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Old 2008-09-23, 19:47   Link #81
Hari Michiru
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Originally Posted by Green² View Post
The bailout weakens the dollar further, so just about everything could be expected to go up in cost. But they are just betting that you won't notice it until after the elections.
Ah, politics at its finest.
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Old 2008-09-23, 19:58   Link #82
Cherudim Arche
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Pretty lame though, considering everybody consider the economy and election highly now. It would be like robbers trying to steal in a stadium with the safe in the middle with everybody watching.
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Old 2008-09-23, 20:37   Link #83
Reckoner
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Quote:
Originally Posted by Vexx View Post
To some extent... its kind of interesting watching a pack of testicle-waving "tough wall street bulls" so rapidly dissolve into screaming little girl squids because "mommy" might be telling them to play nicer.

Cheering my Oregon congresspeople on for saying "hey wait a minute!" (both the Dem and Repubs). Actually, I'm cheering on all the Repubs in the Senate and House saying "hey wait a minute" when they're reading the fine print.
First clear indication that the fascist lock-step might be shearing a bit.
Gosh, I really love the way you put things sometimes Vexx; it always gives me a good chuckle.

In response to the videos Karasuma posted up...

It kind of bothers me that I am not really able to understand the second video. Unless someone is knowledgeable in both finances and economics, it is hard to know if certain plans are reliable or not. I can't understand very much from the solution video and neither can average American folks I would bet as well. As far as the average American knows, the banks gave out loans they shouldn't of to people who were not capable of paying them off. Now the financial institutions got bit in the ass and the whole public suffers for their greed.


Yeah, it is not diffcult to understand the very basics of the situation, but even then the problem is a lot more complicated and can be traced down to may different roots. However, the big problem is that a majority of people do not have the knowledge to know how to fix it. People are going to go into a 2008 election not knowing anything about our economy really and then are going to end up voting for the person they trust more on the economy (Which more often than not depends on how much a person bull shits the public about our situation with statements like "I'll get the money back into the taxpayers hands with this plan I just pulled out of my ass!"

It bothers me how naive and ignorant the masses in America are with our current situation. The government kept us so much in the dark, even spouting out how the banks were sound weeks before this crises, to the point that a lot of people did not see this coming (My family knew it was coming since a year and a half ago). Now the public is still in the dark regarding what is actually the best solution for this and how bad our situation really is.

Just one of the flaws with our half-assed democracy in this country, there is not equal access to information that is very important to us. Same reason we got in the Iraq war, the same reason this crap is happening under many people's noses.
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Old 2008-09-23, 21:22   Link #84
karasuma
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Quote:
Originally Posted by Reckoner View Post
It kind of bothers me that I am not really able to understand the second video. Unless someone is knowledgeable in both finances and economics, it is hard to know if certain plans are reliable or not. I can't understand very much from the solution video and neither can average American folks I would bet as well. As far as the average American knows, the banks gave out loans they shouldn't of to people who were not capable of paying them off. Now the financial institutions got bit in the ass and the whole public suffers for their greed.


Yeah, it is not diffcult to understand the very basics of the situation, but even then the problem is a lot more complicated and can be traced down to may different roots. However, the big problem is that a majority of people do not have the knowledge to know how to fix it. People are going to go into a 2008 election not knowing anything about our economy really and then are going to end up voting for the person they trust more on the economy (Which more often than not depends on how much a person bull shits the public about our situation with statements like "I'll get the money back into the taxpayers hands with this plan I just pulled out of my ass!"

It bothers me how naive and ignorant the masses in America are with our current situation. The government kept us so much in the dark, even spouting out how the banks were sound weeks before this crises, to the point that a lot of people did not see this coming (My family knew it was coming since a year and a half ago). Now the public is still in the dark regarding what is actually the best solution for this and how bad our situation really is.

Just one of the flaws with our half-assed democracy in this country, there is not equal access to information that is very important to us. Same reason we got in the Iraq war, the same reason this crap is happening under many people's noses.
Hrm... Let me try my best to explain this.

