Here's a general article that confirms what we experienced last week. I'm not sure, though, if the recent economic troubles are the direct cause of the effect we saw, since that would be mighty fast action by Citibank.

http://www.cbsnews.com/stories/2008/10/14/earlyshow/living/money/main4519914.shtml

My husband and I had a couple of seldom-used credit cards with Citibank, and for the first time in our lives got notice last week that the MasterCard was being cancelled due to inactivity. We had called to close it over two years ago and were cajoled and sweet-talked into keeping it, winding up with a nearly free loan for our daughter's car.

We really didn't want it and have only been negligent in closing it after our daughter paid off the loan, and decided to see if it was too late for us rather than the bank to close it, thinking "Closed by consumer" looks better on the credit report. We called and they kindly obliged with nary a peep about great new offers if we'd only keep the account open. On the same call we closed the Visa account we had with them. We've never closed an account so quickly and so easily.

We've always been very careful with credit cards, and are being scrupulous with the ones we really want, hoping to avoid any loss of service or perks.

I'm glad you mentioned Citibank, queproblema.

As a former employee of that bank I am saddened by the way they evolved.

They are one of nine major banks being propped up by the Federal government.

Never would I have expected that such a large financial institution would have to be reliant upon the taxpayers to keep them afloat.

Just why did it come to this?

Again, not very difficult to understand.

The person you talked to about your credit card works in a big office environment with many cubicles and name plates...and nobody knows more than than they should about how this big financial monster functions.

Even the C.E.O.'s, when conspicuous, haven't a clue.

It is a chain operation whereby small financial groups create loans, and the bigger ones eventually buy them.

When the economy went sour, the smaller groups (you know, the ones who pester you with phone calls), closed up shop.

The bigger banks now hold those bad loans, and they have mounted to alarming proportions whereby the stability of these big institutions became threatened.

In comes government to buy up their bad assets, in a sense saying that all the bad loans are now good loans because government (by the people) is going to make things right again.

The bad business conducted is now going to be turned into good business again thanks to the generous hand-outs of government(s).

This amazes me to no end.

It is like condoning bad behavior.

Instead of just letting them fail, as many corporations have been failing and filing for bankruptcy, it now appears that everything will be tied up into a neat package of bankruptcy...where bankruptcy is now a good thing.

It makes our existence and striving to excell...a joke.

Once there was a time where in a capitalist society you lived off what you produced through your own manual labor, creativity and ingenuity.

Now it's about over-feeding the masses with crtedit cards and all kinds of junk food to make them useless.

That is why I laugh all the time over this.

It's better than crying.

It still mystifies me how our economy will actually be better with our governments now holding billions of toxic debts, as they so nicely describe them in the media. If they were so toxic as to bring many of the biggest financial organisations in the world to their knees, won't it have a similar effect now on the countries who have now spent our money 'investing' in them, or am I missing a bit here?

It was in 1996 I believe that Bill Clinton gave a state of the union address, whereby he declared "The era of big government is over." It's only just beginning, and judging from the tenor of most of the posts around here it fills many hearts with glee. Government is going to be expanded no matter who gets elected President, although right now an Obama victory seems like a sure thing. Government programs, spending, rules, regulations and bureaucracy of all sorts will greatly expsand in his administration I suspect. It will too in a McCain administration, although probably not quite as fast. I fail to see how this is the road to long term stability and prosperity.

Quote:

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I fail to see how this is the road to long term stability and prosperity.

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It just isn't. The wild spending of this administration, and the ones preceeding it are only part of the cause. Combine this with relaxing mortage requirements, giving American jobs to foreign shores, not developing new energy sources in an agressive manner and about half a dozen other handout programs which would only start an argument - we're in deep. There's no way out, really. I honestly believe the out come will be the same, no matter who wins the election. We in the US are about to be taxed beyond our worst nightmares. Thanks to the printing presses running day and night, our money will soon be worth a fraction of what it is now. Inflation is coming on strong in the next year, the likes of what we've never seen. I'm already seeing some items at the local store jump a dollar from what the price was two weeks ago.

