http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-092908.aspx
Interestingly, the passage of this rested in the hands of Congressional Democrats. The Republicans do not have the numbers in the House to either pass or reject legislation on their own. Don't anyone read too far into that - it's simply meant to be an observation.
Just something to point out before yet another thread descends into political bickering from both sides around here. Probably won't be pointed out much in the media - online, traditional, CNN, FOX, etc.
Yet another result of the 24-hour, real-time availaibility of information:
http://biz.yahoo.com/ap/080929/wall_street.html (http://biz.yahoo.com/ap/080929/wall_street.html)
Quote
As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets on fears that the financial system would keep sinking under the weight of failed mortgage debt.
Apparently, House Speaker Pelosi is wrangling to get several Democrats to change their votes as entered. The vote seems to have been suspended? Lots of backroom, uber-political somethings-or-other going on in the Democrat side of the House.
What's interesting to me is that this wasn't an entirely-partisan vote, it seems.
**EDIT**
Here we go: Final Vote numbers in the House, from CNNMoney.com at 2:18pm:
http://money.cnn.com/2008/09/29/news/economy/bailout/index.htm?cnn=yes (http://money.cnn.com/2008/09/29/news/economy/bailout/index.htm?cnn=yes)
Quote
What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support, before rebounding slightly. The key stock reading was down more than 500 points.
The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.
Further:
http://money.cnn.com/2008/09/28/news/economy/Sunday_talks_bailout/index.htm?postversion=2008092822 (http://money.cnn.com/2008/09/28/news/economy/Sunday_talks_bailout/index.htm?postversion=2008092822)
Quote
Key provisions of the bill
Doling the money out: The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use. Authority to use the money would expire on Dec. 31, 2009, unless Congress certifies a one-year extension.
Protecting taxpayers: The ultimate cost to the taxpayer is not expected to be near the amount the Treasury invests in the program. That's because the government would buy assets that have underlying value.
If the Treasury pays fair market value - which investors have had a hard time determining - taxpayers stand a chance to break even or even make a profit if those assets throw off income or appreciate in value by the time the government sells them. If it overpays for the assets, the government could be left with a net loss but would get something back on the open market for the assets when it eventually sells them.
Here's my question: What in Hades' name does that mean? How am *I* going to profit from this, exactly? Am I going to be cut a check from the Federal Government, saying "here - we had good returns"? Are they going to cut me a tax break in the future, equivalent of whatever the gains on this were? Not bloodly likely, says I.
I want them to tell me - draw it out in 5th-grade, draw-it-out-in-crayon-for-me terms - how the hell I, as a taxpayer, am going to
profit from any of this.
Congress is infested with weak willed cowards...
House defeats $700B financial markets bailout
Sep 29 02:20 PM US/Eastern
By JULIE HIRSCHFELD DAVIS
Associated Press Writer Write a Comment
WASHINGTON (AP) - The House on Monday defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and bipartisan congressional leaders to quickly bail out the staggering financial industry.
Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.
When the critical vote was tallied, too few members of the House were willing to support the unpopular measure with elections just five weeks away. Ample no votes came from both the Democratic and Republican sides of the aisle.
Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home.
The vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said that Bush had used a "call list" of people he wanted to persuade to vote yes as late as just a short time before the vote.
Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.
They found only two.
Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets. The version that was up for vote Monday was the product of marathon closed-door negotiations on Capitol Hill over the weekend.
"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for itâ€"not me.' "
With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of world markets on Congress, Ryan added.
"We're in this moment, and if we fail to do the right thing, Heaven help us," he said
Excellent posting, BT. One more peice of evidence that most DC politicians are more self-serving that either side will ever care to admit. Yet another reason there should be Congressional term limits as well. It's all about CYA in Washington right now, at the expense (literally) of everyone else.
Infuriating.
Quote from: Doctor_K on September 29, 2008, 02:46:33 PM
Excellent posting, BT. One more peice of evidence that most DC politicians are more self-serving that either side will ever care to admit. Yet another reason there should be Congressional term limits as well. It's all about CYA in Washington right now, at the expense (literally) of everyone else.
Infuriating.
yep - we never will know how the markets would've treated a passage, but I don't think it would've been a HUGE upswing...the intl markets had already spoken before our markets opened today. they said $700b was not enough to turn things around globally. this, along with the bad consumer goods spending report that was released over the weekend, spells bad things in the near term for us i believe. hard to ignore all the signs now.
Quote from: stephendare on September 29, 2008, 02:59:15 PM
For once, I feel like the Congressional Republicans are making a stand for the right thing.
I was with the Dems on this one. Can't believe i said that. It was a good package. Wouldn't have been a panacea, but would've helped. Doing nothing is going to be worse.
Quote from: Driven1 on September 29, 2008, 03:06:29 PM
Quote from: stephendare on September 29, 2008, 02:59:15 PM
For once, I feel like the Congressional Republicans are making a stand for the right thing.
I was with the Dems on this one. Can't believe i said that. It was a good package. Wouldn't have been a panacea, but would've helped. Doing nothing is going to be worse.
OMG.... Pelosi is a freaking idiot. yeah, if you wanna get something passed, why don't you piss off the voters you need with a speech like this RIGHT BEFORE THE VOTE!!! WHAT A MORON!!!!!! The Dems need to eliminate this lamebrain from any position of leadership. How stupid do you have to be???
http://www.breitbart.tv/html/184803.html
Has anyone leaped from the top of the BOA tower yet? Better put up the net because here it comes again!
OCKLAWAHA
S&P 500 down 8.14% now.
It's Black Monday again.
failed bail out news hitting regional banks hard. Is Regions Bank (RF) next? Shares down 33% today.
http://finance.yahoo.com/q?s=RF
taking your medicine is not easy and it rarely tastes good but in the end the foul tasting medicine will make the patient better. This bill was a placebo that would have made things feel better but it wouldn't have cured anything.
there is and probably will be more blood running down wall st. but that is the price that has to be paid.
guys - you may have enough money to not need credit, but the vast majority of Americans are not in the same boat. where will Middleclass Joe now get his car loan from? or Mrs. Tanner who wants to open the tanning salon and needs a business loan? or Mr. and Mrs. Youngmarrieds who have great credit and want to buy their first home and no one has the money to loan them?
say all that you want to, but please tell me WHERE the loans will come from?
Quote from: Driven1 on September 29, 2008, 04:21:58 PM
guys - you may have enough money to not need credit, but the vast majority of Americans are not in the same boat. where will Middleclass Joe now get his car loan from? or Mrs. Tanner who wants to open the tanning salon and needs a business loan? or Mr. and Mrs. Youngmarrieds who have great credit and want to buy their first home and no one has the money to loan them?
say all that you want to, but please tell me WHERE the loans will come from?
They will have to wait. While waiting they need to save cash so they can put money down when the time comes. It will come but it looks like we will be in a cash mostly economy for awhile.
Do businesses actually take out loans to make payroll?? I heard this today on CNN... If this is true it seems to me that there are a lot of businesses that were on a wing and a prayer long before this crisis. It may be time to clear away the dead wood before the entire forest goes up in flames. Time to go back to the way things were done 30 years ago. Less credit... much less and more cash... save your money and live within your means.
Quote from: stephendare on September 29, 2008, 05:03:23 PM
It will loosen up as the market starts resembling reality.
(http://files.dmusic.com/music/t/h/thecollabs/rofl-doggie.jpg)
"think positive thoughts, think positive thoughts."
WHERE will this "loosened" up $$ come from?
oh yeah - and in the meantime, while things are "loosening up" magically, what do you think will happen to the economy?
CNN reprters are falling all over themselves calling this "McCains failed bill"... :D :o ::)
Quote from: BridgeTroll on September 29, 2008, 05:14:30 PM
CNN reprters are falling all over themselves calling this "McCains failed bill"... :D :o ::)
of course. morons. partisan politics again. give me a break...
now for some real news...
latest comments from message boards...
Quote
WOW... 33 minutes ago It's amazing that the drop was so significant that my Puts almost cancel out the losses of my calls and I'm much heavier on the call volume. What a scary day/week/month.
Good luck to everyone this week. I know the shorts are snickering, but there is only so much of a drop you can hope for. If we see a complete collapse, then all the money you make going short is worthless anyways.
I have never seen anything like the last two weeks and the thought that it could get worse scares the Sh$t out of me. Not because of my positions, but because of our way of life is being challenged.
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=te&bn=14496&tid=87063&mid=87063&tof=7&frt=1#87063
Quote from: stephendare on September 29, 2008, 05:23:28 PM
Quote from: BridgeTroll on September 29, 2008, 05:10:40 PM
Quote from: Driven1 on September 29, 2008, 04:21:58 PM
guys - you may have enough money to not need credit, but the vast majority of Americans are not in the same boat. where will Middleclass Joe now get his car loan from? or Mrs. Tanner who wants to open the tanning salon and needs a business loan? or Mr. and Mrs. Youngmarrieds who have great credit and want to buy their first home and no one has the money to loan them?
say all that you want to, but please tell me WHERE the loans will come from?
They will have to wait. While waiting they need to save cash so they can put money down when the time comes. It will come but it looks like we will be in a cash mostly economy for awhile.
Do businesses actually take out loans to make payroll?? I heard this today on CNN... If this is true it seems to me that there are a lot of businesses that were on a wing and a prayer long before this crisis. It may be time to clear away the dead wood before the entire forest goes up in flames. Time to go back to the way things were done 30 years ago. Less credit... much less and more cash... save your money and live within your means.
Yes, Bridge Troll, this was one of the indicators in March. The large retail chains were denied their yearly lines of credit which allow them to cover payroll and inventory until the holiday sales season.
That didnt happen this year, causing an early round of closing announcements, but after this christmas, the REAL closings will take place.
Although i posted on this in detail at the time, several other posters drowned out the real news.
There may have been signs in March but the problem goes much deeper. Somehow in this country we convinced ourselves it is OK to make 50k a year and live like we make 100k... More credit cards, bigger better car, bigger better house, TV, computer, washer dryer... all bought on credit... all bought with money we did not have but always expected to make eventually. Worse yet the economy has been built on the rising consumer debt... retailers extended credit to keep people buying things they could not afford.
Quote from: stephendare on September 29, 2008, 04:00:41 PM
Quote from: apvbguy on September 29, 2008, 03:53:44 PM
taking your medicine is not easy and it rarely tastes good but in the end the foul tasting medicine will make the patient better. This bill was a placebo that would have made things feel better but it wouldn't have cured anything.
there is and probably will be more blood running down wall st. but that is the price that has to be paid.
for once we agree.
you are like a blind squirrel, every once in awhile you come up with a chestnut
I'm leaving my office to go buy some plywood, duct-tape and vinyl sheathing to start my very own shantytown.
Anyone wanna join me? I'm sure if we act quickly enough, we can set up a cool place in the spot that they were going to build the St. John on. ;D
:D :D
Quote from: stephendare on September 29, 2008, 05:46:00 PM
Quoteyou are like a blind squirrel, every once in awhile you come up with a chestnut
simply because I am agreeing with your basic recitation of a tenet of classic capitalism doesnt entitle you to pretend parity exists between our underlying understanding of the situation.
This statement is kind of like hearing an eleven year old attempt to correct an adult. I appreciate your eagerness to appear clever, but I would suggest waiting until you actually are before you attempt it again.
bwahahahaha, there you go again, do you really think that you so important that I give a hoot of your impression of me? regardless of you or anyone else siding with me, liking or disliking my opinions I am confident and secure enough not to care
Quote from: Driven1 on September 29, 2008, 04:21:58 PM
guys - you may have enough money to not need credit, but the vast majority of Americans are not in the same boat. where will Middleclass Joe now get his car loan from? or Mrs. Tanner who wants to open the tanning salon and needs a business loan? or Mr. and Mrs. Youngmarrieds who have great credit and want to buy their first home and no one has the money to loan them?
say all that you want to, but please tell me WHERE the loans will come from?
unfortunately for them, that is the bad taste of the medicine that we all will have to endure as the price to pay for this mess. This is what that failed bill was about, it was about avoiding the consequences. The reality is that the country will be worse off for this bill not passing but the bill offered was too flawed, maybe the moronic politicos will get their act together and pass a responsible bill that will make the medicine a bit more palatable
Quote from: stephendare on September 29, 2008, 05:51:06 PM
obviously you do. IN fact, the only thing you ever post on IS other people opinions and how they either compare or contrast to yours. Its generally not an indicator of either confidence or security when someone does this.
However.....whatever lets you sleep at night.
And I wouldnt count on anyone 'siding' with you.
However, you might occasionally just be right.
You will find the experience not only new, but actually thrilling.
maybe the being blind analogy isn't too far off base, I am posting facts and opinions, you are posting insults and innuendos, try and post civilly
Quote from: stephendare on September 29, 2008, 05:54:38 PM
Quote from: apvbguy on September 29, 2008, 05:52:50 PM
Quote from: stephendare on September 29, 2008, 05:51:06 PM
obviously you do. IN fact, the only thing you ever post on IS other people opinions and how they either compare or contrast to yours. Its generally not an indicator of either confidence or security when someone does this.
However.....whatever lets you sleep at night.
And I wouldnt count on anyone 'siding' with you.
However, you might occasionally just be right.
You will find the experience not only new, but actually thrilling.
maybe the being blind analogy isn't too far off base, I am posting facts and opinions, you are posting insults and innuendos, try and post civilly
Ah. yes. Civility. thank you for reminding me.
APVBGuy, please observe our rules of civility and try not to insult others in your posts. Make your points and you will find that people take them more seriously.
bwahahahaha, now the pot calls the kettle black. try and keep it real
Quote from: Doctor_K on September 29, 2008, 02:15:42 PM
Further:
http://money.cnn.com/2008/09/28/news/economy/Sunday_talks_bailout/index.htm?postversion=2008092822 (http://money.cnn.com/2008/09/28/news/economy/Sunday_talks_bailout/index.htm?postversion=2008092822)
Quote
Key provisions of the bill
Doling the money out: The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use. Authority to use the money would expire on Dec. 31, 2009, unless Congress certifies a one-year extension.
Protecting taxpayers: The ultimate cost to the taxpayer is not expected to be near the amount the Treasury invests in the program. That's because the government would buy assets that have underlying value.
If the Treasury pays fair market value - which investors have had a hard time determining - taxpayers stand a chance to break even or even make a profit if those assets throw off income or appreciate in value by the time the government sells them. If it overpays for the assets, the government could be left with a net loss but would get something back on the open market for the assets when it eventually sells them.
Here's my question: What in Hades' name does that mean? How am *I* going to profit from this, exactly? Am I going to be cut a check from the Federal Government, saying "here - we had good returns"? Are they going to cut me a tax break in the future, equivalent of whatever the gains on this were? Not bloodly likely, says I.
I want them to tell me - draw it out in 5th-grade, draw-it-out-in-crayon-for-me terms - how the hell I, as a taxpayer, am going to profit from any of this.
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
Quote from: Driven1 on September 29, 2008, 03:05:50 PM
Quote from: Doctor_K on September 29, 2008, 02:46:33 PM
Excellent posting, BT. One more peice of evidence that most DC politicians are more self-serving that either side will ever care to admit. Yet another reason there should be Congressional term limits as well. It's all about CYA in Washington right now, at the expense (literally) of everyone else.
Infuriating.
yep - we never will know how the markets would've treated a passage, but I don't think it would've been a HUGE upswing...the intl markets had already spoken before our markets opened today. they said $700b was not enough to turn things around globally. this, along with the bad consumer goods spending report that was released over the weekend, spells bad things in the near term for us i believe. hard to ignore all the signs now.
The global markets this morning were dealing with their own bank failures in Europe, I doubt it had anything to do with the $700 billion bill that was announced last week.
Quote from: Driven1 on September 29, 2008, 03:06:29 PM
Quote from: stephendare on September 29, 2008, 02:59:15 PM
For once, I feel like the Congressional Republicans are making a stand for the right thing.
I was with the Dems on this one. Can't believe i said that. It was a good package. Wouldn't have been a panacea, but would've helped. Doing nothing is going to be worse.
The original 3 page proposal may have been good, the revised 44 page proposal may have been ok, but the 110 page bill up for vote was filled with 100+ pages of BS and earmarks.
As usual, Congress has managed to dig their dirty fingers in and screw up something that may have actually been beneficial.
Quote from: BridgeTroll on September 29, 2008, 05:10:40 PM
Do businesses actually take out loans to make payroll?? I heard this today on CNN... If this is true it seems to me that there are a lot of businesses that were on a wing and a prayer long before this crisis. It may be time to clear away the dead wood before the entire forest goes up in flames. Time to go back to the way things were done 30 years ago. Less credit... much less and more cash... save your money and live within your means.
I will keep it simple, if a customer pays with a credit card, the business does not see that money for awhile but they still have to pay employees that week.
Almost every sizeable company has a line of revolving credit, bills due do not always coincide with payments taken.
Quote from: whitey on September 29, 2008, 06:30:06 PM
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
you are correct in your analysis, many of the obnoxious provisions like the ACORN earmarks were stripped out of the bill, but many bad things were left in and while the media won't tell you about the nuts and bolts of the bill if people look hard like you have the good, bad and ugly is out there. The dems padded a lot of pork and precedents that were really bad and that is a part of why the bill went down. the real crime is that the republicans were playing ball with the dems and when the fix fell apart everyone was blaming everyone else when all they needed to do was look in the mirror to see why the bill failed.
