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Old 2008-09-30, 22:54   Link #221
Irenicus
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Quote:
Originally Posted by WanderingKnight View Post
Well, there was the war, too. War fuels the arms industry, and that's what the US has been using since a long time ago to pull itself out of recession.
The bank holiday was around 1932 or something, though. The war is waaaay in the 1940's. True enough, the Depression didn't really end until then, but it was very much moderated, and that's the best anyone could've done when you consider that the USA was at the epicenter of that particular maelstrom. And of course, essentially, it's just a successful way of legitimizing massive government spending in the economy and corresponding ballooning national debts to pay for it. A blanket bailout doesn't exactly convince people to start spending (and it's one of the big legitimate objections to the Bill, IMO), but building factories in America, Shermans for France, and the Thousand Carriers of Doom to smash Japan definitely was in itself a fully economic activity that did convince people to buy and sell.

Interestingly enough, ever since the 1980's the "war is good (for the economy)" meme went the other way around: we kept having these mini-recessions when we went to war ever since the First Gulf War. A decline in usefulness of the much-vaunted and equally hated Military-Industrial complex? Maybe.

Also, I think in geopolitical terms those who are gloating at the US right now will pay the price later, not because of any conscious American revenge, but rather because their economies will be affected too. I said it before somewhere else, but if the US comes crashing down, we'll take the world with us. Not a nice prospect wherever you are. And your point about not having a point of reference in world politics isn't a happy one either, IMO. That's just more chaos, not more, hmm, "self-determination."
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Old 2008-09-30, 23:00   Link #222
WanderingKnight
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Quote:
And your point about not having a point of reference in world politics isn't a happy one either, IMO. That's just more chaos, not more, hmm, "self-determination."
Really?

I'm rather surprised to hear that from you... It almost sounds as if you're advocating having the US policing the world's economy or something like that, (or having any other single, centralized state doing so). The fragmentation of relationships of power is something GOOD in my book. At least we know now that having a centralized point of failure is bound to bring about not-so-good things.

And I'm not gloating at the US... I'm more than conscious that our economy will be affected. I think I mentioned it in my previous post.
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Old 2008-09-30, 23:23   Link #223
Irenicus
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Originally Posted by WanderingKnight View Post
I'm rather surprised to hear that from you... It almost sounds as if you're advocating having the US policing the world's economy or something like that, (or having any other single, centralized state doing so). The fragmentation of relationships of power is something GOOD in my book. At least we know now that having a centralized point of failure is bound to bring about not-so-good things.
Of course not. I'm not very fond of USA = world police either, but your statement made it sound too optimistic really. I just don't believe a potential breakdown of US power (okay, it already started, thanks Bush!) will translate to more self-determination among nations, just that regional powers will just fill the vacuum, or try to fill the vacuum, intensifying the conflict and competition between such powers.

Try the Middle East, for example: so the US leadership was an utter, abject, shameful failure. That's clear enough (thanks again Bush!). But what will happen if the US withdraws its influence from the region in a hurry? Will there be peace and cooperation? I seriously doubt it. Iran will want to assert itself as the master of the region; Saudi Arabia will want the same, Holy Wahhabi Islam and all; Egypt may want to go back being Nasserific; Israel will scramble to protect itself from a hostile neighborhood; and Turkey might prefer itself over other, more volatile nations to lead the region...

And the voice for reason won't be heard. Who ever listens to writers and philosophers when the time comes to wage war?

C&C Generals II: Middle Eastern Mess, or that's how I see it anyway. True, superpower bullying isn't fun, but the UN and other similar organizations on the more local scales are not strong enough to assert themselves in its place. I don't really doubt that it's going to happen -- I believe that my generation will see the relative decline of US power worldwide over time, ala the British Empire post-1900, Pax Americana isn't meant to last -- but while I don't see what we have now as righteous hegemony, I don't think what comes after will be something to look forward to either.

