WHAT IF NO "BAIL OUT" GETS PASSED?

[texaspackerbacker]

Bush, McCain, ALL Obama came out of their meeting at the White House expressing URGENCY that the thing get passed. (I have it on good authority that Obama stated during this meeting, "Let's put some lipstick on this pig and get it passed".)

The consequence of doing nothing, according to the suporters, is a catastrophic meltdown as early as next Monday. I'm getting more and more doubtful about that.

Having all the political elite of Washington lined up in favor of this creates a huge RED FLAG for me. Who is opposing it? Apparently the House Republicans. And WHO in that political sewer known as Washington D.C. is the closest and most in tune with good normal Americans? You got it. House Republicans.

I honestly don't know exactly WHY I am starting to oppose the thing. But I do--mostly based on who is for it and who is against it.

[Freak Out]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

[bobblehead]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

[Freak Out]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

Did I forget the rolling eyes in my post?

[bobblehead]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

Did I forget the rolling eyes in my post?

There were only 2 votes other than me so I assumed you were serious since the vote was same as tex.

[Freak Out]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

Did I forget the rolling eyes in my post?

There were only 2 votes other than me so I assumed you were serious since the vote was same as tex.

No...I have not voted. I was almost laughing when I got the letter....sure they (MM) may not load their funds with what might be considered garbage but there is some serious shit going down right now that will effect ALL OF US if this :shtf: happens again.

[Freak Out]

Its ok...lets just sell more of our debt.

[MJZiggy]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

It'll be ok, all the construction jobs are held by illegals anyway... :eyes:

[texaspackerbacker]

The Obama people are blaming McCain for the impasse over the deal--how exactly I don't know when he seems so strongly for it. McCain seems to be moving back up in the polls this week. Put those two facts together, and you have a perception by a lot of people that the deal is bullshit.

The real question, though, is what WILL happen--not what people THINK will happen. I'm thinking more and more that this whole mess is a contrived crisis by whom? That's anybody's guess--the "illuminati"? I don't know. I've been hearing that conspiratorial crap and not believing it for forty years. I'm getting less and less sure, though.

Something stinks here. The whole think is supposedly about bad assets--mortgages or clusters of mortgages that are defective and devalued because they are in default or at least in serious trouble. Think about it. Does that make sense? Are THAT many mortgages in trouble? I just can't see where more than a tiny tiny percentage of all mortgages are in default. Does ANYBODY here really believe a huge enough percentage of mortgages are "bad assets" of that type?

In addition, ALL of those mortgages are secured by real estate--thus, the bottom line for the mortgage holder is ownership of the property. So then they bring up the real estate "crisis"--claiming the security for the notes isn't worth crap in the bad housing market. However, how bad is that real estate market? Not very damn bad at all in the large majority of the country. California, Florida, a few big cities, and very very few other locations. And even in those cases, the real estate has value. If a $200,000 house drops in value to $100,000, the bank STILL has $100,000 security for a $200,000 note--not ideal, but hardly "worthless". Considering that along with how few defaults there actually are, and I ask, HOW could this "crisis" be REAL? Common sense says it isn't.

OK, Howard, and anybody else who fancies himself so sharp in the field of economics and finance, tell me exactly what part of what I wrote doesn't make perfect sense.

[HowardRoark]

The Obama people are blaming McCain for the impasse over the deal--how exactly I don't know when he seems so strongly for it. McCain seems to be moving back up in the polls this week. Put those two facts together, and you have a perception by a lot of people that the deal is bullshit.

The real question, though, is what WILL happen--not what people THINK will happen. I'm thinking more and more that this whole mess is a contrived crisis by whom? That's anybody's guess--the "illuminati"? I don't know. I've been hearing that conspiratorial crap and not believing it for forty years. I'm getting less and less sure, though.

Something stinks here. The whole think is supposedly about bad assets--mortgages or clusters of mortgages that are defective and devalued because they are in default or at least in serious trouble. Think about it. Does that make sense? Are THAT many mortgages in trouble? I just can't see where more than a tiny tiny percentage of all mortgages are in default. Does ANYBODY here really believe a huge enough percentage of mortgages are "bad assets" of that type?

In addition, ALL of those mortgages are secured by real estate--thus, the bottom line for the mortgage holder is ownership of the property. So then they bring up the real estate "crisis"--claiming the security for the notes isn't worth crap in the bad housing market. However, how bad is that real estate market? Not very damn bad at all in the large majority of the country. California, Florida, a few big cities, and very very few other locations. And even in those cases, the real estate has value. If a $200,000 house drops in value to $100,000, the bank STILL has $100,000 security for a $200,000 note--not ideal, but hardly "worthless". Considering that along with how few defaults there actually are, and I ask, HOW could this "crisis" be REAL? Common sense says it isn't.

OK, Howard, and anybody else who fancies himself so sharp in the field of economics and finance, tell me exactly what part of what I wrote doesn't make perfect sense.

I have done my best over the past few months. I think I have done a good job of explaining.

Let’s say all the stores in your town have stocked their shelves with way too may Instant mashed Potatoes; so many in fact that these Instant Mashed Potatoes have taken up all the space in the store. Now, assume that word has leaked that Instant Mashed Potatoes cause cancer. Every store needs to sell the spuds, but nobody wants to buy them. The store owner keeps marking them down, but nobody buys. Finally, he puts a price of $.01 on the Instant Potatoes. Still they sit. The store can’t do anything…….they run out of money and shut the doors.

What is the value of the spuds?

[mraynrand]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

[Tyrone Bigguns]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

You are semi correct, but tainted spuds ain't right either. More like instant spuds that no one wants...cept we can at least dump them off to some 3rd world country...and get pennies on the dollar.

The problem with a housing slump is inventory. Unlike factories,startups, and spuds...shuttered houses don't go away. No one declares them obsolete. They aren't boxed up and sent to Guatemala like NE Patriots superbowl champs tees. They remain, a drag on the market, decaying and pulling down property values for years.

It took 8 years or so for the market in Texas to rebound after the S&L crisis and oil bust.

[HowardRoark]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

I made it up on the fly, the triggering event is rather arcane and hard to duplicate in a spud analogy.

Let’s say by some magic, some real smart guys are able to start selling the spuds without ever owning them, thus forcing all the other store sellers to drop their prices…….and you, as well as everyone else decides that real mashed potatoes are the way to go. Nobody wants to buy the Instant ones anymore. The Instant Potatoes are perfectly fine.

What is the value of box of Instant Spuds?

[Tyrone Bigguns]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

I made it up on the fly, the triggering event is rather arcane and hard to duplicate in a spud analogy.

Let’s say by some magic, some real smart guys are able to start selling the spuds without ever owning them, thus forcing all the other store sellers to drop their prices…….and you, as well as everyone else decides that real mashed potatoes are the way to go. Nobody wants to buy the Instant ones anymore. The Instant Potatoes are perfectly fine.

What is the value of box of Instant Spuds?

Well, if the world is like Tex...we'll reap a windfall. :roll:

[texaspackerbacker]

The Obama people are blaming McCain for the impasse over the deal--how exactly I don't know when he seems so strongly for it. McCain seems to be moving back up in the polls this week. Put those two facts together, and you have a perception by a lot of people that the deal is bullshit.