This bill highlights how congress, both sides, have failed all of us, both sides are reprehensible and the people are right about demanding change, unfortunately the change offered by BHO is way too radical and the change offered by McCain isn't enough, we really are in a pickle
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
[/quote]
it called reading and understanding the real facts not posting emotional and comments based on ignorance. Think of this like being interrogated, if you're telling the truth the story is always the same, if it is not quite true you need to very careful to keep your BS in order. You are fairly good at it but those who do know fact from fiction can pick you apart every time
Quote from: stephendare on September 29, 2008, 05:20:31 PM
Quote from: Driven1 on September 29, 2008, 05:12:27 PM
oh yeah - and in the meantime, while things are "loosening up" magically, what do you think will happen to the economy?
Well what did you guys think was going to happen when the warning signs were going off for everyone else 15 months ago?The time to fix it was then, Driven, not now that its too late.
But as I recall, none of this was real or important and just a partisan attack based on Bush Derangement Syndrome.Too late is too late.What is the point of dragging the process out significantly longer?The end result of all this 'bailout' nonsense is complete vassalage to the Chinese.
Stephen, perhaps you can hop in your time machine and wrangle with the problem back 5 years ago (or whenever), when it was just a wee-little problem. As for the rest of us, we are stuck here in the present dealing with a major financial crisis. It is my hunch though that time machines and positive thoughts will get us nowhere in the present day.
Quote from: apvbguy on September 29, 2008, 07:27:24 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
it called reading and understanding the real facts not posting emotional and comments based on ignorance. Think of this like being interrogated, if you're telling the truth the story is always the same, if it is not quite true you need to very careful to keep your BS in order. You are fairly good at it but those who do know fact from fiction can pick you apart every time
But, if you listen to rush, he fills your head with a nice believable storyline suitable for posting online.
And since rush is your life and hero, you remember all the fine details exquisitely.
I wonder, where RG is? probably busy covering margin calls.
We could use "the voice of reason and calm
tm" to hepl heal the economy. His pronouncements of the basic soundness of the economy were so compelling.
Quote from: Driven1 on September 29, 2008, 07:37:06 PM
Quote from: stephendare on September 29, 2008, 05:20:31 PM
Quote from: Driven1 on September 29, 2008, 05:12:27 PM
oh yeah - and in the meantime, while things are "loosening up" magically, what do you think will happen to the economy?
Well what did you guys think was going to happen when the warning signs were going off for everyone else 15 months ago?The time to fix it was then, Driven, not now that its too late.
But as I recall, none of this was real or important and just a partisan attack based on Bush Derangement Syndrome.Too late is too late.What is the point of dragging the process out significantly longer?The end result of all this 'bailout' nonsense is complete vassalage to the Chinese.
Stephen, perhaps you can hop in your time machine and wrangle with the problem back 5 years ago (or whenever), when it was just a wee-little problem. As for the rest of us, we are stuck here in the present dealing with a major financial crisis. It is my hunch though that time machines and positive thoughts will get us nowhere in the present day.
Interesting; you have gone from manic to circumspect in just 7 days and 1000 points.
Quote from: stephendare on September 29, 2008, 07:34:52 PM
hmm. perhaps you should practice remaining calm enough to actually use the quote command correctly.
thanks for the advice, do you have ANYTHING to add to the topic at hand?
Quote from: stephendare on September 29, 2008, 07:34:52 PM
The post and line of reasoning remains hogwash.
please try to keep your posts on a more civil level, if you cannot point out the specific parts that are hog wash then this is just an uncivil, unsubstantiated ad hominem attack
Quote from: Midway on September 29, 2008, 07:41:27 PM
Quote from: apvbguy on September 29, 2008, 07:27:24 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
it called reading and understanding the real facts not posting emotional and comments based on ignorance. Think of this like being interrogated, if you're telling the truth the story is always the same, if it is not quite true you need to very careful to keep your BS in order. You are fairly good at it but those who do know fact from fiction can pick you apart every time
But, if you listen to rush, he fills your head with a nice believable storyline suitable for posting online.
And since rush is your life and hero, you remember all the fine details exquisitely.
I wonder, where RG is? probably busy covering margin calls.
We could use "the voice of reason and calm
tm" to hepl heal the economy. His pronouncements of the basic soundness of the economy were so compelling.
[/quote]
if that's what you think so be it, I haven't listened to rush or any other radio pundit in many many years. their listeners and the people who call in are even lower down the chain than many found here, in fact I wouldn't even know where in JAX he could be heard. I rarely listen to terrestial radio
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Quote from: apvbguy on September 29, 2008, 06:44:10 PM
Quote from: whitey on September 29, 2008, 06:30:06 PM
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
you are correct in your analysis, many of the obnoxious provisions like the ACORN earmarks were stripped out of the bill, but many bad things were left in and while the media won't tell you about the nuts and bolts of the bill if people look hard like you have the good, bad and ugly is out there. The dems padded a lot of pork and precedents that were really bad and that is a part of why the bill went down. the real crime is that the republicans were playing ball with the dems and when the fix fell apart everyone was blaming everyone else when all they needed to do was look in the mirror to see why the bill failed.
This bill highlights how congress, both sides, have failed all of us, both sides are reprehensible and the people are right about demanding change, unfortunately the change offered by BHO is way too radical and the change offered by McCain isn't enough, we really are in a pickle
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
Here is the part of the bill in question
TRANSFER OF A PERCENTAGE OF PROFITS.
1. DEPOSITS.Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).
2. USE OF DEPOSITS.Of the amount referred to in paragraph (1)
1. 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and
2. 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).
REMAINDER DEPOSITED IN THE TREASURY.All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt.And here is the link that it came from
http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/ (http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/)
Quote from: whitey on September 29, 2008, 07:52:54 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Quote from: apvbguy on September 29, 2008, 06:44:10 PM
Quote from: whitey on September 29, 2008, 06:30:06 PM
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
you are correct in your analysis, many of the obnoxious provisions like the ACORN earmarks were stripped out of the bill, but many bad things were left in and while the media won't tell you about the nuts and bolts of the bill if people look hard like you have the good, bad and ugly is out there. The dems padded a lot of pork and precedents that were really bad and that is a part of why the bill went down. the real crime is that the republicans were playing ball with the dems and when the fix fell apart everyone was blaming everyone else when all they needed to do was look in the mirror to see why the bill failed.
This bill highlights how congress, both sides, have failed all of us, both sides are reprehensible and the people are right about demanding change, unfortunately the change offered by BHO is way too radical and the change offered by McCain isn't enough, we really are in a pickle
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
Here is the part of the bill in question
TRANSFER OF A PERCENTAGE OF PROFITS.
1. DEPOSITS.Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).
2. USE OF DEPOSITS.Of the amount referred to in paragraph (1)
1. 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and
2. 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).
REMAINDER DEPOSITED IN THE TREASURY.All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt.
And here is the link that it came from
http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/ (http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/)
ut-oh now you've done it!
he'll be mumbling for days, real facts? this isn't on the daily kos site, how can I deal with real facts?
The Mayan calender says 2012, so did Edgar Cayce, Mother Jones, and Nostradamus. What say you Stephendare? Do we all jump yet?
OCKLAWAHA
Quote from: stephendare on September 29, 2008, 08:01:31 PM
Quote from: apvbguy on September 29, 2008, 07:56:00 PM
Quote from: whitey on September 29, 2008, 07:52:54 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Quote from: apvbguy on September 29, 2008, 06:44:10 PM
Quote from: whitey on September 29, 2008, 06:30:06 PM
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
you are correct in your analysis, many of the obnoxious provisions like the ACORN earmarks were stripped out of the bill, but many bad things were left in and while the media won't tell you about the nuts and bolts of the bill if people look hard like you have the good, bad and ugly is out there. The dems padded a lot of pork and precedents that were really bad and that is a part of why the bill went down. the real crime is that the republicans were playing ball with the dems and when the fix fell apart everyone was blaming everyone else when all they needed to do was look in the mirror to see why the bill failed.
This bill highlights how congress, both sides, have failed all of us, both sides are reprehensible and the people are right about demanding change, unfortunately the change offered by BHO is way too radical and the change offered by McCain isn't enough, we really are in a pickle
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
Here is the part of the bill in question
TRANSFER OF A PERCENTAGE OF PROFITS.
1. DEPOSITS.Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).
2. USE OF DEPOSITS.Of the amount referred to in paragraph (1)
1. 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and
2. 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).
REMAINDER DEPOSITED IN THE TREASURY.All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt.
And here is the link that it came from
http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/ (http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/)
ut-oh now you've done it!
he'll be mumbling for days, real facts? this isn't on the daily kos site, how can I deal with real facts?
hey smart guy.
so where did they mention ACORN?
Google "Housing Trust Fund ACORN" and you will see that the fund is nothing more than a slush fund which ACORN gladly partakes in.
This whole issue may be for not, since there is some question as to whether or not this made it into the final bill. But with 110 pages to look though, I am sure there are plenty other BS earmarks to be found.
And the fact that they would have funneled any potential profits (not likely but lets be positive) away from the taxpayers of record is infuriating. I am against even putting any profits into the general fund, if there are profits then a check should be cut to anyone who actually paid federal income taxes during the period that the $700 billion was used. It was their money at risk and it should be repaid to them.
i've said it once and i'll say it again. the bill needs to pass. screw stupid politics. we are talking about middle-class joe and jane here (i thought this was the bread and butter constituent for dems???) who will not be able to get a car loan when the 2001 Honda Odyssey finally goes kaput. they won't be able to get the loan (even with good credit) b/c the banks have no more $$. so they can no longer get to work. they have to take a lower paying job that is walking/biking distance to work. they spend less. their family eats out less. they take less vacations. and this isn't just temporary...this is the new them.
multiply them times millions. that's the new america if there are no credit depositories for americans to draw upon. it's not a Tory issue and its not a Whig issue...it's a very potential stark reality.
Driven I disagree somewhat. Something needs to be done, but the final incarnation of this bill was utter crap.
What could be done instead is revoke the mark to market rules for these securities, which would instantly take pressure off of the banks. Banks would be able to value these assets at book value rather than current market value. The current market values are way down because of all of the uncertainty, but their book values are much higher. This instantly increases the banks credit ratings, alleviating the pressure on them from the ratings agencies. The ratings agencies have been lowering banks credit ratings, when this happens banks need to raise more capital because the cost of borrowing is higher, so they have been dumping the assets in question. It has become an endless cycle. Nobody wants to buy these securities because every day more and more become available at cheaper prices, so the buyers are just idling sitting buy.
In addition to this, perhaps they should trade these securities on the open market like stocks, bonds or options. That would increase the buying pool and thereby increase the liquidity for these securities.
These two options would costs exactly $0.00 They may or may not help the situation, just like the bill that was voted down today.
Either way, every person up for re-election should be tossed out next month. The federal government is a joke.
revoking mark to market is a bad idea. mark to market was institituted when we witnessed Japan go through a decade-long recession because the financials there refused to mark assets to true market value. yeah, it would instantly make the banks' ratings better, but it would be an illusion - not a true picture of reality. as painful as mark to market is, it is needed and the best policy. what is needed to combat the pain is liquidity so that the Regular Joe will be able to buy a car. consumer spending is 72% of GDP. you allow a massive barrier to that arise and you have halted the economy.
btw...saw on CNBC tonight...
the partisan politicians (on both sides) who didn't want us to bail out to the tune of $700 billion, cost us $1.4 TRILLION (double) in stock market value...8% of today's starting US market value.
thanks "servant leaders".
also, just to put this all in perspective - we are now 29% off of our October 2007 highs...the AVERAGE bear market is 30% from top to bottom.
we can all relax a little. especially after i watched a PBS special on how stress is literally a killer.
The bill probably would not have alleviated the liquidity issue because it would have kept the values of the securities down. The plan was to buy the securities in a reverse auction, we would have bought at the lowest price offered, how would that have liquified the market? It would have kept the value of the securities down just as they are now.
Drop the mark to market on these securities only, most of them do not fully mature for years, so their value today is only on paper. It only becomes a real loss when the banks are forced to sell them to raise capital, which they are currently being forced to do because of their ratings downgrades, due to the mark to market prices of the securities, and round and round we go right down the drain.
Quote from: whitey on September 29, 2008, 10:50:26 PM
The bill probably would not have alleviated the liquidity issue because it would have kept the values of the securities down. The plan was to buy the securities in a reverse auction, we would have bought at the lowest price offered, how would that have liquified the market? It would have kept the value of the securities down just as they are now.
it would've
a) gotten the bad assets off the books of the banks
b) given money to the banks for the bad assets
therefore, banks have gotten rid of bad assets (really they are liabilities now) and received cash for them - where before no one else would buy them.
RIGHT?
To say that it would get the "bad assets" off the books is probably not correct. Each one of these things is composed of thousands of mortgages from all over the country. They are not neat little packages, in one you could have 300 Jacksonville mortgages ranging from Brentwood to Mandarin to Ponte Vedra, 300 Seattle mortgages, and a 400 mortgages from anywhere USA. There is no way to pick the "bad" securities out, they all have bad to varying degrees and there are tons of them. But overall they are most likely still profitable in the long run since the vast majority of people still pay their mortgages.
The banks have liquidity, they do not want to use that liquidity though. They are all scared shitless because they know once the ratings agencies start lowering their respective credit ratings they will be forced to come up with billions of dollars to cover their new interests costs. Look what happened to AIG, LEH, BSC, etc once the ratings agencies started lowering their credit ratings after those companies had to write down their portfolios based on mark to market accounting.
The mark to market issue is by far the least expensive and easiest way to take a chance on alleviating this mess.
Quote from: Midway on September 29, 2008, 07:41:27 PM
Quote from: apvbguy on September 29, 2008, 07:27:24 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
it called reading and understanding the real facts not posting emotional and comments based on ignorance. Think of this like being interrogated, if you're telling the truth the story is always the same, if it is not quite true you need to very careful to keep your BS in order. You are fairly good at it but those who do know fact from fiction can pick you apart every time
But, if you listen to rush, he fills your head with a nice believable storyline suitable for posting online.
And since rush is your life and hero, you remember all the fine details exquisitely.
I wonder, where RG is? probably busy covering margin calls.
We could use "the voice of reason and calmtm" to hepl heal the economy. His pronouncements of the basic soundness of the economy were so compelling.
Sorry to disappoint, midway, but I was busy making money this afternoon. Probably more than you make in a month in fact.
As for the economy, we need a reasonable package to flush all these trash loans out of the system without tacking on the typical Democrat pork and usurpation of power from the private to the public sectors. I have been supporting this all along. Unfortunately, this is not what Pelosi and her gang who couldnt shoot straight gave us. We all know the results.
Oh and Stephen, McCain and many Republicans did try to reform Fannie/Freddie in 2005 and 2006 (even before the 15 months ago when you claim to have achieved soothsayer status). These efforts were blocked by Democrats who were both corrupt and stupid. And, dont forget your hero Obama's many donations from Fannie/Freddie. I havent. ;)
Quote from: stephendare on September 29, 2008, 07:46:50 PM
Quote from: Driven1 on September 29, 2008, 07:37:06 PM
Quote from: stephendare on September 29, 2008, 05:20:31 PM
Quote from: Driven1 on September 29, 2008, 05:12:27 PM
oh yeah - and in the meantime, while things are "loosening up" magically, what do you think will happen to the economy?
Well what did you guys think was going to happen when the warning signs were going off for everyone else 15 months ago?The time to fix it was then, Driven, not now that its too late.
But as I recall, none of this was real or important and just a partisan attack based on Bush Derangement Syndrome.Too late is too late.What is the point of dragging the process out significantly longer?The end result of all this 'bailout' nonsense is complete vassalage to the Chinese.
Stephen, perhaps you can hop in your time machine and wrangle with the problem back 5 years ago (or whenever), when it was just a wee-little problem. As for the rest of us, we are stuck here in the present dealing with a major financial crisis. It is my hunch though that time machines and positive thoughts will get us nowhere in the present day.
The problem is that you guys are sitting around proposing the same nonsense that got us into this in the first place.
One doesnt have to have a time machine to fix that, just the capacity to learn from one's mistakes.
What is your proposal? I have asked you this about 15 times. Stop evading answering the question.
Quote from: whitey on September 29, 2008, 08:23:35 PM
Quote from: stephendare on September 29, 2008, 08:01:31 PM
Quote from: apvbguy on September 29, 2008, 07:56:00 PM
Quote from: whitey on September 29, 2008, 07:52:54 PM
Quote from: stephendare on September 29, 2008, 07:21:06 PM
Quote from: apvbguy on September 29, 2008, 06:44:10 PM
Quote from: whitey on September 29, 2008, 06:30:06 PM
From what little I've read of the bill, the profits would go into the general fund of the federal gov't. I have also seen some articles that show 20% of something going to groups such as ACORN, which seems like a blatant earmark. No wonder why the bill went from 3 pages to 44 pages to 110 pages.
you are correct in your analysis, many of the obnoxious provisions like the ACORN earmarks were stripped out of the bill, but many bad things were left in and while the media won't tell you about the nuts and bolts of the bill if people look hard like you have the good, bad and ugly is out there. The dems padded a lot of pork and precedents that were really bad and that is a part of why the bill went down. the real crime is that the republicans were playing ball with the dems and when the fix fell apart everyone was blaming everyone else when all they needed to do was look in the mirror to see why the bill failed.