...but that's all off-topic, so I apologize to the thread readers and participators for dragging it out a bit.
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Old 2008-10-01, 00:50   Link #224
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Oh, I'm not saying it's going to be some sort of panacea or something like that (you'll never hear me advocating magical solutions to overly complicated issues such as, umm, the entire world ). I'm just saying it will be a step in the right direction for once--even if that step is not intended.
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Old 2008-10-01, 12:22   Link #225
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Unlikely, what Irenicus said is not only true in the middle east but in asia too.This is particuliarly worrying considering Asia is rapidly becoming the core of the global economy.

I am not american, but I am convinced that most of us will regret the good old days of the "pax americana".No global hegemon is perfect, but this one was relatively benign and even positive in some aspects if like me you think that democracy, freedom of thougts and other niceties are good things.


Oh, well, I doubt the current crisis will have an important effect on the global standing of the US.12 aircraft carriers and 86 battleships are more effective than billions of dollars on that aspect.
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Old 2008-10-01, 12:32   Link #226
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http://blogs.moneycentral.msn.com/to...n-history.aspx

Bailout Wall St. please! Stories like these definitely don't help the government explain to people why the bailout is needed.
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Old 2008-10-01, 12:41   Link #227
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Quote:
No global hegemon is perfect, but this one was relatively benign and even positive in some aspects if like me you think that democracy, freedom of thougts and other niceties are good things.
Yeah, freedom of thought in the dozens of puppet dictatorships placed around the world by the US government. Such as the one in my own country during the 70s. Freedom of thought in the constantly stupified ideal society the media seems to pursue.

And how can we forget the freedom obtained by countries where the US waged war on just for some sort of economic gain?

And what are the niceties and good things? The stupid and self-destructive consumerist society all countries around the globe have come to inherit?

I know I come off as rather bitter, but it's the truth, you know.
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Old 2008-10-01, 12:47   Link #228
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http://blogs.moneycentral.msn.com/to...n-history.aspx

Bailout Wall St. please! Stories like these definitely don't help the government explain to people why the bailout is needed.
No... but they explain why the first bill was such a crock to the general public (and to most economists - who seem to feel the money is needed but being thrown at the wrong problem). They've added stuff to the bill since then -- we'll see how much traction the added restrictions and caveats have.
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Old 2008-10-01, 12:56   Link #229
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Quote:
Originally Posted by WanderingKnight View Post
And I'm not gloating at the US... I'm more than conscious that our economy will be affected.
Good. Because it seems you're right: Latin American economies catches cold

Quote:
Originally Posted by karasuma View Post
Ok, so, do we have a real problem?

Recession is a real thing and it is a normal thing. Like the tech bubble happened in 2000. No one rush to government and said, "Bail me out or tons of techies are going to lose their job!" Somehow, when it happens to the bankers, they have the ear of the government. So, I said, "All in. I will call your bluff." I will save my 700B and see your bluff on economic collapse. I bet this slow down will feel no worse than the internet bubbles for techies.
I hope, for your sake, that you are right. I am not very confident about your prognosis. The tech bubble burst was very different from the mortgage crisis that you're seeing now. The tech bubble burst wasn't going to cause credit to dry up — the collapse of the American banking system, due to its inability to liquidate toxic mortgage loans, is going to make short-term loans prohibitively expensive for many otherwise healthy businesses. That could lead to contractions that could, in turn, lead to job losses and ultimately, a very deep and painful recession for many Americans, through no fault of their own.

Meanwhile, the banks will collapse, and new banks will pick up the pieces, but along the way, ordinary Americans will suffer. In the long run, this will indeed be a healthy blood-letting. But, again, I wonder if Americans are willing to pay the likely price of this drastic get-well plan?

Quote:
Originally Posted by karasuma View Post
(Proposed alternative to bailout)
2) Government IS going to take equity stake of the company. It will be similar to what Buffet gets from GoldmanSack. IE : 10% interest each year on 5B. For this 5B, if the market goes up, this 5B acts as stock. If the market goes down, this 5B acts like a loan. Extra option to buy 5B more share at current price.
Except that, given America's aversion to "socialism", it'd be difficult to persuade Congress to allow the government to take an equity stake in Wall Street banks. It's different for Warren Buffett because, well, he's a private investor, so it's okay.

There is another alternative. If the United States government doesn't want to own its own institutions, why not let foreign governments buy them? The trillions that Americans have spent on imported goods have fattened many sovereign wealth funds over the years. These funds would probably be quite happy to take controlling stakes in these troubled, but potentially lucrative, assets.