Short answer
you have $10 only and there are 10 friends like you. I, for some reason, am able to borrow $10 from you each and promise to give you interest.

After a while, I say I spent all the money and can't give you neither the interest or principle. Aka, I declare bankrupt.

Since you don't get your money back, you and your friends also go bankrupt. If you and your friends also borrow your $10 bucks to start with, your lender also go bankrupt. This is sorta how credit crunch work.

So, government comes in and say to me. You bad boy, I am going to take all your money ( which I don't have ) and honor my debt so that you and 10 others will get your money back and stop the chain reaction.

This is a mini explanation of bailout.

However, government's money comes from taxation. Taking on extra loan require money to come from somewhere. Hence, government will raise tax or increase their deficit. Your brother, meanwhile, didn't do a thing wrong and his tax suddenly is going up. Hence, he is not happy.

Me, you and 10 other friends are wallstreet.
Your brother is mainstreet.

Reality is more complicated but that is basically what happens right now. If you are with me so far, I can explain more..

Last edited by karasuma; 2008-09-23 at 21:34.
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Old 2008-09-23, 21:27   Link #85
4Tran
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Quote:
Originally Posted by Dynames/ Virtue View Post
Pretty lame though, considering everybody consider the economy and election highly now. It would be like robbers trying to steal in a stadium with the safe in the middle with everybody watching.
I think that part of the problem is that American elections don't work the way that they're supposed to anymore. If the U.S. were a dictatorship, the leaders would simply come out and give the people the bad news that the financial crisis has shot everyone's grand plans to pieces, and that the country has to buckle down, make sacrifices and try to get by as well as possible. Unfortunately, this is political suicide in the middle of an election, so everyone is more afraid of doing something to evoke anger from the voters than to actually doing their jobs.

Even worse, it's a very complicated problem, and it has lots of red herring tangents so it's not easy to figure out the solution. So it's sort of natural that the politicians put their faith in the people who they have in place to address this kind of crisis: Paulson and Bernanke in particular. The problem here is that they were also responsible for getting the financial system into this mess to begin with; and that their proposed plan doesn't seem to do anything to actually fix it. And all that despite threatening to empty the taxpayers' coffers.

Quote:
Originally Posted by Reckoner View Post
In response to the videos Karasuma posted up...

It kind of bothers me that I am not really able to understand the second video. Unless someone is knowledgeable in both finances and economics, it is hard to know if certain plans are reliable or not.
That shouldn't be too surprising. The financial system has been geared to greater and greater complexity over the last little while, and a lot of that complexity hasn't really been touched on by most media sources.

I'm far from being all that knowledgeable about finances, but I'll try to summarize the three points in that video:
1. Everyone must list their assets, and give instructions as to how they valued those assets.
2. Everyone must make contracts based on what they own.
3. All leveraging is capped at a 12:1 ratio.

None of these problems have anything to do with mortgages per se. Instead, they mostly address what financial institutions further do with the mortgages in order to make more money.

Quote:
Originally Posted by Reckoner View Post
I can't understand very much from the solution video and neither can average American folks I would bet as well. As far as the average American knows, the banks gave out loans they shouldn't of to people who were not capable of paying them off. Now the financial institutions got bit in the ass and the whole public suffers for their greed.
That's sort of the basics of what the problem was, but it's far from the whole thing. The main issue with subprime mortgages was that the larger banks wouldn't touch them, so it was confined to a smaller segment of risk-taking companies. However, the mortgages were then listed as assets and sold into the financial industry at large. At a time when most other investments had relatively poor returns, it was a lot of these mortgage-based securities that seemed to be good money-making investments. As a result, they became more and more popular, mutual funds started to buy into them, and the whole industry was tied up with risky investments that most major institutions shouldn't have touched. Everything is fine as long as the mortgage-based securities kept rising in value, but the bubble burst a bit over a year ago, and we're seeing the second phase of the consequences of the collapse today.

