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Old 2008-09-29, 18:49   Link #161
Cherudim Arche
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Quote:
Originally Posted by Neki Ecko View Post
Ditto, everybody in Congress should get a mirror and point at it, then you will see who fault is it. At the end, the American people is one who is going to suffer the most.
Wouldn't you mean the average American and the poor, the rich to some degree definitely took major role the distorting information.
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Old 2008-09-29, 18:54   Link #162
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Quote:
Originally Posted by Dynames/ Virtue View Post
Wouldn't you mean the average American and the poor, the rich to some degree definitely took major role the distorting information.
apologist

the rich invest the most by far, i think there assets getting hammered in the stock market qualifies as a loss.
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Old 2008-09-29, 18:59   Link #163
Cherudim Arche
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Originally Posted by FLCL View Post
apologist

the rich invest the most by far, i think there assets getting hammered in the stock market qualifies as a loss.
Of course they would lose more, but compared to everyone else, they would seem fine.
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Old 2008-09-29, 18:59   Link #164
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Has anyone else heard about what some treasury spokeswomen said about the $700 billion figure. "It's not based on any particular data point; We just wanted to choose a really large number."

Wow, just wow.
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Old 2008-09-29, 19:02   Link #165
Cherudim Arche
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Originally Posted by GuidoHunter_Toki View Post
Has anyone else hear about what some treasury spokeswomen said about the $700 billion figure. "It's not based on any particular data point; We just wanted to choose a really large number."

Wow, just wow.
No, I did not hear that. Great way to help, if we don't know how it will affect economy currently.
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Old 2008-09-29, 19:03   Link #166
SeedFreedom
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I dont know too many details about the plan or weather it would help or hurt economy, but the problem is the longer this thing goes on the more stressed and worried people get which sinks the stocks. Either they need to pass it or let it die but muddling and debating is what has people worried.
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Old 2008-09-29, 19:09   Link #167
Tri-ring
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Quote:
Originally Posted by Vexx View Post
Wonder which players will snap up all the SALE stocks that have suddenly become great deals.
Quote:
Originally Posted by TigerII View Post
Seriously, now is the time to buy.
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Originally Posted by FLCL View Post
im thinking of buying before the next resolution comes through, they just have to pass something

good thing i moved my cash into HSBC and bank of china
If everyone had this kind of mind set then there will be no economic crisis because money will be induced into the stock market which will keep economy afloat.
Unfortunately that is not the case, majority of people will be hesitant in buying wanting to pick up at rock bottom so they will gain maximum profit.

It's like an economic bubble only on a downward trend, everyone pulls out their money thinking they will lose profit that they had not yet earned.

As for socialism being aversed by the US society, I believe it is based on difference in social value.
Americans in general are taught that individuality is a precious virtue that needs to be protected.
Socialism goes against this ideal.
An extreme example would be their disconfort against mass transit transportation where you have little to no privacy and have to follow a route than to form a route of your own.
The republican's ideals are basical based on this believing that the less interference with indviduality the better.
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Old 2008-09-29, 19:46   Link #168
Vexx
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On the socialism .... America spent most of the 20th Century being told that Communism==Socialism==consummate evil (along with a splash of Unionism) .... despite the niggling problem that we basically hauled ourself out of the Depression and created a huge middle class with a combination of socialist mechanisms and a war that fought using a "collective team" mindset.

Individualism in the US is often pushed to the extent that "You're on your own" is extolled as some sort of virtue rather than some form of insanity in an innately social species.
The full quote should be "We've got ours, you're on your own, pbffffft." There's some fictional notion that wealth is created in a vacuum instead of a societal infrastructure.

Last edited by Vexx; 2008-09-29 at 21:38.
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Old 2008-09-29, 20:18   Link #169
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I've quoted it several times, but I think it bears saying again:
"Every one's a socialist at some point."

It's just a question of what point and how. My personal preference is that all socialism be a layer on top of an economic system, not PART of the economic system. Freedom, robustness, and safety. The bailout is putting the government right at the core of the system.

That's my biggest problem with this bailout: It's giving an enormous amount of economic power to the state. A few individuals, really. I'm not concerned about the cash, because a pennies on the dollar buy is going to have returns that will negate any concern about the taxpayer burden. The problem is that it's an outright power grab. It's so absolutely wrong that I simply can't muster the will to be angry. It just doesn't even seem real. How can I be mad if I'm just dreaming it?

The treasury didn't even have figures to support 700 billion. They were looking for a large number. That they've had the gall to say this to the press just shows how bold these people are getting.
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Old 2008-09-29, 20:25   Link #170
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It cracks me up. The government scorns socialism, yet with every bailout they become more socialist.

