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I'm typing quickly because I expect the capitalist edifice to come crashing down on my head at any moment.
In the words of the famous Chaos Space Marine Marx, "All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober sense his real conditions of life and his relations with his kind."

The triumph of Capitalism.

Wouldn't it be funny if no bailout passes, and the sky doesn't fall?

utan wrote:Wouldn't it be funny if no bailout passes, and the sky doesn't fall?

Your portfolio will, Dow is down 700 with more to go. No one will own up to any part of the problem and would rather tank the economy than loose an election.

Kilkrazy wrote:The triumph of Capitalism.

Or the triumph of ignorance and ideological committment over good sense. People should be elected to exercise their own good judgment, not adhere to the foolish, uneducated desires of their constituents. But hey, I've always said it would take a major crisis to bring about any real change in America, maybe this is it.

dogma wrote:

Kilkrazy wrote:The triumph of Capitalism.

Or the triumph of ignorance and ideological committment over good sense. People should be elected to exercise their own good judgment, not adhere to the foolish, uneducated desires of their constituents. But hey, I've always said it would take a major crisis to bring about any real change in America, maybe this is it.

Repeal the 17th amendment if you want that.

The crisis is spreading to the Eurozone and beyond. Banks in Holland and Iceland had to be bailed out today. The Russian stock market is tanking.

I still cannot understand where all the money has gone. I suppose a big chunk went on bonuses to bankers. I like to imagine a lot of builders and real estate agents in the mid-west rolling around in solid gold Hummvees powered by single malt whisky. We're not seeing that -- they've probably stashed it all away in the Cayman islands.

Personally I believe that there should be a major investigation into each of those banks/companies. But, if they are not bailed out, I believe that we'll feel the effect for probably the next decade at least. Don't even bother applying for a home loan.

utan wrote:Wouldn't it be funny if no bailout passes, and the sky doesn't fall?

That would be great. Considering which banks/companies we are talking about. They sky might not fall, but it'll cost you a fortune to look at it.

A lot of that money never existed; it was all supposition and potentials, traded like it was real rather than a fancy of 1s and 0s. So, when the bluff was called, it all went bye-bye.

The banks are hoarding the money because they're afraid to make loans especially to other banks, which drives the interbank lending rates up which in turn messes a whole slew of things up.

I'm going with a bullets and canned food heavy portfolio this quarter.

But would the market have dropped anyway, even if the bill passed?
Its been dropping ever since they announced it, sure its dropped quicker but it was headed down anyway.

My portfolio has shrunk, but as I started buying January this year as part of a 35 year plan I'm not fussed.
I never sell, only buy and live on the dividends.

Watching the news... sometimes I think the "crisis" isn't a crisis at all, the media just makes it out to be far worse than it could ever be. They want people to think the world is going to hell because they just want people to watch and people will only watch if they think the world is going to hell.

I guess this means no one is gonna be buying my house anytime soon :(

Kilkrazy wrote:The triumph of Capitalism.

The triumph of Capit...ulation.

Fun that after brokering a deal on the 11th hour they vote it down. But that how the system works.

M.

It was the committee that put it together and then presented it to the house. It wasn't all 500+ members of the house that were all included in the project. if that happened, bills would never get finished.

Kilkrazy wrote:The crisis is spreading to the Eurozone and beyond. Banks in Holland and Iceland had to be bailed out today. The Russian stock market is tanking.

I still cannot understand where all the money has gone. I suppose a big chunk went on bonuses to bankers. I like to imagine a lot of builders and real estate agents in the mid-west rolling around in solid gold Hummvees powered by single malt whisky. We're not seeing that -- they've probably stashed it all away in the Cayman islands.

The money didn't 'go' anywhere the value of the assets behind it disappeared.

(My take, not an economist) Cheap credit drove up housing prices to the point where even 1 bedroom apartments in New York cost 300k+.

In order to keep prices high and rising banks offered credit to anyone with a pulse. So even though your tenament apartment cost $300k you could still get a loan to cover it.

Now the ponzi scheme has reached its end, many people can't afford the mortgages they took, and the properties can't be sold for anything near the price they were bought at.

Banks who months ago thought they had assets of $X billion now find they have assets of $X/2 billion.

It sounds a lot like what happened in Japan in the late 80s early 90s.

I'm sure a resolution will be coming soon, the news won't say that though.. they will give you the worst case scenario every time.

I feel bad for the legit folks that need a mortgage or car loan but won't be able to get one now till things settle down.

At the same time I feel very fortunate to have had a single mom and grandparents that worked their fingers to the bone to ensure that I would never have a mortgage payment to worry about. Or at the very least, a house I can sell for a big enough deposit so that any mortgage I get would be very small.

Now I just need someone to buy said house... :(

Why not use the $700 billion to pay down everyone's mortgage with a one-time lump sum payment that will reduce everyone's payments. The banks ultimately get more cash, the mortgages are not as risky anymore, the average taxpayer gets some more slack to pay the bills and make purchases to stimulate the economy, etc. I see that as a better solution.

Just one of many possible.

Waaagh_Gonads wrote:But would the market have dropped anyway, even if the bill passed?
Its been dropping ever since they announced it, sure its dropped quicker but it was headed down anyway.