Let's add a tiara:
The 13 member OPEC group is scheduled for a meeting in Vienna on Friday. They will discuss decreasing oil production and how soon a huge price hike targeted to the west can be implemented. In so many words - Iranian
Oil Minister Gholamhossein Nozari boasted today that there would be 'no more cheap oil' and when asked how much OPEC would charge in the future? "The higher the price - the better" was his response.

Inflation in NZ has just hit an 18-year high, but since July petrol has dropped 40cents a litre.

I'm going to go against the grain and say that I think it's more likely we'll be in a deflationary spiral. I do agree about the taxes and regulations. The Nanny State will hit like a two by four against the head in the Obama administration. Little by little freedom, initiative, meritocracy and the like are being wiped from the planet. All while most in the gallery cheer. Go figure. Anyway, regarding the initial idea in the thread, employers are really starting to retrench in my neck of the woods. The South Atlantic has been one of the best area of economic growth for many decades. Recently things are not looking as good in the Carolinas and Georgia. Florida is worse because the housing mess has really affected that state. If things don't bounce back swiftly here, it probably indicates a steeper and longer recession in the US.

Petrol has fallen to 94 pence a litre today, from a high a month ago of £1.17, also the price of bread has begun to fall.

Oil has fallen from $147 a barrel to the low to mid 60s. Incredibly, even gold and silver are tanking. This is evidence of a classic deflationary spiral, not rampant inflation. In the US those that should know say that 27 of the 50 states are now in recession.

At present, the US Treasury is printing from 1 to 3 trillion [ depending on your source ] extra dollars- pumping more money into the ailing economy in a desperate bid to unfreeze internal commerce a bit. In a very real way, this money doesn't exist and will result in a dollar- which in a year or so - will be worth a fraction of what it is now.
This folly will take a few months to trickle down into the private sector -but trickle it will. At that point, we will be in new territory -a financial ailment similar -but very different from a real depression. And since this particular scenario has never happened in the US to such a degree, it's hard to say how long it would last or what the long term implications would be.
I'm no economist, but I know what my dad always said.
-you can't spend money you don't have.
- you can't make bad loans to people who can't pay it back
You may have heard the old joke which goes something like "There must be money left in my account- why, I still have some checks left!"

I am certainly no expert, either, PaulD. But the bottom line on all this is cut and dried enough for even an average person like me to understand...The US has been borrowing money for years from other countries, who because of our past track record, were willing to tote the note on pretty much whatever we asked for. Now that we've gone way beyond our means, the rest of the world is beginning to figure out that we are incapable of paying back those billions in credit. This puts them in an ugly bind financially and one can hardly blame them for being furious.
When we finally begin to crawl out of this financial abyss, it will be to a different landscape. There may actually have to be money in our bank accounts to correspond to our purchases! There just won't be any more easy money and we will be forced to live on what we actually earn, as our parents did.

I'm not saying that the market and large lending institutions are gone. They will just have to re-invent themselves and re-write their loan practices to reflect actual existing money rather than projected earnings or expected stock performance.
In the meantime, we may be looking at years of scrambling toward daylight. And, as I've said before - I would be thrilled to be wrong about all of this. It's like a nightmare.

Yay! Petrol came down below £1 a litre this week, I for one am making a profit. Remember these issues are an average and some areas do profit as well, and if my household energy bills drop as well I'll be even happier. Food prices are creeping down again as well so if this is a bust I'm keeping it, I was doing worse and worse under the boom as I don't own any oilfields or rental flats.

I may be the economic guru you are looking for.

I come from a year of Yahoo Answers, booted off for giving a (too) candid answer as to the way to treat a pedophile moving into the neighborhood.

Before my exit, I did answer an economic question by assessing the current situation (six months ago), as global meltdown.

This having come to fruition, I received no medal or trophy.

I reiterate, there is a big problem going on now, and it has to do with the disappearance of key financial institutions who have adopted the belief that real estate values will always climb.

