Continued from <a href = "http://forum.dvdtalk.com/politics-world-events/535361-economy-going-hell-handbasket-pt-iii.html">here</a>.

VIX hit 36 and change today, i'm around 98% long stocks from here. at least for the next month or two

Poll of the week: Who will buy WaMu?
- Chase
- Wells Fargo
- HSBC
?
I say Chase.

If enough people say that things are getting better, then enough people will believe that things are getting better. Of course, that doesn't mean that things are getting better. Mark my words. :)

If enough people say that things are getting better, then enough people will believe that things are getting better. Of course, that doesn't mean that things are getting better. Mark my words. :)


You're right of course, but...

We say the economy is bad. Well, last week I had to wait in line to buy a car with my mother. That's no lie. My mother bought a car because: "I might as well spend my money while it's worth something." There were people behind us waiting to buy cars. The average Joe doesn't see it yet.

With reguard to the market; if enough people believe things will get better, then the market will improve. Today's market prices (unlike years ago) are nothing more than perceptions. It's a lot like pop culture. Fewer investors care about fundamentals.

My fear is that foreign money may be pissed enough to stay away for a very long time.

Poll of the week: Who will buy WaMu?
- Chase
- Wells Fargo
- HSBC
?
I say Chase.


I would say Chase as well. Wells Fargo I think would have way to much overlap on the West Coast. Chase could use the West Coast exposure. This week has been brutal.

I would say Chase as well. Wells Fargo I think would have way to much overlap on the West Coast. Chase could use the West Coast exposure. This week has been brutal.Is overlap good or bad? Overlap allows you to sell redundant branches and eliminate people while getting the business and eliminating a competitor.

Wells Fargo has had plenty of opportunities to expand east of the Mississippi but really hasn't done so. I wonder if that's what they decided was best for them.

I don't think there are any Chase branches in CA or FL. I know there's BofA in FL. I was surprised at first that BofA didn't go for WaMu but I suppose BofA could have sold the other branches.

What's in the WaMu books may matter more than the branch locations.

Another poll could be when the buyout is announced:
- tomorrow (Thurs)
- Fri
- Weekend
- Next week
etc.

WaMu's stock dropped back down to 2.01 today so I expect the buyout to happen before the week's end.

I work at our local community college. The economy is down. Our business is up. Now excuse me, I need to go wash my new economy stimulating Mustang :)

I work at our local community college. The economy is down. Our business is up. Now excuse me, I need to go wash my new economy stimulating Mustang :)I think that's fairly typical.

The media makes it sound like a panic, but in large, people still have their jobs and the economy keeps on rolling. Some people in the financial industry are losing their jobs but I'm not sure those are the kind of jobs that really contribute to the long term health of our economy anyway. (Maybe they can be retrained to make cars for Toyota and GM/Ford/Chrysler employees can be retrained to work in the financial industry.)

I'm mostly concerned about capital being tight even though interest rates are low. That's not such a bad situation in general, but unfortunately we're a society that's become dependent on loose capital.

Yeah, those 24,600 employees at Hewlett Packard are a bunch of bums.

What the US Gov't did with AIG, was embarassing and outright wrong.

Basically put, instead of stockholders, employees, and investors paying the price, we now have every single American owing this $85 Billion debt. The US Gov't must have looked at Lehman Bros. and known it was worth absolutely nothing and couldn't get a dime for the entire company. Maybe AIG is worth a little, but I seriously doubt the entire $85 Billion is going to be paid back. Just monitor the sell-off over the next few years. We'll end up owing probably half of the $85 Billion. Probably more. Estimates are AIG will make about 10% off the dollar they borrow. So, why the fuck oh dear would the US Gov't make a loan they know they will only get 10% back? Well, because it's not their money, you see. It's yours.

Fuck you. Pay me. A rather famous line from a group of thugs and the US Government is no different.

And the added 11.8% or so AIG is paying back this loan, you gotta be fucking kidding me folks. Just do the fucking math here.

The House always win.

All this USGOV/AIG deal does is give the APPEARANCE things are not as bad as they are. The problem is, people are already figuring it out and are moving their cash accordingly.

Second, this deal gives AIG execs ample time to stash their cash. I can't wait for the news articles on this company when they tell about the money that changed hands and how the current administration was amazingly "oblivious" to the obvious behavior which would happen. Now, the US Government is said to now "own" AIG, but really folks, what the fuck does that mean these days. Does it mean the stipulations include preventing anyone from liquidating any assets? Does it prevent execs from selling off parts of the company without US Gov't approval? And if there is approval required, how much faith do we really have our wonderful US Gov't is going to regulate the deals, and make sure nobody else gets fucked. Yeah, I thought so.

Third, you, the taxpayer are going to pay dearly. I'm not sure how the US Government thinks they can postpone taxes indefinitely, but we're going to see programs being cut and it will be harder to receive benefits of any shape or form because the government won't want to pay them like they did in the past.

Fourth, what the US Gov't is doing is once again, postponing a problem which could be taken care of much quicker, and the US economy would be rebounding quicker. That's why Capitalism and the Free Market ideology, can work because you take your hits and people start over. The US Gov't is now creating an atmostphere of "well, it's never really over...and...we think feeling pain over an extended period of time is better than all at once..." by intervening in situations where historically they have never been involved with nor should they have.

CEO Hank Greenberg, apparently approached the Fed with a $40 Billion bridge loan request over the weekend, but was turned down. Go figure. Why is the Fed taking over AIG with just about twice that figure.

Fifth, and probably the most concerning I suspect, is this. Since Lehman Bros. is Banko, they will sell their "assets". I put assets in quotes because others are doing the same when firms like this announce their worth. Ok, so maybe selling assets, at whatever amount, is kind of a good thing, right? Maybe someone will benefit and some investors as well, thereby pumping some cash into the economy? Well, problem is, the market is going to have to figure out just what these assets are worth. Anyone with half a brain will realize the assets will be significantly adjusted for the reality, and we call this a writedown. There are going to be significant writedowns thanks to Lehman going Banko and AIG then trying to sell their assets in a market which is constantly re-evaluating what they are worth.

I have to ask. Who the fuck would loan money to AIG at this point in time. Hell, these guys don't even know, literally, who owns who. These guys are scrambling to create somekind of real asset to show on paper, but they can't. It's not there. No one wants it.

I think that's fairly typical.

The media makes it sound like a panic, but in large, people still have their jobs and the economy keeps on rolling. Some people in the financial industry are losing their jobs but I'm not sure those are the kind of jobs that really contribute to the long term health of our economy anyway. (Maybe they can be retrained to make cars for Toyota and GM/Ford/Chrysler employees can be retrained to work in the financial industry.)

I'm mostly concerned about capital being tight even though interest rates are low. That's not such a bad situation in general, but unfortunately we're a society that's become dependent on loose capital.

The problem is cars don't impact the economy as much as houses do, and even though a segment/region of the population may very well be buying shiny new sports cars, the overwhelming majority are not......as seen by recent reports from Big 3, Toyota, Honda, etc.

I agree with you on the tight capital, low interest conundrum. I've been saying the same thing for months now. The free flow of cash from the Fed is not reaching the everyday consumers, so what good does it do to simple release more cash? Except maybe to save a bank or two.