The real question, though, is what WILL happen--not what people THINK will happen. I'm thinking more and more that this whole mess is a contrived crisis by whom? That's anybody's guess--the "illuminati"? I don't know. I've been hearing that conspiratorial crap and not believing it for forty years. I'm getting less and less sure, though.

Something stinks here. The whole think is supposedly about bad assets--mortgages or clusters of mortgages that are defective and devalued because they are in default or at least in serious trouble. Think about it. Does that make sense? Are THAT many mortgages in trouble? I just can't see where more than a tiny tiny percentage of all mortgages are in default. Does ANYBODY here really believe a huge enough percentage of mortgages are "bad assets" of that type?

In addition, ALL of those mortgages are secured by real estate--thus, the bottom line for the mortgage holder is ownership of the property. So then they bring up the real estate "crisis"--claiming the security for the notes isn't worth crap in the bad housing market. However, how bad is that real estate market? Not very damn bad at all in the large majority of the country. California, Florida, a few big cities, and very very few other locations. And even in those cases, the real estate has value. If a $200,000 house drops in value to $100,000, the bank STILL has $100,000 security for a $200,000 note--not ideal, but hardly "worthless". Considering that along with how few defaults there actually are, and I ask, HOW could this "crisis" be REAL? Common sense says it isn't.

OK, Howard, and anybody else who fancies himself so sharp in the field of economics and finance, tell me exactly what part of what I wrote doesn't make perfect sense.

I have done my best over the past few months. I think I have done a good job of explaining.

Let’s say all the stores in your town have stocked their shelves with way too may Instant mashed Potatoes; so many in fact that these Instant Mashed Potatoes have taken up all the space in the store. Now, assume that word has leaked that Instant Mashed Potatoes cause cancer. Every store needs to sell the spuds, but nobody wants to buy them. The store owner keeps marking them down, but nobody buys. Finally, he puts a price of $.01 on the Instant Potatoes. Still they sit. The store can’t do anything…….they run out of money and shut the doors.

What is the value of the spuds?

Your example might be a little bit valid if you had said a tenth of a percent or something like that of the boxes of Instant Mashed Potatoes were tainted. Yes, that clearly could cause buyers to avoid them. However, the producer or wholesaler could easily take back the boxes, determine which ones were tainted, and re-market the rest at a decent price albeit slightly less than former retail. Instant Mashed Potatoes, of course, like real estate, don't spoil on the shelf. Rather, they have a degree of intrinsic value.

The way you did set up your example, you imply that Instant Mashed Potatoes are normally just a small part of the retailer's business, rather than far and away, it's dominating product, as with mortgage companies.

You also are sort of mixing your metaphors--talking about customers responding to life and death type rumors being analogous to sophisticated investors responding to rumors of devalued--but clearly not worthless--financial assets.

[texaspackerbacker]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

I made it up on the fly, the triggering event is rather arcane and hard to duplicate in a spud analogy.

Let’s say by some magic, some real smart guys are able to start selling the spuds without ever owning them, thus forcing all the other store sellers to drop their prices…….and you, as well as everyone else decides that real mashed potatoes are the way to go. Nobody wants to buy the Instant ones anymore. The Instant Potatoes are perfectly fine.

What is the value of box of Instant Spuds?

This example, also, fails to acknowledge the concept of intrinsic value of real estate--or Instant Mashed Potatoes.

[HowardRoark]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

I made it up on the fly, the triggering event is rather arcane and hard to duplicate in a spud analogy.

Let’s say by some magic, some real smart guys are able to start selling the spuds without ever owning them, thus forcing all the other store sellers to drop their prices…….and you, as well as everyone else decides that real mashed potatoes are the way to go. Nobody wants to buy the Instant ones anymore. The Instant Potatoes are perfectly fine.

What is the value of box of Instant Spuds?

This example, also, fails to acknowledge the concept of intrinsic value of real estate--or Instant Mashed Potatoes.

THAT IS THE POINT!!!!!!!! THERE ARE TWO VALUES, BUT ONLY ONE MATTERS.

[Freak Out]

WaMu seized....who said they had a mortgage through them? Looks like it's been sold off along with some other items...J.P Morgan Chase bought up a load of stuff at fire sale prices. What a goat fuck.

[Tyrone Bigguns]

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

[Freak Out]

:lol: Nigeria Calling!

[texaspackerbacker]

Tainted spuds can't be exactly the same as what's going on because there is at least some intrinsic value in the homes that exist.

BTW, Newt doesn't like the bailout, and suggests some alternatives to it.


http://www.foxnews.com/story/0,2933,426221,00.html

I made it up on the fly, the triggering event is rather arcane and hard to duplicate in a spud analogy.

Let’s say by some magic, some real smart guys are able to start selling the spuds without ever owning them, thus forcing all the other store sellers to drop their prices…….and you, as well as everyone else decides that real mashed potatoes are the way to go. Nobody wants to buy the Instant ones anymore. The Instant Potatoes are perfectly fine.

What is the value of box of Instant Spuds?

This example, also, fails to acknowledge the concept of intrinsic value of real estate--or Instant Mashed Potatoes.

THAT IS THE POINT!!!!!!!! THERE ARE TWO VALUES, BUT ONLY ONE MATTERS.

yes, Howard. That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

[HowardRoark]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

[texaspackerbacker]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

[HowardRoark]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

I give up.

[texaspackerbacker]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

I give up.

You should!

[Harlan Huckleby]

Tex, the next time you get an urge to make a poll, contact me first and seek my guidance. Your wording creates more heat than light.

There are three options:
1) act quickly, largely accepting what has been proposed.
2) proceed deliberately, form a strategy in the coming weeks.
3) do nothing

you presented a false choice.

Some Republicans are pushing the 2nd option, they want to find an approach where the government doesn't directly take-over ownership of outstanding loans.

[HowardRoark]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

I give up.

You should!

Maybe I'll try to put it in comic book format.

http://docs.google.com/TeamPresent?revision=_latest&fs=true&docID=ddv7hj34_03774hsc7&skipauth=true

[Maxie the Taxi]

Harlan, I like your poll questions better. I vote "Do nothing."

Here's a sample of a real poll of what Americans think:


September 23, 2008

The American People's Thoughts on the Economic Crisis


cross-posted at www.SolutionsDay2008.com

We just finished a polling briefing with Speaker Gingrich, Republican Pollster Kellyanne Conway, and Democratic Pollster Doug Schoen on the economy, energy, education, and health. The full results of the poll will be released on Solutions Day this Saturday, but we wanted to share a few of the fascinating results that pertain to the economy and potential Wall Street bailout.

The survey of 1,000 likely voters nationwide was fielded from September 16 to 21 during the time the $700 billion bailout was first proposed.

This weekend, Speaker Gingrich wrote about a "Recipe for Sound Economic Growth." Here is a sample of what the American people think about the economy. (Download PDF)

1. Which of the following do you consider the most critical issue facing America right now, meaning the one that is most important for the government to address or take action on?

