The Raven Posted December 12, 2008 Share Posted December 12, 2008 OK. So we have large companys going out of biz, banks with no money, and what seems to be lack of cash everywhere. Question where did it all go. I mean the money per say has to still be out there somewhere, I mean the only way to rid the world of it would be to take it out of what ever company is holding it and burning it. So, who has it. I know that is kind of a simple thing to say but you can see my point. The money doesnt just vanish does it. Link to comment Share on other sites More sharing options...
ivan Posted December 12, 2008 Share Posted December 12, 2008 I think the whole point is that it never was there in the first place. Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 I think the whole point is that it never was there in the first place. There was no money... One of the quirks of the stock market is that company valuations are based upon projected revenue figures... Companies have been overhyping them for years, and finally the true value of companies are coming out. The value of money doesn't match what it is really out there, and this is where we find ourselves. Link to comment Share on other sites More sharing options...
tonyhawk Posted December 12, 2008 Share Posted December 12, 2008 I think the whole point is that it never was there in the first place. I asked the same question and this is the answer I found! It's like car depreciation, if your car drops by £2000, that money hasn't physicaly gone, it was never there, it was percieved value. It worries me a little that the global economy is based on thin air... Link to comment Share on other sites More sharing options...
adnanshah247 Posted December 12, 2008 Share Posted December 12, 2008 raven, my cousins yesterday asked me the exact same question!!! people can miss place £10,000 (i mean big business's) and cover it up etc. companies putting away millions and then have no answer is a bit suspicious. hiding 50million under your bed is a lil difficult im sure someone would notice. Link to comment Share on other sites More sharing options...
Gaz Walker Posted December 12, 2008 Share Posted December 12, 2008 Most money these days exists in numbers on a computer screen - its not actually tangible, this is the problem unfortunately. Link to comment Share on other sites More sharing options...
Whitesupraboy2 Posted December 12, 2008 Share Posted December 12, 2008 As others have said there was no money in the first place. Although at the moment no one is feeling any benefit from this, I will be one of the lucky ones who does. Cash waiting to buy a home, no debt and no worries about my job. Its cruel to say but the longer this goes on and if i stay patient and make the right move I can only gain from this situation. Id rather others didnt lose out especially friends, but i do feel fortunate to be where i am, especially as i was going to buy in march this year! Link to comment Share on other sites More sharing options...
Charlotte Posted December 12, 2008 Share Posted December 12, 2008 Lending to 86yr olds for 30 years and then banks all taking a snip of those loans and then the people who borrowed the money defaulted or shot themselves. Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 Lending to 86yr olds for 30 years and then banks all taking a snip of those loans and then the people who borrowed the money defaulted or shot themselves. True, but I think the focus is on the subprime mortgage issue, when to be honest, it is a LOT bigger than just that (not the mortgage thing is small either though in the real world) Link to comment Share on other sites More sharing options...
stevie_b Posted December 12, 2008 Share Posted December 12, 2008 You're comparing the number of banknotes in circulation with the whole credit crunch thing. Let's assume that the number of banknotes in circulation is constant (it probably isn't, but let's assume). The problem is that most people's assets are held not in cash but in other things like houses, shares, etc. £1 in your pocket or in your bank account will always be worth £1, but that is the only thing whose value doesn't fluctuate. The winners in this situation are those who have bet that the value of assets would fall ("short sellers"), or simply people who had sold at the top of the market (housing, stock, car etc). Link to comment Share on other sites More sharing options...
The Raven Posted December 12, 2008 Author Share Posted December 12, 2008 Hmm as i thought, The money was never there then. I suppose having 00000000000000 show on your balance is one thing, getting it in cold hard cash is another thing. Still seems weird to me how it can just vanish, i mean if its numbers on a screen would they not just be numbers on someone elses screen? Another way to look at it is. If i lend you £50 and you cant pay me back i get your phone worth £50. Now you keep my £50 and cant pay me back so i sell your phone. However its now only worth £20. So £30 is lost? but its not as you still have the £50 i gave you in the first place. So very confused. Also how can the UK burrow half its income? Who do they burrow it from? Link to comment Share on other sites More sharing options...
GazB Posted December 12, 2008 Share Posted December 12, 2008 I've lost cash like lots of other people who have put savings and pension funds into accounts that then invest my cash on electronic shares, take a fee for doing it, a bonus for estimated profits, then tell me i've lost my cash altogether. Perhaps i could sue for bad practice Anybody on here work for an investment company like to explain? Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 Hmm as i thought, The money was never there then. I suppose having 00000000000000 show on your balance is one thing, getting it in cold hard cash is another thing. Still seems weird to me how it can just vanish, i mean if its numbers on a screen would they not just be numbers on someone elses screen? Another way to look at it is. If i lend you £50 and you cant pay me back i get your phone worth £50. Now you keep my £50 and cant pay me back so i sell your phone. However its now only worth £20. So £30 is lost? but its not as you still have the £50 i gave you in the first place. So very confused. Also how can the UK burrow half its income? Who do they burrow it from? One of the ways the stock market work is.... I have a company, my stock value is at £1/share... I forecast that I'm going to have profits of £100 pounds next year. I have a total of 50 shares. Given my forecast each share should go up, because they will be worth £100. So the value of my stock goes from £50 to £100 pounds and people buy it accordingly. If I only make £50 profit the following year, my stock is still valued at £100, but people sell the stock cheaper at say £1 again... I've used that money in the company, so someone needs to find the missing £1 again, guess what it doesn't exist... Very simplified but this is what is happening basically. Another example, google is valued at something-stupid-millions.... what is it actually worth? well it is nothing but a few buildings and a lot of out of date IT stuff and some data.... If google had to close, they wouldn't get back ALL that so called value because there is no tangible asset really other the above mentioned. The real value is far less than the perceived stock market value and when they close that difference is what destroys the stock market value... Link to comment Share on other sites More sharing options...