This bill highlights how congress, both sides, have failed all of us, both sides are reprehensible and the people are right about demanding change, unfortunately the change offered by BHO is way too radical and the change offered by McCain isn't enough, we really are in a pickle
Do you guys read the same websites or something??
this is just ridiculous. Ive seriously never heard anything so stupid in my entire life.
Here is the part of the bill in question
TRANSFER OF A PERCENTAGE OF PROFITS.
1. DEPOSITS.Not less than 20 percent of any profit realized on the sale of each troubled asset purchased under this Act shall be deposited as provided in paragraph (2).
2. USE OF DEPOSITS.Of the amount referred to in paragraph (1)
1. 65 percent shall be deposited into the Housing Trust Fund established under section 1338 of the Federal Housing Enterprises Regulatory Reform Act of 1992 (12 U.S.C. 4568); and
2. 35 percent shall be deposited into the Capital Magnet Fund established under section 1339 of that Act (12 U.S.C. 4569).
REMAINDER DEPOSITED IN THE TREASURY.All amounts remaining after payments under paragraph (1) shall be paid into the General Fund of the Treasury for reduction of the public debt.
And here is the link that it came from
http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/ (http://publicmarkup.org/bill/dodds-legislative-proposal-treasury-department-aut/1/5/)
ut-oh now you've done it!
he'll be mumbling for days, real facts? this isn't on the daily kos site, how can I deal with real facts?
hey smart guy.
so where did they mention ACORN?
Google "Housing Trust Fund ACORN" and you will see that the fund is nothing more than a slush fund which ACORN gladly partakes in.
This whole issue may be for not, since there is some question as to whether or not this made it into the final bill. But with 110 pages to look though, I am sure there are plenty other BS earmarks to be found.
And the fact that they would have funneled any potential profits (not likely but lets be positive) away from the taxpayers of record is infuriating. I am against even putting any profits into the general fund, if there are profits then a check should be cut to anyone who actually paid federal income taxes during the period that the $700 billion was used. It was their money at risk and it should be repaid to them.
Please dont confuse the liberals with facts. They imagine that they are the gifted intelligent ones and this fantasy keeps their self-esteem unnaturally high. :D
FYI, here is some more info on the cherished ACORN:
QuoteSeptember 30, 2008
ACORN, Obama, and the Mortgage Mess
By Mona Charen
The financial markets were teetering on the edge of an abyss last week. The secretary of the Treasury was literally on his knees begging the speaker of the House not to sabotage the bailout bill. The crash of falling banks made the earth tremble. The Republican presidential candidate suspended his campaign to deal with the crisis. And amid all this, the Democrats in Congress managed to find time to slip language into the bailout legislation that would provide a dandy little slush fund for ACORN.
ACORN stands for the Association of Community Organizations for Reform Now, a busy hive of left-wing agitation and "direct action" that claims chapters in 50 cities and 100,000 dues-paying members. ACORN is where Sixties leftovers who couldn't get tenure at universities wound up. That the bill-writing Democrats remembered their pet clients during such an emergency speaks volumes. This attempted gift to ACORN (stripped out of the bill after outraged howls from Republicans) demonstrates how little Democrats understand about what caused the mess we're in.
ACORN does many things under the umbrella of "community organizing." They agitate for higher minimum wages, attempt to thwart school reform, try to unionize welfare workers (that is, those welfare recipients who are obliged to work in exchange for benefits) and organize voter registration efforts (always for Democrats, of course). Because they are on the side of righteousness and justice, they aren't especially fastidious about their methods. In 2006, for example, ACORN registered 1,800 new voters in Washington. The only trouble was, with the exception of six, all of the names submitted were fake. The secretary of state called it the "worst case of election fraud in our state's history." As Fox News reported:
"The ACORN workers told state investigators that they went to the Seattle public library, sat at a table and filled out the voter registration forms. They made up names, addresses, and Social Security numbers and in some cases plucked names from the phone book. One worker said it was a lot of hard work making up all those names and another said he would sit at home, smoke marijuana and fill out the forms."
ACORN explained that this was an "isolated" incident, yet similar stories have been reported in Missouri, Michigan, Ohio, and Colorado -- all swing states, by the way. ACORN members have been prosecuted for voter fraud in a number of states. (See www.rottenacorn.com.) Their philosophy seems to be that everyone deserves the right to vote, whether legal or illegal, living or dead.
ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "advisor" to banks seeking regulatory approval. "Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN." Is this a great country or what? As conservative community activist Robert Woodson put it, "The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN."
ACORN attracted Barack Obama in his youthful community organizing days. Madeline Talbott hired him to train her staff -- the very people who would later descend on Chicago's banks as CRA shakedown artists. The Democratic nominee later funneled money to the group through the Woods Fund, on whose board he sat, and through the Chicago Annenberg Challenge, ditto. Obama was not just sympathetic -- he was an ACORN fellow traveler.
Now you could make the case that before 2008, well-intentioned people were simply unaware of what their agitation on behalf of non-credit-worthy borrowers could lead to. But now? With the whole financial world and possibly the world economy trembling and cracking like a cement building in an earthquake, Democrats continue to try to fund their friends at ACORN? And, unashamed, they then trot out to the TV cameras to declare "the party is over" for Wall Street (Nancy Pelosi)? The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.
http://www.realclearpolitics.com/articles/2008/09/acorn_obama_and_the_mortgage_m.html
And, here is some more information on the Democrat's shenanigans (and a possible partial solution):
QuoteSeptember 30, 2008
Bailout Politics
By Thomas Sowell
Nothing could more painfully demonstrate what is wrong with Congress than the current financial crisis.
Among the Congressional "leaders" invited to the White House to devise a bailout "solution" are the very people who have for years created the risks that have now come home to roost.
Five years ago, Barney Frank vouched for the "soundness" of Fannie Mae and Freddie Mac, and said "I do not see" any "possibility of serious financial losses to the treasury."
Moreover, he said that the federal government has "probably done too little rather than too much to push them to meet the goals of affordable housing."
Earlier this year, Senator Christopher Dodd praised Fannie Mae and Freddie Mac for "riding to the rescue" when other financial institutions were cutting back on mortgage loans. He too said that they "need to do more"
to help subprime borrowers get better loans.
In other words, Congressman Frank and Senator Dodd wanted the government to push financial institutions to lend to people they would not lend to otherwise, because of the risk of default.
The idea that politicians can assess risks better than people who have spent their whole careers assessing risks should have been so obviously absurd that no one would take it seriously.
But the magic words "affordable housing" and the ugly word "redlining" led to politicians directing where loans and investments should go, with such things as the Community Reinvestment Act and various other coercions and threats.
The roots of this problem go back many years, but since the crisis to which all this led happened on George W. Bush's watch, that is enough for those who think in terms of talking points, without wanting to be confused by the facts.
In reality, President Bush tried unsuccessfully, years ago, to get Congress to create some regulatory agency to oversee Fannie Mae and Freddie Mac.
N. Gregory Mankiw, his Chairman of the Council of Economic Advisers, warned in February 2004 that expecting a government bailout if things go wrong "creates an incentive for a company to take on risk and enjoy the associated increase in return."
Since risky investments usually pay more than safer investments, the incentive is for a government-supported enterprise to take bigger risks, since they get more profit if the risks pay off and the taxpayers get stuck with the losses if not.
The government does not guarantee Fannie Mae or Freddie Mac, but the widespread assumption has been that the government would step in with a bailout to prevent chaos in financial markets.
Alan Greenspan, then head of the Federal Reserve System, made the same point in testifying before Congress in February 2004. He said: "The Federal Reserve is concerned" that Fannie Mae and Freddie Mac were using this implicit reliance on a government bailout in a crisis to take more risks, in order to "multiply the profitability of subsidized debt."
Chairman Greenspan added his voice to those urging Congress to create a "regulator with authority on a par with that of banking regulators" to reduce the riskiness of Fannie Mae and Freddie Mac, a riskiness ultimately borne by the taxpayers.
Fannie Mae and Freddie Mac do not deserve to be bailed out, but neither do workers, families and businesses deserve to be put through the economic wringer by a collapse of credit markets, such as occurred during the Great Depression of the 1930s.
Neither do the voters deserve to be deceived on the eve of an election by the notion that this is a failure of free markets that should be replaced by political micro-managing.
If Fannie Mae and Freddie Mac were free market institutions they could not have gotten away with their risky financial practices because no one would have bought their securities without the implicit assumption that the politicians would bail them out.
It would be better if no such government-supported enterprises had been created in the first place and mortgages were in fact left to the free market. This bailout creates the expectation of future bailouts.
Phasing out Fannie Mae and Freddie Mac would make much more sense than letting politicians play politics with them again, with the risk and expense being again loaded onto the taxpayers.
http://www.realclearpolitics.com/articles/2008/09/bailout_politics.html
How does Sarbanes-Oxley play into all of this?
I really find this whole subject more entertainment then worry, we are all reacting like a bunch of darn lemmings here. But before you run off the cliff and into the sea, remember some ancient wisdom from the old Hippie...
As the Sun Pulls away from the Pier...
and our boat sinks slowly in the West...
We pass the Island of Carefree...
In the distance we hear the singing of the Hippie Natives...
"In the velvet darkness of the blackest night
Burning bright, there's a guiding star
No matter what or who you are.
There's a light over at the Frankenstein Place
There's a light burning in the fireplace
There's a light, light in the darkness of everybody's life.
I can see the flag fly, I can see the rain
Just the same, there has got to be
Something better here for you and me.
There's a light over at the Frankenstein Place
There's a light burning in the fireplace
There's a light, light in the darkness of everybody's life.
The darkness must go down the river of nights dreaming
Flow morphia slow, let the sun and light come streaming
Into my life, into my life.
There's a light over at the Frankenstein Place
There's a light burning in the fireplace
There's a light, light in the darkness of everybody's life."
HEY DON'T BLAME ME, SOCO IS MY FRIEND!
...OCKLAWAHA
Quote from: RiversideGator on September 30, 2008, 01:11:54 AM
And, here is some more information on the Democrat's shenanigans (and a possible partial solution):
Up until just a few days ago you've been incessantly denying any sort of economic problem, posting graphs, charts, articles, and all kinds of "proof", and now we are supposed to believe you know the cause of the mess? At this point it would probably be best if you didn't discuss the situation at all.
Quote from: Lunican on September 30, 2008, 07:35:21 AM
Quote from: RiversideGator on September 30, 2008, 01:11:54 AM
And, here is some more information on the Democrat's shenanigans (and a possible partial solution):
Up until just a few days ago you've been incessantly denying any sort of economic problem, posting graphs, charts, articles, and all kinds of "proof", and now we are supposed to believe you know the cause of the mess? At this point it would probably be best if you didn't discuss the situation at all.
eek...we saw this kind of censorship on another forum earlier.
It's hardly censorship. River has been free to make a fool of himself for quite some time now. For his own sake it would probably be best if he stopped. I know others will disagree because they enjoy watching him flounder around, but its getting embarrassing.
Quote from: Lunican on September 30, 2008, 08:37:31 AM
It's hardly censorship. River has been free to make a fool of himself for quite some time now. For his own sake it would probably be best if he stopped. I know others will disagree because they enjoy watching him flounder around, but its getting embarrassing.
I am here to encourage RSG to continue posting. Please keep posting RSG. Don't let them censor you.
It may turn out that he may be the one person on here who does not know everything. It would be simply amazing to see someone who does not claim perfection and the ability to see clearly and remain constant at all times.
Quote from: stephendare on September 30, 2008, 09:32:21 AM
RSG. Just keep hanging onto the same disproven arguments that you have been spouting.
Maybe in between telling everyone how wealthy you are, how smart you are, and how much more money you are making than everyone else on this board you are, the magical crisis that you have spent the past 18 months proving didnt exist will simply go away.
While you might think that other people will pretend that you are too stupid to realize that a 'sub prime' loan is one which doesnt qualify for Fannie Mae or Freddie Mac, I think that we are past such delusions. Go ahead and deliberately claim the opposite of the truth if you like. See what it makes you.
the more you post the more foolish you make yourself appear, it was fannie and fredie who WERE BUYING these sub prime loans from the mortgage originators, therein lies the root of the problems we are having.
Please try and have a grasp of the topics you are trying to pontificate about, because on this subject you appear to be absolutely clueless
Quote from: stephendare on September 30, 2008, 09:49:26 AM
apvbguy.
You have absolutely no idea what you are talking about.
Perhaps you should wait till the freshman year of economics before you weigh in any further.
the oracle has spoken, too bad he and the wizard of oz are one and the same.
You really need to get your facts from credible sources, here's a hint, kos, huff post ,moveon and the NY Times are not credible sources
Quote from: apvbguy on September 30, 2008, 09:54:36 AM
the oracle has spoken, too bad he and the wizard of oz are one and the same.
You really need to get your facts from credible sources, here's a hint, kos, huff post ,moveon and the NY Times are not credible sources
Then for the love of all that's holy, start counter-posting with cited sources to back up your position and quit berating and bashing those who are trying to keep a (mostly) civil discourse. I've made it a point to avoid getting pulled into the morass that these threads usually descend into but damn pal, I gotta tell you, debate already - stop arguing for the sake of arguing.
In other news, the Dow is up 185 and change, or approximately 1.75% as of 10:00 this morning. Any takers on an almost total-recovery in the Dow by week's end? It's done that a lot over the last several months that there's been such a headline-making, one-day decline.
Quote from: Doctor_K on September 30, 2008, 09:57:38 AM
Quote from: apvbguy on September 30, 2008, 09:54:36 AM
the oracle has spoken, too bad he and the wizard of oz are one and the same.
You really need to get your facts from credible sources, here's a hint, kos, huff post ,moveon and the NY Times are not credible sources
Then for the love of all that's holy, start counter-posting with cited sources to back up your position and quit berating and bashing those who are trying to keep a (mostly) civil discourse. I've made it a point to avoid getting pulled into the morass that these threads usually descend into but damn pal, I gotta tell you, debate already - stop arguing for the sake of arguing.
I have noted the facts of the matter and others have filled in the blanks, bottom line is that the guy is dead wrong and his spreading of this kind of misinformation is very dangerous because some naive people might actually take his words as being factual. Bottom line Wachovia has not failed and people who have accounts there as of this moment can access their funds. And anyone who says differently is just plain wrong.
Sorry if the verbiage is too strong for you but that guy is out of control, he is posting complete nonsense and someone needs to balance out his garbage facts with truthful, accurate facts and info.
Quote from: stephendare on September 30, 2008, 10:00:50 AM
your a lot more optimistic than I am.
The long term structural issues are still screwed, I think.
So like, sub-10,000 for the mid-term? Possibly.
More than likely the Fed will look to cut rates again, too. Is it still a bad idea for dollar strength to do so, a la the argument against cutting rates the last go-around?
Quote from: apvbguy on September 30, 2008, 10:02:21 AM
I have noted the facts of the matter and others have filled in the blanks, bottom line is that the guy is dead wrong and his spreading of this kind of misinformation is very dangerous because some naive people might actually take his words as being factual. Bottom line Wachovia has not failed and people who have accounts there as of this moment can access their funds. And anyone who says differently is just plain wrong.
Sorry if the verbiage is too strong for you but that guy is out of control, he is posting complete nonsense and someone needs to balance out his garbage facts with truthful, accurate facts and info.
The FDIC insisted that Wachovia did not fail, so that I believe I can agree with you on. I think everyone (especially me!) could use a vocabulary lesson as to what a bank failure truly entails, rather than just a takeover.
Quote from: stephendare on September 30, 2008, 10:00:50 AM
Quote from: Doctor_K on September 30, 2008, 09:57:38 AM
Quote from: apvbguy on September 30, 2008, 09:54:36 AM
the oracle has spoken, too bad he and the wizard of oz are one and the same.
You really need to get your facts from credible sources, here's a hint, kos, huff post ,moveon and the NY Times are not credible sources
Then for the love of all that's holy, start counter-posting with cited sources to back up your position and quit berating and bashing those who are trying to keep a (mostly) civil discourse. I've made it a point to avoid getting pulled into the morass that these threads usually descend into but damn pal, I gotta tell you, debate already - stop arguing for the sake of arguing.
In other news, the Dow is up 185 and change, or approximately 1.75% as of 10:00 this morning. Any takers on an almost total-recovery in the Dow by week's end?
your a lot more optimistic than I am.
The long term structural issues are still screwed, I think.
you are right, there are still major problems that need to be addressed but the reality is that the sky still hasn't fallen, and as long as people don't disseminate false rumors and keep their heads on straight, things will work out. It might be a painful road to get any semblance of normalcy back but once the patient swallows the medicine the patient will begin to recover
Quote from: stephendare on September 30, 2008, 10:08:59 AM
Funny, this is exactly the same type of nonsense that was used to claim that Wachovia was a safe bet and sound as a pound only 2 months ago.