Now I am sitting here trying to calm my friend down who is nearly in a panic attack.
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Old 2008-09-29, 20:42   Link #171
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Originally Posted by TinyRedLeaf View Post
I just don't get it at all. Where does this fear of socialism come from?
People aren't afraid of socialistic practices. They're afraid of socialism giving too much power to the government. Socialism as a form of government has extremely limited success. It has had the same problems Capitalism has - controlling the innate desire to have more than someone else (greed).

Capitalism as a system does work, but it needs Socialist policies to keep it in check. Unchecked systems of one or the other assuredly fail, but when the balance is between equal between freedom and someone telling you when freedom has limits the system works better as a whole.

What the underlying fear really is though, is that too much Socialism will lead to a police state (what Americans think of when it comes to Fascism or Communism). So anything that gives what the people believe is too much power to the government will be treated with resistance, even as they look to the people they voted in power for help when the going gets tough.

It's a strikingly hard balance to maintain, and even the Founding Fathers struggled with their beliefs on this. Read up on Jefferson sometime - he'll admit that even though he hated large corporations, banks, and governments, he also admitted that they were sometimes a necessary evil.

Quote:
Originally Posted by SeedFreedom
the problem is the longer this thing goes on the more stressed and worried people get which sinks the stocks. Either they need to pass it or let it die but muddling and debating is what has people worried.
While not the sole problem, the speculation is killing the market. Because the bill didn't pass, investors are panicking and making the problem *worse*. I question those choices on the actions of today's market plunge.
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Old 2008-09-29, 21:06   Link #172
Tri-ring
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Quote:
Originally Posted by Solace View Post
People aren't afraid of socialistic practices. They're afraid of socialism giving too much power to the government. Socialism as a form of government has extremely limited success. It has had the same problems Capitalism has - controlling the innate desire to have more than someone else (greed).

Capitalism as a system does work, but it needs Socialist policies to keep it in check. Unchecked systems of one or the other assuredly fail, but when the balance is between equal between freedom and someone telling you when freedom has limits the system works better as a whole.

What the underlying fear really is though, is that too much Socialism will lead to a police state (what Americans think of when it comes to Fascism or Communism). So anything that gives what the people believe is too much power to the government will be treated with resistance, even as they look to the people they voted in power for help when the going gets tough.

It's a strikingly hard balance to maintain, and even the Founding Fathers struggled with their beliefs on this. Read up on Jefferson sometime - he'll admit that even though he hated large corporations, banks, and governments, he also admitted that they were sometimes a necessary evil.



While not the sole problem, the speculation is killing the market. Because the bill didn't pass, investors are panicking and making the problem *worse*. I question those choices on the actions of today's market plunge.
This really cracks me up.
While on one hand people trys to point out the ill values of socialism while the house of representatives wrecks up a plan for the sake of his own personal gain.

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Originally Posted by mg1942 View Post
As more and more facts about the failed vote come out, it becomes plain that there was more going on than just Pelosi's ill-timed, ill-directed, screw bi-partisan cooperation, BLAME BOOOSH speech.

The good of the nation took second-place to election year posturing and opportunism.

The democrats did not need Republican votes to pass this bill. All they had to do was whip all of their horses in line and the it would be a done deal. One reports alleges that democratic House members up for reelection in strongly contested races were urged to vote against the bill, because enough Republicans were committing to vote for it that it was safe to do so. Republicans got wind of the double-dealing. That, and Pelosi's speech had them livid with outrage.

Cynics might also state that the democratic presidential candidate morphed into the Invisible Man during the debate over the bipartisan bill at a time when his influence was sorely needed.

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Originally Posted by mg1942 View Post
Just heard a great line by Mike Huckabee in relation to the bailout:

"Those who just burned the Thanksgiving Turkey are asking that they be allowed to cook Christmas dinner."
Guess what, while the US government is inept to do anything the central banks around the world are desperately trying to avoid a worldwide economic failure.

Central banks to double amount of dollar injections into market as U.S. financial crisis spreads
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Old 2008-09-29, 21:11   Link #173
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Proposed solution.

http://www.denninger.net/letters/fixit.pdf
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Old 2008-09-29, 21:25   Link #174
TigerII
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Did you watch the last part which contained the disclaimer?
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Old 2008-09-29, 21:34   Link #175
Vexx
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Originally Posted by Solace View Post
While not the sole problem, the speculation is killing the market. Because the bill didn't pass, investors are panicking and making the problem *worse*. I question those choices on the actions of today's market plunge.
While not the sole problem, the speculation is killing the market. Because the bill didn't pass, speculators are panicking and making the problem *worse*.