With the over-exuberant run-ups in housing prices the past 5 years, it's almost impossible to save and buy a house without financing nowadays. Even after 1+ years of housing declines, most real estate is still more expensive now compared to 2002. Although very uncommon, disciplined families used to be able to save up and buy homes outright or at least make large down payments maybe with the exception of expensive areas like CA. I don't see us returning to that situation anytime soon, and without financing, real estate will greatly disappoint for the forseeable future which will only result in more problems for the banks down the road.

The irony of the whole situation is......the banks loosened credit under the premise of providing more Americans with a shot at the American dream; but IMO less Americans have that shot now than before this house of cards was created.

If all heck breaks loose how far down will DJIA go? My guess: 8500 before cash-rich investors in Bahrain, Qatar and the United Arab Emirates snap depressed stocks up at bargain prices and we see a turnaround.

If all heck breaks loose how far down will DJIA go? My guess: 8500 before cash-rich investors in Bahrain, Qatar and the United Arab Emirates snap depressed stocks up at bargain prices and we see a turnaround.

My guess is it will continue to fluctuate wildly but decrease overall for the rest of the year.....especially with Xmas looking like a scrooge this year. Maybe things will turn around after the new President takes over, but I doubt any sooner.

Yeah, those 24,600 employees at Hewlett Packard are a bunch of bums.

I thought most of those were redundant positions in non-techincal areas (Finance, HR, Etc.) of their most recent acquisition.

I thought most of those were redundant positions in non-techincal areas (Finance, HR, Etc.) of their most recent acquisition.

I'm sure the people being fired feel exactly the same way.

Yeah, those 24,600 employees at Hewlett Packard are a bunch of bums.

:lol: Clearly this is the first time there have ever been large layoffs by a company. Look at HP and you will see that it wasn't done because they are in bad shape.

If it weren't for this forum, I wouldn't notice any difference in anyone I have interacted with in the past week. Admitedly, that mainly includes cows and hill folk, but most people still have good jobs. Most people still are making their payments. Most people are not losing their houses.

It would be nice to think that this "turmoil" would make people look at their own finances and decide not to carry so much consumer debt, but I doubt it will.

The movement of CDSs and CDOs is in danger of freezing up, Lehman may have been the start of that chain. We're facing a major monetary deflationary crisis, and if banks and investors start hoarding cash and capital, it's trouble.

People looking at recent events and saying that "everything seems fine on their block so what's the worry" doesn't make it fine. There's an order of events.

From the Wall Street Journal:

The Federal Reserve and other central banks including the European Central Bank and Bank of England announce new, coordinated action to shore up money markets. Full article coming shortly.

There's talk of the possibility of US debt being downgraded in the future if this thing spirals out of control. If that doesn't scare the crap out of people, I don't know what would.

People looking at recent events and saying that "everything seems fine on their block so what's the worry" doesn't make it fine. There's an order of events.

very true. i'm not sure how people can look at the panic in the financial sector and think that it won't eventually filter down to them. do they really think these people with their hands on the tiller of the economy don't make any difference at all?! it's gonna be a delayed reaction, but it will certainly come. already over here morgage lenders have raised their minimum downpayment substantially, in an attempt to weed out defaulters. another bank collapsed over here this morning, btw.

already over here morgage lenders have raised their minimum downpayment substantially, in an attempt to weed out defaulters. Is that a bad thing?

it is if you're a family looking to buy your first property. from the perspective of the lender it substantially decreases the level of risk, since those most likely to default are found in the lower wage bracket, which this tactic excludes. personally i think it's a sensible strategy. however it does undermine margaret thatcher's conservative warcry of the 80's of wanting more familes to own the homes they live in.

The movement of CDSs and CDOs is in danger of freezing up, Lehman may have been the start of that chain. We're facing a major monetary deflationary crisis, and if banks and investors start hoarding cash and capital, it's trouble.

People looking at recent events and saying that "everything seems fine on their block so what's the worry" doesn't make it fine. There's an order of events.

people forget that the 1990's weren't just one happy decade

1994 was a pretty bad bear market and the one in 1998 was just as scary. the nasdaq was down 50% at it's lowest point in October of 1998. 1999 the indexes may have doubled, but there were several 15% - 25% corrections that year

:lol: Clearly this is the first time there have ever been large layoffs by a company. Look at HP and you will see that it wasn't done because they are in bad shape.

They simply wanted to make more money. How American.

If it weren't for this forum, I wouldn't notice any difference in anyone I have interacted with in the past week. Admitedly, that mainly includes cows and hill folk, but most people still have good jobs. Most people still are making their payments. Most people are not losing their houses.

It would be nice to think that this "turmoil" would make people look at their own finances and decide not to carry so much consumer debt, but I doubt it will.

The unaffected point of view. How enlightening.

for now i'm still getting emails and phone calls asking me to switch jobs, but not as much anymore

noticed that the way things work is every downturn one or two sectors are affected more than others and enough to push the national numbers negative. last time IT was pretty bad, this time it's anything to do with housing

I heard on the radio that Whoopie was ripping the govt for bailing out AIG. She was saying why don't the govt bail out the Homeowner who can no longer afford his home. The govt should offer ~2% 30year loans so people don't default on their mortgages...

Another question.. Why can't these banks work more with the homeowner if they are going to default? Can'tt he bank say... ok we will lower your interest rate to 3% so you can afford your payment for the next year... Then we will re-evaluate you and bring it back to normal if things change... Wouldn't this be in their best interest?

it is if you're a family looking to buy your first property. from the perspective of the lender it substantially decreases the level of risk, since those most likely to default are found in the lower wage bracket, which this tactic excludes. personally i think it's a sensible strategy. however it does undermine margaret thatcher's conservative warcry of the 80's of wanting more familes to own the homes they live in.
It's not a bad thing. It is a correction. We collectively should never have been put in a situation where families needed to take out zero-down, ARMs with balloon payments, and other gimmick loans in order to keep the scam (that things are just fine) going.

If loan requirements are tightening up, then the available pool of home buyers shrinks and that will have to bring house prices down to the more realistic level they should've been at.

Where I think the real problem is, are these bailouts. The bailouts are going to prevent the necessary corrections from taking place... by propping up those who invested in those companies, they'll get to retain the money that they could potentially lose... and in the end, THEY will be the ones who will be in a position to snatch up those lowerpriced homes as investments and rentals.

The final result... those more affluent will own more homes, the average person will not.

If you lower the value of the dollar does it soften the blow?

The final result... those more affluent will own more homes, the average person will not.

Capitalism is a bitch.

Capitalism is a bitch.
For someone who was whining about people posting responses not directed at them, you sure didn't waste any time being hypocritical. ;)

We're talking about more than just capitalism. It has to do with governmental interference with a free-market economy.

It's not a bad thing. It is a correction.

as i said it depends on who's perspective you are looking from; the potential buyer, the lender, or the overall economic position. economically it makes excellent sense to increase the rigourousness of lending arrangements. governmental support for those lenders who made unwise gambles on low wage buyers is almost certainly going to be seen as an endorsement for further activity along these lines in the future. which means more rollorcoaster rides to come. on the other hand not all governmental intervention is a bad thing. infact a capitalistic socieity cannot function without a fair degree of oversight and regulation.