On the other end, the consumer has gone overboard with mortgaging out to the max, and using their homes to finance all other endeavors that heretofore was financed through adequate employment capability.

I see no end (and neither does Alan Greenspan) to the mortgage debacle, since values are far from what they should be, given the poor earnings of working class people.

When magnified, this is a multi-trillion dollar problem now gone worldwide.

In comparison to 911, that event was only a hundred or two hundred billion dollars in magnitude.

Got that?

Questions???????

I think you summed it up pretty well there. Someone else said yesterday that 30 years ago we called credit 'debt' and was seen as a social problem, not a lifestyle. Now the chickens have come home to roost and a correction between income and outgoings, and price and value are returning.

If inflation raises everything to double its true value then unless it comes back to half (as it may do sooner or later) we will be throwing away half our money. Of course in future generations they'll do exactly the same as that is human nature. They have very short memories but anyone who has been careful this time round is far less likely to be touched. Including everyone with a mortgage who keeps their job. Anyone borrowing beyond their means would be vulnerable whatever the general economy is doing. The state of the economy doesn't automatically determine everyone's fate- you can't become richer or poorer just because the average is that way. And someone I know today wanted to invest the GDP of a small country in shares as he (as I also do) expect them to return to their original price very shortly and as a result at least double his money, probably well within a year.

We have yet to see house prices fall over here though, and may not happen, not in London at least.

The problem is, it may be increasingly difficult for many people to hold onto their jobs as the economy continues to contract. Businesses may close and downsizing may increase. That, plus fears of inflation as prices rise, makes many keep a tight hold on their wallets and spend very frugally, often avoiding big purchases like new automobiles, and avoiding buying anything that's not really necessary. The less people spend, the more the economy remains stagnant, or continues to contract. Then, even more jobs may be lost. That kind of vicious cycle can continue for some time.

Yesterday, an acquaintance told me her husband lost his long time job last week. He was fortunately able to find another job within a few days, but she said they felt so nervous about spending money now that they weren't buying anything except food and gas for their cars, and were planning on a very lean upcoming holiday season. They've stopped eating out and going to the movies. I think this attitude may be fairly typical among those who are anxious about their financial situation.

The rate of return on safe investments--CD's, savings accounts, money market funds, Treasury Bonds--is low and not keeping pace with rising prices on things like food or bank fees. And the stock market isn't currently appealing to anyone but the most determined and stoic bargain hunters. It remains to be seen how long it will take for people's 401K's, IRA's, and college savings funds to recover from the severe losses they have taken. The future outlook for the average person is very uncertain.

And it's yet to be seen whether the $700 billion bailout by the government will have any significant effect at all.

And, in the United States, we are about to elect a new president and we may have a substantial shift in the balance of power within Congress. We don't know how these profound changes will affect the economy, or each taxpayer, after next January.

Our banks are safer now, and the price of gas is down. But everything else about our economic lives is very unsettled and uncertain at the moment. I doubt that the retail sector will do very well this coming Christmas season. Not too many people may feel like doing a lot of shopping.

Nice to hear from you again, chelseabelle.

On your statement about the upcoming presidential election, I have a feeling the bad stock market reflects the changes coming, whereby the economic trends of decades ago are being replaced with a worker focused economy.

By rewarding the elite, we experienced a blind eye attitude that opened the flood gates to all kinds of chicanery, the results of which tore a gaping hole into the financial sector that is hemoraging throughout the entire spectrum.

Now they march, cup in hand, toward Washington...for relief.

What a mess.

The economic situation certainly hasn't improved since I started this thread, if anything it has gotten worse. Great Britain is now officially in a recession, and, in the U.S., the number of jobs being lost continues to climb at an alarming rate. Yesterday alone, over 70,000 new layoffs were announced. Well known companies and businesses continue to declare bankruptcy or to fail completely.

No matter how you look at it, the immediate economic situation is dire, and anything approximating a recovery is a long way off.

So, how are you managing in your corner of the world? Has your stress level increased due to the economy?