So If the economy collapses on Tuesday--What happens?

[The empressof all]

What can I anticipate happening first. Will I be able to access the ATM? Will I be able to buy milk if I have cash? Will everyone get layed off?

Give me your worst case scenerio for what I'll wake up to if the Collapse happens.

[grasswire]

1. if you're worried, prepare a little bit

Lay in some groceries and some cash. Make sure you have any meds you need. Pay your utility bills before Oct. 1.

That's my plan. I bought $30 in peanut butter yesterday. (Teenagers in the house.)

[The empressof all]

5. I'm stocked pretty well

Plus I have lots of wild rabbits on my property so if I need to go back to nature I'll survive.

I'm not really worried but I'm hearing about this collapse makes me wonder what it really means for us regular folks and how fast.

[coalition_unwilling]

12. Darn that wascally wabbit anyway! -n\t

[Dr.Phool]

15. I have a very fat dog.

:evilgrin:

[dana_b]

17. LOL

is that your pooch in your avatar??? at least give him/her a few months. Wait until starvation sets in and it's him or you!! ;)

[sarcasmo]

29. Pop tarts are good too, extra cheap at Target.

[succubus.blues]

2. The world as we know it will cease to exist.

[The empressof all]

7. Ya Think? (nt)

[dkofos]

3. Nothing the dems will cave before anything happens.

Go fearless leaders!!

[Subdivisions]

4. Has Monday been cancelled this week?

:shrug:

[Gin]

6. all I am hearing on CNN is Monday is dooms day if we don't pay up.

[The empressof all]

8. I'm giving it a days wiggle room (nt)

[grasswire]

16. interesting that they would choose a day...

....when millions of people expect their Social Security Disability payments and -- two days later -- when tens of millions more expect their Social Security retirement checks.

[The empressof all]

22. I never thought of that

OMG there are gonna be a lot of pissed off people if those checks don't come.

[lonestarnot]

24. Oct. 1 isn't until Thursday.

[Pastiche423]

30. We get our SSDI checks on the 3rd of every month

(Unless the third is on a weekend day, then it is received on the Friday before.)

[FreakinDJ]

9. I'm starting to think it will be more of a "Wall St." collapse

401K pension funds, and business credit will be the most severly affected - at first

Then of course should nothing be done unemployment will go throught the roof - not much worse then when Ronnie Rayguns took office

[Warpy]

10. Unless you live in the Caymans, you won't notice much

All the mail drops in the Caymans will start to lose a lot of money as hedge funds go belly up. That will have a huge effect on their economy, as it's one of the main things propping it up.

There will be increased unemployment in NYC where all the employees of the hedge funds actually work and reside.

The wealthy will feel a need to economize and major galleries will hold fewer auctions of fine art and antiques every year because of the reduced demand.

It won't be any harder to get loans than it is today because banks are already limiting what they lend to peasants.

What is evaporating is funny money that never really existed in the first place. The name on your bank will probably change at some point as somebody else buys it out if your bank is one with too much funny money on its balance sheet to survive.

Unless your 401K portfolio is laden with high risk funds, you won't see much immediate effect. Your equities will continue to lose face value because they are overpriced, not because hedge funds didn't get bailed out.

In fact, most of us on DU will lose a little but we would with the bailout, too. The people who will lose a lot are the greedheads, and that's how it should be.

Oh, there might be a need for an eventual bank bailout, but not this one and not right now. This is just another attempt to sock the treasury and cripple the government, just when Democrats are poised to take it over.

[BelgianMadCow]

31. That makes a lot of sense

I've seen elsewhere on DU you have some knowledge.

Thanks for your perspective

bmc

[sofa king]

11. I don't think it will be too bad until it freezes.

Then, all hell breaks loose. People will choose almost anything above freezing, like breaking into buildings or other homes, burning gasoline and furniture, or getting together to riot. (It's interesting to recall that while Hurricane Katrina was approaching New Orleans, FEMA's attention was focused on buying snowmobiles and winter gear.)