How the hell this is not scary or "pretending" nothing has happened? I lost 20K in the 401K since the beginning the year and that's after i changed the 80% money market allocation... If i haven't done that two months ago, i think i probably bleed out 50K-60K. Maybe i should just shut my eyes and ears regarding the financial markets, it's easier that way...

For someone who was whining about people posting responses not directed at them, you sure didn't waste any time being hypocritical. ;)

We're talking about more than just capitalism. It has to do with governmental interference with a free-market economy.

:lol: they can reply to me, but they can't backpedal and say "I'm not going to get into it." I mean, why even contribute?

I was just joshing. But I must say that the lax government is a big factor as to why the market is in trouble.

How the hell this is not scary or "pretending" nothing has happened? I lost 20K in the 401K since the beginning the year and that's after i changed the 80% money market allocation... If i haven't done that two months ago, i think i probably bleed out 50K-60K. Maybe i should just shut my eyes and ears regarding the financial markets, it's easier that way...
Consider yourself lucky. It could've been much worse. When the corporation that I work for took advantage of a loophole in the ERISA laws to convert their defined benefits retirement plan to a cash balance 401k plan, I lost $400,000.

Ron Paul predicted this problem 5 years ago.


http://www.lewrockwell.com/paul/paul128.html

Fannie and Freddie

by Rep. Ron Paul, MD

Ron Paul in the House Financial Services Committee, September 10, 2003

Mr. Chairman, thank you for holding this hearing on the Treasury Department's views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today's hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

Dr. Ron Paul is a Republican member of Congress from Texas.

Consider yourself lucky. It could've been much worse. When the corporation that I work for took advantage of a loophole in the ERISA laws to convert their defined benefits retirement plan to a cash balance 401k plan, I lost $400,000.

oh fuck! that's a lot of money... damn, i don't know if i can sleep if i lost that much.

oh fuck! that's a lot of money... damn, i don't know if i can sleep if i lost that much.
:lol: Yeah, I wasn't happy about it. If I didn't have the beliefs that I have, I would've had a similar reaction.

If the dollar is worthless, and you lose it, what have you lost?

If the dollar is worthless, and you lose it, what have you lost?
I could buy a mini mansion here w/ 400K.

Ron Paul predicted this problem 5 years ago.


http://www.lewrockwell.com/paul/paul128.html

.

fannie and freddie did a good job for a long time along with the FHA for subprime loans. the problems started when wall street i-banks got into the subprime mortgage business and didn't do the proper underwriting

I heard on the radio that Whoopie was ripping the govt for bailing out AIG. She was saying why don't the govt bail out the Homeowner who can no longer afford his home. The govt should offer ~2% 30year loans so people don't default on their mortgages...

Another question.. Why can't these banks work more with the homeowner if they are going to default? Can'tt he bank say... ok we will lower your interest rate to 3% so you can afford your payment for the next year... Then we will re-evaluate you and bring it back to normal if things change... Wouldn't this be in their best interest?


most of the loans are sold to Fannie or packaged in other pools and sold as bonds to other investors. to change the interest rate would require the OK of the owner of the bonds.

another problem is in the last few years they took a mortgage and divided it into tranches where the top level tranches would be the first to be paid, etc. this is how subprime loans became AAA paper. a single mortgage could be split among 5 different bonds owned by 5 different investors

Everyone laughs at me for not having a 401k (and I understand why), but at least I'm not losing a shit-ton of money. :shrug:

Everyone laughs at me for not having a 401k (and I understand why), but at least I'm not losing a shit-ton of money. :shrug:

are you close to retirement or something? If, over the long term, the market doesn't correct itself, screwing everyone with a 401k, I'd think everyone else would have problems anyway.

I wonder how many people are stopping their 401k contributions outright because of this, in order to sell low and buy high.

I still oppose bailing out homeowners... this for the most part rewards foolish spenders (who bought or refinanced over their heads) and hurts the people who saved up and waited the market out (since it artificially props up housing prices). Without the exorbitant loans, housing prices would not have taken the leaps that it did, at least here, and it should correct on it's own.

Didn't some legislation pass recently that forced lenders to take more time trying to work a deal out with homeowners? I think a recent report showed that it only delayed foreclosures.

didn't the govt already help homeowners? they got the mortgage companies to keep rates steady on some ARMs and they were talking about buying up foreclosures and giving tax credit to people who bought foreclosures.

Everyone laughs at me for not having a 401k (and I understand why), but at least I'm not losing a shit-ton of money. :shrug:

as of 8/31/08 the Vanguard Sp500 index fund has an average return of 11.32% per year since 1976. please tell me where else i can find this type of return

http://www.crossingwallstreet.com/1101990215_400.jpg

Everyone laughs at me for not having a 401k (and I understand why), but at least I'm not losing a shit-ton of money. :shrug:

With employer matching and tax benefits, I still come out way ahead.

With employer matching and tax benefits, I still come out way ahead.

Agreed. I would have to get close to losing my own contributions before I pulled my money.

I've been learning lots of good stuff from you al over the last few weeks and just wanted to say thanks first off.
most of the loans are sold to Fannie or packaged in other pools and sold as bonds to other investors. to change the interest rate would require the OK of the owner of the bonds.You're talking about the MBS's which is the whole reason we're in such trouble. Correct me if I'm wrong, but weren't MBS a relatively recent invention? What did they do with mortgages before the MBS was invented? Also, please don't think I'm agreeing with Whoopi's proposal, I'm just learning here :)

another problem is in the last few years they took a mortgage and divided it into tranches where the top level tranches would be the first to be paid, etc. this is how subprime loans became AAA paper. a single mortgage could be split among 5 different bonds owned by 5 different investorsAre you saying a subprime could become AAA because the top tranch was in a good bond (while the lower tranches were in lower rated bonds) or that they were mixing and matching subprimes with prime mortgages to spread out the risk? I'm guessing you're saying they did both but I just want to be clear.

Agreed. I would have to get close to losing my own contributions before I pulled my money.My mom invested my Dad's life insurance settlement almost two years ago. She hasn't worked since I was born and she's getting his pension but she is expecting to have to live off her investments at some point. She was upset because she lost >$10K just yesterday. I'm hoping her financial planners know what they're doing, but it does make me question whether I steered her in the right direction.

How the hell this is not scary or "pretending" nothing has happened? I lost 20K in the 401K since the beginning the year and that's after i changed the 80% money market allocation... If i haven't done that two months ago, i think i probably bleed out 50K-60K. Maybe i should just shut my eyes and ears regarding the financial markets, it's easier that way...

Consider yourself lucky. It could've been much worse. When the corporation that I work for took advantage of a loophole in the ERISA laws to convert their defined benefits retirement plan to a cash balance 401k plan, I lost $400,000.

Huh? We should feel lucky if we only lose a portion of our money due to the incompetence of the government and the greed of some selfish bastards. I wouldn't consider myself lucky. I'd consider myself ripped off.

I don't think I would continue to listen and trust the people who tell me that things aren't that bad and that things are getting better and better as my money is being taken away little by little by little.

i stop looking for a few minutes and the market explodes

i stop looking for a few minutes and the market explodesAnybody have info on what Henry Paulson's proposal is?

i stop looking for a few minutes and the market explodes

:eek: no doubt... I just wiped out 1/2 my loses (at least of the ones I track ;)). Single best day for me that I can recall.