47% THE ECONOMY AND JOB CREATION
8% THE WAR IN IRAQ
8% NATIONAL SECURITY/TERRORISM
6% HEALTH CARE
5% GOVERNMENT SPENDING
5% GOVERNMENT PROGRAMS LIKE SOCIAL SECURITY, MEDICARE, AND MEDICAID
4% ENERGY PRICES AND AVAILABILITY
2% TAXES
2% THE ENVIRONMENT
2% EDUCATION
2% ABORTION
2% IMMIGRATION


2. Who or what do you believe is most responsible for the current state of the U.S. economy?

44% THE FEDERAL AND STATE GOVERNMENTS - BY NOT LOWERING TAXES, INCREASING GOVERNMENT SPENDING, AND GROWING THE NATIONAL DEBT

22% AMERICAN CITIZENS - BY BEING IRRESPONSIBLE WITH THEIR CREDIT, SPENDING TOO MUCH ON LUXURIES AND NOT NECESSITIES, AND SPENDING BEYOND THEIR MEANS

11% THE FEDERAL RESERVE BANK - BY SETTING WEAK FISCAL AND MONETARY POLICY

10% PRIVATE COMPANIES - BY FIRING WORKERS AND NOT KEEPING THE PRICES OF THEIR GOODS UNDER CONTROL


3. When a company faces a potential failure due to poor internal mismanagement, which of the following do you think would be the best solution?

68% BANKRUPTCY FOR THE COMPANY, EVEN IF IT MEANS INVESTORS LOSE MONEY AND THERE IS HARM TO THE STOCK MARKET

19% GOVERNMENT SHOULD STEP IN AND SUPPORT THE COMPANIES WITH TAXPAYER DOLLARS TO AVOID BANKRUPTCY AND PROTECT THE MONEY OF INVESTORS

4. As you may have heard, the federal government recently took over Freddie Mac and Fannie Mae, two of the nation's largest mortgage companies. Combined, these two companies guarantee about 40% of U.S. home loan debt and have backed approximately up to 70% of mortgages in recent months. In essence, the two companies are now under government ownership and control. This move is estimated to cost taxpayers nearly $25 billion. It is predicted that by taking over these mortgage firms, national and international markets stabilized and the housing and credit crises were minimized. Do you support or oppose the federal takeover of Freddie Mac and Fannie Mae?

52% TOTAL SUPPORT (NET)
22% STRONGLY SUPPORT
30% SOMEWHAT SUPPORT

38% TOTAL OPPOSE (NET)
14% SOMEWHAT OPPOSE
24% STRONGLY OPPOSE

Register for Solutions Day and join us for this solutions-oriented dialogue on the economy, energy, education, and health.

from Big Solutions website (http://www.americansolutions.com/Blog/)

[LL2]

I will say the entire situation is down right scary! We can argue this from every angle possible, but if nothing gets done what good does that do.

I'm a McCain supporter, but I'm a little pissed at him right now. Most here wouldn't criticize their beloved candidate no matter what. I thought it was a good idea at first for McCain to go to DC to try to help get something done. Getting this mess straightened out is more important than a debate. He has a track record for pulling the republicans together and get them to support a deal. It seems the House republicans are not supporting Bush or McCain. The thing that I'm critical about is that McCain goes to DC just to sit at a table with Bush and others to just twiddle his thumbs? Maybe he is doing and saying more behind other closed door meetings, but the impression he is giving people is that he has contributed nothing or said nothing. If he was going to go to DC to just observe he should've stayed on the campaign trail. This is back firing on him. I hope I'm wrong, and if others have info to support the contrary write it out.

[Tyrone Bigguns]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

In the kingdom of the blind, Ty is KING!!!! :oops:

[bobblehead]

According to a letter I received from Mass Mutual today I have nothing to worry about....my investments are safe.

Until the entire economy tanks because capital is no longer available to build thus costing jobs, which in turn costs sales revenue which hurts reinvestment which in turn causes more lost jobs.

You guys really don't get it do you?

It'll be ok, all the construction jobs are held by illegals anyway... :eyes:

you mean those $32/hour jobs americans wont' do?

[bobblehead]

I don't get in the habit of posting my private emails, but I sent this to a friend this morning. I won't preface what the conversation was, or edit this beast, but this is what happened and is happening. The only editing I did involved personal info and names.

The derivitives market dates to 1995 when congress, in order to actually sell BS affirmative action mortgages, changed regulations on how mortgage based securities were bundled and sold...thus allowing subprime mortgages to be sold/MARKETED the same as prime mortgages. They passed that deregulation BECAUSE the banks they were forcing to make shitty loans couldn't sell them to the investors. Anyone aware of what was going on could have predicted this outcome...I was ignorant at the time and only really became aware of all this about june last year. This is why you and I and everyone else is stuck with worthless paper and never saw it coming. Make no mistake, the "trading vehicles" you speak of were created due to deregulation specifically aimed at making crappy loans so we could "empower" nonworthy borrowers.

The real problem with buffet is that he had no fricking clue either until it was too late (or he didn't care). By 2005 anyone with a brain saw a problem, buffet just had the market knowledge to pin point ONE of the issues. He is not so brilliant on this. It was also far too late. If we had acted then and there we still would have a big problem...just not quite as bad. But again, congress and financial leaders were well aware of what was going on YEARS ago and did nothing...why? congress wanted minorities in homes (they couldn't afford) and financiers were making BANK in writing bad mortgages and passing them on to fannie, freddie, ect. Once many people saw the problem we stopped buying said bad paper and those that borrowed it realized that they had no incentive to pay us anymore...thus a MASSIVE credit crisis/crunch.

You're wrong about the banks not worrying cuz the housing market kept going up, they weren't worrying because they just sold off the bad loans (disguised as mortgage backed securities). their problem came when the buyers realized what they were buying and hung them with the last round of bad loans. Prior to that they didn't care about the risk. then all their assets were tied up in bad mortgages.

Finally the reason I saw the walk away coming is because I live in possibly the perfect place to see it coming. A lot of uneducated people (many first generation immigrants) making 60k plus in a growing city. Many of these same people were coming to me a year ago asking what they should do. " I bought my house for 450k thinking it would go up 100k in a year but now it has dropped 100k, what should I do??" (save the sarcasm, I know). My answer was simple. Stop paying, stay in the house til the marshall evicts you (usually 9 months or so), stash your mortgage payment in a safety deposit box and walk away from it with trashed credit. Then rent a property for 5 years (at half the monthly outlay) while you rebuild your life. Most of these people had nothing invested anyway (0 down, 5 year interest only loans) and had nothing going in. they somehow believed that they had been wronged out of a ton of money (none of which they put up) when in reality they had wronged the banks out of a ton of money (but the banks were the morons who loaned them money). Predicting the housing market crash was econ 101, predicting the walk away and problems that ensued were simply knowing how the credit/finance markets work. I did have 5 years of the finest education XXXX had to offer and a mother that ran a bank my entire childhood...and as I said, it didn't take a rocket scientist to see it coming....(mutual Friend) got qualified for a 200k mortgage....any more questions?

