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

[Driven1]

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. 

[apvbguy]

Well, 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!

[Driven1]

you win. 

[apvbguy]

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. 

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 ----------------.

[apvbguy]

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

[Doctor_K]

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.

[apvbguy]

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.

[Doctor_K]

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.

[Driven1]

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.

[apvbguy]

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

[apvbguy]

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.”


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 ...”


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 capitalism”, 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.

[apvbguy]

on a lighter note

http://www.youtube.com/watch?v=Ct89zcFTjiI

[RiversideGator]

I am starting to think we should just trust capitalism:

September 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

[Midway ®]

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,

[Ocklawaha]

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.

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