Every community needs to have cold-weather plans that include emergency housing and heating, and legal preventions against shutting off gas and electricity in winter months. Most won't, and if they ignore the problem, shit's gonna hit the fan.

Interestingly enough, my life was hit by a depression just after Bush stole America, both mental and economic. Being flat broke ain't that bad, as long as you get a little lucky and don't act like a dick. Be ready to team up with others; forget about driving and get a scooter or a bike instead (and a lock to go with it!); offer your time and help to anyone who needs it; don't overeat your welcome; consider quitting drinking and smoking.

[Delphinus]

13. That's a grand idea, sofa king.

Having the communities have a cold-weather plan, sort of like the hot-weather heat waves and centers for those without a/c.

[northernlights]

14. I'm preparing for a normal winter here in in the frozen tundra

Nonperishables for all to last through the winter. Some cash on hand for emergencies. A friend is able to go through an entire winter on 1 tank of oil by keeping her house at 55. As long as I keep electric running, than I can keep my house to 55 and stay warm...I splurge on an e-blanket last month and my oil tank is full.

[Warpy]

19. Electric blankets are great

That's what I use when it's especially bitter. I just drop the heat and roll up in it at the puter, give myself a lazy day at home.

I do find quilted booties to have been a wise investment for those days because what really freeze are my feet. Wool socks and quilted boots keep them toasty. I have fingerless gloves for my hands and lots of homemade knit hats.

[pa28]

18. Stock market the main victim IMO.

We've already seen the result of forced liquidation of some hedge funds and institutions as they began to fold and the dives in stock prices that resulted. But what would happen if you scaled that way up and many started folding or getting margin demands they could not meet at the same time?

Many of their holding would automatically go to market to generate liquid cash but in the worst case I'm thinking there would be a logjam of sells all over the board to sell at any price. Perhaps market makers would quit trading the shares altogether but electronically traded shares would certainly be free to trade in a market with no buyers and no cash in the system available to pick up the shares. I'd think such a day would quickly trip the circuit breakers and shut down the market. Once it re-opened I could see the Dow eventually settling at 8000 but missing some major components like GE, GM as well as other highly leveraged American companies being erased.

Aside from lots of people in a very bad mood about their losses I don't think there would be much effect on the real world right away. Sure I believe it would inflame our current recession with less availability of credit and job losses but all the talk of full scale melt down or us returning to some kind of financial stone age is mostly scare talk designed to manufacture consent.

That being said I think the bailout will go through but it's fun to speculate.

[A HERETIC I AM]

20. If there is a true and complete collapse, your grocery store will be empty in 4 to 7 days.

Because if a collapse is total, it means the interstate trucking fleet will grind to a halt within 2 days because no one will be able to fuel. No fuel means no deliveries of ANY kind. Your local gas stations will run dry and your local grocery store will be empty in a week or less, depending on the volume they normally do.

Truck drivers do not carry thousands of dollars on them in order to buy fuel. It is almost all done through companies like Comdata. If they freeze up, it's goodnight Irene.

[The empressof all]

21. Good info thanks...

It gives me a clue of what to potentially think of if the "doom and gloom" pin is pulled.

[sfwriter]

23. How many good and services are delivered on credit?

I mean, how many stores, like Home Depot, basically rely on lines of credit to purchase their inventory? If the credit crunch were to create problems for Pilot say and they couldn't get gas or Krogers say and some of their distributors couldn't pay for food, then we are hurting.

That was the warning bell at Lehman, a LOT of routine transactions started to seize.

That is the horror story congress was told... starvation and food riots by Christmas.

[leftofthedial]

25. more power grabs by politicians

more attacks on civil liberties by authoritarians

more price gouging by capitalists

[aint_no_life_nowhere]

26. I'm worried about the value of the U.S. dollar

Since I don't invest in stock since losing $5,000 in the 1987 crash, my one big immediate concern is the value of the dollar. I guess it will probably not crash in value right away but will probably experience a gradual decline into the toilet over the next few years.

[Captiosus]

27. It's dangerously close to being in the toilet as is

If you compare straight to exchange rates.