[bobblehead]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

Tex...the problem RIGHT NOW is that many people are sitting on cash afraid to invest. The lending market is all but frozen. businesses across america count on short term loans to allow them to smoothly roll inventories. Bigger corps need longer term loans to allow them to expand where needed (and if they don't the guy they supply is screwed and looks elsewhere for a supplier). Lending capital is the grease that makes our economic engine turn...we are woefully short on grease right now. This IS a problem. Unemployment is creeping up, GDP is creeping down. It is not the goddamned leftist media making things up. We will see a reversion to older america soon where 8% unemployment is considered normal. Excusse me now, I gotta go see bosley to replace the hair I just pulled out reading this thread.

[Tyrone Bigguns]

There are economic based writers whose opinion I trust and tend to lean toward the right that have pretty much said that the credit market was literally minutes away from going completely off the tracks before the "RTC 2.0" proposal was made on last Thursday afternoon.

I'm worried about a great depression and where it would lead. Let's not forget that it was a major factor in creating conditions that led to WW2.

[HowardRoark]

There are economic based writers whose opinion I trust and tend to lean toward the right that have pretty much said that the credit market was literally minutes away from going completely off the tracks before the "RTC 2.0" proposal was made on last Thursday afternoon.

I'm worried about a great depression and where it would lead. Let's not forget that it was a major factor in creating conditions that led to WW2.

This is correct.

[Tyrone Bigguns]

There are economic based writers whose opinion I trust and tend to lean toward the right that have pretty much said that the credit market was literally minutes away from going completely off the tracks before the "RTC 2.0" proposal was made on last Thursday afternoon.

I'm worried about a great depression and where it would lead. Let's not forget that it was a major factor in creating conditions that led to WW2.

This is correct.

well, now i feel validated. :lol:

I'm not tex. I understand we are in a very precarious situation...i'm really not on board for giving money to companies, but it seems like a sword of damocles type situation. So, i will hold my nose.

[bobblehead]

There are economic based writers whose opinion I trust and tend to lean toward the right that have pretty much said that the credit market was literally minutes away from going completely off the tracks before the "RTC 2.0" proposal was made on last Thursday afternoon.

I'm worried about a great depression and where it would lead. Let's not forget that it was a major factor in creating conditions that led to WW2.

This is correct.

seconded...very correct

[texaspackerbacker]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

Tex...the problem RIGHT NOW is that many people are sitting on cash afraid to invest. The lending market is all but frozen. businesses across america count on short term loans to allow them to smoothly roll inventories. Bigger corps need longer term loans to allow them to expand where needed (and if they don't the guy they supply is screwed and looks elsewhere for a supplier). Lending capital is the grease that makes our economic engine turn...we are woefully short on grease right now. This IS a problem. Unemployment is creeping up, GDP is creeping down. It is not the goddamned leftist media making things up. We will see a reversion to older america soon where 8% unemployment is considered normal. Excusse me now, I gotta go see bosley to replace the hair I just pulled out reading this thread.

Aynrand, this strikes me as another one of those "I'm OK, but I just know so many others aren't OK" situations. I'm more and more convinced that some of these big financial companies who are salivating to get a chunk of that $700 billion are sort of holding the country hostage THREATENING what you are talking about--shutting down short term credit. I really don't think that would be a natural result without some sinister force making it happen intentionally.

The question is, will they do it if their bluff is called? The other question, as I asked at the beginning of this thread, is what happens if they do? I just don't see a deliberate sabotaging of short term credit as being something the wrongdoers can sustain for long enough to do real harm.

I doubt we will find out the answer to either question, though, as a deal will probably be rammed through. As Rush said today, the Dems have the votes to make it happen by themselves if they really want it.

[bobblehead]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

Tex...the problem RIGHT NOW is that many people are sitting on cash afraid to invest. The lending market is all but frozen. businesses across america count on short term loans to allow them to smoothly roll inventories. Bigger corps need longer term loans to allow them to expand where needed (and if they don't the guy they supply is screwed and looks elsewhere for a supplier). Lending capital is the grease that makes our economic engine turn...we are woefully short on grease right now. This IS a problem. Unemployment is creeping up, GDP is creeping down. It is not the goddamned leftist media making things up. We will see a reversion to older america soon where 8% unemployment is considered normal. Excusse me now, I gotta go see bosley to replace the hair I just pulled out reading this thread.

Aynrand, this strikes me as another one of those "I'm OK, but I just know so many others aren't OK" situations. I'm more and more convinced that some of these big financial companies who are salivating to get a chunk of that $700 billion are sort of holding the country hostage THREATENING what you are talking about--shutting down short term credit. I really don't think that would be a natural result without some sinister force making it happen intentionally.

The question is, will they do it if their bluff is called? The other question, as I asked at the beginning of this thread, is what happens if they do? I just don't see a deliberate sabotaging of short term credit as being something the wrongdoers can sustain for long enough to do real harm.

I doubt we will find out the answer to either question, though, as a deal will probably be rammed through. As Rush said today, the Dems have the votes to make it happen by themselves if they really want it.
It was me not ayn, but i agree with one thing, we gotta tread lightly here, some undeserving people will undoubtedly get some of this package.

[texaspackerbacker]

That is THE POINT!!! Even the lesser of these two values is a far cry from "worthless". And there is such a tiny tiny amount of bad apples that it is beyond common sense that they could ruin any significant portion of the barrels--these clusters of mortgages. Yet we are being told that so many of these mortgage securities are "bad assets" that the "bail out" is needed. How is that NOT ludicrous?

It is ludicrous.

Then what are we arguing about? Are you saying you agree, the idea of the so-called "crisis" in real estate and the miniscule percentage of defaults and foreclosures of property still having value is NOT sufficient to justify all the crap being spewed by the Washington and Wall Street elite to try and justify this "bail out"? I hope you agree, but somehow, I doubt it.

Tex...the problem RIGHT NOW is that many people are sitting on cash afraid to invest. The lending market is all but frozen. businesses across america count on short term loans to allow them to smoothly roll inventories. Bigger corps need longer term loans to allow them to expand where needed (and if they don't the guy they supply is screwed and looks elsewhere for a supplier). Lending capital is the grease that makes our economic engine turn...we are woefully short on grease right now. This IS a problem. Unemployment is creeping up, GDP is creeping down. It is not the goddamned leftist media making things up. We will see a reversion to older america soon where 8% unemployment is considered normal. Excusse me now, I gotta go see bosley to replace the hair I just pulled out reading this thread.

Aynrand, this strikes me as another one of those "I'm OK, but I just know so many others aren't OK" situations. I'm more and more convinced that some of these big financial companies who are salivating to get a chunk of that $700 billion are sort of holding the country hostage THREATENING what you are talking about--shutting down short term credit. I really don't think that would be a natural result without some sinister force making it happen intentionally.

The question is, will they do it if their bluff is called? The other question, as I asked at the beginning of this thread, is what happens if they do? I just don't see a deliberate sabotaging of short term credit as being something the wrongdoers can sustain for long enough to do real harm.

I doubt we will find out the answer to either question, though, as a deal will probably be rammed through. As Rush said today, the Dems have the votes to make it happen by themselves if they really want it.
It was me not ayn, but i agree with one thing, we gotta tread lightly here, some undeserving people will undoubtedly get some of this package.

Sorry about mixing you up with aynrand, Bobblehead. At least I called you somebody good--not one of the slimey leftists.