Quote:
Originally Posted by Reckoner View Post
Yeah, it is not diffcult to understand the very basics of the situation, but even then the problem is a lot more complicated and can be traced down to may different roots. However, the big problem is that a majority of people do not have the knowledge to know how to fix it. People are going to go into a 2008 election not knowing anything about our economy really and then are going to end up voting for the person they trust more on the economy (Which more often than not depends on how much a person bull shits the public about our situation with statements like "I'll get the money back into the taxpayers hands with this plan I just pulled out of my ass!"

It bothers me how naive and ignorant the masses in America are with our current situation. The government kept us so much in the dark, even spouting out how the banks were sound weeks before this crises, to the point that a lot of people did not see this coming (My family knew it was coming since a year and a half ago). Now the public is still in the dark regarding what is actually the best solution for this and how bad our situation really is.

Just one of the flaws with our half-assed democracy in this country, there is not equal access to information that is very important to us. Same reason we got in the Iraq war, the same reason this crap is happening under many people's noses.
You've hit upon the crux of one of the major weaknesses of American democracy: most people do not and cannot understand the complexities of the situations they're in, or the ramifications of their vote. Even worse, a great many don't even make the effort to understand more, and make decisions based on the sound bite, tribalism, or even worse - "common sense". It really doesn't help when most politicians don't make the effort to educate people, and instead try to pass on easily repeated low-information slogans. I'm not sure that I can blame them in general since the voters seem to prefer that kind of message, but I can certainly blame the more egregious forms of this when I see it.
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Old 2008-09-23, 21:39   Link #86
karasuma
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I LONG support that financial education should be studied in HS. People ought to know how credit card works, how money created and how mortgage works.

Like it or not, you will touch these stuff when you grow up and people will take advantage of you if you don't know what they are.

Here is a good question : What is money?

Part 1 of 5
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Old 2008-09-23, 22:37   Link #87
Solace
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Quote:
Originally Posted by 4Tran
So it's sort of natural that the politicians put their faith in the people who they have in place to address this kind of crisis: Paulson and Bernanke in particular. The problem here is that they were also responsible for getting the financial system into this mess to begin with; and that their proposed plan doesn't seem to do anything to actually fix it. And all that despite threatening to empty the taxpayers' coffers.
I watched the panel for most of the day, and it was a sham. The panel was dead on, with pointed criticism that the plan wouldn't do anything but waste money and benefit outside interests but nothing to ease the burdens of the system and taxpayers. And the constant repetition that Paulson offered while dodging questions was disappointing. While I didn't expect him to have all of the specifics, I could hardly call his answers "plans".

He couldn't answer on the process of hierarchy and how the plan would be regulated. He couldn't answer plans beyond reverse auctions on how to resell the bad debt. He quickly said yes to bailing out foreign investment institutions who have stakes in US banks but had no answer as to why the plan had no provisions for covering home owners that are on the verge of or in foreclosure, which would further hurt home values and banking systems.

The request is too much money and power granted for a man who can't sit in front of a congressional panel and explain very clearly *what* he wants to do beyond stating that it's broad and important. We get that. Now explain the specifics, the why's and hows. It's why we're holding this panel, right?

Quote:
Originally Posted by karasuma View Post
I LONG support that financial education should be studied in HS. People ought to know how credit card works, how money created and how mortgage works.
I don't know about other school systems, but I took a full economics and marketing management course in High School. While I'll admit it's not a full college education the course covered the fundamentals of how finance works and how management handles financial decisions.

The problem is that the economy has changed a lot since my education 15 years ago. The average American has about the same grasp on the system as I do, maybe a little worse. We didn't all go to college to continue such studies so we're relatively uneducated on the complexities and changes of the system as it has become today.

This is why we're struggling to understand what all of this means.
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Old 2008-09-23, 22:49   Link #88
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Ben Stein offers some different perspective on the march into this mess.
http://finance.yahoo.com/expert/arti...DeCl.2G0S7YWsA
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Old 2008-09-23, 23:30   Link #89
Vexx
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God.. Ben Stein.... even when I fervently disagree with him, I find myself smiling at the injection of humor he puts in it.

Flashback to Animaniacs and a certain party-goer voiced by Ben that discussed cheese puffs and Bob Barker.....