Jedi Knight trick.

Pump 'N Dump

http://biz.yahoo.com/ap/080918/wall_street.html

NEW YORK (AP) -- Wall Street has ended a volatile session sharply higher after a stunning late-session turnaround that sent the Dow Jones industrials up about 400 points. The big comeback followed a report that the federal government may create an entity that will take over banks' bad debt.

The report on CNBC said Treasury Secretary Henry Paulson is considering the creation of an entity like the Resolution Trust Corp. that was set up during the savings and loan crisis of the late 1980s and early 1990s.

anyone know how much the Resolution Trust Corp cost the taxpayer?

as of 8/31/08 the Vanguard Sp500 index fund has an average return of 11.32% per year since 1976. please tell me where else i can find this type of return
Paid for Real Estate ;)

Huh? We should feel lucky if we only lose a portion of our money due to the incompetence of the government and the greed of some selfish bastards. I wouldn't consider myself lucky. I'd consider myself ripped off.

I don't think I would continue to listen and trust the people who tell me that things aren't that bad and that things are getting better and better as my money is being taken away little by little by little.
Welcome to the world of risk. That average rate of return includes ups and downs.

anyone know how much the Resolution Trust Corp cost the taxpayer?

Just bend over and take it like a man.

Huh? We should feel lucky if we only lose a portion of our money due to the incompetence of the government and the greed of some selfish bastards. I wouldn't consider myself lucky. I'd consider myself ripped off.


It's all relative, Mr. Half Empty Glass. -ptth-

Huh? We should feel lucky if we only lose a portion of our money due to the incompetence of the government and the greed of some selfish bastards. I wouldn't consider myself lucky. I'd consider myself ripped off.

I don't think I would continue to listen and trust the people who tell me that things aren't that bad and that things are getting better and better as my money is being taken away little by little by little.

we have had bear markets and financial panics since before there was a USA, it's all part of the risk of investing. stock markets don't always go up.

i'm reading of a theory that there is a 120 year stock cycle that will end in 2012 and that the SP500 will fall to around 500 before it surpasses 1565 again

It's all relative, Mr. Half Empty Glass. -ptth-

I don't own a glass. I had to pawn it to pay my taxes.

http://www.nypost.com/seven/09152008/news/nationalnews/mudd_flap_manor_129159.htm

MUDD-FLAP MANOR
NO HOUSING WOES FOR FANNIE'S FAILED CEO

By BRADEN KEIL
WHAT CRISIS? Fannie Mae's Daniel Mudd.
Posted: 4:02 am
September 15, 2008

As more than a million US homeowners face devastating mortgage foreclosures, ousted Fannie Mae CEO Daniel Mudd continues to live in an opulent Washington, DC, mansion replete with expansive gardens, servants' quarters and a home theater.

Mudd, whose former company is being bailed out by billions in taxpayer dollars, calls home a 22-room Colonial mansion on Newark Street in tony Cleveland Park, built on the former property of President Grover Cleveland.

The eight-bedroom, eight-bath pad includes large public rooms with fireplaces, a home theater, a gym, a wine cellar, a solarium, servants' quarters, a terrace off the master-bedroom suite, and a gourmet kitchen.

The gated, landscaped property also features a pool, fountains, gardens and a guesthouse.

The property is so lavish that some company employees dubbed it "Mudd Manor."

And they're furious that the executive at the helm of the ship as it sank into profound crisis has surfaced relatively unscathed, at least for now.

"Hey, he lost his limo and corner suite [at the office], but Mudd Manor is not a bad place to contemplate your next move," said a bitter Fannie Mae employee who requested anonymity.

"Most Fannie Mae employees are reeling from their employee stock-option-plan account balances' going to cents on the dollar."

Mudd, the son of former newsman Roger Mudd and descendent of Dr. Samuel Mudd, who treated Lincoln's assassin, John Wilkes Booth, did not return calls for comment.

The federal government last week announced a $200 billion bailout of the mortgage giants Fannie Mae and Freddie Mac as they put both collapsing financial institutions under their control.

The Fannie Mae employee said workers are now calling the street that Mudd lives on "the street of broken dreams," since his neighbors include Wendy Raine, the ex-wife of former Fannie Mae Chairman Frank Raine, and Executive Vice President Ken Bacon.

One worker said Mudd routinely treated loyal employees to lavish affairs there if they donated a minimum of 1 percent of their salaries to the company's political action committee.

Under the terms of his employment contract, Mudd could collect $9.3 million in severance pay, retirement benefits and compensation, as long as his dismissal was "without cause."

His salary last year was $900,000, although in a radio interview last month, he didn't deny reports that he raked in a total of $43 million in stock options, bonuses and overall compensation through the years.

Democratic Sens. Barack Obama, Chuck Schumer, and Jack Reed have written to Treasury Secretary Hank Paulson to object to golden parachutes for Mudd and ousted Freddie Mac Chairman Richard Syron, saying it would be "a gross violation of the public trust."


The last sentance is a huge joke on what those politicians think are their own stupid constituants. Of course, now they complain about Mudd, they already got their money from there in terms of political contributions.

Don't feel bad for him though, like F. Raines, another guy who took home 100 million from there, Mudd might get a chance of being an Obama economic advisor

Welcome to the world of risk. That average rate of return includes ups and downs.

I wasn't talking about risking money in the stock market. I understand that. I was hoping that putting money in a bank or a retirement fund wouldn't turn out to be a risky proposition.

I can understand the bitterness that people have that these scumbag CEOs are still rich, but isn't that in their contracts? I'm not sure why more CEOs don't seem to have company-performance-based payscales, but it's a little too late to complain about it. The real tragedy will be when some other company decides to hire these guys.

I can understand the bitterness that people have that these scumbag CEOs are still rich, but isn't that in their contracts? I'm not sure why more CEOs don't seem to have company-performance-based payscales, but it's a little too late to complain about it. The real tragedy will be when some other company decides to hire these guys.

It seems to be like NFL coaches. Once you are in the network you seem to stay in the network, even if you suck.

I just heard Ron Paul being interviewed.

Paul said that congress was not even consulted about these bailouts.

Is that true?

Maybe Paul's idea about doing away with the Federal Reserve wasn't such a bad idea after all. ;)

anyone know how much the Resolution Trust Corp cost the taxpayer?

According to this report from the FDIC, roughly $124 billion:

Over the 1986–1995 period, 1,043 thrifts with total assets of over
$500 billion failed. The large number of failures overwhelmed the resources of the FSLIC, so U.S. taxpayers were required to back up the commitment
extended to insured depositors of the failed institutions. As of December 31, 1999, the thrift crisis had cost taxpayers approximately $124 billion and the
thrift industry another $29 billion, for an estimated total loss of approximately $153 billion. The losses were higher than those predicted in the late 1980s,
when the RTC was established, but below those forecasted during the early to mid-1990s, at the height of the crisis.

The full report (in .pdf form) can be viewed here: The Cost of the Savings and Loan Crisis (http://www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf)

CNBC just reported that this would up to being roughly $4,000 for every man, woman, and child.

According to this report from the FDIC, roughly $124 billion:



The full report (in .pdf form) can be viewed here: The Cost of the Savings and Loan Crisis (http://www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf)

CNBC just reported that this would up to being roughly $4,000 for every man, woman, and child.