Talk about undeserving, one of the provisons the leftists were trying to include in the fine print was that 20% of the funds was to go to an organization called "ACORN"--some sort of minority housing outfit that Obama used to work with, and that has several people under indictment for corruption or something.

I believe part of the motivation for this is to create an atmosphere of economic crisis to try and help Obama--divert away from national security, defense, foreign policy, social issues, etc. where Obama is so weak.

I think the other part of the motivation for contriving a phony crisis is the fact the the Dem/libs expect Obama to win, and that he and his people will be the beneficiaries of this huge Executive Branch power grab. And if, as many expect, eventually these assets will bounce back in value, the money grabbed now will help pay for Obama's horrendous spending programs later.

And they want to get Republicans aboard so when people realize they've been had, they will blame all Washington politicians, not just Dodd, Dirty Harry, Barney Fag,etc. And a lot of Republicans are falling right into it.

[Freak Out]

I know this approach is abhorrent to some but it worked.

September 23, 2008
Stopping a Financial Crisis, the Swedish Way
By CARTER DOUGHERTY

Correction Appended

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

“If I go into a bank,” said Bo Lundgren, who was Sweden’s deputy minister of finance at the time, “I’d rather get equity so that there is some upside for the taxpayer.”

Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.

But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.

The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.

The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.

Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said.

The Swedish crisis had strikingly similar origins to the American one, and its neighbors, Norway and Finland, were hobbled to the point of needing a government bailout to escape the morass as well.

Financial deregulation in the 1980s fed a frenzy of real estate lending by Sweden’s banks, which did not worry enough about whether the value of their collateral might evaporate in tougher times.

Property prices imploded. The bubble deflated fast in 1991 and 1992. A vain effort to defend Sweden’s currency, the krona, caused overnight interest rates to spike at one point to 500 percent. The Swedish economy contracted for two consecutive years after a long expansion, and unemployment, at 3 percent in 1990, quadrupled in three years.

After a series of bank failures and ad hoc solutions, the moment of truth arrived in September 1992, when the government of Prime Minister Carl Bildt decided it was time to clear the decks.

Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt’s conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation’s 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.

Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.

The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.

“For every krona we put into the bank, we wanted the same influence,” Mr. Lundgren said. “That ensured that we did not have to go into certain banks at all.”

By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.

More money may yet come into official coffers. The government still owns 19.9 percent of Nordea, a Stockholm bank that was fully nationalized and is now a highly regarded giant in Scandinavia and the Baltic Sea region.

The politics of Sweden’s crisis management were similarly tough-minded, though much quieter.

Soon after the plan was announced, the Swedish government found that international confidence returned more quickly than expected, easing pressure on its currency and bringing money back into the country. The center-left opposition, while wary that the government might yet let the banks off the hook, made its points about penalizing shareholders privately.

“The only thing that held back an avalanche was the hope that the system was holding,” said Leif Pagrotzky, a senior member of the opposition at the time. “In public we stuck together 100 percent, but we fought behind the scenes.”

This article has been revised to reflect the following correction:

Correction: September 27, 2008
An article and a picture caption on Tuesday about Sweden’s response to its 1992 financial crisis misstated the position at the time of Bo Lundgren, who described Sweden’s strategy and commented on the United States’ proposals for resolving its own crisis. He was the deputy minister of finance — not the finance minister, a post held by Anne Wibble.

[bobblehead]

That is a very solid approach to the problem...no way our congress does it.

[MJZiggy]

That is a very solid approach to the problem...no way our congress does it.

Lol...I wonder what happens if everyone starts asking there congressional leaders about it.

[Joemailman]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

[Tyrone Bigguns]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

Which is going to lead to Socialism!

Thank you conservatives...your policies are the magic touch! :lol:

[HowardRoark]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

[Tyrone Bigguns]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

Dereg.

[HowardRoark]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

Dereg.

Thanks for he insight.

[Tyrone Bigguns]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

Dereg.

Thanks for he insight.

You are welcome.

If you prefer, you can just mail me your paycheck..and skip the gov't redistribution.

[HowardRoark]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

Dereg.

Thanks for he insight.

You are welcome.

If you prefer, you can just mail me your paycheck..and skip the gov't redistribution.

No. I have a plan. I will stop working every year once I earn 249,999.99. Maybe I'll buy a house in North Scottsdale....do you have that guy's number?

I hope the Gov't doesn't use force to make me keep working.

[Tyrone Bigguns]

Thank you conservatives...your policies are the magic touch! :lol:

I have had a busy weekend.....could you tell me what the polices are/were that caused this situation?

Dereg.

Thanks for he insight.

You are welcome.

If you prefer, you can just mail me your paycheck..and skip the gov't redistribution.

No. I have a plan. I will stop working every year once I earn 249,999.99. Maybe I'll buy a house in North Scottsdale....do you have that guy's number?

I hope the Gov't doesn't use force to make me keep working.

No, they wont' force to work, but let us know when you think that will happen...need to get you into the reeducation camp.

Guy: I wasnt' there. You can call any agent. Times are bad here.

[LL2]

Looks like another bank (wachovia) gets gobbled up.

[Freak Out]

Unfortunately it looks like were in for a financial Pearl Harbor but it was bound to happen considering how divided the house is. I'm ok with this as long as we end up with better legislation.

[GoPackGo]

Let these financial institutions choke on their own greed and mis-management.

Doesn't this bill sneak in a major transfer of power away from Congress and to the Executive Branch? If so, this being defeated may be a good idea, until they take their time and come up with a well thought-out bill.

I'm glad the bill did not pass. I will endure much hardship to ensure that my child and his peers do not have to have a 70% tax burden when they grow up. If that means I'm working two jobs and we stay in a trailer, so be it. For once, I'm grateful to the Republicans.

[Cheesehead Craig]

I love how each side says that the other is being partisan. The more things change...

[texaspackerbacker]

Let these financial institutions choke on their own greed and mis-management.

Doesn't this bill sneak in a major transfer of power away from Congress and to the Executive Branch? If so, this being defeated may be a good idea, until they take their time and come up with a well thought-out bill.

I'm glad the bill did not pass. I will endure much hardship to ensure that my child and his peers do not have to have a 70% tax burden when they grow up. If that means I'm working two jobs and we stay in a trailer, so be it. For once, I'm grateful to the Republicans.

You're right, GPG, it does--or more correctly, it would.

I honestly don't think very many people are going to endure much hardship, and if it does turn out that way, it will NOT be a natural consequence, but DELIBERATE RETRIBUTION from these Wall Street pigs who got right up to the trough, only to find that the goodies they had been promised weren't there.

[retailguy]

Similarly I'm also glad this failed. Seeing the partisanship on both sides is very telling. This is largely what this country has been reduced to. Much like the debates in here, they line up along partisan lines.

I'll adopt the Dave Ramsey view point. He wants to insure the loans, NOT purchase them. Also, a removal of the Capital Gains tax would immediately stimulate the economy. Could you imagine what would happen to all these unsold homes, if you told investors, you've got 5 years, or 7 years, or whatever - go make a profit.

We don't need to "borrow" 700 billion, lets just let those with the money do it. This government needs to reduce spending - ACROSS THE BOARD, not engage in more spending that we don't have.

