*Talking of not having lost until you sell is unwise , we may never see shares sold at last years peek again.*

Belly, you have to see things in perspective here. Despite
all the gloom, doom and turmoil, the sharemarket is back to
about 2003 values. Now if you had 100$ in a fixed deposit in
2003, if you spent the interest, you would still have 100$.
No different with shares.

Fact is that with cheap and easy credit, assets became
overvalued, economies overheated and the Chinese/Japanese
kept lending the US/Australia money, to keep the credit
bubble going, so that they could keep up their exports
and accumulate US Dollars by the trillions.

The Economist has said for years, that this is unsustainable,
the wheels will eventually fall off the cart, that Australian
housing values are overvalued, driven by easy and cheap credit.
etc.

So its been predicted for a long time, just nobody knew when
the bubbles would burst.

Note the companies that have crashed bigtime and its those
who overborrowed most, again unsustainable. But now that
fear has set in, hedge funds are forced to liquidate at any
price, heavily geared investors are being forced to dump at
any price, there are still a huge number of people and
funds out there, with enormous amounts of cash, ready to
buy bargains when they think that we have reached the bottom.

When we actually hit the bottom, nobody can predict but everyone
is guessing. We'll probably know what the bottom was in hindsight,
meantime we'll have a few dead cats bounces along the way.

But at some point, those with cash will pick up absolute bargains
and those forced to sell by too much debt, will be licking their
wounds for being too greedy.

The thing is, those mines are still there, those oil wells still
there, that machinery is still there, etc. Would I buy a cheap
oil well with confidence? Sure I would, as I think that in
some years time, oil will be back to 150$ a barrel, as its not
cheap to find these days.

While money that went from my house value may be called paper money I had I wished have sold and spent it real money for sure.
On both sides of me, from the same vendor homes sold at the very top of the market.
12 months after I bought and for 250% of what I paid.
No mater what comes they must be paid for at the top rate plus interest, how can anyone say its not real money?
Yes phantom money is used, miss used in fact by banks and many others but some must take the loss and its yet to come for some.
Zero chance exists in this country village surrounded by other villages with for sale signs in full bloom that we will see those prices again for ten years or more.
Bigger falls are still likely, no one is inspecting houses for sale here, most are owned by city speculators who got stuck with them.
The rises, interest rates paid on investments have been extraordinary.
The falls have too.
How can we look for profits like that until we find answers for the crash?
And ways to stop another one.

Keep your lupins Austin. Nobody wants lupins these days. Can I interest you in this here shrubbery?

*most are owned by city speculators who got stuck with them.*

Belly, in a market economy, you cannot stop people being greedy
and you cannot stop people making bad judgements. They will
pay a heavy price. But they are responsible for their actions,
so only have themselves to blame.

I bet you that some of those people were sucked in by seminars,
telling them to buy 10 houses on credit, life would be a breeze
and they would become rich. Why should we feel sorry for them
now? They were warned plenty of times by plenty of people.

Or the young generation Y that are shown on tv, with 50-60k$
debts on their credit cards, to pay for the latest fashions,
for overseas trips etc. They want it all and they want it now!

There are plenty of my generation (baby boomers) who did it
tough, know hard times and urged caution and lived by that.
That advice was ignored by many, who will now pay a heavy
price.

One thing that I have learned about humanity, we seem to
need pain to learn the hard way, sad but true.

Bazz,
It's a hard concept to get across but the cash you hold in your hand is actually the money owed by somebody else to a third person and didn't magically materialise just because you did something.

You are thinking (quite logically) along the lines of how the system used to work and how people still think it works but it's no longer correct.

The concept of interest is what creates perpetual debt because if all the money created represents capital, then where can the money come from to pay the interest?

Check this out for some background. It's pretty long but very interesting.

http://video.google.com/videoplay?docid=-9050474362583451279

Yabby every word is how I think and I come from the same generation as you.
I was one who warned just as you said, this could not last.
One of the home owners, both sold twice in the rush to profit, even had to pay installments on credit card.
Interest on interest, and yes that family is broke forever now.
I and just maybe you, knew this would come, the crash, but that it came so fast stunned me.
It is that speed that has many talking about phantom money, the pain has not yet caught up with the reality, the money is gone forever.
Not at all eccentric I have refused to spend money I do not have, pay in cash and still have lost a lot via super last financial year, this one, and maybe the next.
Blind Freddy can see this recession is much worse than most will let themselves see.
This time next year much sooner I am afraid, we will all know how bad it is.
Greed did not only harm the greedy it took large chunks of my squirreled away 29% super that was to let me live better in retirement.