The doomsayers waiting for the economy to crash
businessinsider.com
businessinsider.com
A crash to me is like, I wake up, £1 is worth 50p and in one fell swoop I'm significantly net negative every month. Or like, the supermarkets start closing down, there's no fuel left in the petrol stations, etc.
A crash is not - things cost 5%, 10% more over a period of months, and it's a bit harder to find a job.
I grew up without even getting pocket money, I have a "reverse inheritance" e.g. I pay my parents on occasion, the memetic idea that everyone who isn't underwater comes from Big Money(tm) just seems like self destructive behaviour to me.
I just don't identify with the mindset. My feeling is that most people prioritise other things over their financial wellbeing because they think that's "normal" or whatever.
All you need to do to almost completely immunise yourself against this stuff is to spend, say, 70-80% of what you earn, less if that's viable. There is someone out there already, in your town, who earns about 70-80% of what you do, so just live like them.
A crash is when this continually happens.
>All you need to do to almost completely immunise yourself against this stuff is to spend, say, 70-80% of what you earn, less if that's viable.
And do what with that money?
>things cost 5%, 10% more over a period of months
In a 6 month period, these are the same.
If you search youtube for "2024 financial crash" you will hit quite a few results
If you search youtube for "2023 financial crash" you won't find anything, they delete them all NYD 2024
Yes, sometimes catastrophe does indeed happen, and yes, you should be responsibly prepared for it when it eventually occurs, and I am. But I wonder how strong of a correlation there is between age and people with severe beliefs along these lines.
It's infinitely worse now, of course, as with the internet and mass media these ideas are effectively viral memes that can reach and swarm the population quickly and easily.
Even worse, a lot of it is intentional and adversarial - if you wanted to destroy a country's economy, it would be an extremely cost effective strategy to simply flood the country's internet with doomer posts about their economy, about their country, get the citizens fear riddled and have them lose faith in their country. Never have to fire a single bullet.
That's exactly what happened in Brazil 10 years ago and we are just now starting to recover
The amount of shrill hysterical fetishism of doom over climate change by many, many comments on this site almost takes on hive-minded, fervent proportions that fall well outside of even any evidence-based or rational discourse.
The ironic thing about that is that it's done by people who frequently deride so-called climate change deniers for their unwillingness to accept science. How could you expect those people to do so if even your own emotional conclusions in the opposite direction ignore the exact same science and reports you want deniers to take seriously? It's laughable.
I've followed the science rather closely and what becomes clear is that we just can't understand the climate system in its vast complexity; it's quite possible that there are dragons lurking that could cause a cascade of feedback loops that end very badly for humanity.
I suppose I'm just wired differently than most; it seems that others believe that because there is ambiguity in projections, they can just assume that all will work out. Many seem to believe that god or some force will watch out and protect them. I wish I had this belief as well.
You do realize that you've taken exact pages out of the so-called denier playbook (I truly hate that phrase and all of its debate-censorious religious undertones, even though I don't doubt climate change myself) albeit in the other direction, while also criticizing those who practice that very same thing as doubters of climate change worries.
"Your partner leaves hairs in the sink? Leave the relationship now!"
Maybe a better way to address things is to have an objective list of trouble signs, and let people make up their mind from that. Maybe being able to apply this to old problems will help.
1) Save diligently.
2) Think in terms of 5 or 10 years.
3) Have sufficient cash accessible for emergencies.
4) Do not over leverage yourself such that a job loss or housing crash will immediately crush you.
5) Diversify your assets sufficiently. Don’t have all your money in your company’s stock.
People aren't realizing just how financially tight and desperate poorer people are getting right now
Maybe (2) is doable, but it's hard when you're worrying about next week.
(3) is basically the same as (1).
I'm not sure about (4). Your choice is between throwing money away on rent, and being house-poor, overleveraged on a house.
Again, you can't do (5) when the only asset you have (and can just barely hang on to) is a house. And most people sure as hell don't get equity from their employer.
So, sure, if you're a typical tech worker making $200k+ with some stock options -- which probably does characterize a substantial fraction of people here -- then the advice is very reasonable. Yes, "seven figures" is an overstatement. But a ton of people make nowhere near this.
I think the advice for lower incomes needs to be about (a) increasing skills/qualifications/income (but choosing education wisely), and (b) pooling resources with roommates/family to reduce expenses.
This is a great way to achieve (1). Immigrant families have been doing it forever.
It’s a good tactic no matter how much money you make.
more than fifty percent of American children do not have a two parent home; more than one million American men are in prison right now; the majority of the population lives in urban areas, etc
report: https://www.pewresearch.org/social-trends/2021/10/05/rising-...
I can reasonably assert that an economically significant number people would be in big trouble if they lost their jobs.
As for a housing crash, it depends on your specific meaning. If enough of the value of property were lost, banks would be forced to take action to survive their lending risks. The ramifications of that would be extensive, let us say.
Instead of buying the 250k house, buy the 200k house and put 1/4 of the mortgage payments away. After a year you have three months buffer, after four years you have a year.
The key is simply to live slightly below your means.
Re housing crash: the banks are not going to foreclose en masse on people who are paying their mortgage payments regularly simply because they are in negative equity. They are not incentivised to do so.
If you can afford a 250k house then you can afford a 200k house + 25% saved per month. It's exactly the same amount of money.
You then have a buffer. It's the opposite of expensive.
If you spent money to reduce your debt, you aren't just reducing the money you own, you reduce all future interest. Saving money instead of paying off your mortgage is expensive, it costs a lot of money each month.
You have a very small opportunity cost, which reduces your risk of default to near zero.
Holistically, you can then take greater risks in other areas and end up longer term positive.
To me your argument is like saying that an airbag, or a crumple zone, or a seatbelt, increases the weight of your car, and therefore fuel consumption, and therefore it's expensive. It's true but only in a pedantic way, when you need it it suddenly goes from being "expensive" to a huge net positive no brainer.
Over the decades you are paying off your loan you pay tens of thousands of dollars for having that savings. Each month of having that safety net will cost you money, the result will be that it takes you many years longer to pay it off.
I am not saying that in moderation it is a bad thing, but it certainly has serious downside, especially if you are tight on money.
I do not believe so.
Banks are predatory. They want power and will do anything to het it.
During some historical economical disasters, people lost all their saving, their jobs and all safety they thought they possessed. None of your suggestions would have helped, many, many people who were well off, saved diligently, spent cautiously and never borrowed too much were suddenly destitute and had to make serious efforts to find calories.
The reality of economic disasters is that no one is safe, regardless of what you do or don't do.
What I do know is how many shares I still hold of a broad range of companies with a track record for growth today and how much they've collectively risen in value between October 5, 2008 and May 11, 2024.
Optimists invest in stocks.
Pessimists invest in bonds.
I invest in beans, bullets, blankets, and bandages.