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Old 26-02-2009, 12:05   #1
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Six Months on... Global Collapse Destinations?

Back last year, there was a thread "Good destinations in event of global economic depression?" It started with something like "with predictions of an economic collapse in the fourth quarter of 2008..." and so on...

Now, six months on, how do we Cruisers and aspiring Cruisers, feel that future directions will take us? Are we in a collapse? Is a collapse still coming? How will we deal with the recession as Cruisers? Is the recession realling affecting us? Are any people becoming Cruisers as a direct result of the recession? How long will it last? Are we becoming a more tight-knit community as a result of it? How is it affecting us both now and in the future? Would our Cruise Destinations alter?

Is there a danger in developing an almost survivealist attitude? Pension Plans have suffered, sometimes severely, and this must have an effect on many of us planning to retire and cruise. In my personal case, the drop in house prices initially meant that I could no longer afford the dream boat I wanted, and I must settle for something smaller, more economical to run, and so on. However, boat prices have recently softened, and it's becoming more of a buyer's market. But now, I also find I have concentrated much more on making the boat as self-sufficient as possible (A don't fully rely on Marinas concept) in terms of fuel, energy, waste and water requirements etc. And, I have even changed my earlier global aspirations to a more realistic (for me) itinerary.

I have experienced the 1980s and 1990s recessions, here in the UK. But this one is so different, as interest rates have gone down rather than up!!! My feelings are that with all the extra Government borrowings, something has to crack, and that it will be more than a year or two before we are out of this one. I am very . Am I alone with these thoughts? How do you feel the present and future climate will directly effect the Cruising World?

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Old 26-02-2009, 13:34   #2
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I guess it depends on the investments. Those who expected to live off the slow sale of shares or dividends will now be back at home with the boat for sale.

Mine is rent from realestate so I am fine... except for the currency rate where $A has gone down 30 cents in the dollar to the US$

As for Global Collapse... well thats not gunna happen. The people with money now buying shares are the ones who will be the next cycles winners. The doom and gloom the world is lost mob will be the ones that loose out biggest.
These cycles happen all the time. The great depression was NOT the greatest depression, it was just a large one that the media was able to report and maybe the first one to cover a number of western countries at the same time.

Its just a cycle so think of it that way... now is the time to be buying


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Old 26-02-2009, 14:59   #3
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Just one example but the largest pension fund in Canada reported this week that they have lost almost $40 billion (I assume C$) or 25% of it's value. I think a lot of people who were counting on pensions to enjoy a cruising life may be reevaluating that dream.

Psst, Mark, buy Chrysler.
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Old 26-02-2009, 15:10   #4
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It doesn't get better until after significant tax cuts take effect - a realigning into what govt. is supposed to do (police, military, judicial system, guaranteeing personal freedoms, a few more maybe), and out of what it does purely to buy votes. No sign of that right now.
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Old 26-02-2009, 15:13   #5
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Originally Posted by DeepFrz View Post
Psst, Mark, buy Chrysler.
Nah, buy A.I.G. - you can get a 100 shares for $52.
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Old 26-02-2009, 15:48   #6
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The crime rate will rise for sure. ALready is here in the US. Many retirees about to retire are now reported to not seeing they will ever be able to retire due to the 40% loss in retirement funds. GOod time to be boating, if your investments are monthly pensions or not dependent on making money off your principle. Great time to consider buying that retire home. Looked at a fenced acre in FL a few months back with mature palms and Pines. Small 3BD, 2Bath on one fenced acre: couldnt be sold at $139K
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Old 26-02-2009, 15:57   #7
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The times they are a changin!
2 years ago you could not find a cheap house under $200k in S Fl. l now I see them for $50-75k
I beleave the storm has just come ashore and has a way to go before it passes-
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Old 26-02-2009, 16:01   #8
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IMHO, the biggest risk to the cruising lifestyle will be runaway, world-wide inflation. It is inevitable.
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Old 26-02-2009, 16:25   #9
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Originally Posted by MarkJ View Post
These cycles happen all the time. The great depression was NOT the greatest depression, it was just a large one that the media was able to report and maybe the first one to cover a number of western countries at the same time.