carl0s Posted December 12, 2008 Share Posted December 12, 2008 As others have said there was no money in the first place. Although at the moment no one is feeling any benefit from this, I will be one of the lucky ones who does. Cash waiting to buy a home, no debt and no worries about my job. Its cruel to say but the longer this goes on and if i stay patient and make the right move I can only gain from this situation. I'm in the same boat but am not quite so sure and positive. What happens if there's very little interest paid on your savings, and inflation causes that money to be worth less and less as time goes on? Having said that, house prices are only dropping in price.. so maybe I'm talking rubbish. Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 I'm in the same boat but am not quite so sure and positive. What happens if there's very little interest paid on your savings, and inflation causes that money to be worth less and less as time goes on? Agreed, I'm not so positive either, well, not really positive or negative as such, but the whole global economy is need of (read GOING TO HAVE) a major change in order to bring everything back to a sustainable system, whether that is capitalism as we know it I'm not so sure. All the regulations and such that they will have to put in place will change it. Nationalism of a large entities will also help that along. Link to comment Share on other sites More sharing options...
Whitesupraboy2 Posted December 12, 2008 Share Posted December 12, 2008 I'm in the same boat but am not quite so sure and positive. What happens if there's very little interest paid on your savings, and inflation causes that money to be worth less and less as time goes on? I know what your saying, but i dont think we will hit a slump where our money is worthless. If it goes that bad, I dread to think of the economy and house prices! Also i dont want to wait more then 5 years for a place max. As I am 25 and still living at home. infact 5 years is still way too long, 27 really is my max and even that is if i have too. Regarding interest, it is annoying im not earning as much on my money for nothing, however id rather be in this position then losing value on my house with still a high morgage to pay. Lets be honest i dont think anyone has a clue where this is going! Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 Lets be honest i dont think anyone has a clue where this is going! No, not a clue, there is a sensible option or there is the likely to be followed "How can I cover my own ass and half fix it so I'm okay" option which I forsee as being the main option chosen. Link to comment Share on other sites More sharing options...
carl0s Posted December 12, 2008 Share Posted December 12, 2008 Agreed, I'm not so positive either, well, not really positive or negative as such, but the whole global economy is need of (read GOING TO HAVE) a major change in order to bring everything back to a sustainable system, whether that is capitalism as we know it I'm not so sure. All the regulations and such that they will have to put in place will change it. Nationalism of a large entities will also help that along. I think I'm the same as you. I'm cautious, not particularly positive or negative, but I think the property market should sort itself out, and the government doesn't want that to happen, for good reasons sure. You're right with the capitalism stuff though. I bet the Russians are having a right laugh at us Link to comment Share on other sites More sharing options...
Whitesupraboy2 Posted December 12, 2008 Share Posted December 12, 2008 No, not a clue, there is a sensible option or there is the likely to be followed "How can I cover my own ass and half fix it so I'm okay" option which I forsee as being the main option chosen. I agree, worse thing is there are going to be alot more losers then winners I feel. I just hope i can make the right decisions to benefit from it all. Link to comment Share on other sites More sharing options...
grahamc Posted December 12, 2008 Share Posted December 12, 2008 ...perceived stock market value... This is the key bit for me... Its all perceived value! Link to comment Share on other sites More sharing options...
JustGav Posted December 12, 2008 Share Posted December 12, 2008 I bet the Russians are having a right laugh at us Oh yes.....Not saying it is a perfect system, but certainly had its merits... Before people get confused, democracy doesn't equal capitalism and communism doesn't equal socialism. Britain is bordering on a socialist society anyway and there are benefits associated with that. Sure people would bitch and moan about government control of this and that, however I think it has been proven that general populace need control and boundaries otherwise they get out of control. Link to comment Share on other sites More sharing options...
Ark Posted December 12, 2008 Share Posted December 12, 2008 I think the root of the problem comes from treating money as a valued commodity in its own right, rather than as a worthless token that merely represents value as a means of exchange. Buying money, shares or other worthless representations of value in the hope of increasing their apparent value might make you some cash in the short term, but just like a money pyramid scam, sooner or later there are no more suckers to scam and the pyramid collapses while the person at top gets to run away giggling having made a tonne of cash. The problem however with doing this to whole economies the way stock markets operate, is that now that cash isn't worth very much, because there isn't enough REAL product to back it up. Even the old 'value' commodities like oil and gold are pointless, because they have very little use - oil is supposedly running out and prices go up and down like a w***es drawers, and gold...well you can't live on gold. Link to comment Share on other sites More sharing options...
Carl_S Posted December 12, 2008 Share Posted December 12, 2008 hello raven. i think that that banks lent poor people money and these people could not pay the banks back, so they banks suffered. banks foound it hard to lend to eachother becuase the cost of borrowing money went up, so there was less finance around. people started to hang on to their money and panic. this lack of condfidence, made stock market values fall, and of course house prices, and there are less people wanting to buy, and less banks willing to lend cheaply. i think thats it. so the money did not go anywhere it just shrunk like a willy after sex. Link to comment Share on other sites More sharing options...
Gaz Walker Posted December 12, 2008 Share Posted December 12, 2008 it just shrunk like a willy after sex. Carl you are my hero Link to comment Share on other sites More sharing options...
stevie_b Posted December 12, 2008 Share Posted December 12, 2008 the money did not go anywhere it just shrunk like a willy after sex. I look forward to Robert Peston using that analogy in his reporting Link to comment Share on other sites More sharing options...
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