Presumably, the above idea would be an even harder sell than the Great US Socialist Bailout Plan.

Quote:
Originally Posted by Vexx View Post
When most economists are talking like this:
http://www.npr.org/templates/story/s...04&ft=1&f=1001
It's worth highlighting something from the reference that Vexx quoted:

"And the underlying issue, Baker says, is that the US has lost close to $4 trillion in housing equity. The toxic assets at the heart of the financial meltdown are mortgage-backed securities. But with house values plummeting, it's impossible to gauge how much these securities are worth."

I hope that Americans, and indeed the whole world, will now learn this important lesson: Real estate can fall in value just as easily as it can rise in value. Property-fuelled consumption has always been a leading cause of financial crises all over the world. People constantly make the mistake of thinking that property is a "safe bet" that cannot fail. Once again, we are reminded, very expensively, that there is no such thing as a "sure bet".

Credit is freezing up in the US because no one knows the value of mortgage loans any more — we only know that they are steadily declining. From the same source that Vexx had quoted, I found this suggestion:

Quote:
Mr Simon Johnson, a former chief economist at the International Monetary Fund, thinks there's another approach that would be superior to the Treasury's plan — giving government loans to the struggling financial firms and taking their distressed mortgage securities as collateral.

"Think of it like this: You need some cash, and you have a second-hand car that's in pretty dubious condition; if I buy the car from you and the car turns out to be a complete dog, that's my problem," he explained. "But if I lend you money against the collateral of that car, ultimately you're going to pay back the loan, and it's still your car. So, if it's a dog it's still your problem."

So, by not buying the distressed securities that are the equivalent of the used car, taxpayers aren't holding the bag if the securities turn out to be dogs. But the financial firms do get the money they need in the form of a loan to help them get on their feet again.
In effect, Mr Johnson wants the US Treasury to act as a lender of last resort, rather than being the rescuer of last resort. The banks will still own their toxic mortgages, but with the help of government loans, they can hopefully recapitalise themselves, and eventually earn enough money to write off the bad debt (and pay back the government loan, with interest).

=============

Meanwhile, the US has a far deeper problem to resolve. American consumers cannot be allowed to continue funding their expenditure by borrowing against their properties. The mortgage crisis clearly shows that this is an unsustainable trend. Many Americans are steadily growing poorer today because they've depended too heavily on rising home values to prop up their bank accounts.

In the long run, American households must be encouraged to start saving again, and to spend within those savings.

But that's a problem to be solved over time. The crisis on Wall Street, on the other hand, needs to be resolved now.

Last edited by TinyRedLeaf; 2008-10-01 at 13:31.
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Old 2008-10-01, 13:02   Link #230
TigerII
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Regardless of what happens. The middle class is was is going to hurt. This is what people need to realize. My wonder is how bad.
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Old 2008-10-01, 13:16   Link #231
Shadow Kira01
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Originally Posted by TigerII View Post
Regardless of what happens. The middle class is was is going to hurt. This is what people need to realize. My wonder is how bad.
Not exactly true. Certainly, the economic crisis of the United States will have negative effects worldwide, but I doubt it will affect everyday ordinary citizens who aren't purchasing stocks or whatsoever.

On second thoughts, maybe it does have an effect. I think this current economic turmoil will be a wait and see speculation thing as to how bad it will affect the world. It might not hurt just the middle class, but everyone on a whole different scale.
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Old 2008-10-01, 13:25   Link #232
Anh_Minh
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Not exactly true. Certainly, the economic crisis of the United States will have negative effects worldwide, but I doubt it will affect everyday ordinary citizens who aren't purchasing stocks or whatsoever.
Unless they lose their job over it.
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Old 2008-10-01, 13:34   Link #233
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Not exactly true. Certainly, the economic crisis of the United States will have negative effects worldwide, but I doubt it will affect everyday ordinary citizens who aren't purchasing stocks or whatsoever.
try getting a loan lately on buying a house, purchasing a car or student loan?

the credit problems is going effect everyone, it is call the trickle down effect
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Old 2008-10-01, 13:37   Link #234
mg1942
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Originally Posted by TigerII View Post
Regardless of what happens. The middle class is was is going to hurt. This is what people need to realize. My wonder is how bad.
My sister just received 35-40% increase in income ~3 months ago. She works at Southwest Gas Corporation (auditing).
She doesn't seem affected by this crisis.
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Old 2008-10-01, 13:37   Link #235
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Assuming that the banks are still wary about loaning to one another and this uncertainty continues, this could affect the people who need to take out loans to buy cars, homes and so on.