Its just a cycle so think of it that way... now is the time to be buying
Yeah. The Romans are still waiting for the upturn to their last economic down turn

But in response to OP boat should be ready this summer for some extended cruising (only partly driven by the economic stuff and intended to be "only" coastal Northern France) - whether I do or not depends on business (mainly whether I want to expand a bit or keep to a size I can just lock the office as long as I want). Always had low costs / needs, and an (inherited) tendency to hoard stuff that may come in useful later. like money .

In any event bottom line is that I won't ever starve and anything over that is cool with me. All part of life's adventure

Of course a couple of months (or so ) back down to SEA clinging onto a Bar Counter always had attractiions, and not done that for a few years.......
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Old 26-02-2009, 16:31   #10
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Personally I sold off the real estate and single family home about 3 months before the $%*(* hit the fan. I was a lucky one. It appraised for something like $319,000 and I walked away with $306,000. (I owned it free clear). I now live in another home, (my personal one) that apprasied for around $325,000 2 yrs ago, and now has dropped to around $287,000. I owe $117,000. So, I planned on spending the $200K of the first sale and then investing and living off the income from all the money. I took a small hit with the second property but haven't unloaded it yet. Still watching the market and waiting for something... what I don't quite know...but something. I suppose if things went south in a hurry I could just rent it out for whatever I could get and move aboard the boat and cruise. Depends on how bad things get.
I unloaded everything I had tied up in my 401K and got away lucky. The others here at work are talkiing a 50% drop in their values. They aren't laughing at me now. Guess I was at the right place at the right time.
I put all the cash stuff in an account in Beleze. I still work, but after 3-1/2 yrs here and lots of layoffs, I'm fortunate to still bring in $80K a yr.
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Old 26-02-2009, 16:33   #11
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Originally Posted by bene505 View Post
It doesn't get better until after significant tax cuts take effect - a realigning into what govt. is supposed to do (police, military, judicial system, guaranteeing personal freedoms, a few more maybe), and out of what it does purely to buy votes. No sign of that right now.
You're right...let the markets and banks self regulate. It sure has worked so far! Where have you been the last eight years?

Here's to swimmin' with bowlegged women!
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Old 26-02-2009, 20:03   #12
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Collapse is something that does not happen overnight.... or even in 6 months. Besides, the "collapse" we are currently in the early stages of is not going to be a Mad Max style event but more of a Weimar Republic sort of happening.

I believe the current recession will slowly get worse but with a number of strong bear market rallies mixed in over the next 2-3 years. Unemployment will rise despite ever larger rolls of the Govt. employed, we will have Stimulus package #3 and #4 and #5, we will see all the major banks effectively nationalized (though they will be careful not to call it that) and most importantly we will see both the overall US debt and the Fed's balance sheet explode.

Ultimately, this is going to lead to the destruction of the dollar and a collapse of our basic financial system. What happens after that is anyones guess but I would bet on a third world country style currency replacement with all previous dollar denominated debts being eliminated. When the dust settles, the US will no longer reap the benefits of being the worlds reserve currency and we will no longer be the economic superpower we have been for the last 60 years.

Oh well. Our grand kids are not going to have it so good. But its not the end of the world. Remember, Spain used to be the worlds top superpower. Thats long gone, but Spain is not some 3d world craphole.

All that said, there are big opportunities being created by what is happening. Real estate is stupid cheap, rents are solid and tenants are plentiful. We have moved our plans for cruising up and our rental income will make our cruising easier.

That's my website on real estate investing.

S/V Lillie Mae
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Old 26-02-2009, 22:41   #13
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Originally Posted by Kanani View Post
IMHO, the biggest risk to the cruising lifestyle will be runaway, world-wide inflation. It is inevitable.
Kinda makes one want to get the biggest interest only loan one can handle...

Steve B.
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Old 27-02-2009, 00:10   #14
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Originally Posted by MoonlightShadow View Post
I have experienced the 1980s and 1990s recessions, here in the UK. But this one is so different . . . <snip>
Well, you've certainly got that right, MoonlightShadow - it is very different, this time. This is no typical correction, no typical downturn in the business cycle. The world as we knew it is gone - there is no going back; no return to normality.

The problem is that we're inside a rickety old bus, careening down an iced-over highway from the summit of a high mountain pass in white-out conditions, with no guardrail, no brakes, no notion where the bottom is and the driver keeps announcing over the speaker that everything will be OK - if not immediately, then soon, or if not soon, then in the foreseeable future, at least, or if not then, uhm, probably not long after that.

