I say "no way" to the bail out!

[mikebike]

I thought the first rule was : "there is no Fight Club"

 

[Fred]

You ALL have forgotten the 1st rule... it only works because people believe it works. If enough people panic then it doesn't matter what the market factors are.

Some things work because they work. A company that makes tires works because there's a product and a demand.

My rule 1? Never invest in any company which does not have a tangible product or asset which meets a market demand.

Michelin has a tangible product (tires) and meets a market demand (the need for new tires.)

Greyhound has a tangible asset (buses) and meets a market demand (moving people around the country.)

A company like Enron follows your first rule. Enron did not have a product and did not fulfill a demand (greed don't count.) They had an asset, energy, but that's intangible and was constantly being bought and sold. You might as well buy six feet of power line in Arkansas and claim that you are now an "energy trading company." You'd be just as much of a useless middleman as Enron was.

The mortgage companies did not have a product either, although they did fulfill a demand. Mortgages aren't a product. They're a concept, a shared idea that only works because we believe in them.

They had an asset in the form of the houses they owned. But the houses were overvalued, so you could consider a large amount of their assets to be intangible.

 

[tom5796]

It would seem this video was attempted to be banned so they had to post another in case you didn't see it.

[ame="http://www.youtube.com/watch?v=1RZVw3no2A4&feature=iv&annotation_id=event_597487"]YouTube - Burning Down The House: What Caused Our Economic Crisis? Bombshell[/ame]

 

[GodSpeedLuc]

It would seem this video was attempted to be banned so they had to post another in case you didn't see it.

YouTube - Burning Down The House: What Caused Our Economic Crisis?

there must be like ten versions of this video. i already posted one of them on here just a day or two ago.

 

[tom5796]

there must be like ten versions of this video. i already posted one of them on here just a day or two ago.

Yeah! You had the banned link, as of today, so this is the new one. The record companies took issue with the music. Funny because they never banned Wavex' videos. I think the record companies are showing their political cards, no? :cheer:

 

[GodSpeedLuc]

Yeah! You had the banned link, as of today, so this is the new one. The record companies took issue with the music. Funny because they never banned Wavex' videos. I think the record companies are showing their political cards, no? :cheer:

lol. INDEED THEY ARE!

 

[nimzotech]

I take everything with a grain of salt. Now this video in no way is trying to discrecredit Obama in hopes gaining votes for McCain right

I'm not worried because California is a Democratic Blue State anyway.

 

[Nelly]

If this bail out is pushed through, how will it effect your defense budget?

Nelly

PS any updates? In the UK we have had the news about the US markets having a really poor day. This will surely fuel the hysteria?

 

[Abnatare]

My humble opinion (and perhaps it shows my lack of depth of knowledge in politics but I am trying ot learn more) is that we cannot blame the Reps or the Dems. I think this mess is a culmination of errors in judgement, ignoring of information, and greed/influence by special interest groups and lobbyists by both parties. I do nto know how far back it goes, but in recent history I think Clinton was president (a DEM) but the congress was Rep at the time wasn't it? And don't we have the "checks and balances" system so any things that came up would have eventually had to have consent form both parties? I personally believe the bulk of it is Bush's fault but that's just me and my dislike for him.

The point to me is regardless of how we got here, what good is pointing the blame going to do at this point? What's important is how do we get out of this mess? I don't know the answer. I am not economic pundit, and no I did not stay at a Holiday Inn Express last night! For every argument I hear from a economic savvy person arguing for the bailout, I hear equal arguments against it. So the question boils down to who to believe? You can do all the research you want on the internet but in theh end you are left with 2 questions: 1. How do you know the information given in the site is valid? 2. Is the site is biased?

I am very ANGRY when I think about bailign out banks that are failing because the management often knowingly made their bad decisions. I am of the strong opinion they did so knowing full well teh repurcussions but did so because they felt they would see huge profits at the time, and deal with the consequences later. I hate the idea of them getting golden parachutes as well. It'd be great if we could sue them as individuals and take away the bulk of their massive fortunes when auditors find proof they knowingly did this. Is it legal or possible? I have no idea but it would be nice to use those millions and millions of dollars to help fund this bail out if it passes. A s for legality, is it even legal for the government to bail out the banks?

So yes I am agry about the bailout, but at the same time I am very fearful of the doomsday that some experts say will come if we don't do it.