That's the change I'd make there. You're hearing the screams of testicle-waving day-trading speculators who just got their waving ways scrunched. Investors tend to be more measured in their response - if you didn't sell this morning you're probably best off riding it out. And it might be a good time to pick up some deals. ... even if it drops more, the only thing that really matters is how much you bought it for and later how much you sell it for.

Personally, I'd like to see day trading speculative twits run out of the market and back to the roulette and craps tables. Go back to rewarding long-term investing with tax incentives
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Old 2008-09-29, 21:43   Link #176
Tri-ring
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Originally Posted by Vexx View Post
While not the sole problem, the speculation is killing the market. Because the bill didn't pass, speculators are panicking and making the problem *worse*.

That's the change I'd make there. You're hearing the screams of testicle-waving day-trading speculators who just got their waving ways scrunched. Investors tend to be more measured in their response - if you didn't sell this morning you're probably best off riding it out. And it might be a good time to pick up some deals. ... even if it drops more, the only thing that really matters is how much you bought it for and later how much you sell it for.

Personally, I'd like to see day trading speculative twits run out of the market and back to the roulette and craps tables. Go back to rewarding long-term investing with tax incentives
Actually it is more devious then that becuase of short selling which will accelerate the downward trend.
Yeah, captial gain(and/or loss) is a bitch.
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Old 2008-09-29, 21:43   Link #177
solomon
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Ioono, Vexx. I mean it's understandable how some of the pachyderms have ideological differences to gov't intervention, but isn't it true the longer we wait the worse off we will be?

I mean many higher ups said that this Bill is HARDLY gonna please everyone, but that's kinda expected right?


Also why I agree, that Pelosi SHOULDN'T have said the partisan speech (even if there was some truth to it) not getting behind the bill with that as I primary reason IS A HUGE LOAD OF CROCK IN MY BOOK.

I personally figured out that American fear of socialism is partly bull, I keep on looking to Western European countries like UK, France, Germany, Sweden, etc. they have Social Democratic (A mix of democratic and socialist principles, I think) parties and more Free market parties which both at the end are biased towards a generally free market (in varying degrees) and they all seem to have healthy robust economies, I seriously don't get the problem

Last edited by solomon; 2008-09-29 at 21:54.
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Old 2008-09-29, 22:12   Link #178
TigerII
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Corporations don't want government in their business. That is why they have lobbyist. So over time they preached 'socialism=communism and Communist are bad.'
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Old 2008-09-29, 22:16   Link #179
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I think that it's good news that the bailout plan as proposed failed. Hopefully it'll mean that Congress will take their time and come up with a better one.

The plan was basically Paulson's with a few modification (admittedly for the better). However, all it'll really accomplish is some temporary increase in spending, only to make the big crash that much bigger when it hits.

Quote:
Originally Posted by Aquillion View Post
I am getting the sense that a lot of people here don't understand what the bailout plan really is; they just hear 'a trillion dollars', then lock up and start screaming, imagining a trillion dollars being randomly given away to wealthy fat-cat bankers.

That isn't what it is at all. A post by an economist I know explains it better than I could. It is long but please please please read it, this is very important; it could easily be more important than the Presidential election. Understand that for the past few years, the Bush administration has been desperately struggling to salvage its economic conservative legacy; they instantly tossed it in the fire just now. They did not do this lightly. Nearly half the Republican party turned their back on economic conservative principals. They did not do this because lol they wants the monies.
Quote:
A DISCUSSION ON MARK TO MARKET ACCOUNTING

1. HOW TO MAKE A MORTGAGE BACKED SECURITY

first, read Liar's Poker. Mortgage Back Securities (henceforth, MBS's) were invented at Solomon Brothers back in the eighties. Previously, mortgages were held by banks. this was for a few reasons: a) each individual mortgage was, well, unique, it is very hard to make them fungible, or easily exchangeable for other mortgages; b) the biggest risk, for your standard investor/bond holder, with buying a mortgage, is prepay risk. if interest rates go down, your mortgage holder refinances, and then you have all your money back, and now interest rates are lower so you re-invest it at a lower rate.
This guy seems to have a decent idea of where the problem originated, but I fail to see how just dumping money into the financial system is supposed to solve anything.

Here's a counterpoint from someone who managed to predict this whole mess: http://www.rgemonitor.com/roubini-mo...itors_of_banks
Quote:
Thus the claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit at a huge expense for the US taxpayer - the common and preferred shareholders and even unsecured creditors of the banks. Even the late addition of some warrants that the government will get in exchange of this massive injection of public money is only a cosmetic fig leaf of dubious value as the form and size of such warrants is totally vague and fuzzy.