1 Dollar, currently equals:
0.68 Euros, 0.54 GB Pounds, 105.9 Japanese Yen...

[sarcasmo]

28. Full Tank of gas and a full pantry will do me for a month.

[HamdenRice]

32. Here's my take

The problem is that every financial panic of the past has been different, so it's difficult to use history to sketch out what would happen. But I figured I'd give it a try.

The first part would probably be another big bank failure in the commercial bank sector. So far, the failures have been in the investment banking sector (Lehman, Bear Stearns) and thrift/savings and loan sector (Wamu). A failure in the commercial banking sector would be much scarier.

This would generally scare people into withdrawing money from banks and money market funds. If this is like the late 80s, the first thing you would notice is lines of people in and stretching outside the banks in the downtown section of your city or town.

Many of the most fearful people would be withdrawing money from money market funds. These funds invest in short term corporate debt called commercial paper and have to sell commercial paper in order to pay people who withdraw from the money market accounts.

Because the money market managers would all be dumping commercial paper at once, the price of this paper would go down drastically. Commercial paper earns interest, but not in the usual way. Instead of it being like a note with an interest rate, it is created and sold and pays interest more like a post dated check. A company writes a "check" for $100 payable 30 days from today and sells it for $99. When the holder of the check "cashes" it in 30 days he gets $100, earning 1% interest. Because it pays interest this way, interest can change depending on the price people are willing to pay for the paper. Also most paper is rolled over. When the 30 days are up, the company pays the old paper off by writing a new check to a new investor.

Commercial paper prices would drop -- in effect meaning the interest rate on the paper would rise. As the paper is traded, the paper purchased by the money market fund for $99 would be sold to the next guy for $97 and the next for $90 meaning that the money market managers would be losing money rather than making money, making it harder for them to pay out accounts to the consumers who own the money market accounts. Also the companies that write commercial paper would realize that they could not sell any more of it, and could not roll over outstanding paper. Effective interest rates on paper would be astronomical. Remember that 30 day $100 commercial paper selling for $95 is an effective interest rate of like 60%, so small declines in paper value mean big interest rate moves.

These companies would take drastic measures to cut costs. You would see instant, massive nationwide layoffs. They would stop ordering supplies and inventory which are generally paid for with commercial paper.

Money markets and banks would have to simply stop paying out and shut their doors till things calmed down. The feds might step in and declare a bank holiday for a few days for things to calm down.

Lots of money would flee the US and the US dollar. As the dollar fell, things we buy overseas, particularly oil, would increase in price very rapidly. Remember how much of our current high price of oil actually hit us in several punches after hurricane Katrina? You would see oil at the pump rise from $4 to $5 to $6 and so on, on a weekly basis. I have no idea where it would stabilize.

These energy prices would be reflected in the prices of stuff that you buy that is moved with gasoline, such as food.

If you are old enough to remember the inflation of the 1970s, one of the things that cushioned it was the very strong position of labor unions. For each price rise, the labor unions demanded wage rises, and these rises were often already embedded in labor contracts. Economists called this the "wage price spiral." That kind of inflation was harder to stop (it was on auto pilot) but it was not as hard on working people. It mostly hurt investors.

There will be no "wage price spiral" this time because the labor force is in a very weak bargaining position compared to the 70s. There are few unions and virtually no cost of living increases in the labor market. Rising prices would directly affect family budgets. Pretty soon many, many families would not be able to afford food, gas, heating oil, rent/mortgage payments etc., and there would be a rise of homelessness that will be shocking in its swiftness.

You think this stuff can't happen, but Argentina was for decades one of the most middle class countries in Latin America, but after its currency crisis had Brazilian/African style shanty towns within months.

It could happen here, and indeed it did in the 30s.

[tpsbmam]

33. Wish I could rec your post -- please think about posting this on its own thread. n/t

[brettdale]

34. My wacko theroy is

There will be no election, they will use the collapses of the economy as an excuse not to have an election and Bush*t will stay president.