My how times change.
No matter APVBGuy, this type of nonsense always gets proven wrong by time.
Ask your pal, RSG.
a completely vapid and useless response, a real man would offer some mea culpas and come back to fight another day, but you can only offer insults and innuendo.
I really feel sorry for someone who is so bitter and clueless.
Quote from: stephendare on September 30, 2008, 10:17:51 AM
the market is probably realistically valued at about 6thousand.
Thats why even los federales are bandying about this whole one third loss figure so frequently.
Its probably destined to shrink back to its real value no matter what we do.
market prognosticators are like butt holes, we all have them and they all stink
Quote from: stephendare on September 30, 2008, 10:28:05 AM
Quote from: Driven1 on July 16, 2008, 04:12:16 PM
Quote from: stephendare on July 16, 2008, 04:04:47 PM
I suppose no one has heard that people are betting against Lehman Bros as well?
"and no one has heard"...exactly - it is these precise RUMORS that the SEC is cracking down on. seriously...google "sec, rumors, lehman" and see what you find. they are going criminally after the people that are starting these rumors concerning the financial institutions.
and you posted this why?
Quote from: stephendare on September 30, 2008, 10:32:07 AM
I love this following quote: I suppose now that the major banks have failed and there are gas lines and rationing going on all over the southeast, DowntownDweller has changed her mind.
With due respect, and not to minimize the whole economics issue, but I wonder how much more the gas lines in Atlanta have to do with refineries/infrastructure still coming back online from Hurricane Ike than the market situation.
Quote
http://www.ajc.com/metro/content/metro/stories/2008/09/27/gas_lines_atlanta.html (http://www.ajc.com/metro/content/metro/stories/2008/09/27/gas_lines_atlanta.html)
Weeks after Hurricane Ike shut down Gulf Coast refineries and dried up interstate pipelines, the shortage continued, hitting hardest in Atlanta, Nashville, and the Carolinas, including the Charlotte area and the mountain towns to the west. Many across the Southeast were keeping their cars in the garage this weekend, forced to cancel plans for fear they’ll run out of gas.
Quote from: stephendare on September 30, 2008, 10:32:07 AM
I love this following quote: I suppose now that the major banks have failed and there are gas lines and rationing going on all over the southeast, DowntownDweller has changed her mind. Or maybe she still thinks the most important thing we need to worry about is starting a war with Iran?
a few non sequiturs always make you look good, got any other red herrings to add to the mix?
Stephen, not all major banks have failed. I am still doing very well as I bought low and my stock prices are still double what I paid for them. I was prudent. I still have not seen the end of the world, I can get gas (just got some this morning), I went grocery shopping last night and they had everything I needed, and I juts got paid today. I have a solid loan (15yr fixed) with more than 30% equity in my house, a good job with a strong company that isn't going anywhere, actually is growing, because like me they are conservative. I would also like to point out, Wachovia did not "fail" they were purchased.
I am not heading for the hills yet (I will save that for after the elections), or stock piling food or gas ;)
btw, I didn't say we would start a war with Iran, I said Iran would START world war III. I don't mind if you disagree with me, but please get my quotes correct :-*
Quote from: Lunican on September 30, 2008, 08:37:31 AM
It's hardly censorship. River has been free to make a fool of himself for quite some time now. For his own sake it would probably be best if he stopped. I know others will disagree because they enjoy watching him flounder around, but its getting embarrassing.
What a joke. Perhaps I underestimated the extent of the problem but I am aware of it now, am discussing the root causes and possible solutions. I dont recall you posting much of anything except for the occasional sarcastic non sequitur. Perhaps in the future I can borrow your crystal ball which has served you so well.
Oh and so much for the spirit of civility. I guess this only applies to people with whom the liberals agree.
You have that right, this will be one for the books, but I think the downturn is artificial (I could be wrong) but the accounting rules force corporations to lower assets based on a downturn in the market, all their assests. This is what Paulson, the crook, was betting on by wanting that 700 billion dollars to play the stockmarket with. Maybe it was all a secret ploy to make money on the market and force SS should also play in that sandbox!
Now I must go back to my cave of work...conservative companies that make money expect their people to work all day ??? ???
Quote from: stephendare on September 30, 2008, 09:32:21 AM
RSG. Just keep hanging onto the same disproven arguments that you have been spouting.
Maybe in between telling everyone how wealthy you are, how smart you are, and how much more money you are making than everyone else on this board you are, the magical crisis that you have spent the past 18 months proving didnt exist will simply go away.
I am not sure I would go there if I were you, Stephen.
Quote
While you might think that other people will pretend that you are too stupid to realize that a 'sub prime' loan is one which doesnt qualify for Fannie Mae or Freddie Mac, I think that we are past such delusions. Go ahead and deliberately claim the opposite of the truth if you like. See what it makes you.
You are wrong again on the facts.
Again I ask, what is your proposal? I have asked you this about 16 times. Stop evading answering the question.
Quote from: stephendare on September 30, 2008, 10:54:58 AM
But lets be honest. Wachovia did not simply get tired of the banking business and then sell out to someone for a profit.
Surely were not pretending that are we?
The reality is that Wachovia was forced to sell its assets to a bank with more stability by the FDIC.
Its been in the papers for weeks. Does anyone deny that this is the fact?
As much as I hate to admit it, Stephen is right as far as Wachovia and the same thing happened with Washington Mutual late last week. The FDIC does not have enough reserves to cover deposits for even one large bank. In fact the FDIC has gone through nearly half of their reserves this year already and we've "only" had about 15 small banks and one medium sized bank literally go under.
The FDIC knows that if one of the big boys does go down, the whole banking system would be crushed. They moved in and orchestrated hostile takeovers of WaMu and Wachovia to prevent a complete collapse. Do you really think that the leaders at WaMu or Wachovia agreed to sell their companies for $1 per share? Hell the guys from WaMu weren't even part of their deal, they were notified by phone that they no longer had a company.
Quote from: whitey on September 30, 2008, 11:13:38 AM
As much as I hate to admit it, Stephen is right as far as Wachovia and the same thing happened with Washington Mutual late last week. The FDIC does not have enough reserves to cover deposits for even one large bank. In fact the FDIC has gone through nearly half of their reserves this year already and we've "only" had about 15 small banks and one medium sized bank go under.
The FDIC knows that if one of the big boys does go down, the whole banking system would be crushed. They moved in and orchestrated hostile takeovers of WaMu and Wachovia to prevent a complete collapse. Do you really think that the leaders at WaMu or Wachovia agreed to sell their companies for $1 per share? Hell the guys from WaMu weren't even part of their deal, they were notified by phone that they no longer had a company.
while you may be correct with this assessment the term failure is being bandied about incorrectly, this was a takeover, forced yes but far from a bank failure.
Quote from: stephendare on September 30, 2008, 09:49:26 AM
apvbguy.
You have absolutely no idea what you are talking about.
Perhaps you should wait till the freshman year of economics before you weigh in any further.
And where did you get your bachelor's degree from?
Quote
If one were to listen to your dissembling, one would be forced to believe to totally contradictory things at the same time.
There are THREE products you seem to be discussing.
1. a subprime mortgage, issued by a lender willing to ignore FMs minimum credit requirements.
2. CRA loans which are the actual minimum credit requirements
and
3. Mortgage backed securities which included sub prime loans.
You and River are doing your best to pretend that somehow magically, the FMs are responsible for both originating AND bundling the sub prime loans that caused this present debacle.
This is clearly insane, since by definition a 'sub prime loan' is one NOT backed by the FMs.
The Fannie/Freddie loans AND the subprime loans were problems and the lending requirements were loosened for both types of mortgages. This is really not that complicated. A bunch of people mortgaged up real estate which then declined in value. Many of these people had poor credit and decided to walk away thereby proving that they should not have had the loan to start with. Now the banks, the investors and the taxpayers are left holding the bag for those deadbeat's bad behavior.
Quote
Second, you are attempting to imply that McCain in some way tried to reform the FMs in such a way that would have prevented this crisis.
He did not.
Yes he did. I have posted the bill he co-sponsored. Please stop misleading. Now, this would not have solved all the problems, but it would have been a good start. Meanwhile, Obama was on the other side of this issue in favor of mass lending to people with bad credit in order to get as many people owning homes as possible.
Quote
In fact, his economic advisor created the law which allowed the FMs to traffic in MBS bundling in the first place, making your boneheaded contention one of the more fatuous lies ever printed.
Explain to me, in your own words, how you think Phill Gramm (??!!) caused this crisis and further explain how this is somehow linked to McCain.
Quote
Thirdly you are trying to claim that Barak Obama in some way worked to enable the sub prime market.
This is also a lie.
Stop Lying please.
Obama did. This has been proven. And stop accusing others of being liars. This is not in keeping with the spirit of civility.
Quote
If we hadnt been so hellbent on humiliating 'old europe' with the coalition of the willing and shocking the world with torture, secret prisons and etc, maybe we could more easily count on our european allies to help us come up with a marshall plan that doesnt leave us so dependent on chinese capital.
It's not just the Chinese though - that's another misconception that's blown into a bigger proportion than it is (notice I didn't say 'out of porportion'). Japan owns more of our debt than China does, but no one ever seems to mention them. Is it because they're such a staunch ally? (Can't find the dang article now..)
Point is, we're indebted to way more than jut China. My question is why they're the only one ever mentioned?
Quote from: stephendare on September 30, 2008, 10:14:29 AM
Pay attention to the fact that the US Mint just suspended production of all gold coins.
Funny that you consider this a harbinger of doom:
QuoteGet Government Out of Coin Manufacture
By George Selgin, Numismatic News
September 29, 2008
Coin dealers and collectors are still reeling from the U.S. Mint's announcement that it had run out of American Eagle gold coins. But what ought to surprise every American isn't that a government agency came up short. It's that the U.S. government should be making little metal discs at all.
Coin shortages are nothing new. A few months before running out of gold Eagles, the U.S. Mint had to ration silver Eagles. Not long before that, pennies were in very short supply. Nor are other government mints any better. Back in 2007, for instance, Argentina had such a severe change shortage that its panhandlers nearly starved to death, while in southern China 100-yuan coins commanded a whopping 25 percent premium.
Why are coin shortages so common? Governments typically blame unexpected changes in demand. But suppliers of all sorts of other goods manage to avoid running out despite even more dramatic demand changes. So what's special about coins? An old chestnut says that, if the government were put in charge of the desert, pretty soon there'd be a sand shortage. Recall the plight of consumers under socialism: socialist governments tried to make everything and eventually ran out of everything.
Now socialism is dead, but not when it comes to coining. So coin shortages keep breaking out, as they have ever since governments first monopolized coin making in ancient times.
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=5364
Quote from: stephendare on September 30, 2008, 10:17:51 AM
the market is probably realistically valued at about 6thousand.
Thats why even los federales are bandying about this whole one third loss figure so frequently.
Its probably destined to shrink back to its real value no matter what we do.
This is a bold prediction. I'll have to bookmark this. :D
Quote from: stephendare on September 30, 2008, 10:32:07 AM
I love this following quote: I suppose now that the major banks have failed and there are gas lines and rationing going on all over the southeast, DowntownDweller has changed her mind. Or maybe she still thinks the most important thing we need to worry about is starting a war with Iran?
"The major banks" did not fail. I suggest you go look up what a real bank failure is. Wachovia Corp sold its retail banking operation to Citibank. It did not fail although it was not entirely healthy. WaMu did fail briefly but it was seized by the Feds and immediately sold to JPMorgan.
Quote from: stephendare on September 30, 2008, 11:05:40 AM
Quote from: RiversideGator on September 30, 2008, 11:01:42 AM
Quote from: stephendare on September 30, 2008, 09:32:21 AM
RSG. Just keep hanging onto the same disproven arguments that you have been spouting.
Maybe in between telling everyone how wealthy you are, how smart you are, and how much more money you are making than everyone else on this board you are, the magical crisis that you have spent the past 18 months proving didnt exist will simply go away.
I am not sure I would go there if I were you, Stephen.
Quote
While you might think that other people will pretend that you are too stupid to realize that a 'sub prime' loan is one which doesnt qualify for Fannie Mae or Freddie Mac, I think that we are past such delusions. Go ahead and deliberately claim the opposite of the truth if you like. See what it makes you.
You are wrong again on the facts.
Again I ask, what is your proposal? I have asked you this about 16 times. Stop evading answering the question.
Let it fail and start over with a clean slate clear of foreign entanglements or accept chinese vassalage.
If we hadnt been so hellbent on humiliating 'old europe' with the coalition of the willing and shocking the world with torture, secret prisons and etc, maybe we could more easily count on our european allies to help us come up with a marshall plan that doesnt leave us so dependent on chinese capital.
Apples and oranges. Iraq has NOTHING to do with this. Oh and European banks are in the crapper also BTW.
Quote from: stephendare on September 30, 2008, 11:24:55 AM
That is true, Doctor K. The Japanese do own a substantial proportion of the treasury notes against our federal debt. The UK owns even more.
However, in the private investment game, the numbers are significantly weighted towards the chinese.
cite? or is this just another in a long line of unsubstantiated proclamations from the financial oracle of JAX?
Quote from: stephendare on September 30, 2008, 11:24:55 AM
That is true, Doctor K. The Japanese do own a substantial proportion of the treasury notes against our federal debt. The UK owns even more.
However, in the private investment game, the numbers are significantly weighted towards the chinese.
How about the Middle East countries like the UAE and whatnot? Due to the oil markets/demand? Would they not be high up on that scale as well?
Quote from: Doctor_K on September 30, 2008, 11:32:14 AM
How about the Middle East countries like the UAE and whatnot? Due to the oil markets/demand? Would they not be high up on that scale as well?
good catch, but don't confuse the oracle with too much factual data
Quote from: RiversideGator on September 30, 2008, 11:28:12 AM
Quote from: stephendare on September 30, 2008, 10:32:07 AM
I love this following quote: I suppose now that the major banks have failed and there are gas lines and rationing going on all over the southeast, DowntownDweller has changed her mind. Or maybe she still thinks the most important thing we need to worry about is starting a war with Iran?
"The major banks" did not fail. I suggest you go look up what a real bank failure is. Wachovia Corp sold its retail banking operation to Citibank. It did not fail although it was not entirely healthy. WaMu did fail briefly but it was seized by the Feds and immediately sold to JPMorgan.
The retail banking operation is the only portion of the bank that the FDIC must insure, that is why they forced the sale. What happened was a pre-emptive move by the FDIC to save its own ass and to prevent a massive run on other banks. I guess if it makes you feel better, it was not a failure, but if the FDIC did not force the sale when it did, Wachovia would have died yesterday after the bill in the House was voted down.
They and WaMu were insolvent, it is not debatable
Quote from: apvbguy on September 30, 2008, 11:33:13 AM
Quote from: Doctor_K on September 30, 2008, 11:32:14 AM
How about the Middle East countries like the UAE and whatnot? Due to the oil markets/demand? Would they not be high up on that scale as well?
good catch, but don't confuse the oracle with too much factual data
Alright, then you answer it. As this is a discussion *forum,* it's not like one person has to/needs to/wants to do all the answering. I asked a question and am genuinely curious. Don't waste my time insulting your personal adversary. ;D
Quote from: stephendare on September 30, 2008, 11:32:23 AM
apvbguy. you try citing any source for the nonsense you print on this site.
the minute you do, you will be taken more seriously.
the oracle is has proclaimed to the pot that the kettle is indeed black
Quote from: whitey on September 30, 2008, 11:34:54 AM
Quote from: RiversideGator on September 30, 2008, 11:28:12 AM
Quote from: stephendare on September 30, 2008, 10:32:07 AM
I love this following quote: I suppose now that the major banks have failed and there are gas lines and rationing going on all over the southeast, DowntownDweller has changed her mind. Or maybe she still thinks the most important thing we need to worry about is starting a war with Iran?
"The major banks" did not fail. I suggest you go look up what a real bank failure is. Wachovia Corp sold its retail banking operation to Citibank. It did not fail although it was not entirely healthy. WaMu did fail briefly but it was seized by the Feds and immediately sold to JPMorgan.
The retail banking operation is the only portion of the bank that the FDIC must insure, that is why they forced the sale. What happened was a pre-emptive move by the FDIC to save its own ass and to prevent a massive run on other banks. I guess if it makes you feel better, it was not a failure, but if the FDIC did not force the sale when it did, Wachovia would have died yesterday after the bill in the House was voted down.
They and WaMu were insolvent, it is not debatable
That might be true, but the practical effect is those who have deposits are fine, even if the deposits exceeded $100,000. The shareholders lost everything but they tolerated the bad management in the first place. This is the way it should be.
Quote from: Doctor_K on September 30, 2008, 11:35:26 AM
Quote from: apvbguy on September 30, 2008, 11:33:13 AM
Quote from: Doctor_K on September 30, 2008, 11:32:14 AM
How about the Middle East countries like the UAE and whatnot? Due to the oil markets/demand? Would they not be high up on that scale as well?
good catch, but don't confuse the oracle with too much factual data
Alright, then you answer it. As this is a discussion *forum,* it's not like one person has to/needs to/wants to do all the answering. I asked a question and am genuinely curious. Don't waste my time insulting your personal adversary. ;D
is the question where is it where is all the money in middle east going? I don't know, but it is a very good question
Quote from: stephendare on September 30, 2008, 11:36:09 AM
As Driven can tell you, the Chinese decided to create 'capitalist' zones a few years back in order to provide themselves with wealth.
the 17trillion dollars in investment capital generated by this decision was only the beginning of the present.
