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 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...

[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.

[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.