

Posted by anne | Report as abusive
 

I am about to sell all my stock holdings for about $700,000 and keep half the proceeds in a 3-month fixed term deposit, with the remainder as cash.

I believe it prudent to preserve my capital before going into the red. I will realise a profit from the sale and believe that no matter the effects of government intervention, until the gigantic debt burden is resolved, this crisis will not end. Today private US debt is about 3 times GDP, during the Great Depression, is was 2.15 times GDP. The crushing burden of servicing this debt is the root cause of this crisis. Furthermore, this crisis is precipitated by banks not trusting one another in the belief that banks may not exist in the future to repay a loan. Lastly, the derivatives meltdown will further compound bankruptcies.

I’m happy to sit on the fence and wait for the dust to settle as I believe this crisis has a long way to run.

Posted by James | Report as abusive
 

I lost my job at a local corner restaurant which is going under. my fiancee cant get student loans for next semester and people all around me have lost their 401k savings.
a music career is looking bad to start at the moment too, ha.

 

I lost my job in 2007 as company started to outsource cheap IT professional from overseas. Stop outsourcing our jobs in cheap labor countries or start to outsource everything. Forget fragile BRIC’s (Brazil, Russia, India and China) growth or forget US growth.

Outsourcing is the blood cancer for US economy.

Posted by A. | Report as abusive
 

To start, I live in a suburb of Detroit. This has been one of the hardest hit areas economically in the past 10 years. But it is strange. The city of Detroit is gutted but the suburbs are seemingly doing great. You go to any restaurant in the suburbs and they are doing great with 30 minute plus waits. If people are so cash strapped what are they doing eating out multiple times a week. There are truly the haves and the have nots. I have found that alot of the people complaining about how bad things are, are actually those people doing quite well. Strange!!

Posted by Brian | Report as abusive
 

Hyderabad, India, Software Engineer

We are more concerned than affected. Apprehension about the outsourcing is growing big. And we are bothered for the ICICI bank’s exposure. But, frankly, the full impact of crisis has not hit the conscience of common man yet. N-Deal is still more prominent.

Short to medium term effect will be lower realty prices which may help me in getting my first home on EMI. Currently, I may expect rents to stay normal. And lower petrol price will bring down some prices. Maybe I can get good discount on my first car also. Airlines ticket prices will come down again.

Overall, high-flying will be affected more than a common man. Few of them will lose their $-denominated salaries and stop acquiring property everywhere in India.

Posted by Atul Kumar | Report as abusive
 

Graduated recently, can’t find a job. Was looking for the financial industry but it’s hopeless.
Trying to switch my focus to elsewhere but it seems that the avalanche is now hitting other industries as well, taking into account the loss in market values in all major equity markets.

Posted by Paul | Report as abusive
 

the crisic hit my home in Vietnam, all the food go up and my wife have to consider which food to buy for the familly. The energy will be up dueto the notice from the authority , so We have to saving the budget to suffer for the difficult duration expect for end of year and also extension during next year, the budget must be made as week to week and cancelling for all the travelling plan. We are loss 1/2 for the total invest in stock and now are just waiting for the economic recover in next year.

Posted by Hai Ninh | Report as abusive
 

i live in kuala lumpur, malaysia. so far, no direct impact from the US financial crisis, except if you hold stocks, which had declined by 20%. ironically, with this comes lower oil prices, which would be good as inflation was something we worry more than stock market crashes. only the rich play the markets.

 

Wanted to become an actor, but studio started to cut production budget, I cannot even afford the cocaine anymore and now I have to use crack which stinks and puts me on bad trips in which I hallucinate about the world going down.

Posted by Ray | Report as abusive
 

It\’s not affecting me very much. Over the years I saved money, I carry no credit card debt, and did not enter into a stupid home loan. I think it might be good for the system to meltdown.

Posted by Paul | Report as abusive
 

The fallacy of buy and hold has been dispelled once and for all and sadly a question is raised about the long term viability of free market capitalism. Although we have Bush to blame about these tragic events we must recognize that he had alot of help to get us here. Reagan’s deficit spending spree…Greenspan’s free market dogma…ceo’s and political leaders worry about tactical planning versus longer term strategic planning, and finally unbridled American consumption without thought of the future are just a few of the players. The way I’m playing this mess is by tactical trading because I know in the long run…as long as we spend more than we produce this will end very badly.

Posted by Joe | Report as abusive
 

US citizen 59. Lost $130,000 so far in IRA. We are all being taken for a ride. The wealthy, investment houses, banks and the US government will protect themselves and the average person will be left with the short end of the stick. We are consumer lemmings hedged in by these people. If you operate outside of their system by being frugal it’s only going to hurt others like you. Rock and a hard place

Posted by Mike | Report as abusive
 

Just retired last December and moved 401k investments into international growth areas understanding that the U.S. economy was going flat. Slowly lost almost 15% over last 9 months thinking international markets were independent of U.S. Big mistake! Then over the last month and especially last week lost 15 more %! Total loss….72k! Have NO faith in Wall Street anymore. Moved all of investments out and putting into money markets, CDs and cash. Mark my words……the Dow will fall this coming week another 1000 points. Good luck to all. PS…..did anyone notice that Allan Greenspan has virtualy disappeared from the media in the last month, when before that he was making comments almost daily after Bernanki made his statements?

Posted by George | Report as abusive
 

I cut back all expenses and removed some RRSP to pay down credit cars debt.We used to travel to litle towns outside of our city every weekend to show sight see etc.Not any more,now we go for walk at some of the local trails in our area.
The days of easy credit,high levering for a quick buck are gone,at least in our life time.
It astounds me how these wall street gurus still think there will be a quick fix for this crises and the markets will back to normal.Even after this massive de-leveraging
ends,there will be so much regulation and government intervention in the markets it will be as dull and as profitable as T-bills.
-Ageing population
-Healthcare crises
-Energy crises
We are in for some tough times folks.I predict unemployment goes to 15%

Posted by Jack | Report as abusive
 

I am concerned that the choices offered in this poll are all negative, which seems inconsistent with Reuters usual impartially.

There isn’t even a “None of the above” or “I’m holding on tight” option, which is what a lot of people are doing, refusing to succumb to a panic which is now at least partly media-induced.

Posted by Terence Johnson | Report as abusive
 

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