Wall Street, proceeding on the PTBarnum maxim "theres a sucker born every minute" created the mortgage backed security vehicle as a method of depriving the chinese of the 17t.
But the capitalist experiment launched by China didnt simply stop producing money in 2000. The Capitalist Zones have been creating wealth like breeding rabbits ever since then.
That money has been heavily invested in our economy.
Good.
Quote from: stephendare on September 30, 2008, 11:36:09 AM
As Driven can tell you, the Chinese decided to create 'capitalist' zones a few years back in order to provide themselves with wealth.
the 17trillion dollars in investment capital generated by this decision was only the beginning of the present.
Wall Street, proceeding on the PTBarnum maxim "theres a sucker born every minute" created the mortgage backed security vehicle as a method of depriving the chinese of the 17t.
But the capitalist experiment launched by China didnt simply stop producing money in 2000. The Capitalist Zones have been creating wealth like breeding rabbits ever since then.
Having done business with the Sauds, and having lived with a member of the family in the 90s, I can tell you that the Arabs have been scrambling making infrastructure investments into their own countries against the day when the oil runs out.
In sheer investment money volumes, they do not hold a candle to the chinese. And keep in mind that regardless of our present conflict with their countries, the arabs are not military expansionists with an eye to world hegemony, whereas the chinese are.
That money has been heavily invested in our economy.
So if all the Chinese-created wealth (from what I understand, created there and not here in the first place?) was invested here, and our economy for all intents and purposes is in or heading for the crapper, how are we indebted to the Chinese? If you invest money, and those investments tank, you've lost your investment. I don't understand (geunuinely) how that makes us debtors.
As for the Arab oil investment, take a look at the construction and infrastructure boom going on in Abu Dhabi and the rest of the UAE. That's where our money is going. No questions there.
Quote from: stephendare on September 30, 2008, 11:40:19 AM
see above post on arab investment.
Good. Foreign investment in America is a good thing. Why would you think otherwise?
here's an opinion piece that should be pondered
Don’t Blame Wall Street - At Least Not Completely
by: Markos Kaminis posted on: September 29, 2008 | about stocks: DIA / DOG / IWD / IWM / QLD / QQQQ / SDK / SDS / SPY / TWM / XLF Font Size: PrintEmail My dear friends, Americans, we stand this day on the precipice of abyss, and while I never mince words, I neither exaggerate words in saying so. A horrible misconception is greatly disturbing me, and I feel it's fueling a good deal of argument against this bill.
You want to blame the rich blue suits of Wall Street, because you are sure they are to blame and you are comforted to hear others doing so as well. Also, you see Lehman Brothers and Bear Stearns now nonexistent and Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) fighting for survival. You note the stock market is nearing 30% collapse, and you see Wall Street on the front page of your daily paper. You hear about the excessive compensation of self-seeking CEOs, and you witness the witch hunt for their heads as human behavior drives counteraction.
Many people, many segments of American industry are to blame for the mess we are in, and even you and I are to blame. Just the same, it was Wall Street's contribution to this mess that is the same contribution which allows almost every American the opportunity to own a vehicle, and even a home. What separates the average American from the average third world suffering citizen is surely in part American creativity, invention and will. Why does a man in one nation have a job at Wal-Mart (NYSE: WMT), Target (NYSE: TGT), The Olive Garden (NYSE: DRI) or Disneyland (NYSE: DIS), and own a car and a home, while another across the world struggles to keep his family alive? You can partly thank Wall Street for that, because one man is not more intelligent than the other, nor embodies greater work ethic than the other.
Wall Street did nothing more than create financial securities, specifically secondary markets in asset backed securities, that allowed Americans to live the American dream. They created securities, they bought them and sold them, held them for investment and traded them for fee. That's all they did. Meanwhile, as a result, the every day Joe was able to own a home and a new car too.
I'm not saying that excess does not exist on Wall Street; that would be gravely naive. Certainly excesses generated from greed took a well-intended idea, however profitable, and led it to dangerous extreme. But Wall Street is not solely to blame for that, nor is Wall Street solely to blame for every stock market downturn or economic cycle trough. Wall Street bears the pain the most, and enjoys the fruit at the highest.
Let's not overlook others equally at fault:
Credit Rating Agencies
Let's start with the credit rating agencies, Standard & Poor's (NYSE: MHP) and Moody's (NYSE: MCO), that supposedly analyzed these securities and negligently labeled too many of them investment grade. That little mistake which made no difference as long as home values rose, made all the difference as the housing bubble busted. It was their job to decide how risky these investments were, so how hard was it to envision the scenario of home price decline and why didn't they? Is price decline so abnormal as to not be included in scenario analysis?
Each bank that now owns these securities, and falls into bankruptcy because of holding them, trusted these organizations to do their job correctly. They were supposedly a trustworthy voice to be believed in these matters. Nothing was sold that was not rated by these organizations. So don't blame Wall Street alone while ignoring Water Street!
These assets, whether backed by mortgage loans, commercial loans or consumer credits, embody the securities the Treasury Secretary plans to buy with your $700 billion. These are the illiquid assets that are clogging the financial system. These are the securities that prevent banks from lending to one another. These are the securities that marked-to-market are now worth well below the value they were suppose to have, the value that was supposedly appropriate for the risk born. These are the securities that cause your banks to take massive charges. These are the securities that lead to insolvency. These are the securities that have caused bankruptcy. These are the securities that our government now needs your tax money to purchase, $700 billion to $2 trillion in total, to remove from the balance sheets of our financial system. So, if you are looking to place blame, consider these firms equally to Wall Street's financial designers.
Mortgage Brokers
It was mortgage brokers who created liar loans. It was mortgage brokers who extended opportunity beyond its natural reach. It was mortgage brokers who propagated the excesses of housing price rise, partly at least. Most of these people are out of their jobs now, but many banked their profits and walked away. Sure, after the fact, many came to trial, but part of the blame belongs there as well. Also, some of the banks that originated these loans took on great risk for the sake of greed. These banks are not on Wall Street, but it's easier to blame the guys on the golden hill for all our woes. Greedy men in these other banks originated bad loans, and sought Wall Street's help to package them and sell them since they could be rated investment grade and dumped onto others. That greed is partly to blame as well.
Ourselves
Look no further than the mirror.
We neglected these errors. You and I, our elected officials, and the agencies we've established to watch over the activities of mortgage brokers, credit rating agencies, lending practices and securities creation, the collective group of us failed.
And please do not politicize this. This is not a Republican problem nor a Bush Administration issue. It's not the creation of the Democratic Party either. This is not John McCain's fault, nor Barak Obama's misunderstanding. This is a problem endemic to our society.
Society
Our society is to blame - our encouragement of easy living and good times.
The cheating we overlook in our schools, the free pass we give to negligence there; the selfishness throughout our society and deficiencies of our family structure; these are to blame as well. The easy going mentality that we have sown into our society, the 9 to 5 work day we arrange so as to allow for the life we think we deserve, this is to blame. The little consideration we give to our day's work and to our life's passing, this is to blame.
More specifically, the priority we give to Thursday night bar outings, beginning in college and extending throughout our lives in many instances, this is to blame. The priority we give to sports over church, this is to blame. The speed with which we rush to fight, before we offer outreach, this is to blame. The "entitled-to mentality," the "me first" way of thinking, this is to blame. The circle within which we enclose our love ones, and at the same time use to keep out the rest of the world, this is to blame.
People just like you and me made these mistakes, and people like me and you allowed it to happen by not staying informed with the goings on of our society and by not seeking to improve upon it. But, we looked the other way didn't we. After all, we were happy while driving our new cars, which we surely could not afford without credit nor deserved due to equal value work completed. Same goes for that first home we purchased. It made it easy to look the other way, to completely miss the "too good to be true" rule.
So don't go blaming some fictional enemy you've created on Wall Street. I've been to Wall Street. I worked on Wall Street. I know Wall Street, and it's no different than Main Street.
Of all the fools I've seen speak today in the House of Representatives, there were a few clear-minded voices I now admire. Maxine Waters, for one, is neither from my neighborhood nor from my party, but she made perfect sense today and her voice deserves credit.
Not Bailing Out Wall Street
The most important point I can make is that we are not bailing out Wall Street. Wall Street is bankrupt already. The Wall Street machine is broken. We're not bailing out Wall Street, but if we were, they would deserve as much as the Main Street banks we really are saving. Washington Mutual (NYSE: WM) is not located on Wall Street. Wachovia (NYSE: WB) is neither on Wall Street. National City (NYSE: NCC) is no where near Wall Street. Corruption is not isolated to any one place, no matter what you think. Also, wealthy individuals are NOT always corrupt, whether they own a car lot in Pennsylvania or a brokerage firm on Wall Street. You know as well as I do, corruption is not a rarity in our society. Selfishness is not uncommon. So, please do not draw a black circle around a place somewhere far away where people just like you and me live and work. Some of the worst men I'll ever know work on Wall Street, but some of the best men I'll ever know also do.
Our financial system needs fixing. This is the problem. These assets and their faults are not the sole responsibility of Wall Street, though Wall Street is feeling the pain more than anyone so far. You know, sometimes the sick are shunned just because they are ill. Lepers were sent to far away places long ago, just because they had a problem. All throughout history, men have been blamed for their own problems. People have been killed because of the problems of smaller societies they dwelled within. Wall Street is reliant on trade, and so when liquidity dried up, Wall Street got sick first. But, this problem is not the sole responsibility of Wall Street.
Sometimes people are to blame for the problems of many innocent, but these assets have existed for a long time my dear friends, and our economy thrived partly because of them. The average Joe in America has lived a far better life than the average Joe in the third world, partly because of these securities that allowed for it. So, while I will not absolve Wall Street of all blame, I will not attribute all the blame to those folks either. But, most importantly, the other financial institutions now sick with the cancer of these securities need radical surgery. Otherwise, make no mistake, you will get sick as well. These are your banks, and they fund your life.
The Emergency Economic Stabilization Act of 2008 just failed in the House of Representatives. I am reviewing the bill in detail. I suspect I will also find faults with it. However, we must support some form of government intervention, which I believe should be based upon the Paulson plan; because otherwise I believe we very well could see the support of the failings of Ron Paul and Dennis Kucinich led bull-headed, self-righteousness (and ignorance) help to destroy American life as we know it.
Quote from: stephendare on September 30, 2008, 11:45:20 AM
Quote from: Doctor_K on September 30, 2008, 11:42:29 AM
So if all the Chinese-created wealth (from what I understand, created there and not here in the first place?) was invested here, and our economy for all intents and purposes is in or heading for the crapper, how are we indebted to the Chinese? If you invest money, and those investments tank, you've lost your investment. I don't understand (geunuinely) how that makes us debtors.
As for the Arab oil investment, take a look at the construction and infrastructure boom going on in Abu Dhabi and the rest of the UAE. That's where our money is going. No questions there.
Youve hit the nail on the head exactly, Dr. K. Its the reason most conservative intellectuals do not support this bailout stuff without a lot of thought.
It doesnt allow the investment to collapse, and it retains the obligations to foreign investors.
thats why so many of us were alarmed when Hank Paulson announced that the chinese had threatened to wash their banks of the US dollar had precipitated emergency action.
So the Bailout Act would have not allowed the investments to collapse, retained obligations to foreign investors, and left us really even more screwed. While leaving Paulson with all sorts of de facto unchecked power, ruining the dollar's already weak expectation, and causing hyperinflation?
How is yesterday's failure to pass this a bad thing?
Dow is up, so what is the real loss right now? I don't think it is 600...Nasdaq and S&P up too... Why?
Quote from: Downtown Dweller on September 30, 2008, 12:39:25 PM
Dow is up, so what is the real loss right now? I don't think it is 600...Nasdaq and S&P up too... Why?
to be expected...people looking for bargains. S&P finished down 8.2% yesterday. up 3% so far today. net down 5.2% over last 2 days.
Quote from: Driven1 on September 30, 2008, 12:40:17 PM
Quote from: Downtown Dweller on September 30, 2008, 12:39:25 PM
Dow is up, so what is the real loss right now? I don't think it is 600...Nasdaq and S&P up too... Why?
to be expected...people looking for bargains. S&P finished down 8.2% yesterday. up 3% so far today. net down 5.2% over last 2 days.
Agree on probably bargain buying. If memory serves, this has happened almost every single time after a big one-day drop in the markets. Nature of the beast, IMO.
The Dollar and even the Yen are also up nicely against Euro and British Pound.
Gold is still hovering around $880 - near its normal range for the last year or so, approximately. Platinum is still in the basement...
Whew, so the end is not here yet I can get back to worrying about Iran starting World War III ;)
Further:
http://biz.yahoo.com/ap/080930/credit_markets.html (http://biz.yahoo.com/ap/080930/credit_markets.html)
Quote
Banks were in miser mode after the House's rejection of the rescue package. The key bank-to-bank lending rate, the London Interbank Offered Rate, or LIBOR, soared to 4.05 percent from 3.88 percent for 3-month dollar loans, and to 6.88 percent for overnight dollar loans -- the highest level since tracking began in 2001.
That's especially worrisome because normally, LIBOR is just slightly above the Federal Reserve's target fed funds rates, an interbank lending rate. Now, it is more than 4 percentage points above the target rate of 2 percent. That has troubling implications for other lending rates tied to LIBOR, including homeowners' adjustable rate mortgages.
Financial contracts tied to Libor amount to more than $300 trillion -- or $45,000 for every person in the world.
Some more ARMs that are due to adjust soon are going to be more painful adjustments than normal, methinks. So glad I did my research and stuck it out to get a Fixed-rate mortgage.
Lastly, some more food for thought from Yahoo, courtest of the NYT:
http://finance.yahoo.com/banking-budgeting/article/105872/Is-Your-Money-Safe? (http://finance.yahoo.com/banking-budgeting/article/105872/Is-Your-Money-Safe?)
Pretty lengthy, but a good read for all the clueless, unwashed masses. The last part of the passage, however, caught my attention particularly:
Quote
Q. What about more bank failures?
A. They will happen. In recent days, we've seen the F.D.I.C. getting out in front of troubles at big banks like Wachovia and Washington Mutual, by arranging for other banks to take over their consumer accounts. What's less clear, however, is how many healthy institutions are left to take in other big banks that may run into trouble.
As always, stay within F.D.I.C. deposit limits. Then, the worst-case scenario is that it will take a couple of days to extract your funds from a failed bank.
Quote from: stephendare on September 30, 2008, 01:49:38 PMWell, this is why I found myself in the position of feeling that the House republicans were doing their damned jobs finally.
The 'Bailout' needs public discourse. Not a bunch of panicked "sign here, sign now!" pressure.
so what are you saying about the majority of Democrats who voted "yea" on the bill?
Quote from: stephendare on September 30, 2008, 02:20:07 PM
Quote from: Driven1 on September 30, 2008, 02:16:34 PM
Quote from: stephendare on September 30, 2008, 01:49:38 PMWell, this is why I found myself in the position of feeling that the House republicans were doing their damned jobs finally.
The 'Bailout' needs public discourse. Not a bunch of panicked "sign here, sign now!" pressure.
so what are you saying about the majority of Democrats who voted "yea" on the bill?
i couldnt be clearer
sorry, if you posted the info somewhere else, i have missed it - we've all been posting a lot in a lot of different threads. be clear. what is your opinion of those Dems (75% I think voted for this package)??
i'm not sure i can be clearer.
1) you have stated the bailout is not the right thing for the country now.
2) you are a democrat.
3) i just want your opinion on 65% of your party's reps in the house voting FOR the plan, while only 33% of the Republicans voted for the bailout plan.
you will have successfully worn me out and exhausted me (thereby winning) if you can't answer it this time!! i just don't have the time to explain it again. :D
Quote from: Driven1 on September 30, 2008, 02:16:34 PM
Quote from: stephendare on September 30, 2008, 01:49:38 PMWell, this is why I found myself in the position of feeling that the House republicans were doing their damned jobs finally.
The 'Bailout' needs public discourse. Not a bunch of panicked "sign here, sign now!" pressure.
so what are you saying about the majority of Democrats who voted "yea" on the bill?
what would be more interesting would be the oracle's take on the 40% of the dems who voted no, along with the repubs.
or how that moron barney frank was chiding the repubs for not being able to muster 12 more votes when 12 of the dems who sit on HIS banking committee voted NO, memo to Barney we all might have been born at night but it wasn't last night!
you win. :)
Quote from: stephendare on September 30, 2008, 03:02:25 PM
Quote from: Driven1 on September 30, 2008, 02:48:04 PM
i'm not sure i can be clearer.
1) you have stated the bailout is not the right thing for the country now.
2) you are a democrat.
3) i just want your opinion on 65% of your party's reps in the house voting FOR the plan, while only 33% of the Republicans voted for the bailout plan.
you will have successfully worn me out and exhausted me (thereby winning) if you can't answer it this time!! i just don't have the time to explain it again. :D
I am a republican.
still.
