Dow down 600 points...think its gonna get worse...

[Driven1]

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.

[whitey]

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.

[Driven1]

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?

[whitey]

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.

[RiversideGator]

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.

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.   

[RiversideGator]

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.

[RiversideGator]

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/

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.   

[RiversideGator]

FYI, here is some more info on the cherished ACORN:

September 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

[RiversideGator]

And, here is some more information on the Democrat's shenanigans (and a possible partial solution):

September 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

[gradco2004]

How does Sarbanes-Oxley play into all of this?

[Ocklawaha]

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

[Lunican]

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.

[Driven1]

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.

[Lunican]

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.

[Driven1]

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.