Now that would have been an economic stimulus package... 4 grand for every man, woman, and child.

Consider yourself lucky. It could've been much worse. When the corporation that I work for took advantage of a loophole in the ERISA laws to convert their defined benefits retirement plan to a cash balance 401k plan, I lost $400,000.

Crap, I'm so sorry. :(

I've been telling people at work to check with their financial consultant ASAP ever since Friday, because I suspect their 401k earnings which have bloomed over the last 5-10 years, have lost a considerable amount due to fudged earnings and where those earnings were taken from.

Outside of what's going on in the market, I can't believe how people who have a 401k, aren't monitoring it and taking appropriate action. One lady I talked to said she wasn't worried because she has her funds with an "insurance company" and her 401k is "insured".

Well, I just politely walked out of her office.

Short of saying she deserves what she gets, it's really hard to feel sorry for people like that lady.

Now that would have been an economic stimulus package... 4 grand for every man, woman, and child.

IIRC only 65-70% of the population actually works and pays taxes, that would mean each taxpayer is on the hook for ~$5800, and I haven't even subtracted the folks who make <$25K. $5,800 is like two months salary for most people. This also doesn't include the cost of Iraq. :eek:

people forget that the 1990's weren't just one happy decade

1994 was a pretty bad bear market and the one in 1998 was just as scary. the nasdaq was down 50% at it's lowest point in October of 1998. 1999 the indexes may have doubled, but there were several 15% - 25% corrections that year

Yes, but the difference now is the mountain of derivatives and other financial securitization instruments built upon continually-deflating assets. These are reletively recent creations. This isn't strictly a liquidity crisis, or a broader-market disruption or "correction".

Nobody can predict what's going to happen, and just as many creative "fixes" may come along as well (hopefully real fixes) - I think the basic point to many people's understanding of what's happening is the scope and size of the global systemic risk assoiciated, which is new territory in many ways.

Just bend over and take it like a man.

Joe Biden says, "It's the patriotic thing to do. Now squeal like a pig!"

I planned on riding this bear market out, but now I'm wishing I had gone to cash back at the beginning of the year (I'm down 22% YTD).

I'm crossing my fingers for a decent short-term rally in the fall (anyone think the Dow will spike to 12,000 this year?), then I'm going to dump some of my stocks and mutual funds. Of course, with my luck the rally will end with a nosedive the day I decide to dump.

The scary part about all this is that even the money market funds are on shaky ground right now. Retirees and those who are planning to retire soon are probably really feeling the hurt.

I planned on riding this bear market out, but now I'm wishing I had gone to cash back at the beginning of the year (I'm down 22% YTD).

I'm crossing my fingers for a decent short-term rally in the fall (anyone think the Dow will spike to 12,000 this year?), then I'm going to dump some of my stocks and mutual funds. Of course, with my luck the rally will end with a nosedive the day I decide to dump.


That's a natural reaction. I had it after the dotcom bubble and would have been ahead even now if I had just stayed in the mutuals, etc. It wasn't a total loss because I just used the money to pay off mortgages on investment property, but still....just a natural reaction.

Probably the biggest thing to consider is when you plan to need it. I am probably 22 years out (when I hit 59.5) so I'll just stick it out. I learned that lesson once. :lol:

I thought of this and haven't heard anyone mention this.
But could all these mortgage loans by people who should not have got the loans be the fault of illegal aliens?
I see a lot of illegals who can't speak english and live in the suburbs.
And they do have 3 families in a single family home.

Well, I won't argue illegal aliens probably are amongst the homeowners in the US who have the worst credit scores and many of them are foreclosing, but it isn't their fault.

Sorry, but I'm not blaiming illegal aliens for this major FUCK UP. While they are responsible for other issues in the US, it would be naive to point fingers at illegal aliens and say they created the mess.

I blame the fucking idiots who were dumb enough to lend them my fucking money. More than likely these fuckwads were white, have nice homes, and were plain greedy and didn't care who had to eventually pay for the shady loan deals made.

And in other news, Short-Selling has just been temporarily banned.

I thought of this and haven't heard anyone mention this.
But could all these mortgage loans by people who should not have got the loans be the fault of illegal aliens?
What is the percentage of illegal aliens in the population? Even if there are 20 million, that's still less than 10% of the US population. 10% is not going to cause the mortgage crisis we're seeing. Joe and Sally Six Pack are just as much to blame here as the a-hole lending institutions who took advantage of the frenzy to buy homes at any cost.

I thought of this and haven't heard anyone mention this.
But could all these mortgage loans by people who should not have got the loans be the fault of illegal aliens?
I see a lot of illegals who can't speak english and live in the suburbs.
And they do have 3 families in a single family home.

Immigants! I knew it was them! Even when it was the bears, I knew it was them.

Yes, but the difference now is the mountain of derivatives and other financial securitization instruments built upon continually-deflating assets. These are reletively recent creations. This isn't strictly a liquidity crisis, or a broader-market disruption or "correction".

Nobody can predict what's going to happen, and just as many creative "fixes" may come along as well (hopefully real fixes) - I think the basic point to many people's understanding of what's happening is the scope and size of the global systemic risk assoiciated, which is new territory in many ways.

if you go back a few decades, every decade the jokers on wall street lend a lot of money and it threatens to bring down the economy. one reason why the names on wall street change every 10 years.

I've been learning lots of good stuff from you al over the last few weeks and just wanted to say thanks first off.
You're talking about the MBS's which is the whole reason we're in such trouble. Correct me if I'm wrong, but weren't MBS a relatively recent invention? What did they do with mortgages before the MBS was invented? Also, please don't think I'm agreeing with Whoopi's proposal, I'm just learning here :)

Are you saying a subprime could become AAA because the top tranch was in a good bond (while the lower tranches were in lower rated bonds) or that they were mixing and matching subprimes with prime mortgages to spread out the risk? I'm guessing you're saying they did both but I just want to be clear.

that's what they did

took subprime loans, divided them up with the top tranches having the first 90% or so of a payout, maybe mixed in a few quality loans and the whole thing got a AAA rating.

the big subprime push started around 1997 and picked up speed around 2002. back then the underwriting standards were a lot tougher than 2003-2006 and it was a very profitable business because people would pay very high rates

this time it's not really subprime, ALT-A is a big thing this time as well. people with good credit took out loans they couldn't afford and some of the blogs i read like calculated risk cover this every few weeks how some ALT-A bond is running a 20% default rate. and these are people with FICO's around 700.

i remember back in 2003 when the rates started going back up everyone thought the housing market would cool off. but it took off because come spring 2004 the banks started pushing ARM's and other affordability mortgages. internet guerilla marketing was still new but i remember back then almost daily threads on fatwallet about how someone wanted to buy a house, couldn't afford a 30 year fixed and listed all the bullet points of ARM's.

the govt seems to want to do whatever it can to prop up Wall Street.

Looks like picking up some C a couple of days ago wasn't such a bad idea. Its up $6 from where I got it in premarket. If I had waited a day, it'd be up $8, but I can't really complain

When is government going to prop up main street?