Im just not in the religious whacko branch of the fascist wing of the party.
Please stop intentionally lying about this.
I consider myself an American First. I wish that some of our posters felt the same way.
And no, I don't think an appropriate use for the tax payers money would be to bail out a bunch of jerks who took hundred million dollar bonuses as they collapsed the companies they headed.
Take the money out of their estates and country homes.
If thats not enough, track down every --------- in congress who voted for the deregulation which made this mayhem possible and take it out of their------------.
Sorry boys, this isnt a partisan question.
The republican led deregulation of the markets via its corrupt addiction to lobbyist pork has led to this situation.
Now if the taxpayers are going to front the money then they deserve the kinds of things obama is demanding.
Dont forget that the house republicans refused to pass the bill if there were going to be limits on the golden parachutes of the parasites responsible for this.
your analysis is so ---------and --------------, explain how this was a republican failure when 40% of the dems in the house voted no, when the dem leadership voted no, when the dems couldn't get 12 guys from their side to change their vote to make it pass. this was turned into a political circus and only the ---------------or completely -----------don't realize the games being played by the dems at our expense.
for such a --------------- ----------- like you not to grasp what happened here is just -----------, then again when you're the ---------- of JAX you can get away with saying anything and like our democrat congress --------------have --------------- to ----------------.
Quote from: stephendare on September 30, 2008, 03:20:04 PM
try actually reading the post. btw, this is the last response you will get from me until you can act more like an adult.
toodle lou buckaroo
never argue with -----------, he'll clobber you with his experience
Quote from: Doctor_K on September 30, 2008, 09:57:38 AM
In other news, the Dow is up 185 and change, or approximately 1.75% as of 10:00 this morning. Any takers on an almost total-recovery in the Dow by week's end? It's done that a lot over the last several months that there's been such a headline-making, one-day decline.
Dow ends the day +485.21, or +4.68%. NASDAQ up 4.97%, S&P up 5.27%.
US Dollar up moderately against Euro, Pound, Canadian Dollar, and Yen.
Gold still hovering well below the $900/oz mark; Platinum fell further towards the $1,000/oz level - way down from huge highs earlier this year.
Lots of bargain buying after a steep sell-off yesterday on the markets. Will be interesting to see what the rest of the week brings.
Quote from: Doctor_K on September 30, 2008, 04:54:26 PM
Quote from: Doctor_K on September 30, 2008, 09:57:38 AM
In other news, the Dow is up 185 and change, or approximately 1.75% as of 10:00 this morning. Any takers on an almost total-recovery in the Dow by week's end? It's done that a lot over the last several months that there's been such a headline-making, one-day decline.
Dow ends the day +485.21, or +4.68%. NASDAQ up 4.97%, S&P up 5.27%.
US Dollar up moderately against Euro, Pound, Canadian Dollar, and Yen.
Gold still hovering well below the $900/oz mark; Platinum fell further towards the $1,000/oz level - way down from huge highs earlier this year.
Lots of bargain buying after a steep sell-off yesterday on the markets. Will be interesting to see what the rest of the week brings.
those are all positive numbers, today is a jewish holiday and that usually trims volume and participation, let's get past the holidays and give the congress critters a chance to concoct a reasonable bill and we'll see where the market stands after friday before blowing the all clear horns.
Quote from: apvbguy on September 30, 2008, 05:11:20 PM
those are all positive numbers, today is a jewish holiday and that usually trims volume and participation, let's get past the holidays and give the congress critters a chance to concoct a reasonable bill and we'll see where the market stands after friday before blowing the all clear horns.
Oh yea - forgot about Rosh Hashanah... leading into Yom Kippur. We'll have to wait until well into next week then, won't we? Good catch.
Quote from: apvbguy on September 30, 2008, 03:22:33 PM
Quote from: stephendare on September 30, 2008, 03:20:04 PM
try actually reading the post. btw, this is the last response you will get from me until you can act more like an adult.
toodle lou buckaroo
never argue with -----------, he'll clobber you with his experience
lol!!! are you serious?? "idiot" got censored on here. ROFL!!! simply awesome.
Quote from: Driven1 on September 30, 2008, 06:06:14 PM
Quote from: apvbguy on September 30, 2008, 03:22:33 PM
Quote from: stephendare on September 30, 2008, 03:20:04 PM
try actually reading the post. btw, this is the last response you will get from me until you can act more like an adult.
toodle lou buckaroo
never argue with -----------, he'll clobber you with his experience
lol!!! are you serious?? "idiot" got censored on here. ROFL!!! simply awesome.
it's only the beginning, I think that you are on to something, the great oracle is just warming us up for life in a BHO people's republic
in all seriousness, please give this article a good look, . it isn't grinding any political axes, just some views on the mess we are all dealing with
Bailout marks Karl Marx's comeback
Posted: September 29, 2008, 8:03 PM by Jeff White
Martin Masse, mortgage crisis
Marx’s Proposal Number Five seems to be the leading motivation for those backing the Wall Street bailout
By Martin Masse
In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.â€
If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.
Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities†engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.
“Whatever happened to the modern followers of my free-market opponents?†Marx would likely wonder.
At first glance, anyone who understands economics can see that there is something wrong with this picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is no different. It is an invisible tax that redistributes resources to debtors and those who made unwise investments.
So why throw this sound free-market analysis overboard as soon as there is some downturn in the markets?
The rationale for intervening always seems to centre on the fear of reliving the Great Depression. If we let too many institutions fail because of insolvency, we are being told, there is a risk of a general collapse of financial markets, with the subsequent drying up of credit and the catastrophic effects this would have on all sectors of production. This opinion, shared by Ben Bernanke, Henry Paulson and most of the right-wing political and financial establishments, is based on Milton Friedman’s thesis that the Fed aggravated the Depression by not pumping enough money into the financial system following the market crash of 1929.
It sounds libertarian enough. The misguided policies of the Fed, a government creature, and bad government regulation are held responsible for the crisis. The need to respond to this emergency and keep markets running overrides concerns about taxing and inflating the money supply. This is supposed to contrast with the left-wing Keynesian approach, whose solutions are strangely very similar despite a different view of the causes.
But there is another approach that doesn’t compromise with free-market principles and coherently explains why we constantly get into these bubble situations followed by a crash. It is centered on Marx’s Proposal Number Five: government control of capital.
For decades, Austrian School economists have warned against the dire consequences of having a central banking system based on fiat money, money that is not grounded on any commodity like gold and can easily be manipulated. In addition to its obvious disadvantages (price inflation, debasement of the currency, etc.), easy credit and artificially low interest rates send wrong signals to investors and exacerbate business cycles.
Not only is the central bank constantly creating money out of thin air, but the fractional reserve system allows financial institutions to increase credit many times over. When money creation is sustained, a financial bubble begins to feed on itself, higher prices allowing the owners of inflated titles to spend and borrow more, leading to more credit creation and to even higher prices.
As prices get distorted, malinvestments, or investments that should not have been made under normal market conditions, accumulate. Despite this, financial institutions have an incentive to join this frenzy of irresponsible lending, or else they will lose market shares to competitors. With “liquidities†in overabundance, more and more risky decisions are made to increase yields and leveraging reaches dangerous levels.
During that manic phase, everybody seems to believe that the boom will go on. Only the Austrians warn that it cannot last forever, as Friedrich Hayek and Ludwig von Mises did before the 1929 crash, and as their followers have done for the past several years.
Now, what should be done when that pyramidal scheme starts crashing to the floor, because of a series of cascading failures or concern from the central bank that inflation is getting out of control? It’s obvious that credit will shrink, because everyone will want to get out of risky businesses, to call back loans and to put their money in safe places. Malinvestments have to be liquidated; prices have to come down to realistic levels; and resources stuck in unproductive uses have to be freed and moved to sectors that have real demand. Only then will capital again become available for productive investments.
Friedmanites, who have no conception of malinvestments and never raise any issue with the boom, also cannot understand why it inevitably leads to a crash.
They only see the drying up of credit and blame the Fed for not injecting massive enough amounts of liquidities to prevent it.
But central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.
Friedman â€" who, contrary to popular perception, was not a foe of monetary inflation, but simply wanted to keep it under better control in normal circumstances â€" was wrong about the Fed not intervening during the Depression. It tried repeatedly to inflate but credit still went down for various reasons. This is a key difference in interpretation between the Austrian and Chicago schools.
As Friedrich Hayek wrote in 1932, “Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion. ... To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about ...â€
The confusion of Chicago school economics on monetary issues is so profound as to lead its adherents today to support the largest government grab of private capital in world history. By adding their voices to those on the left, these confused free-marketeers are not helping to “save capitalismâ€, but contributing to its destruction.
Financial Post
Martin Masse is publisher of the libertarian webzine Le Québécois Libre and a former advisor to Industry minister Maxime Bernier.
on a lighter note
http://www.youtube.com/watch?v=Ct89zcFTjiI
I am starting to think we should just trust capitalism:
QuoteSeptember 29, 2008
In Times of Crisis, Trust Capitalism
By Joseph Calhoun
The US government is executing a coup d’etat of capitalism and I fear that we will pay the price for many years to come. Hank Paulson, Ben Bernanke and a host of others tell us the credit market is not working and the only way to get it working again is for the government to intervene. They claim this intervention is urgently needed and if we don’t act, the consequences are dire. Dire, as in New Depression dire. Have these supposed experts on capitalism forgotten how it really works?
Last week Goldman Sachs raised $10 billion in new capital in one day. They sold $5 billion in preferred stock and warrants to Berkshire Hathaway and also completed a secondary offering of common stock that raised another $5 billion. Friday, JP Morgan raised $10 billion in a secondary offering to help pay for the Washington Mutual takeunder. Both of these offerings were oversubscribed, meaning that the companies could have raised more capital if they wanted. There is not a shortage of capital for well run financial companies.
There is, however, a shortage of capital for companies that have acted irresponsibly with investor capital in the recent past. For some reason, our political leaders believe this is a failure of the market, but isn’t this what should be expected from rational investors? Given a choice, why would a rational investor allocate limited capital to the losers rather than the winners? If capital is really as scarce as it seems, isn’t it better for our economy if we make sure that it is allocated wisely?
The biggest bank failure in the history of the United States happened last Thursday night and by Friday morning, it was business as usual. The only difference was the name on the door and the losses suffered by those unfortunate enough to invest in Washington Mutual bonds or stock. The taxpayers didn’t lose anything and depositors didn’t lose anything, only investors. That is how capitalism works in case everyone has forgotten.
The “crisis†we face today is not a creation of the market. Government intervention over many years (but especially the last year) is what brought us to the point where we’ve placed our hopes for economic recovery on the good intentions of a Congress facing re-election in a few weeks. There has been much commentary recently about the role of Fannie Mae and Freddie Mac in the creation and expansion of the sub-prime mortgage market which many believe to be the cause of this mess. That criticism is certainly warranted, but little attention has been paid to the real culprit â€" the Federal Reserve. Furthermore, what attention there has been is concentrated on the role of Alan Greenspan rather than Ben Bernanke. While Alan Greenspan deserves his share of the blame, Bernanke’s contribution to this mess should not be minimized or excused.
Bernanke obviously does not trust the market to sort the winners from the losers. When this erupted last year, the Fed lowered interest rates, including the discount rate, which is the rate charged by the Fed to lend directly to banks. There has always been a stigma attached to borrowing directly from the Fed and for good reason. If a bank can’t get other banks to lend it money, that tells the market something about the condition of the bank in question. Last August, Bernanke convinced three large banks to borrow at the discount window in an effort to remove that stigma. When that didn’t work, he concocted a scheme to allow banks to borrow from the Fed in anonymity via a mechanism he called the Term Auction Facility. When Bear Stearns blew up, he added the Term Securities Lending Facility for investment banks. By removing the stigma of borrowing from the Fed and hiding the identity of the borrowers, Bernanke removed important information from the market.
Now we face a situation where banks are not willing to lend to each other and have therefore become dependent on the Fed for daily liquidity. This is a direct result of the Fed’s actions. Banks will not lend to each other because they don’t know which ones are really in trouble. The rise in inter-bank lending rates is a rational market response to a lack of information. Furthermore, why pay those inter-bank rates when the Fed or ECB is offering easier terms?
These opaque lending facilities are just part of the problem created by the Fed and Treasury. The Bear Stearns intervention started the process by raising expectations that the government would step in and broker deals that would normally be left to the private sector. By providing favorable terms to JP Morgan in the deal, private actors came to see an advantage in waiting to see if the Fed would provide similar terms again. The worry at the time was that a Bear Stearns failure would cause a collapse of the system, but after watching Lehman Brothers file bankruptcy one has to wonder if that worry was based on fear or facts. Lehman filed bankruptcy on a Sunday night and the market opened the next day and functioned as it should. Would a Bear bankruptcy have been different? We will never know, but I have my doubts.
Now markets are waiting on pins and needles as the politicians haggle over the details of the latest bailout attempt by the Fed and Treasury. This has introduced another roadblock to the re-capitalization and reorganization of the financial industry. Companies that are in need of capital are waiting to see if the plan will bail them out of their difficulties. If Hank Paulson is willing to pay an above market price for their bad loans, why should they dilute their equity now? Why not wait until they can offload the bad paper on the taxpayer and raise capital at a better price? Why take Tony Soprano terms when Uncle Sam is willing to let the taxpayer take the hit for you?
If this bailout goes ahead in its current form and the Treasury pays a high enough price to recapitalize the troubled banks, what has been accomplished? The plan may be enough to induce the banking sector to start lending again, although frankly, I don’t know why we would want institutions who have shown such poor judgment in the past to stay in that business. This plan short circuits the capitalist model which would allow the stronger, well-run institutions to gain market share and/or expand profit margins. The long-term effect will be to lower the overall return on capital in the financial services industry. The government apparently believes that the key to economic recovery is to allocate limited resources in an inefficient manner. Does that make sense?
Paulson and Bernanke have testified to Congress that the market for the mortgage paper rotting on the balance sheets of bad banks is not working. They have not offered an explanation of why that market is not functioning except to blame the complicated nature of some of the securities. That explanation begs the question of how exactly the Treasury believes it will be any better at deciphering the mortgage market. A more logical explanation is not a lack of willing buyers, but a lack of willing sellers. The Fed has allowed institutions to use collateral of ever falling quality to secure loans from the Fed. If a bank can finance its activities through the Fed and keep the bad loans on the balance sheet, what incentive does it have to sell? Selling will reveal the true condition of the company and will also force other institutions to do the same under mark- to-market accounting. The Fed is the one keeping the market from functioning. The Treasury does not need to enter the market for it to start functioning; the Fed needs to leave the market.
Paulson has said that the cause of the current problems is the housing deflation, but that ignores the elephant in the living room. The housing bubble, which was concentrated in a relatively small number of states, was caused by the reckless actions of the Greenspan Fed. The consequences of that bubble have been exacerbated by the Bernanke Fed. The market is functioning as it should. It is the Fed that is not functioning correctly. There is no reason we had to go through either the bubble or the aftermath. We got into this mess because we tried to avoid the consequences of the Internet bubble. We will only make things worse by trying to avoid the consequences of the housing bubble.
We are not on the verge of a new depression. The housing bubble collapse in California, Florida and a few other states is not enough to bring down the entire banking system. Investors who made mistakes in these markets should be held responsible and those who navigated the Fed-distorted market should be rewarded for their wisdom and prudence. Enacting the Paulson plan will not allow that to happen and our economy will suffer for it in the long run. The Japanese tried to prop up failed banks in the aftermath of the bursting of their twin bubbles and the result was 15 years of stagnation. Why are we emulating a strategy that is a demonstrable failure? A better alternative would be to allow capitalism to work as it should and stop the interventions of the Fed in the money market. Trust capitalism. It works.
Joseph Calhoun is chief investment officer for Alhambra Investment Management in Coral Gables, Florida.
http://www.realclearmarkets.com/articles/2008/09/in_times_of_crisis_trust_capit.html
Quote
Dear Congressman,
I oppose the Paulson plan and believe you should consider an alternative plan detailed below. This plan addresses not just the banking crisis but the economic slowdown as well.
The problem the US faces is a shortage of capital. The Paulson plan attempts to address that by having the US taxpayer provide that capital through the Treasury Department. This plan will benefit poorly run institutions that are at the root of the housing problem. These poorly run institutions should not be bailed out of their bad decisions.
A recession is likely if not already underway and for any plan to work, it must address this basic issue. Since the issue is really a shortage of capital, there are a number of steps we can take that reduces the percentage of that capital that must be provided by the taxpayer.
1. Fannie Mae and Freddie Mac should be nationalized and used to coordinate any use of taxpayer funds. These institutions are a big part of the problem but we will not solve that problem by creating another parallel bureaucracy. Hiring outside asset managers to run a new system doesn’t make sense when we already have the infrastructure in place at Fannie/Freddie.
2. To support the recapitalization of the banking industry, all ownership restrictions on US banks should be lifted immediately. If Wal Mart wants to buy a bank, we should allow it. If private equity funds or Sovereign Wealth funds want to buy a stake, we should allow it.