Small and medium-sized business owners could lose entire businesses if they don't get the credit they need from their banks.

People's retirement accounts could lose a lot of money if they are heavily invested in stock markets.
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Old 2008-10-01, 13:38   Link #236
TigerII
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Yeah, it will affect normal citizens like me. I might have to suspend college if I can't get a loan. Or how about the businesses that will tank? unemployment will rise. I just hope it doesn't rise with inflation, or I might not be able to post here since internet would be insanely expensive.

Hard times for all in the US are coming.


Also, people are already loosing portions or all of their 401Ks.
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Old 2008-10-01, 16:13   Link #237
Irenicus
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Originally Posted by TinyRedLeaf View Post
In effect, Mr Johnson wants the US Treasury to act as a lender of last resort, rather than being the rescuer of last resort. The banks will still own their toxic mortgages, but with the help of government loans, they can hopefully recapitalise themselves, and eventually earn enough money to write off the bad debt (and pay back the government loan, with interest).
...which, interestingly enough, is reminiscent of what the Japanese government did post-WWII, becoming the largest and most lenient bank out there because there's nobody else to become banks, or existing banks won't do their job and provide capital to people who need them.

Why, how ingenious! While there's no guarantee that throwing trillions at banks and financial intermediaries will really convince them to loan out again, the government itself becoming a lender bypasses that problem. Papa Sam doesn't -- or shouldn't, ideally -- care all that much about getting a profit off its loans, it cares a lot more about allowing businesses to receive capital for their operations; and in any case the position of a lender has far more leverage than the one-time beneficiary role will have, allowing for future, crucial, necessary adjustments to be made in the economy as needed. But of course, that's "socialism" and a big no-go, uh-huh.

Although I'm not sure it'll come out that excellently in the long run. I can hardly call myself an expert or even an amateur of Japanese economic history, but I vaguely recall that the Japanese eventually had to change out of that model and not perfectly smoothly while at it.
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Old 2008-10-01, 17:17   Link #238
Vexx
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Originally Posted by Irenicus View Post
...which, interestingly enough, is reminiscent of what the Japanese government did post-WWII, becoming the largest and most lenient bank out there because there's nobody else to become banks, or existing banks won't do their job and provide capital to people who need them.

Why, how ingenious! While there's no guarantee that throwing trillions at banks and financial intermediaries will really convince them to loan out again, the government itself becoming a lender bypasses that problem. Papa Sam doesn't -- or shouldn't, ideally -- care all that much about getting a profit off its loans, it cares a lot more about allowing businesses to receive capital for their operations; and in any case the position of a lender has far more leverage than the one-time beneficiary role will have, allowing for future, crucial, necessary adjustments to be made in the economy as needed. But of course, that's "socialism" and a big no-go, uh-huh.

Although I'm not sure it'll come out that excellently in the long run. I can hardly call myself an expert or even an amateur of Japanese economic history, but I vaguely recall that the Japanese eventually had to change out of that model and not perfectly smoothly while at it.
aye, that is what the bill *should* do, that's what most economists say should happen ... so WHY is the bill not addressing that - the heart of what will pound Main Street to shreds?
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Old 2008-10-01, 19:32   Link #239
mg1942
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New Senate bailout bill pricetag: $850B

Yep, watching debate, they are about to vote on c-span... it is gonna cost 850 billion... lots of earmarks... including a large sum for "mental health parity"?

get to the phones and scream bloody murder!


(are you kiding me, hold on, gotta look up the number...Email and phone call made)
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Old 2008-10-01, 19:51   Link #240
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Btw, the Obama-singing video is now out on the mainstream.
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