When is government going to prop up main street?
That would be unethical. The recovery will trickle down to main street. ;)

put some limit orders in just in case people go really crazy today so i can lock in some profits. didn't catch the exact bottom with my play money, but no complaints about the returns. a lot better than my loan shark business

When is government going to prop up main street?

i will make sure to stop paying my mortgage just so i can get bailed out

Aren't the people in here complaining about the losses in their market accounts considered "main street"?

No!

Mainstreet is those millions of folks who have lost their homes thru foreclosure.

So the feds are going to buy mortgages now?

Aren't the people in here complaining about the losses in their market accounts considered "main street"?
Maybe.

I wouldn't be crying about losses when you're 30+ years away from retirement though (which I am). I'm certainly not that concerned about this mess long term when I look at my personal portfolio. :shrug:

I checked my 401K's yesterday just to see how much I've lost and it wasn't as bad as I thought. At this point, I'm getting more shares at a cheaper price and that's great long term.

No!

Mainstreet is those millions of folks who have lost their homes thru foreclosure.Oh, that's right. Social Security will take care of everyone if their retirement savings go down the drain. I keep forgetting.

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.

they already did stuff to prop up mainstreet. they got the lenders to lock in ARM prices and they are giving tax credits to peopel buying foreclosures.

both things that "hurt" someone like me who didn't get an ARM knowing it would adjust high. Also, my house would be less attractive if i sold it because it is NOT a foreclosure

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.

We can't discuss that here anymore. :eyebrow:

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.Another thing I keep forgetting. Old people just sell their homes to get cash and live it up the rest of their years in the old folk's home.

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.

I know that's the conventional thinking but is that really true anymore? I don't know either way but w/ more and more people getting directly involved in the market (401k, IRA, ROTH, individual accounts) earlier in life it wouldn't surprise me if before long the "house being the greatest asset" is no longer the case.

I have more money in my investment accounts than my house, but not in any one account. So my house is my greatest individual asset - assuming I could sell my house and get any money for it

http://www.politico.com/news/stories/0908/13602.html

bailout could cost a trillion :(

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.
Is that before or after you subtract the mortgage?

btw, McCain is against the bailouts: http://www.breitbart.com/article.php?id=D939QJ4G0&show_article=1

btw, McCain is against the bailouts: http://www.breitbart.com/article.php?id=D939QJ4G0&show_article=1
I will reserve judgement until I see how he votes.

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.

aren't you supposed to pay off your home before you retire and not use it like an ATM or buy a new one you can't afford?

So the feds are going to buy mortgages now?

Pretty much.

I also have some swamp land in Florida I'm trying to sell them. I have a good feeling about this. :up:

aren't you supposed to pay off your home before you retire and not use it like an ATM or buy a new one you can't afford?

And that has what do with the question?

aren't you supposed to pay off your home before you retire and not use it like an ATM or buy a new one you can't afford?

reverse mortgage. the house can be an atm!

Again - how much has the national debt been increased by these bailouts?

Pretty much.

I also have some swamp land in Florida I'm trying to sell them. I have a good feeling about this. :up:
You'd be surprised what they can do with swamp land down here.

"They paved paradise and put up a parking lot, la la la la la." :)
Again - how much has the national debt been increased by these bailouts?
It's no problem. China will take care of the rest of the debt.

Again - how much has the national debt been increased by these bailouts?
Who knows? With the creative accounting used by the government, I will bet we have actually reduced the national debt w/ the bailouts.

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.

So instead of taking your word on it, I looked it up:
http://www.census.gov/prod/2003pubs/p70-88.pdf

Home equity (the value of the home minus the mortgage amounts) constituted the largest share of household net worth, accounting for 32.3 percent of total net worth in 2000.
...
stocks and shares in mutual funds held outside IRAs and 401K plans made up the next largest share of net worth in 2000—15.6 percent, well above the share in 401K and Thrift Savings Plans and interest-earning assets at financial institutions (9.7 and 8.9 percent, respectively).


So adding stocks, IRAs and 401k = 34.2% > 32.3%

I wouldn't bet the farm on it.

Who is ultimately responsible for paying off these bailouts?

Again - how much has the national debt been increased by these bailouts?

A lot. But no one cares about the national debt anymore, right?

When is the U.S. government going to become a junk bond?

A trillion & a trillion there - pretty soon we're talking about real money.

Never again do I want to hear that conservatives care about the deficit or the national debt. Time & time again they've demonstrated they don't.

Reality - I know we'll hear over and over we that same thing coming from the conservatives.

And, yet, they rant & rave about the expenditure of 18 billion dollars in earmarks. :rolleyes:

When is the U.S. government going to become a junk bond?

According to some it sounds like next week...

Never again do I want to hear that conservatives care about the deficit or the national debt.

I would argue that Conservatives still do... this batch of Reps that's in power though is another story.

some of us conservatives think the bailouts are a bad idea.


btw, here is a really good article describing AIG's problem
http://www.reuters.com/article/newsOne/idUSMAR85972720080918?pageNumber=1&virtualBrandChannel=0

When is government going to prop up main street?


What do you think this has been about?


Have you all seen what has been happening in the rest of the world in response?

Again - how much has the national debt been increased by these bailouts?

looking at the terms of the deals the government will probably make money

some of us conservatives think the bailouts are a bad idea.


btw, here is a really good article describing AIG's problem
http://www.reuters.com/article/newsOne/idUSMAR85972720080918?pageNumber=1&virtualBrandChannel=0

And after reading that cursory, though decent, explanation, you still oppose the bailouts?

i dont know about that. if they start buying up bad debt, they are going to have to eat it. the 80s thing cost them 120 billion, how much will the mortgages cost them these days?

And after reading that cursory, though decent, explanation, you still oppose the bailouts?

That explanation suggests that AIG needs to be kept afloat. But I really don't like the idea of the govt getting involved. Basically, AIG made money for years by selling CDS and now the govt (taxpayers) is going to have to assume the risk? How is that right? Sounds like CDS sellers need to be regulated to actually have assets to back up a certain % of the swaps they sell

Best letter published in the NY Times about the financial bailouts:


To the Editor:

Dear Mr. Bernanke and Mr. Paulson:

My student loans are too big and it is hurting the economy. Can I have a bailout, please? I need $92,000.

Thanks.

Nathan Kottke
St. Paul, Sept.
17, 2008

:lol:

What is the average American's 'greatest asset?' I'll give you a hint - it ain't his 401K.


Looking ahead I wonder if the deaths of baby boomers will leave too many empty homes to maintain home prices. I've known many people who view thier homes as part of thier nest egg.

Does the government keep tabs on the ratio of living spaces / population ?

I read a book talking about how the kids of the baby boomers are set to inherit something like $4 trillion - primarily in homes from their paretns. I can't imagine we'll have too many homes. If the mortgage crisis extends that long (doubt it), the kids will just move in the parent's house instead of paying rent at the apartments they are living in.

I would argue that Conservatives still do... this batch of Reps that's in power though is another story.

:up:

And after reading that cursory, though decent, explanation, you still oppose the bailouts?

What do you think this has been about?
Have you all seen what has been happening in the rest of the world in response?

Again, you are saying or at least implying that these bailout need to happen because they are necessary... the problem is now too big that there cannot NOT be a bailout.

I still oppose the bailouts. There are worse things than a depression. The bailouts will ultimately result in one of those worse things.

what is that worse thing?

what is that worse thing?
Government ownership of private property. When the dust settles on this thing after the bailouts, the government in one way or another will own 60% of the private homes.