The market made several recoveries each time there was good news on the recovery plan. It dropped each time negotiations stalled.

My portfolio has shrunk, but as I started buying January this year as part of a 35 year plan I'm not fussed.
I never sell, only buy and live on the dividends.

True that. Popular media tends to fixate on the share price because it provides a handy metric for 'we're winning' and 'we're losing' when it really doesn't mean a lot. What matters is the availability of investment to fuel growth. It's likely your dividends will drop off in future years, perhaps massively, if the markets are left to their own devices.

utan wrote:Wouldn't it be funny if no bailout passes, and the sky doesn't fall?

If nothing passes, I’m pretty confident a year from now that whatever happens we’ll have pundits on the tv telling us the sky did fall and pundits saying the sky didn’t fall. But they’re just talking heads trying to score political points and they really don’t matter.

But I can tell you I know of two companies, one looking to develop the next generation of solar panels and the other working to bring hydro-electric busses to market, that are now likely to fail because they can’t access bridging finance (although their long term prospects are excellent they are start up companies and so are cash negative at present). Even if the whole banking sector doesn’t fall in on itself, we will see many years of very tight lending conditions, and that means venture capital will dry up, and many new technologies won’t be brought to market. The impact on jobs will be considerable. The slowing effect on progressing technologies, including many environmental technologies, could be disastrous.

VermGho5t wrote:It was the committee that put it together and then presented it to the house. It wasn't all 500+ members of the house that were all included in the project. if that happened, bills would never get finished.

It blows my mind that it would get out of committee without the numbers already counted. Weren't people talking to reps while the bill was being written, finding out what needed inclusion for them to sign on?

There's an idea out there that the Democrats geared their numbers so that the bill would only pass if Republicans were also on board, basically allowing their reps holding marginal seats to vote against the bill. The Republicans agreed to this but couldn't get enough of their numbers to vote for the bill. But that's pretty speculative.

utan wrote:Why not use the $700 billion to pay down everyone's mortgage with a one-time lump sum payment that will reduce everyone's payments. The banks ultimately get more cash, the mortgages are not as risky anymore, the average taxpayer gets some more slack to pay the bills and make purchases to stimulate the economy, etc. I see that as a better solution.

Just one of many possible.

The key thing to remember is that this isn't just handing out $700 billion. It's using $700 billion to buy assets that will return at least some of their purchase value. It's unlikely the final net loss will exceed $100 billion, and there's a chance it could break even or even turn a profit (according to some anyway, I think that's quite unlikely). Actually just racking up $700 billion in debt to cut everyone a cheque is not possible.

Personally I think using the money for direct equity investment in the banks would be the best option, it's the option being taken everywhere else, but that's not really viable given US politics and the strength of the financial sector lobby in Washington.

Kid_Kyoto wrote:

Kilkrazy wrote:The crisis is spreading to the Eurozone and beyond. Banks in Holland and Iceland had to be bailed out today. The Russian stock market is tanking.

I still cannot understand where all the money has gone. I suppose a big chunk went on bonuses to bankers. I like to imagine a lot of builders and real estate agents in the mid-west rolling around in solid gold Hummvees powered by single malt whisky. We're not seeing that -- they've probably stashed it all away in the Cayman islands.

The money didn't 'go' anywhere the value of the assets behind it disappeared.

(My take, not an economist) Cheap credit drove up housing prices to the point where even 1 bedroom apartments in New York cost 300k+.

In order to keep prices high and rising banks offered credit to anyone with a pulse. So even though your tenament apartment cost $300k you could still get a loan to cover it.

Now the ponzi scheme has reached its end, many people can't afford the mortgages they took, and the properties can't be sold for anything near the price they were bought at.

Banks who months ago thought they had assets of $X billion now find they have assets of $X/2 billion.

It sounds a lot like what happened in Japan in the late 80s early 90s.

Add in something about the increasing number of mortgages sold on to third parties and the difficulty of assessing the risk of on-sold mortgages and you pretty much nailed it.

utan wrote:There are many guilty parties in this crisis. Legislators meddling irresponsibly, average citizens borrowing (and voting) irresponsibly, financial institutions lending irresponsibly, etc.

I am against a "bailout" that buys up the "toxic" securities. There are many other ways we could spend this sort of money and avert the expected financial disaster.

Could you please give an example of piece of meddling legislation that has led to this crisis? I'm hearing this argument a lot but no-one seems capable of giving an example of a piece of legislation, it really is beginning to sound like nothing but empty rhetoric.

I agree about the nature of the bailout, by the way. A direct equity investment, even to the point of taking a controlling interest or completely nationalising some companies seems the better way to go.

utan wrote:Why not use the $700 billion to pay down everyone's mortgage with a one-time lump sum payment that will reduce everyone's payments. The banks ultimately get more cash, the mortgages are not as risky anymore, the average taxpayer gets some more slack to pay the bills and make purchases to stimulate the economy, etc. I see that as a better solution.

Just one of many possible.