[Freak Out]

There was no way this was going to pass. Everyone knew it.

[LL2]

It's all Obama's fault. Just ask PIP.

[GoPackGo]

Time to do nothing and let the free market do what it is supposed to do. ( long post/rant coming.. .you've been warned )

Ah, America... no faith at all in our own system... We always tout capitalism as being so awesome when things are good, but run and hide behind socialism when things go bad.

SOME companies will fail. They *should* they gambled and gambled big... so big that they want you to bail them out. WHY!?

Tell me how letting these banks fail will make Taco Bell stop selling food. Will it make Apple stop selling iPhones? Will it make Coal mines and Copper producers and Farmers and finished goods manufacturers fail? Absolutely not.

This problem only exists because of the made up numbers and made up portfolio loan packages that these banks have been selling to investment firms finally got soooo weak in their loan quality that they can't possibly stand up to the ridiculous numbers they said they would earn them. So of course no one's going to buy and they're stuck holding the banana.

Does that make the loans themselves worthless? NO. I just means they're going to lose money.

Well guess freaking what... one company's loss is another company's gain. That's the goddamn freemarket. Not one single one of these megabanks that have failed so far failed for wrong reasons. They *all* deserve to fail.

Why won't this cause further chaos for miiddle class america? Think about it... aren't you seeing foreclosures in your neighborhoods? Were you getting nervous that they seemed to be too many of them? Well, there's this magical point where there *are* too many of them.. and then something magical happens... the good fairy of the free market comes down and *bing* the supply drives the price down low enough that people with money to invest say "holy fuck... you've got a 2000 sq ft house in a middle class neighborhood going for $36K?"

and *gasp* the prices slowly drive back up to equilibrium. Now be keen and understand that the price may not go back to where it was before, but that's not because of anything bad.. that's because the price was way over inflated in the first fucking place.

The reason everyone is upset at all of this is that the POWER of this money is shifting. All the hedge fund managers and people who make a living at driving up false expectations are getting what they deserve and all the backers are crying in a corner because they know that someone ELSE will be buying up all these failed assets for pennies on the dollar because THEY were to greedy and thought their little magic could go on forever.

[Partial]

I am very saddened by this whole thing because my parents are in their 50s and keep seeing their retirements get cut in half by the shitty economy. When you're 30 its one thing since you have plenty of time to build it back up. Not when you're 55.

[Tyrone Bigguns]

I am very saddened by this whole thing because my parents are in their 50s and keep seeing their retirements get cut in half by the shitty economy. When you're 30 its one thing since you have plenty of time to build it back up. Not when you're 55.

Retirement is a 20th century concept. I see no reason they can't work until near death. Unless they are just lazy.

[Freak Out]

This deal needed to fail...it was garbage from the get go and Paulson made sure it really had no chance by insulting all of us. Give me 700 billion or else? Fuck off.

[Tyrone Bigguns]

This deal needed to fail...it was garbage from the get go and Paulson made sure it really had no chance by insulting all of us. Give me 700 billion or else? Fuck off.

I just can't believe it...not from the guy with 90 or so million still in stock at Goldman Sachs.

Guess that half a billion isn't going as far as it use to. :roll:

[Partial]

Bobble can you sum up what events led to the build-up of the mortgage crisis? I gotta pwn some newbs.

[HowardRoark]

I honestly don't think very many people are going to endure much hardship, and if it does turn out that way, it will NOT be a natural consequence, but DELIBERATE RETRIBUTION from these Wall Street pigs who got right up to the trough, only to find that the goodies they had been promised weren't there.

Pigs is pigs. What about all the people who just needed to have their own McMansion too? Greed and culpability is everywhere.

I think symbiotic is the word.

http://images.chron.com/blogs/beltwayconfidential/mcmansion3a.jpg

[retailguy]

hey! whats wrong with my house. :shock: :P :wink:

[texaspackerbacker]

I honestly don't think very many people are going to endure much hardship, and if it does turn out that way, it will NOT be a natural consequence, but DELIBERATE RETRIBUTION from these Wall Street pigs who got right up to the trough, only to find that the goodies they had been promised weren't there.

Pigs is pigs. What about all the people who just needed to have their own McMansion too? Greed and culpability is everywhere.

I think symbiotic is the word.

http://images.chron.com/blogs/beltwayconfidential/mcmansion3a.jpg

Howard, that's a little thing called "THE AMERICAN DREAM" that you're pissing all over. I would have expected better from somebody who occasionally acts like a conservative.

This thing didn't pass because a whole lot of Congressmen--some of them even Democrats, but the great majority Republican, got a whole lot of phone calls and emails from constituents telling them to ignore the elitists and media types, and side with the people. Fortunately, a majority of them did.

The ONLY way we will have any harm to regular normal people from this is if there is SPITE--collusion on the part of financial bigwigs who got jilted by the politicians to tie up credit--when such would NOT happen in the normal course of things.

[Tyrone Bigguns]

I honestly don't think very many people are going to endure much hardship, and if it does turn out that way, it will NOT be a natural consequence, but DELIBERATE RETRIBUTION from these Wall Street pigs who got right up to the trough, only to find that the goodies they had been promised weren't there.

Pigs is pigs. What about all the people who just needed to have their own McMansion too? Greed and culpability is everywhere.

I think symbiotic is the word.

http://images.chron.com/blogs/beltwayconfidential/mcmansion3a.jpg

Howard, for once i'm in complete agreement.

It is beyond imaginable how my upper middle class parents raised 3 children in a 2000 square foot house. It was positively dickensian for me...i had to share a bathroom with my brother.

And, my mom had to schlep us around in a car. Can you imagine that...no escalade or hummer. My god, the woman suffered tremendously.

[texaspackerbacker]

I shoulda known it was too good to be true, Tyrone, that you'd be on the right side for once--the side of the people.

[Tyrone Bigguns]

I shoulda known it was too good to be true, Tyrone, that you'd be on the right side for once--the side of the people.

Say what?

[hoosier]

I shoulda known it was too good to be true, Tyrone, that you'd be on the right side for once--the side of the people.

Say what?

Don't you see, that house = the American dream. How dare you disparage its obnoxious and portentious presence with your "when I was your age I walked fifty miles to school through two feet of snow" stories. :lol:

[bobblehead]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

Actually the REGULATING of loans to people who couldn't pay them in the name of compassion is the problem...the deregulation that enabled said regulation was a "fix" to the problem. Deregulating is the way to go if you can stomach the pain that will occur sometimes in the path to an overall better market.

[bobblehead]

I love how each side says that the other is being partisan. The more things change...

I think by definition it takes both sides to be partisan...if one side caves it would become bipartisan.

[bobblehead]

Time to do nothing and let the free market do what it is supposed to do. ( long post/rant coming.. .you've been warned )

Ah, America... no faith at all in our own system... We always tout capitalism as being so awesome when things are good, but run and hide behind socialism when things go bad.

SOME companies will fail. They *should* they gambled and gambled big... so big that they want you to bail them out. WHY!?

Tell me how letting these banks fail will make Taco Bell stop selling food. Will it make Apple stop selling iPhones? Will it make Coal mines and Copper producers and Farmers and finished goods manufacturers fail? Absolutely not.