With that said, I'll end and will likely never look back at this thread again because it stirs some pretty strong emotions for me. Not only the bail out but I am sick and tired of so many people playing the blame game and spewing facts that say DEMs suck and others that say REPs suck. In the end we have to realize we are Americans and we have different beliefs. We will always be able to find and quote misleading stats to prove each other's points. Rremember, stats and polls are only as good as the collection method and sample used.

 

[necrotimus]

Some things work because they work. A company that makes tires works because there's a product and a demand.

My rule 1? Never invest in any company which does not have a tangible product or asset which meets a market demand.

Michelin has a tangible product (tires) and meets a market demand (the need for new tires.)

Greyhound has a tangible asset (buses) and meets a market demand (moving people around the country.)

Yes but if everyone thinks the good is worth $50 it is worth $50. If everyone thinks the good is worth $5 its worth $5. It doesn't matter what the good is or how much it costs. People drive the market more than any other factor regardless if the good is tangible or not. Why is a flawless created diamond worth pennies where a flawed natural one is priceless?

 

[GodSpeedLuc]

^ scarcity determines value

anyone really know why the $700b quote? why not less? why not more? (God forbid). lol.

 

[necrotimus]

Scarcity doesn't determine value... I can draw one ugly picture.... if no one thinks its worth anythign then its not worth anything...


I think the 700b was what the actual value fo the loans were/are not the 'value' of the properties

 

[GodSpeedLuc]

Scarcity doesn't determine value... I can draw one ugly picture.... if no one thinks its worth anythign then its not worth anything...

scarcity does determine value. your painting doesnt apply and it would just be too complex to explain why. bottom line if you need to know why, i can send you any of my college economics books for reference.

 

[necrotimus]

scarcity does determine value. your painting doesnt apply and it would just be too complex to explain why. bottom line if you need to know why, i can send you any of my college economics books for reference.

Economics is not a science and does not hold to any rules when faced with the real world. Economics is at best an explanation of trends and patterns in a small fixed market with no interference. "If Suzy does x then y will happen" but what economics doesn't account for is people. Economics can't explain what will happen if Suzy becomes a stripper.

If tomorrow you could convince everyone in the world that the US market wasn't tanking guess what would happen? Despite all economic factors, despite all your trends, despite all the patterns to the contrary the market would rise. Propaganda has more market control than any other determining factor in our economy because economics are built on what economists 'think' PEOPLE will do. Take the basic law of supply and demand. Demand is a purely human factor and cannot ever be accurately predicted.

 

[oldtimer]

Potentially yes. This is the worst financial situation we have had since the Great Depression but for the moment it can still be avoided, at least minimized, with quick and decisive action. If nothing is done to stop the problem (not enough free capital, too much toxic debt) then the life blood of the economy (credit) dries up. Banks can't loan money any more. My colleage works for a local bank that has already halted ALL new loans. ALL. PERIOD. I heard that this week and it is terrifying. When that happens it's the same as an engine running at full speed with no oil. It is a chain reaction.

It looks something like this: Your sales drop because your customers can't get financing to buy your product, you can't get a loan to pay your suppliers and keep your business going, your suppliers aren't getting paid by you and they can't get loans either, the manufacturer can't sustain these loses and cut hundreds of thousands of jobs, many file for bankruptcy. There are runs on the banks and they begin to fail (catch the new lately?) which means the last bit of capital dries up. The system breaks down completely, panic sets in, the markets are crashed and trillions of dollars disappear over night (catch the news lately?), people hoard their money and wont invest which means there is no growth or progress to get out of the mess, unemployment is rampant, crime increases dramatically, and everyone goes running to the government for a hand out. Except this time it isn't a mere $700B loan, it's not an investment to maintain and stimulate growth, it's a desperate bail out that dries up trying to keep the unemployed, uninsured, starving masses fed.

Public sentiment seems to be punish the fools that did this rather than saving ourselves. There was no crime here! They have done nothing to break the law! These hedge fund managers did what they were supposed to do, make money for their investors within the confines of the law. Congress is what failed us here, for many, many years. Regardless, that doesn't matter right now. We need to deal with this situation NOW to stop the damage and potential economic crash.

If you think for one second that this effects only the rich, or only the financial sector, or only stupid people that bought houses that they can't afford, then you are dead wrong and should get an education before opening your mouth.

Also an important tidbit for all of us to remember: FDIC only has $45B to insure every personal bank account in the country. Where is your money right now? Safe? You sure about that?