Because instead of helping keep greedy banks afloat you are keeping dopey (and undeniably some unlucky) Americans afloat by keeping their ability to get credit from the banks who you want killed off but who will ultimately be supported anyway under your plan. Essentially the bill would cut out the 'middle man' of the american consumer.

Also how pissed off would you be if you had gotten a loan you could afford to pay off and were not offered the money, but the numbskulls down the street who could never hope to pay their loans off were bailed out?

The bill that they're trying to present is ultimately paid for by all of the working class. The rejection of said bill is obvious what the majority of Americans (working class) want, and that is to not support this bail out plan.

If you listen to Senator Ron Paul he has the problem firmly grasped and the reasons for why this is happening.

Bills are not released until they have gone through the ringer and then they are submitted to the House and then once they pass the House to Congress. Because of the enormous amount of work that goes on in the legislature, almost every representative is on a committee or multiple committees, bills are not seen until they reach the floor and are voted on I believe. Bills also have amendments tagged onto them, that is what happens when they go through the whole process I have described above in my previous post and here. bills can have multiple iterations with amendments added to them which can sometimes be stipulations or compromises that legislatives have agreed to include or strike from the bill in order to pass it on the floor.

Would the bill have failed if all this hadn't happened a month out from elections?

I don't think so... no one wants to be seen withing 100 miles of a banker ATM.

Kid_Kyoto wrote:

Kilkrazy wrote:The crisis is spreading to the Eurozone and beyond. Banks in Holland and Iceland had to be bailed out today. The Russian stock market is tanking.

I still cannot understand where all the money has gone. I suppose a big chunk went on bonuses to bankers. I like to imagine a lot of builders and real estate agents in the mid-west rolling around in solid gold Hummvees powered by single malt whisky. We're not seeing that -- they've probably stashed it all away in the Cayman islands.

The money didn't 'go' anywhere the value of the assets behind it disappeared.

(My take, not an economist) Cheap credit drove up housing prices to the point where even 1 bedroom apartments in New York cost 300k+.

In order to keep prices high and rising banks offered credit to anyone with a pulse. So even though your tenament apartment cost $300k you could still get a loan to cover it.

Now the ponzi scheme has reached its end, many people can't afford the mortgages they took, and the properties can't be sold for anything near the price they were bought at.

Banks who months ago thought they had assets of $X billion now find they have assets of $X/2 billion.

It sounds a lot like what happened in Japan in the late 80s early 90s.

Exactly.

sebster wrote:

utan wrote:There are many guilty parties in this crisis. Legislators meddling irresponsibly, average citizens borrowing (and voting) irresponsibly, financial institutions lending irresponsibly, etc.

I am against a "bailout" that buys up the "toxic" securities. There are many other ways we could spend this sort of money and avert the expected financial disaster.

Could you please give an example of piece of meddling legislation that has led to this crisis? I'm hearing this argument a lot but no-one seems capable of giving an example of a piece of legislation, it really is beginning to sound like nothing but empty rhetoric.

I agree about the nature of the bailout, by the way. A direct equity investment, even to the point of taking a controlling interest or completely nationalising some companies seems the better way to go.

Modifications of the Community Reinvestment Act instituted in the 1990s. Originally the CRA was meant to eliminate “redlining” wherein sections of town were effectively banned from getting credit. However that changed. Pressure by legislators on Freddie/Fannie and the big banks led to the permitted use of lending to unqualified borrowers. The Banks did it because of the pressure and Freddie/Fannie agreeing to buy those loans from the Banks. They were packaged and marketed (and sold) on the belief that the US government would back Freddie/Fannie (effectively a credit enhancement). It made the Clinton administration and THE SAME PEOPLE WRITING THE CURRENT BAILOUT BILL look good, and the Bank's made money because they viewed it as minimal risk.

There were warnings back when the program was modified then in 1999. In 2002/2003 various attempts by legislators (including McCain but also including democrats) were attempted but failed.

Want to blame a legislator-blame Chris Dodd. Blame Barney Frank. Blame Obama (who took $500,000 from freddie/fannie). Blame McCain (took $125,000). Blame any incumbent in Congress now. Then blame the banks for get greedy. Then blame all the speculators who took loans but couldn't repay them.


Now I am seeing reporters foaming at the mouth that “the sky is falling! Your kids won’t be able to get student loans! Your dog won’t get breakfast! We’re all doomed” Reporters must be the dumbest people on the planet. There’s credit out there, you just have to pay for it. As you should.

jfrazell wrote:Modifications of the Community Reinvestment Act instituted in the 1990s. Originally the CRA was meant to eliminate “redlining” wherein sections of town were effectively banned from getting credit. However that changed. Pressure by legislators on Freddie/Fannie and the big banks led to the permitted use of lending to unqualified borrowers. The Banks did it because of the pressure and Freddie/Fannie agreeing to buy those loans from the Banks. They were packaged and marketed (and sold) on the belief that the US government would back Freddie/Fannie (effectively a credit enhancement). It made the Clinton administration and THE SAME PEOPLE WRITING THE CURRENT BAILOUT BILL look good, and the Bank's made money because they viewed it as minimal risk.

That's a deregulation of the market, allowing the market do something it wanted to do but was previously forbidden.