This problem only exists because of the made up numbers and made up portfolio loan packages that these banks have been selling to investment firms finally got soooo weak in their loan quality that they can't possibly stand up to the ridiculous numbers they said they would earn them. So of course no one's going to buy and they're stuck holding the banana.

Does that make the loans themselves worthless? NO. I just means they're going to lose money.

Well guess freaking what... one company's loss is another company's gain. That's the goddamn freemarket. Not one single one of these megabanks that have failed so far failed for wrong reasons. They *all* deserve to fail.

Why won't this cause further chaos for miiddle class america? Think about it... aren't you seeing foreclosures in your neighborhoods? Were you getting nervous that they seemed to be too many of them? Well, there's this magical point where there *are* too many of them.. and then something magical happens... the good fairy of the free market comes down and *bing* the supply drives the price down low enough that people with money to invest say "holy fuck... you've got a 2000 sq ft house in a middle class neighborhood going for $36K?"

and *gasp* the prices slowly drive back up to equilibrium. Now be keen and understand that the price may not go back to where it was before, but that's not because of anything bad.. that's because the price was way over inflated in the first fucking place.

The reason everyone is upset at all of this is that the POWER of this money is shifting. All the hedge fund managers and people who make a living at driving up false expectations are getting what they deserve and all the backers are crying in a corner because they know that someone ELSE will be buying up all these failed assets for pennies on the dollar because THEY were to greedy and thought their little magic could go on forever.
damn...not bad...except that this "panic" has caused the credit markets (high end mainly...the kind that create jobs) to freeze. We do need moderate intervention to regrease the gears, but in the process those that screwed up must be allowed to fail and go bankrupt so that new more efficient models can emerge.

[hoosier]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

Actually the REGULATING of loans to people who couldn't pay them in the name of compassion is the problem...the deregulation that enabled said regulation was a "fix" to the problem. Deregulating is the way to go if you can stomach the pain that will occur sometimes in the path to an overall better market.

Huh? How do you get from subprime lending to "regulating of loans to people who couldn't pay them"?

[bobblehead]

Bobble can you sum up what events led to the build-up of the mortgage crisis? I gotta pwn some newbs.

Your gonna hate this suggestion, but I just hhit this post and have to go to work...go read ann coulter's most recent article. I'm not saying republicans aren't to blame at all, but I also summed it up on page 2 when I posted my private email to a friend.

[HowardRoark]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

Actually the REGULATING of loans to people who couldn't pay them in the name of compassion is the problem...the deregulation that enabled said regulation was a "fix" to the problem. Deregulating is the way to go if you can stomach the pain that will occur sometimes in the path to an overall better market.

Huh? How do you get from subprime lending to "regulating of loans to people who couldn't pay them"?

CRA

[hoosier]

Deregulation of the banking industry has now led to an unprecedented intervention of the government into the banking industry. Perhaps some day we'll learn that when you deregulate financial markets, the scoundrels move in. But it's not the scoundrels who pay.

Actually the REGULATING of loans to people who couldn't pay them in the name of compassion is the problem...the deregulation that enabled said regulation was a "fix" to the problem. Deregulating is the way to go if you can stomach the pain that will occur sometimes in the path to an overall better market.

Huh? How do you get from subprime lending to "regulating of loans to people who couldn't pay them"?

CRA

Canadian Retirement Association? I don't do acronyms today. What are you saying?
EDIT: never mind, I know what you mean, but unfortunately you're completely wrong. CRA=a red herring, the last gasp of finger pointing from an exhausted, bankrupt ideology.

[HowardRoark]

EDIT: never mind, I know what you mean, but unfortunately you're completely wrong. CRA=a red herring, the last gasp of finger pointing from an exhausted, bankrupt ideology.

Need more than that.....explain.

[hoosier]

EDIT: never mind, I know what you mean, but unfortunately you're completely wrong. CRA=a red herring, the last gasp of finger pointing from an exhausted, bankrupt ideology.

Need more than that.....explain.

Community reinvestment act was created in 1977. How is that supposed to have caused a financial crisis that originated in 2004, especially considering that W enacted unprecedented CUTS to CRA? If those questions don't convience you that this is a specious argument being enacted by deregulationist fundamentalists who know their time is up, consider Michael Barr's testimony (Professor of Law, University of Michigan) that 80% of subprime loans were made by lenders not subject to government oversight. Business Week also ran a piece today debunking the CRA-mortgage crisis connection. Back to the drawing board....http://www.businessweek.com/investing/insights/blog/archives/2008/09/community_reinv.html

[Tyrone Bigguns]

When did business week become a tool of the liberal media.

Sigh. Another one bites the dust.

[mraynrand]

Michael Barr's testimony (Professor of Law, University of Michigan) that 80% of subprime loans were made by lenders not subject to government oversight.

And assuming you're right, whose fault is it for making and taking those loans - the government?

[mraynrand]

Cluster fucks rarely are due to a single cause. Towit:



THIS MEMO PROVIDES A BRIEF HISTORY OF your actions that helped create this crisis.

1997: Federal Reserve Chairman Alan Greenspan's famous "irrational exuberance" speech in 1996 was somehow ignored by, um, Fed Chairman Greenspan. The Fed missed the opportunity to change margin requirements. Had the Fed acted, the bubble would not have inflated as much, and the subsequent crash would not have been as severe.

1998: Long Term Capital Management was undercapitalized, used enormous amounts of leverage to purchase all manner of thinly traded, hard-to-value paper. It failed, and under the authority of the Federal Reserve a "private-sector" rescue plan was cobbled together. Had these bankers suffered big losses from LTCM, they might have thought twice before jumping into the exact same business model of undercapitalized, overleveraged, thinly traded, hard-to-value paper. Instead, they reaffirmed Benjamin Disraeli's famous aphorism: "What we learn from history is that we do not learn from history."

1999: The Financial Services Modernization Act repealed Glass-Steagall, a law that had separated the commercial-banking industry from Wall Street, and the two industries, plus insurance, came together again. Banks became bigger, clumsier, and hard to manage. Apparently, risk-management became all but impossible, even as banks had greater access to larger pools of capital.

2000: The Commodities Futures Modernization Act defined financial commodities such as "interest rates, currency prices, and stock indexes" as "excluded commodities." They could trade off the futures exchanges, with minimal oversight by the Commodity Futures Trading Commission. Neither the Securities and Exchange Commission, nor the Federal Reserve, nor any state insurance regulators had the ability to supervise or regulate the writing of credit-default swaps by hedge funds, investment banks or insurance companies.

2001-'03: Alan Greenspan's Fed dropped federal-fund rates to 1%. Lulled into a false belief that inflation was not a problem, the Fed then kept rates at 1% for more than a year. This set off an inflationary spiral in housing, and a desperate hunt for yield by fixed-income managers.

2003-'07: The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned such standards as employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability. The borrower's ability to repay these mortgages was replaced with the lender's ability to securitize and repackage them.

2004: The SEC waived its leverage rules. Previously, broker/dealer net-capital rules limited firms to a maximum debt-to-net-capital ratio of 12 to 1. This 2004 exemption allowed them to exceed this leverage rule. Only five firms -- Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley -- were granted this exemption; they promptly levered up 20, 30 and even 40 to 1.