The irreversible weakening of the financial system. After the bailout, the financial systems will never fully recover. In the same way that the Great Depression changed certain aspects of our society and financial systems, this too will have long-lasting effects.

I can't help but think that the timing of this financial crisis was not coincidence.

I don't own a glass. I had to pawn it to pay my taxes.

i guess we all have to pawn something to pay the taxes... i don't like the idea of using tax payers' money to bailout sinking corporations, but i hate to see the ripple effect on the market when one giant falls after another...

I read a book talking about how the kids of the baby boomers are set to inherit something like $4 trillion - primarily in homes from their paretns. I can't imagine we'll have too many homes. If the mortgage crisis extends that long (doubt it), the kids will just move in the parent's house instead of paying rent at the apartments they are living in.



So what happens to appartment building owners?

Inheriting homes would certainly slow growth.

Also this is a global situation. Without the bailout many foreign banks will fall like dominoes. It has the potential to become a global depression destroying our relationship with everyone. With that much bad blood, people going hungry, and fear it would only be a matter of time before war breaks out.

short PPS? ;)

some of us conservatives think the bailouts are a bad idea.


btw, here is a really good article describing AIG's problem
http://www.reuters.com/article/newsOne/idUSMAR85972720080918?pageNumber=1&virtualBrandChannel=0Thanks for that article. Details the situation really well.

If you don't pass these bailouts, we'll have world-wide depression.

Tell me y'all don't believe that nonsense.

the best business of the last decade would have been to set up a boiler room operation to sell CDS's, collect the cash and go bankrupt instead of paying out the insurance

Whew, a trillion dollar bailout. How has it come to this?

Oh, and now CitiGroup is interested in WaMu - blech! C'mon, Chase, Fargo.

this is an interesting article on the different solutions being attempted in the us and the uk.

If this fails, it will take down all Britain's banks (http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4776149.ece)

Whew, a trillion dollar bailout. How has it come to this?

Oh, and now CitiGroup is interested in WaMu - blech! C'mon, Chase, Fargo.
Well, they bought out Washington Mutual Finance and closed down my office when I worked for WMF, might as well buy up the papa bear too. :lol:

So glad I don't work for them anymore.

If you don't pass these bailouts, we'll have world-wide depression.

Tell me y'all don't believe that nonsense.
Without the bailouts, things in the economy will be much much worse in the short to moderate term.

As you've always said c-man, the free market is a myth.

this is an interesting article on the different solutions being attempted in the us and the uk.

If this fails, it will take down all Britain's banks (http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4776149.ece)

i saw another article a couple of days ago about how we were basically having a run on the banks but instead of by depositers, it was by investors. this article backs that idea up. basically short sellers screwed the banks. GS and ML reported better than expected earnings and they are both still at the risk of going under. crazy

As you've always said c-man, the free market is a myth.

Well...

The 'truth' of the free market is Standard Oil, Robber/Railroad Barons , and IBM with EBCDIC, etc.

Only those that forget the truth of the free market are the ones who laud it's merits.

some of us conservatives think the bailouts are a bad idea.


btw, here is a really good article describing AIG's problem
http://www.reuters.com/article/newsOne/idUSMAR85972720080918?pageNumber=1&virtualBrandChannel=0

Thanks for the article, very insightful, now i can explain to a six years old...

i saw another article a couple of days ago about how we were basically having a run on the banks but instead of by depositers, it was by investors. this article backs that idea up. basically short sellers screwed the banks. GS and ML reported better than expected earnings and they are both still at the risk of going under. crazy

i have a friend who's just started work experience at ml in london. interesting times to be sure. apparenlty all the talk is of the company potentially going bust. insane!

btw there was one of the short sellers on the news over here this morning trying to justify his actions. he reminded me of nothing more than a 70's asset stripper along the lines of james goldsmith, jim slater, or gordon geko. i wonder if the "temporary" injunction on short selling will lapse into permenency.

Well...

The 'truth' of the free market is Standard Oil, Robber/Railroad Barons , and IBM with EBCDIC, etc.

Only those that forget the truth of the free market are the ones who laud it's merits.

i didn't expect to read this comment from you. do you support regulation of the market then? i also wonder how this latest crisis plays with the libertarian views espoused by some. i'm not sure how it would be possible to alter this situation at all under such a limited form of governance.

Well... the fact are the facts. History is the best educator on things of complexity and large scope.

The whole 'regulation of the markets' thing/question gets into personal prejudice, and therefore political superficialities for the most part. I'll avoid taking my post in that direction.

Suffice it to say what I posted is factual and accurate.

If someone is 'for' 'free markets' they are for Standard Oil.

Since most people have little to no truly contextual historical understanding of what Standard Oil was, that probably means very little to most. Reading a few blurbs in a college text book is worthless on such a subject.

Contextual understanding of history is almost as rare as a 'heart of gold'.

But history shows us, again and again, what a truly 'free' market is, and does.

Doesn't this seem to people like alot of this is simply stemming from the fact that people are experiencing stagnating unemployment and wage growth that is finally starting to take it's toll. The US was ripe for a problem like this to occur sooner or later. You cannot sell an "ownership society" to an underclass of people who don't have the means and will never have the means to become owners. The banks most surely knew this, but in order to make their business models work, they had to come up with these "exotic products" to mask the real truth and to hang on for a little longer. Now, they are getting bailouts, but the old business models just don't work anymore and the bandaid approach will do nothing but buy a little more time (maybe until after the elections?) The independent investment bank doesn't make sense anymore and few want to admit it.

Investors either didn't care to know or really did not know how bad it has become for the common person.

Also, reading that article on AIG tells me just how bad it has become for the common financial/insurance services firm. Someone had to actually sit around and come up with that ridiculous product. If people would put that much effort into doing anything even remotely productive for the human race, where could we be today. Instead, we have people sitting around trying to dream up the next scam to get rich quick without lifting a finger. It's a sad state of affairs.

And what have the Bush administration and Congress been doing all this time when these instruments were becoming a larger and larger share of the balance sheets. These people aren't dumb.

I am of the opinion of scracer that this is not all happening merely "by coincidence". If it is, then why do we even bother with leaders?

Investors either didn't care to know or really did not know how bad it has become for the common person.
One of the reasons it got bad for someone like me is because people bought houses that they couldn't possibly afford. People making less money than me bought houses 3 times the size of mine. Now the question is, should those people be allowed to stay in their houses when they shouldn't have bought them in the first place? I think they deserve the right to a house, but one that is within their means. And if that's a 1 bedroom condo or a studio apt, it's still home ownership. I think there was greed on both Wall Street and on Joe Six Pack Street.

Now it takes two to tango and most of the companies who engaged in these bad lending practices are going to die or get hurt very badly financially as they should. The bail outs are basically protecting the economy from imploding entirely. The sooner we get house prices down, the faster the common man will be able to afford them again with traditional mortgages. That's going to cause a lot of pain to people who bought more house than they could afford, but it will be better for the little guy in the long run. As it stands now, with house prices still high and no credit to buy them, the little guy is screwed anyway.

I just don't have a lot of sympathy for the folks who bought more house than they could afford. And for all you Republicans and Libertarians out there, no I'm not coming over to your side. :lol: This is just one issue that sticks in my craw.