So this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the financial firms (not just banks but also other non bank financial institutions); with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money.

Indeed, the plan also does not address the need to recapitalize those financial institutions that are badly undercapitalized: this could have been achieved by using some of the $700 billion to inject public funds in ways other and more effective than a purchase of toxic assets: via public injections of preferred shares into these firms; via required matching injections of Tier 1 capital by current shareholders to make sure that such shareholders take first tier loss in the presence of public recapitalization; via suspension of dividends payments; via a conversion of some of the unsecured debt into equity (a debt for equity swap). All these actions would have implied a much lower fiscal costs for the government as they would have forced the shareholders and creditors of the banks to contribute to the recapitalization of the banks. So less than $700 billion of public money could have been spent if the private shareholders and creditors had been forced to contribute to the recapitalization; and whatever the size of the public contribution were to be its distribution between purchases of bad assets and more efficient and fair forms of recapitalization (preferred shares, common shares, sub debt) should have been different. For example if the private sector had done its fair matching share only $350 billion of public money could have been used; and of this $350 billion half could have taken the form of purchase of bad assets and the other half should have taken the form of injection of public capital in these financial institutions. So instead of purchasing most likely at an excessive price - $700 billion of toxic assets the government could have achieved the same result or a better result of recapitalizing the banks by spending only $175 billion in the direct purchase of toxic assets. And even after the government will waste $700 billion buying toxic assets many banks that have not yet provisioned for such losses/writedowns will be even more undercapitalized than before. So this plan does not even achieve the basic objective of recapitalizing undercapitalized banks.

The Treasury plan also does not explicitly include an HOLC-style program to reduce across the board the debt burden of the distressed household sector; without such a component the debt overhang of the household sector will continue to depress consumption spending and will exacerbate the current economic recession.

Thus, the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented - many on the RGE Monitor Finance blog forum - alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.
This doesn't mean that there's only a single possible solution or anything like that, but there has to be an attempt at looking at such a faceted problem from many different points of view, and that takes time. And it's tons better than simply throwing lots of money at the problem.

From a logical point of view, if a housing bubble is partially to blame for the mess, then isn't it also necessary for the housing market to correct itself? Any plan that fails to take that into account seems to me to be rather inadequate.

Quote:
Originally Posted by Fipskuul View Post
The system has been there for a long time, and they have been part of the system. Being a player of that system, if they didn't have the clue on what is going on in reality, they must really be stupid. But, I doubt they are.
Most economists can understand the workings of the economy within their own purview, but it's easy to weed out the good economists from the bad ones by looking at who actually knew this mess was going to happen and who has a clue about how to fix it. It's also a good idea to look at an economist's prediction record - it's often a whole lot worse than you'd imagine.

Quote:
Originally Posted by TinyRedLeaf View Post
Now, we say the whole idea is stupid and shouldn't have been implemented in the first place. Hindsight, unfortunately, is 20-20. Was it always a question of greed? Or was it more a systematic problem? I feel it's the latter, not the former. A problem this huge couldn't have been caused by any grand plan, no matter how "intelligent" Wall Street operators think they are.
It was mostly greed. There are lots of banks who took the conservative route and resisted investing into the subprime market and are much better insulated as a result. Moreover, it's certain that a lot of the big companies involved were cooking the books to hide how much their assets were actually worth (and they're probably still doing so now). It's also fairly likely that the ratings agencies were in on some of this.

Quote:
Originally Posted by GuidoHunter_Toki View Post
Has anyone else heard about what some treasury spokeswomen said about the $700 billion figure. "It's not based on any particular data point; We just wanted to choose a really large number."

Wow, just wow.
That they were doing so isn't too surprising, but the sheer brazeness of saying it out loud is unfathomable.

Quote:
Originally Posted by Solace View Post
While not the sole problem, the speculation is killing the market. Because the bill didn't pass, investors are panicking and making the problem *worse*. I question those choices on the actions of today's market plunge.
Speculation had little to do with the big drop on Monday. Short selling of most the financials has already been forbidden. Instead, investors seemed to be trying to find some sort of refuge from all the chaos.
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Old 2008-09-29, 22:21   Link #180
Vexx
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The House showed us why you have a Senate ...... madhouse vs lethargic consideration

I actually listened to Pelosi's speech .... she didn't attack "Republicans" as such, she attacked *Bush* and his administration (which only a few Republicans still think of as representing Republicans). That said, her need to do that at that moment was stupid ... and the Republicans harumphing away was stupid. But I also think the ones who voted YES were being stupid.

This puppy of a bill stinks..... and the twinks that came up with it might shouldn't be involved in reworking it.
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