Sounds pretty grim, doesn't it? Surely I'm exaggerating.

No, I'm not. There is a "problem" built-in to the system. It is a cancer and it has metastasized. It is called derivatives.

Derivatives have a notional value in excess of $600trillion. How much is that? Well, the total world-wide economy is about $60trillion. The GDP of the US is less than $15trillion. And just one small aspect of the derivative cancer is Credit Default Swaps - CDSs. They have a notional value of about $50trillion.

They came to be when someone got the bright idea of "insuring" against a default by a borrowing entity. Think AIG, or Citibank, or BofA collecting fees to "guarantee" that if a borrowing entity defaulted on its credit, the buyer of the guarantee would be paid the full amount of the loan. So confident were these genius "insurers" that there would be no defaults, they sold the insurance over and over again to anyone who wanted to buy it.

It was as if the lender on Joe's house down on the corner persuaded another bank to sell him insurance that would pay him the amount of his loan if Joe stopped making his payments. The second bank was confident that Joe was a great risk with his high credit rating, income and history of always making his mortgage payment. To this bank, the "insurer," this was easy money! So easy, they didn't even charge much premium.

Why, it was so easy that they didn't just sell the insurance to the original lender, they sold it again and again to anyone who, for a small premium, wanted to buy the same insurance. Then several other banks discovered this easy money and they began to sell insurance against a default by Joe, as well.

Joe's simple, little mortgage was now the epicenter of a brisk trade in the selling of insurance against his ever defaulting. Entities with no stake in the original loan - who, therefore had no skin in the game save their "insurance" premium - were gambling that Joe might indeed default on his promise to repay the loan. If he did, they would collect the entire amount of the loan, and, by now, there were hundreds - even thousands - who had an interest in whether Joe paid his mortgage or not - had, in fact, bet that he wouldn't.

Bad time to be Joe!

Now, instead of Joe, substitute Chrysler, for example, or GM or any other mega-corporation, and instead of one pathetic little mortgage, substitute the corporate debt of the mega-corp. Who can fail to see that the failure to repay this corporate debt, a default, will send those holding the winning tickets - the CDSs - straight to the pay-out window of the entities that wrote the "insurance." Do you think they might want to "encourage" the failure of mega-corp?

Problem! Those who wrote the insurance have but a fraction of the capital required to make good on all the insurance they sold - again and again and again . . . Once the Credit Default Swaps must be payed out, the nice little premium-collecting profit-center has become a catastrophic liability. Just one major default can bankrupt an insurer - no single entity has the kind of capital required to pay the enormous losses.

Not even Uncle Sam.

Buying Credit Default Swaps on credit that you never had anything to do with providing, from an entity which, likewise, had nothing to do with providing the credit, turns out to have been the greatest lottery ticket available. For a few million dollars of premium per year, you stood to collect billions if the mega-corp you bet against defaulted.

It was like everyone in the neighborhood bought fire insurance on Joe's house, then did everything they legally could to encourage a big cook-out at Joe's, with fireworks and free matches for the kiddies, firewalkers, jugglers of flaming torches - well, you get the idea. Who knows what might happen?

For now, the US Treasury and the Fed will attempt to prop up all of the faltering entities - the mega-corps and the insurers - to delay for as long as possible what would seem to be the inevitable. The billions that are being thrown into the hole that is trillions of dollars deep is only window-dressing designed to buy time. Behind the scenes, you can be sure that things are being considered that would never pass the laugh test in "normal" times.

It's just that times are no longer normal - and never will be again. The Credit Default Swaps represent less than 10% of the total derivative market, as I stated, yet they have the potential to annihilate the current financial system.

Imagine the destructive energy contained in the other 90%!

So, MoonlightShadow, you asked if the current crisis will effect cruising? Yes, absolutely, and everything else you know or think or believe to be true about capitalism!

"Your vision becomes clear only when you look into your own heart. Who looks outside, dreams; who looks within, awakens."
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Old 27-02-2009, 00:18   #15
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That's one of the best / most succinct pieces I have read on the situation......apart from "If you are not scared, it means you haven't understood the problem"

Made me late for work

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