You cannot sell an "ownership society" to an underclass of people who don't have the means and will never have the means to become owners. The banks most surely knew this, but in order to make their business models work, they had to come up with these "exotic products" to mask the real truth and to hang on for a little longer.

"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered."

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

"We must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty or profusion and servitude. If we run into such debts as that we must be taxed in our meat in our drink, in our necessities and comforts, in our labors and in our amusements, for our callings and our creeds our people must come to labor sixteen hours in the twenty-four, give earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live. We have not time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow suffers. Our landholders, too retaining indeed the title and stewardship of estates called theirs, but held really in trust for the treasury, must be contented with penury, obscurity and exile. Private fortunes are destroyed by public as well as by private extravagance. This is the tendancy of all human governments. A departure from principle becomes a precedent for a second; that second for a third; and so on, till the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering. And the fore horse of this frightful team is public debt. Taxation follows that, and in it's train wretchedness and oppression."

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question it's methods or throw light upon it's crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe.. corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong it's reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed."

We may congratulate ourselves that this cruel war is nearing its end. It has cost a vast amount of treasure and blood. . . .It has indeed been a trying hour for the Republic; but I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless.


The money system is rigged for the wealthy, and like TJ and AL and many others predicted they run the government, both parties. The two parties are used to manipulate the masses by appealing to their personal prejudices.

All this talk of 'lower taxes on the wealthy, they can't pay ALL of it" by some here and many in the media really makes me laugh.

http://i260.photobucket.com/albums/ii18/drmabuse06/Forum%20comments/link.gif (http://www.timesonline.co.uk/tol/money/tax/article1996735.ece)

Well...

The 'truth' of the free market is Standard Oil, Robber/Railroad Barons , and IBM with EBCDIC, etc.

Only those that forget the truth of the free market are the ones who laud it's merits.



The system of banking we have both equally and ever reprobated. I contemplate it as a blot left in all our Constitutions, which, if not covered, will end in their destruction, which is already hit by the gamblers in corruption, and is sweeping away in its progress the fortunes and morals of our citizens.

this is an interesting article on the different solutions being attempted in the us and the uk.

If this fails, it will take down all Britain's banks (http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4776149.ece)

Regardless of what happens, I fear it is going to be very bad for London.

The sooner we get house prices down, the faster the common man will be able to afford them again with traditional mortgages. That's going to cause a lot of pain to people who bought more house than they could afford, but it will be better for the little guy in the long run. As it stands now, with house prices still high and no credit to buy them, the little guy is screwed anyway.

I just don't have a lot of sympathy for the folks who bought more house than they could afford. And for all you Republicans and Libertarians out there, no I'm not coming over to your side. :lol: This is just one issue that sticks in my craw.

This is exactly right. I know that the mortgage crisis is huge, but if the government does any kind of bailout for individual owners to help keep people in their houses, it does the economy no good. If the government does this, they will artificially keep housing prices high, which pretty much screws all the people who don't yet have a house, because not only are housing prices still high, nobody will be able to afford them without the ridiculous loans of the past few years. The housing market, especially in the peak bubble areas needs to correct itself on it's own.

I listen to a lot of AM radio, especially sports talk radio, which must cater to the lowest common denominator considering the kinds of commercials that are run. There used to be tons of refinancing/mortgage commercials, even up to the last few months telling people that NOW is still the best time to buy because you make money in the down market. Now there are commercials from law firms telling people to come in and have them look over the papers so that they can get out of their loans on technicalities, as well as a ton of debt consolidation companies, where they tell you you CANNOT do it alone.

Again, you are saying or at least implying that these bailout need to happen because they are necessary... the problem is now too big that there cannot NOT be a bailout.

I still oppose the bailouts. There are worse things than a depression. The bailouts will ultimately result in one of those worse things.

No need to reiterate my support for some of the steps taken so far. My point to Venusian though was that if he, or anybody else, agreed with the basic tenets of the article he posted, which is a logical conclusion given his endorsement of said article, it is difficult to understand how he could oppose bailouts of some sort. Unless one shares your view that a global economic depression, as posited by the article, would be better.


Relatedly, what do you believe is not coincidental about the current situation? Who and why?

Now it takes two to tango and most of the companies who engaged in these bad lending practices are going to die or get hurt very badly financially as they should. The bail outs are basically protecting the economy from imploding entirely. The sooner we get house prices down, the faster the common man will be able to afford them again with traditional mortgages. That's going to cause a lot of pain to people who bought more house than they could afford, but it will be better for the little guy in the long run. As it stands now, with house prices still high and no credit to buy them, the little guy is screwed anyway.
As I mentioned before, without a bailout, such a correction would ultimately put things back on solid footing. But WITH a bailout, those investors who had their risky investments secured by the bailout will have the money to snap up these cheaper homes. That will cause prices to rise on those homes. Couple increased investment activity with a tightening up of writing new mortgages, we're going to ultimately end up with fewer people owning more homes, and more people renting.

Bottom line... IMO, without a bailout the little guy will have a chance.

btw there was one of the short sellers on the news over here this morning trying to justify his actions. he reminded me of nothing more than a 70's asset stripper along the lines of james goldsmith, jim slater, or gordon geko. i wonder if the "temporary" injunction on short selling will lapse into permenency.
I don't know if it's a bad idea or not, but it seems impossible to enforce.

Beyond the whole federal government being involved angle, isn't anyone troubled by the fact that such a costly bailout was done without the approval (or any kind of involvment) of Congress? Once again, we are putting our faith into the executive branch (that grows more powerful) and the unelected (with people put in charge by that executive) federal depts/agencies. We are trusting them to do what's right. The sad thing is that Congress doesn't even seem to want to be involved. This has become a growing and disturbing trend.

I shudder to think how powerful the executive branch will be in 20 years.

Also, maybe just the conspiracy theorist in me, but anyone notice how all this stuff started getting really bad now that commodities have crashed?

I read somewhere that only 1 of every 10 homes has gone into foreclosure. That's 10% of the business. It has seemed odd to me from the beginning that 10% should make any business fail.

But when you couple that with the fact that these companies have no cash and their main form of making alot of cash over the past few years has been the commodities trades and these phony scams coming due, it's no wonder.

Some have said for AIG, hurricane Ike was the straw that broke the camel's back.

Just like the reasons for the Great Depression, there could be many more components of this than just the simple one-liner of "subprime" being touted by the media.

Beyond the whole federal government being involved angle, isn't anyone troubled by the fact that such a costly bailout was done without the approval (or any kind of involvment) of Congress? Once again, we are putting our faith into the executive branch (that grows more powerful) and the unelected (with people put in charge by that executive) federal depts/agencies. We are trusting them to do what's right. The sad thing is that Congress doesn't even seem to want to be involved. This has become a growing and disturbing trend.

I shudder to think how powerful the executive branch will be in 20 years.
BUT IT WAS AN EMERGENCY!!!!

Privatized profits, socialized losses.

Could this not be any more true today?

Beyond the whole federal government being involved angle, isn't anyone troubled by the fact that such a costly bailout was done without the approval (or any kind of involvment) of Congress? Once again, we are putting our faith into the executive branch (that grows more powerful) and the unelected (w