2005-'07: Unscrupulous home appraisers found that they could attract more business by inflating appraisals. Intrinsic value was ignored, so referrals kept coming in. This helped borrowers obtain financing at prices that were increasingly unsupportable. When honest appraisers petitioned both Congress and the bureaucracy to intervene in the widespread fraud, neither branch of government acted.

THERE'S ACTUALLY A LOT MORE we could add to these items. We could mention impotent supervision of Fannie and Freddie by the Office of Federal Housing Enterprise Oversight; the negligent oversight on ratings agencies; the Boskin Commission's monkeying around with how inflation gets measured; the "Greenspan Put," etc.

We could mention former Fed Governor Edward Gramlich, who warned about making home loans to people who could not afford them, and who said the runaway subprime-mortgage industry would create problems in housing and the credit markets. But Gramlich was up against a Fed chairman who apparently believed that markets can regulate themselves. (Gramlich died last year, three months after the housing bubble started to deflate.)

We on Wall Street do not deny our part. We created these securities, we rated them triple-A, we traded them without understanding them. Now that they have gone bad, we are real close to getting the rest of the country to take them off our hands.

Thanks, D.C. None of this would have been possible without you.

Very truly yours,
Wall Street

(By BARRY L. RITHOLTZ, Barrons)

[hoosier]

Michael Barr's testimony (Professor of Law, University of Michigan) that 80% of subprime loans were made by lenders not subject to government oversight.

And assuming you're right, whose fault is it for making and taking those loans - the government?

Uh wuh? My point is that total deregulation created a situation in which the "boom and bust" cycles that are characteristic of a global financial market have the devastating effects that we're witnessing. I posted this in response to Howie's assertion that government regulation (i.e. CRA) created the mess. I showed him the Business Week to debunk that, and we haven't heard a word from him since. How exactly does your comment relate to all this?

[HowardRoark]

Michael Barr's testimony (Professor of Law, University of Michigan) that 80% of subprime loans were made by lenders not subject to government oversight.

And assuming you're right, whose fault is it for making and taking those loans - the government?

Uh wuh? My point is that total deregulation created a situation in which the "boom and bust" cycles that are characteristic of a global financial market have the devastating effects that we're witnessing. I posted this in response to Howie's assertion that government regulation (i.e. CRA) created the mess. I showed him the Business Week to debunk that, and we haven't heard a word from him since. How exactly does your comment relate to all this?

I have been busy. I have a three year old son that no matter what I say, he responds, “no I don’t…or, yes I do”….depending on what I am trying to discuss with him, he says the opposite; without any reasons or backing of the statement. It’s frustrating.

Then I come here, and I get nothing but the same. Frankly, I think I am going to pull a “Harlan” and just start focusing on football. But that could be a tough thing too this year.

The mess is many people’s fault. I think I have been honest in my assessment all along; starting with my posts in July. The CRA was part of the problem. So was 40:1 leverage. So were the rating agencies. So was the insatiable appetite for this crap (worldwide). So is and was representation in Washington that could not understand the complexities of this problem if their lives depended on it. And yes, Bobby, greed too.

Galt has an honest post above too. It would be nice to get some from the other side. But I guess you guys are all drunk on the prospects that The Autobiographer will soon be our President.

[HowardRoark]

Here is another loony right Wing hack:


No one's clean in this mess

Democrats and Republicans must share the blame for the failure to pass a $700-billion bailout plan.

Jonah Goldberg

September 30, 2008

On Sunday evening, Republican House Minority Leader John A. Boehner explained his considered opinion on the $700-billion Wall Street bailout plan: It's a "crap sandwich," he said, but he was going to eat it.

Well, it turned out he couldn't shove it down his colleagues' throats. The bill failed on a bipartisan basis, but it was the Republicans who failed to deliver the votes they promised. Some complained that Democratic Speaker Nancy Pelosi drove some of them to switch their votes with her needlessly partisan floor speech on the subject. Of course Pelosi's needlessly partisan. This is news?

The Republican complaint is beyond childish. Democratic Rep. Barney Frank, a man saturated with guilt for this crisis, nonetheless was right to ridicule the GOP crybabies on Monday. "I'll make an offer," he added. "Give me [their] names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they'll now think about the country."

Would that Frank had been imbued with such a spirit earlier. Frank, chairman of the House Financial Services Committee, has spent the last few years ridiculing Alan Greenspan, John McCain and others who sought more regulation for Fannie Mae's market-distorting schemes -- the fons et origo of this financial crisis. Now he says "the private sector got us into this mess." His partner in crime, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), a chief beneficiary of Fannie Mae lobbyists' largesse, claims this mess is the result of poor oversight -- without even hinting at the fact he is in charge of oversight of banks. They sound like pimps complaining about the prevalence of STDs among prostitutes.

And let us not forget that the Democrats, with a 31-seat majority, could not get 95 of their own to vote for the bailout, largely because it didn't provide enough taxpayer money to their left-wing special interests. Would that they thought about the country.

The one man who truly tried to treat this crisis like a crisis -- McCain -- was ridiculed by Senate Majority Leader Harry Reid, who implored him to come to Washington to help in the first place. And the news media, which now treat any Republican action that threatens a Barack Obama victory as inherently dishonorable, uncritically accepted the bald Democratic lie that McCain ruined a bipartisan bailout deal last Friday.

This is not to say that McCain knows what to do. Faced with an unprecedented financial crisis involving frozen global credit markets and a maelstrom of moral hazard, his standard response is to talk about wiping out earmarks and eliminating waste, fraud and abuse. Memo to Mr. McCain: Waste, fraud and abuse are the only things holding the system together at this point.

Obama is no better. The man has spent two weeks irresponsibly excoriating his opponent for saying the fundamentals of the economy are strong -- a perfectly leaderly thing for McCain to have said during a panic. Then, campaigning in Colorado on Monday, the day the market plunged 777.68 points, Obama proclaimed: "We've got the long-term fundamentals that will really make sure this economy grows."

Perhaps after Al Qaeda seizes Baghdad, a President Obama would finally declare, "Hey, we can win this thing!"

Meanwhile, President Bush, his popularity ratings stuck at below-freezing numbers, has decided to cling to Treasury Secretary Hank Paulson for warmth on the grounds that the vaunted former Goldman Sachs chair has the credibility to sell the solution to a problem he's been exacerbating for 18 months. When a reporter for Forbes magazine asked a Treasury spokesman last week why Congress had to lay out $700 billion, the answer came back: "It's not based on any particular data point." Rather: "We just wanted to choose a really large number."

There's a confidence builder.

As for the reputedly free-market firebrands of the congressional GOP, with whom my sympathies generally lie, I cannot let pass without comment the fact that they controlled the legislative branch for most of the last eight years. Only now, when capitalism is in flames, does this fire brigade try to enforce the free-market fire codes without compromise.

I loathe populism. But if there ever has been a moment when reasonable men's hands itch for the pitchfork, this must surely be it. No one is blameless. No one is pure. Two decades of crapulence by the political class has been prologue to the era of coprophagy that is now upon us. It is crap sandwiches for as far as the eye can see.