3. To address the recession, take the following actions:
a. Pass Rep. Ted Poe’s H.R. 6690 defining the dollar as 1/500th of an ounce of gold. This would have an immediate and electrifying effect on global capital markets. Overnight you would see long term interest rates come down, commodity prices (including oil) drop dramatically, and a rush to dollar-denominated assets. U.S. funding costs would come down, and equity markets would rally. Banks would find it easier to recapitalize.
b. Corporate and capital gains tax cuts could be instituted, and the Bush tax cuts made permanent. This would again rally our equity and bond markets, draw more capital into the U.S., and hasten recovery.
c. As much as possible, domestic discretionary spending should be cut, helping to lower interest rates, increase productivity, and lower inflation.
These three items would attract capital to the US. That is the key problem we have right now â€" a shortage of capital and these three items will address that.
4. Take other actions to reduce the stress in the banking system. The goal should be to attract capital to these institutions and shore up their remaining capital. Here are several additional steps that can be taken:
a. Repeal Sarbanes-Oxley â€" this law has driven capital away from the US by making the cost of doing business here versus other locales prohibitive.
b. Allow banks forbearance in complying with FASB 157 and mark to market accounting rules.
c. Banks should be required to eliminate their dividends. The top 20 banks pay over $400 billion in dividends annually. If Paulson is correct and the need is $700 billion, taking this step will provide a majority of the funds required.
d. Banks which cannot raise private capital can be recapitalized by the government buying preferred stock in the companies. Any company that takes this option should be required to cut the pay of its executives or fire them if necessary. Goldman Sachs was able to raise capital by selling preferred stock to Warren Buffet. The US taxpayer should get similar terms if we are to provide capital to failing banks.
If it is still believed necessary, the Treasury can still have a bad asset purchase program, but this should be run through Fannie/Freddie and they should only pay current market prices for these assets. The size of this asset purchase program should be much less than the currently requested $700 billion.
Whatever is done, please remember that the need is for more capital. That capital does not have to be provided by taxpayers. If you use free market principles, private actors will step up and provide the needed capital.
Do the right thing. Protect the US taxpayer and help our economy recover.
Sincerely,
Quote3. To address the recession, take the following actions:
a. Pass Rep. Ted Poe’s H.R. 6690 defining the dollar as 1/500th of an ounce of gold. This would have an immediate and electrifying effect on global capital markets. Overnight you would see long term interest rates come down, commodity prices (including oil) drop dramatically, and a rush to dollar-denominated assets. U.S. funding costs would come down, and equity markets would rally. Banks would find it easier to recapitalize.
GOLD! ORO? SI ORO! GOLD!
Finally something besides the damn worthless paper that says "IOU one dollar - because I said so"
I LOVE THIS, where did you get this? OCKLAWAHA
Quote from: Midway on September 30, 2008, 09:53:50 PM
Quote
Dear Congressman,
I oppose the Paulson plan and believe you should consider an alternative plan detailed below. This plan addresses not just the banking crisis but the economic slowdown as well.
The problem the US faces is a shortage of capital. The Paulson plan attempts to address that by having the US taxpayer provide that capital through the Treasury Department. This plan will benefit poorly run institutions that are at the root of the housing problem. These poorly run institutions should not be bailed out of their bad decisions.
A recession is likely if not already underway and for any plan to work, it must address this basic issue. Since the issue is really a shortage of capital, there are a number of steps we can take that reduces the percentage of that capital that must be provided by the taxpayer.
1. Fannie Mae and Freddie Mac should be nationalized and used to coordinate any use of taxpayer funds. These institutions are a big part of the problem but we will not solve that problem by creating another parallel bureaucracy. Hiring outside asset managers to run a new system doesn’t make sense when we already have the infrastructure in place at Fannie/Freddie.
2. To support the recapitalization of the banking industry, all ownership restrictions on US banks should be lifted immediately. If Wal Mart wants to buy a bank, we should allow it. If private equity funds or Sovereign Wealth funds want to buy a stake, we should allow it.
3. To address the recession, take the following actions:
a. Pass Rep. Ted Poe’s H.R. 6690 defining the dollar as 1/500th of an ounce of gold. This would have an immediate and electrifying effect on global capital markets. Overnight you would see long term interest rates come down, commodity prices (including oil) drop dramatically, and a rush to dollar-denominated assets. U.S. funding costs would come down, and equity markets would rally. Banks would find it easier to recapitalize.
b. Corporate and capital gains tax cuts could be instituted, and the Bush tax cuts made permanent. This would again rally our equity and bond markets, draw more capital into the U.S., and hasten recovery.
c. As much as possible, domestic discretionary spending should be cut, helping to lower interest rates, increase productivity, and lower inflation.
These three items would attract capital to the US. That is the key problem we have right now â€" a shortage of capital and these three items will address that.
4. Take other actions to reduce the stress in the banking system. The goal should be to attract capital to these institutions and shore up their remaining capital. Here are several additional steps that can be taken:
a. Repeal Sarbanes-Oxley â€" this law has driven capital away from the US by making the cost of doing business here versus other locales prohibitive.
b. Allow banks forbearance in complying with FASB 157 and mark to market accounting rules.
c. Banks should be required to eliminate their dividends. The top 20 banks pay over $400 billion in dividends annually. If Paulson is correct and the need is $700 billion, taking this step will provide a majority of the funds required.
d. Banks which cannot raise private capital can be recapitalized by the government buying preferred stock in the companies. Any company that takes this option should be required to cut the pay of its executives or fire them if necessary. Goldman Sachs was able to raise capital by selling preferred stock to Warren Buffet. The US taxpayer should get similar terms if we are to provide capital to failing banks.
If it is still believed necessary, the Treasury can still have a bad asset purchase program, but this should be run through Fannie/Freddie and they should only pay current market prices for these assets. The size of this asset purchase program should be much less than the currently requested $700 billion.
Whatever is done, please remember that the need is for more capital. That capital does not have to be provided by taxpayers. If you use free market principles, private actors will step up and provide the needed capital.
Do the right thing. Protect the US taxpayer and help our economy recover.
Sincerely,
Finally some good ideas. Good work, midway. ;)
I'll agree. Wouldn't pegging the dollar to $500/oz of gold essentially re-establish the gold standard? Can't go wrong with that. Very Ron Paul-ian.
Now is not the time to peg anything to an ounce of gold. Gold is in a bubble just like every other commodity was and it will fall significantly in the next few months.
For the record, I do not agree with the gold standard either. This is one of the things which helped to cause financial troubles in the past. It does not need to be resurrected.
Dollar up near a 12-month high against the Euro; hovering near 4-year high against the British Pound.
http://finance.yahoo.com/currency/convert?amt=1&from=EUR&to=USD&submit=Convert
http://finance.yahoo.com/currency/convert?from=GBP&to=USD&amt=1&t=5y
So... people are choosing the dollar over the Euro in uncertain economic times??? :)
At least at the moment, yes - looks like. The Yen too. Dollar vs Yen is still near all-time lows, but Yen-to-Euro is strongest its been in a year, and Yen-to-Pound is near a 4-year high, in favor of the Yen.
I think those probably have a lot to do with the European version of the American Meltdown. I think I read yesterday that Eurozone uneomployment is at or past 7.5%, etc. Lots of problems there as well. The ECB held rates steady at 4.25%, so that'll help sustain the Euro for a while longer against other currencies.
Also of note, Gold today is (as of this morning) hovering around the $850 mark, and Platinum is still ~$1,040, still well off its highs of earlier this year. If the dollar is weak, then at least platinum should be way higher. I'm no expert and don't claim to be, but that's what's happened in the past. Silver's still hanging out around the $12 level.
Either the dollar isn't as fundamentally weak as most think, or there's something screwy with the commodities markets. I confess I don't know which.
Quote from: BridgeTroll on October 02, 2008, 10:44:25 AM
So... people are choosing the dollar over the Euro in uncertain economic times??? :)
They are choosing the dollar because we are further ahead in the recovery process. People are just now starting to realize how screwed Europe is in regards to housing/credit. Europe will have to start to lower interest rates (they did not today), which will in turn lower the price of the Euro and by default, raise the price of the dollar.
Everything is connected
Quote from: Doctor_K on October 02, 2008, 10:52:11 AM
Either the dollar isn't as fundamentally weak as most think, or there's something screwy with the commodities markets. I confess I don't know which.
The dollar was at historic lows earlier this year, its no surprise that it is higher now.
There is nothing screwy with commodities, they were in a bubble, that bubble is popping now. Agriculture stocks have been getting absolutely crushed this week, metals will be the last bubble to pop. Take a look at just about any stock or commodity over the last two years, you can see the meteoric rise and then a thud.
For the record, gold is NOT immune to the bubble cycle.
Certainly looks that way, whitey. Platinum tanking below the $1,000 mark today. w0w.
So the dollar is currently in a recovery upswing then? Good to know.
Still sticking with your Dow 6000 prediction?
It will be merely a "hypothesis" if the Dow doesnt hit 6000 but if it does you will claim it was a prediction. ;)
In other news, the Yen continues to gain against just about all major currencies, while the Dollar has stabilized for now against the Euro, Cana-dollar and Pound.
As of 3:45, the DJIA is down 17-and-change after being down by around 200 (ballpark) earlier today. Wild swings all day - nothing new.
Gold is back above $900/oz (interesting).
Oil is under $90/bbl still. And gas futures are right at $2.00/gal. Lowest that's been in a while, I think.
http://money.cnn.com/data/commodities/index.html (http://money.cnn.com/data/commodities/index.html)
http://money.cnn.com/data/currencies/index.html (http://money.cnn.com/data/currencies/index.html)
Quote from: stephendare on October 08, 2008, 12:36:47 PM
Its still a hypothesis, but yes. Seems a lot more realistic now doesnt it?
The optimists think it will contract to about 8500, and the pragmatists are preparing for 6000.
There are truly grimmer assessments out there, but I feel safe with what I think is the worst case scenario.
I am going to say we see 10,000 before we see 8,500, those are equidistance from each other as of the close today (9,250 ish).
Panic buying/selling is rarely the correct move, I have been loading up on stocks and selling gold short all week. I think when we do break the downward momentum (cracks showing today), we will see a violent move higher. This is how Wall Street has worked for decades, buy your stocks low and sell them back to you when the price is higher.
i read an analyst today saying that this last week or so has been smaller investors who have been getting their quarterly statements (arriving end of Sept, beginning of Oct) and liquidating. that is usually a good sign. but who knows - now, i actually think that 8,500 is more likely than 10,000 here in the near future.
No one really knows if we are at a point of true capitulation. It looks close for the time being, but as earnings erode (and they will over the next 2 quarters), you will see share prices drop to reflect those earnings.
Right now, valuations are not in focus, earnings (and lack thereof) are in focus. You could have a rally tomorrow or the next day. You could also have another sharp down day. I hate to try and time a market of so many unknowns; it's like reading tea leaves. I tend to agree with Driven's assessment of seeing 8,500, but I doubt any of us really know for sure.
You could see 10,000 just as easily as you could see 8,500 in the near future. Either way, you would have to get out of the market soon enough to realize your profit. Volatility and day-trading only work if you can time your transactions correctly.
Your best guess in trying time a rally is to look at Asian and European overnight stock trends. Also, look at the 1 month libor rate. If it drops overnight, that means banks are lending to each other and investors will feel better about the credit markets flowing again. If libor rises, it is a very bad sign that the credit markets are still choked. If this rate drops for about a week, then it is a good idea to go ahead and get back in the market (at least for the short term).
Overall, I see the market headed down at least to 8,000 before this is all done with. It may be next week, next month or early next year. I continue to dislike financial stocks (sold my Goldman stock last Thursday at a 6% profit).
I am stocking up my cash because I see capitulation in the market completing within 3 months. Stocks will be very cheap and we can all ride a good wave of equity prosperity. The occasional sucker's rally is nice to get into, but as always with great reward, you end up taking great risk. I tend to be a bit more risk averse than others.
Everyone is looking at the stock market for capitulation, I don't think we will see it. Everyone is waiting for a big sell off with high volume as a signal to get back in, I expect a back door rally starting in the bond markets. The bond market started to move higher today almost at exactly the same time the market turned around, money moving out of bonds signals the movers and shakers looking to take on more risk in stocks.
Paulson is also looking at directly injecting cash into banks in exchange for equity in those banks instead of or in addition to buying MBS'. If they can set up an open exchange market for the MBS' at a low cost and then use the vast majority of the $700 billion to directly infuse cash into the banks I see that as a much more beneficial solution for the system and taxpayers. We get MBS' into a more liquid setting with an open trading forum, banks get an infusion of cash if needed and taxpayers get equity in those banks.
Dow closes at 8,579.
Yup, another bad day on Wall Street. :'(
As long as libor stays high, things will continue to get worse. I am skeptical of bank injection plans, becuase I just do not see it really easing banking fears right now. Banks are in survival mode and will remain so even after govenrmnet backing.
I believe tomorrow will be a very down day as well.
Quote
Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen
By Anchalee Worrachate and Gavin Finch
Oct. 9 (Bloomberg) -- The cost of borrowing in dollars for three months in London soared to the highest level this year as coordinated interest-rate reductions worldwide failed to revive lending among banks for any longer than a day.
Attempts by policy makers to restore confidence to money markets are being stymied by almost daily crises among financial institutions. Iceland's government took over the nation's biggest lender today to keep the country's banking system working. American International Group Inc., the insurer taken over by the U.S. government, may need $37.8 billion of extra funds, the Federal Reserve Bank of New York said yesterday.
``To see little or no reaction in the fixings is very disappointing and reinforces the fact that Libor is broken and the transmission mechanism from central banks isn't working,'' said Barry Moran, a currency trader in Dublin at Bank of Ireland, the country's second-biggest bank. ``Things are still very stressed and we don't know what's going to fix it.''
The London interbank offered rate, or Libor, for three-month loans rose to 4.75 percent today, the highest level since Dec. 28. The Libor-OIS spread, a measure of cash scarcity, widened to a record. The overnight rate fell to 5.09 percent, still 359 basis points more than the Fed's 1.5 percent target rate.
The European Central Bank today offered banks as much cash as they need for six days at its benchmark rate of 3.75 percent, bringing forward new measures to soothe money markets. It also loaned banks a record $100 billion in overnight dollar funds, allotting most of the cash at 5 percent, down from 9.5 percent yesterday.
`Holding Cash'
South Korea, Taiwan and Hong Kong cut interest rates today, a day after reductions by central banks including the Federal Reserve and European Central Bank that were designed to stem damage from the global financial crisis. The U.K. government pledged yesterday to spend 50 billion pounds ($87 billion) to stave off a collapse of the British banking system.
``I don't see a wave of liquidity coming into the market,'' said Alessandro Tentori, an interest-rate strategist in London at BNP Paribas SA. ``People are still holding on to their cash because there's still a great deal of uncertainty out there.''
There were signs of a thaw in short-term markets. Overnight borrowing costs for companies dropped to the lowest in almost two weeks after yesterday's rate cuts and the Fed committed to buying commercial paper. Yields on the highest-rated one-day commercial paper placed by dealers declined 1.15 percentage points to 2.35 percent, according to data compiled by Bloomberg. Rates from Sears Holdings Corp. and HSBC Holdings Plc fell, the data show.
Iceland, AIG
Interbank lending rates have climbed as financial institutions stockpile cash to meet funding expectations and remain skeptical that central bank efforts to unblock markets will work. The three-month rate in euros held at a record high of 5.39 percent today.
Iceland's government today seized control of Reykjavik-based Kaupthing Bank hf, completing the takeover of a banking industry that has collapsed under the weight of its foreign debt. Late yesterday, the Fed said New York-based AIG can swap as much as $37.8 billion of its ``investment-grade, fixed-income securities'' for cash to ``replenish liquidity.''
Money-market rates rose today in Hong Kong, Singapore and Japan to the highest levels in at least nine months. Hong Kong's three-month interbank offered rate jumped to 4.4 percent, a one- year high. Singapore's comparable rate for dollar loans increased to 4.51 percent, the highest level since Jan. 8.
`Of Little Help'
The Libor-OIS spread, the difference between the three-month dollar Libor and the overnight indexed swap rate, climbed 23 basis points to an all-time high of 348 basis points. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began. The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, exceeded 400 basis points for a second day.
``Libor spreads are still wide, which suggest offshore banks are not willing to take more risks lending to other banks,'' said Cezar Bayonito, a liquidity trader at Allied Banking Corp. in the Philippines. ``Interest-rate cuts will be of little help in the near term because the issue is trust, not rates.''
Libor, set by 16 banks in a daily survey by the British Bankers' Association at about noon in London, determines rates on $360 trillion of financial products worldwide, from home loans to derivatives. Member banks provide estimates on how much it would cost to borrow in 10 currencies for periods ranging from a day to a year.
Sears' commercial paper rate declined by 1 percentage point to 3 percent, according to Bloomberg data. The rate for HSBC fell by 25 basis points to 2 percent. Companies sell commercial paper, which matures in nine months or less, to help pay for day-to-day expenses such as payroll and rent.