Last edited by Vexx; 2008-09-24 at 01:03.
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Old 2008-09-23, 23:57   Link #90
karasuma
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Quote:
Originally Posted by Solace
I don't know about other school systems, but I took a full economics and marketing management course in High School. While I'll admit it's not a full college education the course covered the fundamentals of how finance works and how management handles financial decisions.

The problem is that the economy has changed a lot since my education 15 years ago. The average American has about the same grasp on the system as I do, maybe a little worse. We didn't all go to college to continue such studies so we're relatively uneducated on the complexities and changes of the system as it has become today.

This is why we're struggling to understand what all of this means.
You know what I really think. I really don't think so call "high finance" cannot be understand by common people. At the end of the day, it is principle, interest and leverage. Leverage is just like all sort of insurances.

Basic problem we have right now is Katrina hits and all insurance companies go belly up.

They like to use fancy name like CDS, CDO and all the alphabet soup to go with it because they don't want people to understand it!!

Like mutual fund and 401k, how many mutual funds beat the index? Why your 401k plan only have a few fund selection. Do you know how those fund get on the exclusive list that you can choose from your 401k?

At the minimum, we should understand all financial tools that we use everyday and avoid those that we don't understand.
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Old 2008-09-24, 00:14   Link #91
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OP finally changed thread title!

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Old 2008-09-24, 01:13   Link #92
4Tran
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Quote:
Originally Posted by karasuma View Post
You know what I really think. I really don't think so call "high finance" cannot be understand by common people. At the end of the day, it is principle, interest and leverage. Leverage is just like all sort of insurances.
Mind you, for many of the common people, teaching them why it's a bad idea to only pay the minimum payment every month would already greatly improve their financial positions. And of course, the sheer amount of jargon and complexity helps to discourage all but the most curious of laymen. Then again, if the common people do learn more about this stuff, they'd probably get quite upset at how the rules are stacked to give all sorts of advantages to wealthier investors.

Quote:
Originally Posted by mg1942 View Post
OP finally changed thread title!

Actually, the title was bugging me, so I changed it when I first posted.
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Old 2008-09-24, 01:17   Link #93
Kang Seung Jae
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Quote:
Originally Posted by mg1942 View Post
OP finally changed thread title!

What was the original title? I forgot.




On the topic: So the era of the pure investment banks ends. Much better for the basics.
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Old 2008-09-24, 01:24   Link #94
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^ the original title was "Economical Crisis of 2008."

As to your on-topic point, yes, the current era of pure investment banking is going to have a sharp decline. One "good" war will correct all of the economical problems...
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Old 2008-09-24, 01:27   Link #95
Kang Seung Jae
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Originally Posted by james0246 View Post
As to your on-topic point, yes, the current era of pure investment banking is going to have a sharp decline. One "good" war will correct all of the economical problems...
You know it's funny that as a guy who profitted from the investment banks, I'm actually happy they've fallen......



This Economic Crisis has been good for my bank account.
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Old 2008-09-24, 02:04   Link #96
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Originally Posted by Kang Seung Jae View Post
You know it's funny that as a guy who profitted from the investment banks, I'm actually happy they've fallen......

This Economic Crisis has been good for my bank account.
You invested on the other "side"?
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Old 2008-09-24, 02:28   Link #97
Kang Seung Jae
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Originally Posted by yezhanquan View Post
You invested on the other "side"?
Well, I pretty much got out of the investment banks when the sub-prime crisis started up. Also, my bars of gold have exploded in value.



All in all, a good year for me.
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Old 2008-09-24, 02:29   Link #98
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KSJ must be investing in gold
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Old 2008-09-24, 02:35   Link #99
Kang Seung Jae
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Originally Posted by mg1942 View Post
KSJ must be investing in gold
Natural resources are very good if you can tell how the prices goes. They're one of the mose volatile, but also one of the most solid investments.


Wheat, rice, uranium, gold...... so many precious resources, so little cash to invest.
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Old 2008-09-24, 02:56   Link #100
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I guessed right!

I swear I posted earlier than KSJ. I dunno how he beat me to it
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