Yields on three-month Treasury bills were unchanged at 0.62 percent
one thing is for certain...when it hits "the bottom" it won't stay there more than a few days and will shoot back up violently (recovering 25% or so of losses in a week or so) . so to say that the market is realistically valued at X...yeah...maybe...maybe for a day.
btw, CNBC had quite a few famous short-sellers on tonight. everyone, in turn, when asked if they would short THIS market now (at 8600), replied a resounding "NO".
i agree - tomorrow is another down day.
DOW goes no lower than 7750 though.
one thing is for sure - this is exciting stuff!
some interesting notes...
GM is now at a price lower than 1950. GM market cap is lower than it was in 1929.
DOW has lost 2,200 points in 7 days. we are down 42% from all-time market high one year ago today. DOW is now around same place it was in 1997 (of course, you would've still made decent $$ in an DOW index fund with dividends reinvested).
GE is at an almost 10 year low.
Sprint is at a 21 year low.
Bank of America is at 1996 prices.
Quote from: stephendare on October 09, 2008, 08:55:47 PM
still way further to go. and when the municapal bonds market cracks open like a rotten egg, the dow is going to sink a little further.
muni bond market has already been killed. since march when Ambac and MBIA hit the fan. that's old news.
Gonna be a bad day here tomorrow!
NIkkei down 10% right now. Futures trading suspended there. Mitsubishi Estate Co (2nd largest prop developer) just became the country's first ever failed REIT.
QuoteThe Osaka Securities Exchange halted trading in Nikkei 225 Stock Average futures for 15 minutes until 9:23 a.m. after a plunge triggered circuit breakers. The futures were suspended because of a decline of more than 1,000 points and as the value of the underlying Nikkei average differed from the futures value by more than 200 points.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aI999JNaYtn4&refer=japan
tomorrow afternoon should be a pretty good time to buy into the market. If you can stomach the risk, I think there will be some good buys after the projected big sell-off.
I imagine early next week should be good for equities. I project a short rally on Monday/ Tuesday.
I will bargain shop tomorrow. Who wants to come?
i'm transferring in more cash myself. sold all gold today & invested those proceeds and all the rest of my MMKT funds. if i'm going down, it's gonna be everything!!!!! kind of freaking exciting/scary. :)
"these are the times you make money. you just don't know it for a year or two."
btw, here is a very good article from the journal...
Quote
We're getting bludgeoned to death. Day after day. Five, six hundred points at a time.
No wonder lots of people giving up. They are throwing up their hands at all that "invest for the long term" stuff, and selling out for what they can get. "Get me out of here!" they cry.
Mutual fund investors withdrew another $9.4 billion in the most recent week, according to industry analysts AMG Data Services. You can't blame them. This is really tough. It takes a heavy emotional toll. And every day you hang on, hoping it's going to stop, and it falls again and you kick yourself for not selling yesterday.
This is why our grandparents had absolutely no interest in stocks throughout the 1940s and 1950s. They remembered how tough it could be.
The Dow was last below 9000 five years ago.
We are living through history. What makes this crash stand out is the sheer speed of it.
The bear market that followed 2000 took three years. The huge slump in the early 1970s took two.
This time around, world markets have nearly halved in just a year.
Only one crash fell that far faster: Yes, 1929. And I'm sorry to say that slump went on for another two years. By the end the Dow was down 90% from its peak and the U.S. economy had shrunk by a third.
No, I don't think anything like that will happen this time. I don't think Hitler or the Charleston are going to make a comeback either. The 1930s were the 1930s.
But here's the problem. If you get out of the market here, you may never get back in.
The financial crisis we're going through resembles, in some ways, the titanic financial crash that Great Britain saw in the early 1970s. Their real estate market collapsed, setting off a similar chain of events. Their government was way behind. Their banks imploded â€" it is still known as "the secondary banking crisis." Their stock market fell 75%. Then, like now, investors were bludgeoned to death, one after another, until there were none left.
But when the stock market finally turned around, it nearly doubled in a few weeks. Those who had jumped off earlier missed it. It simply moved too fast to jump back on.
I don't know how much further this will fall or how exactly it will end. And as I've said before, I don't trust anyone who says they do know. If you are investing, the only way to protect yourself against further falls is to keep buying little and often.
We are seeing everywhere signs, not merely of selling, but of wholesale, mindless panic. IBM just beat expectations: The stock fell.
Johnson & Johnson and Procter & Gamble shares just plunged 8%. Microsoft, which may end up as the true lender of last resort after Uncle Sam folds, fell 3%. Diageo, the alcohol giant that makes Guinness, Smirnoff vodka and lots of scotch, fell 4%. So did Altria, aka Philip Morris.
Tax-free municipal bonds are yielding far more than taxable Treasurys. Small company stocks, especially in Europe, are being given away for a fraction of their breakup value.
Stocks, world-wide, stopped being expensive by any serious measure earlier this year. Now, many of them are downright cheap. World-wide, the equity bubble that first inflated in 1998-2000 and then re-inflated in 2005-7 has now thoroughly been burst.
It's easy to forget how high share prices went back then, and just how far they have fallen now.
Compared to annual sales, or net assets, or annual earnings, or dividends, global stocks are at or near the lowest levels seen in maybe 30 years. History is pretty clear. Buying good stocks when they are cheap, and holding on for a long time, has been very good business. The further prices fall, the truer that is.
Write to Brett Arends at brett.arends@wsj.com
Quote from: Driven1 on October 08, 2008, 08:36:42 PM
i read an analyst today saying that this last week or so has been smaller investors who have been getting their quarterly statements (arriving end of Sept, beginning of Oct) and liquidating. that is usually a good sign. but who knows - now, i actually think that 8,500 is more likely than 10,000 here in the near future.
didn't know it would happen the next day, though. :)
Quote from: Driven1 on October 09, 2008, 11:35:21 PM
Quote from: Driven1 on October 08, 2008, 08:36:42 PM
i read an analyst today saying that this last week or so has been smaller investors who have been getting their quarterly statements (arriving end of Sept, beginning of Oct) and liquidating. that is usually a good sign. but who knows - now, i actually think that 8,500 is more likely than 10,000 here in the near future.
didn't know it would happen the next day, though. :)
Almost prophetic Driven. You should share your palm reader's contact information with the rest of us. ;D
But seriously, good call
panic selling across Eruope and Asia. markets down from 7-10% across the board. S&P futures down 4% already here.
a huge capitulation at noon, followed by a record reversal would be nice today!
Cripes. Dow down 5% and then some within like first 10 minutes of the opening bell. Was down over 1,000 at one point. We've blown way past that 8,500 mark Driven hypothesized about. Unreal.
Dollar still holding its own against the Euro and Pound. Down some more against the Yen; up against the Loonie and Peso.
Crazy times these last few weeks.
i think i got real lucky this morning (definitely for the really, really short-term - today maybe - and also for the really long term). with the DOW down 700 points this morning, i put in my new buy orders. it then rallied to only being down 30 points. bunch of computer buying started happening i think. Dow down 200 points now.
this morning...
picked up CX at 5.50... now 7.10
picked up more PM at 36... now 38
picked up a good amount of CSIQ (thank you bail out package) at 10... now 11
Dow only down 1.5%, NASDAQ up a quarter percentage-point. Dollar still doing well against the currencies, and better against the Yen.
One good thing here: Per-barrell oil now in the upper 70s. Can't wait to see those results at the retail level!
Please keep hands and feet inside the car at all times, until the roller coaster comes to a complete stop.
The old saying is two things drive the market:
Greed and Fear Fear is definitely driving the market now. In the near future is a good buying opportunity.
The day started with $790/oz gold, $9.50/oz silver, $880/oz platinum, and $71/bbl oil. Gasoline futures down to $1.67/gal.
Dollar doing decently against the Euro and Pound, up against Peso and Loonie. Interesting standings.
Quote from: Driven1 on October 10, 2008, 10:41:16 AM
i think i got real lucky this morning (definitely for the really, really short-term - today maybe - and also for the really long term). with the DOW down 700 points this morning, i put in my new buy orders. it then rallied to only being down 30 points. bunch of computer buying started happening i think. Dow down 200 points now.
this morning...
picked up CX at 5.50... now 7.10
picked up more PM at 36... now 38
picked up a good amount of CSIQ (thank you bail out package) at 10... now 11
just an update... CX still at 7.50 (had gotten up to $10)
PM at 44.
CSIQ got up to $15 last week. i waited for it to come back down. bought more at $10.66 Wed. it is currently at 12.00. that stock is down from $20 in jan to $40 in June (yeah, it doubled in a horrible market). down from $80 last year, btw. i like their biz and earnings.
btw - yesterday was a great day for our economic recovery. forget that the markets were up 4%. that's irrelevant (just as them being down 3% was today). more important is that both yesterday and today, the credit libor spread has begun narrowing significantly. this is extremely important and has been anticipated as a very real sign that all the measures the gov't has been throwing at the economy is finally starting to have impact in a measurably positive way.
Quote from: Driven1 on October 20, 2008, 09:51:49 AM
Quote from: Driven1 on October 10, 2008, 10:41:16 AM
i think i got real lucky this morning (definitely for the really, really short-term - today maybe - and also for the really long term). with the DOW down 700 points this morning, i put in my new buy orders. it then rallied to only being down 30 points. bunch of computer buying started happening i think. Dow down 200 points now.
this morning...
picked up CX at 5.50... now 7.10
picked up more PM at 36... now 38
picked up a good amount of CSIQ (thank you bail out package) at 10... now 11
just an update... CX still at 7.50 (had gotten up to $10)
PM at 44.
CSIQ got up to $15 last week. i waited for it to come back down. bought more at $10.66 Wed. it is currently at 12.00. that stock is down from $20 in jan to $40 in June (yeah, it doubled in a horrible market). down from $80 last year, btw. i like their biz and earnings.
UPDATE:
CSIQ back at $10.60 again. i like it. PM at 41. i like it.
http://biz.yahoo.com/ap/081022/dollar.html (http://biz.yahoo.com/ap/081022/dollar.html)
Quote
Dollar surges vs Canadian dollar, euro, pound
By Erin Conroy, AP Business Writer
Dollar surges to multi-year highs against the Canadian dollar, euro, pound on recession fears
NEW YORK (AP) -- The dollar surged to multi-year highs against the Canadian dollar, British pound and 15-nation euro Wednesday on anxieties about the deteriorating economies overseas and growing expectations that central banks will cut interest rates.
The euro traded at $1.2842 in early New York trading, down from $1.3133 it bought the day before, as the euro zone exhibits more and more signs of a deep recession. Earlier, the currency bottomed at $1.2736, its lowest point since November 2006.
The British pound slumped more than 5 cents to its lowest level in five years after Bank of England governor Mervyn King hinted at further interest rate cuts to come and warned that the British economy is now likely in recession. The pound slid to $1.6382 from $1.6946, after hitting $1.6201 earlier in the session -- its lowest point since September 2003.
As recently as July, the pound was trading above $2 before lower British interest rate expectations fueled the sharp decline. Around that same time, the euro was trading above $1.60.
...
The dollar has seen support from "safe-haven" buying as investors rush to snap up short-term government debt and sell off positions in emerging-market currencies that they see as less stable, Gilmore said.
"The global deleveraging of markets is forcing a run into the yen and the dollar, which are arguably the two cheap funding currencies from the credit boom," Gilmore said. "I'd be hesitant, however, to assert that somehow the strength of the dollar reflects a global surge in confidence in the U.S. economy and U.S. markets. This is a rally in the U.S. currency that is a sign of stress, not a sign of relief."
The Fed announced Wednesday it will boost the interest rate paid to commercial banks on excess reserves, but investors shifted their focus to worrisome corporate profit forecasts that are raising fears of a deep economic slowdown. The major indexes fell more than 1 percent in late morning trading, including the Dow Jones industrial average, which lost about 250 points. The major European indexes -- Britain's FTSE 100, Germany's DAX and the CAC-40 in France -- all slipped about 4 percent.
The dollar fell to 98.93 Japanese yen from 100.79 yen, but rose to 1.1669 Swiss francs from 1.1507 Swiss francs.
Meantime, from CNNMoney.com: http://money.cnn.com/data/commodities/index.html (http://money.cnn.com/data/commodities/index.html)
Oil is down to $68.35/bbl, gasoline futures are at $1.58/gal - yippie!
Gold = $735/oz
Silver = $9.46/oz
Platinum = $857/oz
Now is a good time for a European vacation! ;)
AMAZING day in the market. 600 points down again! We touched the lows from Friday, two weeks ago (the following Monday was when the market exploded upwards). Was it a capitulation? Nah, I don't think so. Let's check the volume. Volume appears to be 25-45% higher than normal. A nice, panicked sell-off, but I don't think the capitulation we are looking for.
Nikkei just closed & finished down 5.6% for the day. S. Korean market finished down over 8% for the day. I think we have minor down day or minor up day tomorrow here.
The lack of gold or silver coinage will deny HARD CURRENCY to the common man. This feels like something big is about happen to this world and we're riding it like a mis-guided cannon ball to hell. If we completely crash and burn, I'll give it 7 bloody years until it suddenly clears up.
You KNOW what I'm saying Stephen, without causing an earthquake, what say you?
OCKLAWAHA
the bottom?
for the last 3 business days now I have heard CNBC and everyone they bring in talking about we may have seen "the bottom" on the S&P & DOW plummeting. this is a first. no one had been saying this before now. the concensus seems to be that if we haven't already hit it, we are literally within "a week or two" (their words, not mine).
seems the rest of the world is catching up with us now (or catching DOWN with us)....Hong Kong market was down 12% last night...we are up 1.3% right now. same kind of deal on Friday with us being only down 3% (at one point only being down 1%) and the Nikkei being down like 7 or 8% thursday night.
The best thing is after November 4, the media will have no motivation for talking down the economy (no matter who wins) as they have been for the past 2 years so consumer confidence will begin to rebound either way.
And, if Obama wins, it will soon by "The Best Economy In 50 Years!!" according to the media. :D
QuoteThe best thing is after November 4, the media will have no motivation for talking down the economy (no matter who wins) as they have been for the past 2 years so consumer confidence will begin to rebound either way.
And, if Obama wins, it will soon by "The Best Economy In 50 Years!!" according to the media.
(http://i196.photobucket.com/albums/aa111/Ocklawaha/CRITICAL%20Cartoons%20and%20Fun%20Stuff/csab120m.jpg)
I'm just going to sit on my Bonds, in the long run they'll be worth more then the USA is lock-stock and barrel, besides mine are backed by REAL gold. OCKLAWAHA
I own $6000 worth of Confederate bonds also. ;D
this morning's news...
Stocks Set to Surge as Global Shares Jump- AP
http://biz.yahoo.com/ap/081028/wall_street.html
Quote from: stephendare on October 28, 2008, 12:24:25 AM
wow. even less interesting chit chat than the usual totally wrong prognostication.
interesting.
the dow is destined to fall to 6000, then stabilize.
Once the anointed one, Barack Hussein Obama, Jr., peace be upon him, is in office, 1000 years of peace and prosperity will be ushered in.
Quote from: stephendare on October 28, 2008, 12:24:25 AM
the dow is destined to fall to 6000, then stabilize.
More disastrous investment advice. I hope no one sold off early today based on this. :D
QuoteU.S. Stocks Rally, Dow Jones Industrials Climb 889 Points
By Lynn Thomasson and Eric Martin
Oct. 28 (Bloomberg) -- Stocks rallied and the Dow Jones Industrial Average posted its second-best point gain as the cheapest valuations in 23 years lured investors and increased commercial paper sales signaled credit markets are thawing.
Alcoa Inc. jumped 19 percent, leading the Dow to an almost 900-point advance, after the shares slid to their lowest price- to-earnings ratio on record. General Electric Co., the largest issuer of commercial paper, soared 9.9 percent after sales of longer-term debt grew 10-fold yesterday as the Federal Reserve entered the market for corporate IOUs. Citigroup Inc. and Bank of America Corp. rose more than 12 percent as traders boosted bets the Fed will cut interest rates tomorrow.
The Standard & Poor’s 500 Index gained 91.59 points, or 11 percent, to 940.51 after sliding to the lowest level since March 2003 yesterday. The Dow climbed 889.35 points, or 11 percent, to 9,065.12. Hong Kong’s benchmark index added 14 percent, its best advance in 11 years, while Germany’s climbed 11 percent and Brazil’s jumped 13 percent.
“The valuations are extremely compelling right now,†said Dan Veru, who helps manage about $2 billion at Palisade Capital Management in Fort Lee, New Jersey. “When you’re in extreme oversold conditions, the market is prone to these types of wild swings. The key thing is, can we hold these gains?â€
Valuation Watch
The S&P 500 was valued at 10.7 times estimated profit when trading opened today, the cheapest compared with the multiple using trailing profit since at least 1995. The index was also 25 percent below its average closing price over the last 50 days, a level reached only four previous times, spurring average gains of about 20 percent over the next six months.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ3EufoOM1wM&refer=home
c'mon river...don't you know the DESTINY of the Dow? ;)
it's pure fate.
:D
Quote from: stephendare on October 28, 2008, 12:24:25 AM
wow. even less interesting chit chat than the usual totally wrong prognostication.
interesting.
the dow is destined to fall to 6000, then stabilize.
The Dow Index is 350 points away from hitting 10,000 again...after hitting a low of 7,900.
S&P 500 is up 16% in last 6 market days.