Worst case we are looking at a full scale Depression. Best case we immediately buy the toxic debt and relieve the stress on the banks, sell off the assets over the next few years, make a profit on them, accept the loss of inflated values, and move on. Personally I believe that they will come up with a very similar plan very soon, but the delay has already cost us dearly and will make recovery more drawn out and painful. If the run begins before the recovery plan (and it would have already if the masses had any understanding of what is happening) then we are in big trouble.

Come on Chicken Little. I personally know 3 people who are first time homebuyers buying foreclosed properties. If lending is so tight, how did they get the loans?

As far as I can tell, nothing has changed. The local stores are still running. My credit card still works. The economy doesn't just stop. Someone will make money off this situation. If your local bank stops lending money, then that's their perogative, but don't extrapolate that one bank to all banks in the USA. One bank who wants to make money, will loan their money out to good credit risks. Investors that buy that bank's debt will buy it because the bank is a good credit risk.

What is going to end up happening is a tightening of credit which means people (read businesses) with good credit = get the loans. Those with bad credit = get denied.

I really don't understand this armageddon day theory.

Company earnings won't be high, economy will be slowed, possible loss of jobs (dead weight probably deserved to lose their job for not doing their job), some businesses will go under because no one will give them credit, home prices continue to fall. Businesses will finally be forced to raise wages to keep the valuable employees. Wage increases go towards more spending. Businesses will start making more money and can start re-hiring. The economy will recover.

The economy needs a reboot. Let it happen.

 

[necrotimus]

Come on Chicken Little. I personally know 3 people who are first time homebuyers buying foreclosed properties. If lending is so tight, how did they get the loans?

As far as I can tell, nothing has changed. The local stores are still running. My credit card still works. The economy doesn't just stop. Someone will make money off this situation. If your local bank stops lending money, then that's their perogative, but don't extrapolate that one bank to all banks in the USA. One bank who wants to make money, will loan their money out to good credit risks. Investors that buy that bank's debt will buy it because the bank is a good credit risk.

What is going to end up happening is a tightening of credit which means people (read businesses) with good credit = get the loans. Those with bad credit = get denied.

I really don't understand this armageddon day theory.

If the credit market tightens too much then no loan will be considered a good loan. There is also a credit market that none of us sees between the banks. This is the crucial credit market. If a bank cannot borrow money from other banks to cover the amoutn of money they have out on the street then its ability to give credit to consumers is severly limited. The net result of a tightened credit market is no new money is created.

Wachovia was just sold for a fraction of its assumed value. Which bank is next? And what happens when no one wants to buy the bank that has gone under.

The armageddon theroy is a real scenario but is more of a domino effect. Too many wrong steps and it will be too late to come back. Then again it may never happen but the fact that we are closer today then we were yesterday should be cause for concern.

 

[Nelly]

Re: I say yes to the recovery plan

without it we will be in unprecedented financial times.....there is nearly no liquidity in the markets ( i know that goes over the head of many of you ---just like how to adjust the throttle bodies goes over my head) .

they are buying hard assets and also receiving stock warrants and the companies who participate will pay a premium --- this will end up making money for the taxpayer when things turn around :thumbup:

You have got to get over the whole "their out to get me" mentality

putting this to a vote would be disastrous...like letting your teenager or primary aged child decide what is best for them. The American populous as a whole is not smart enough to do the right thing here.

that is why when this country was set up it was not done as a democracy rather as a republic

if you are struggling now wait till you see what life it like if this does not pass... which it appears it will early this coming week:cheer::cheer:

after which we will see the markets go up briefly then still tough times till the middle of 2009 then we will start the recovery (read -better corporate earnings) in most sectors except real estate (which will be sometime in 2010)

it is not you against them..... if you think it is .....go look in your garage ---I think the guy is back to take your bike


===============
PS --- nate will you chime in with some reason???

Regardless of what people think, isn't one of the essential aspects of living in a democracy freedom of choice? The government are elected by the people to serve the people, not the other way round. Sadly this is often forgotten and brushed aside once the elected take power.

I hole heartedly agree with you Mike that many people will make a knee jerk decision without all of the facts. The decision would be easier for the people if they were given facts that were reliable and stripped from any political tainting.

If the public want to vote, and vote en mass they have made that decision and will need to live by it.
I live in a nanny state where I am always told what is in my best interest we
have been refused referendums because we are unable to make decisions that pertain to the way live.

Nelly

 

[dako81]

I think this whole situation just proves to everyone that the politicians are going to do whatever they want to do regardless of what anyone else thinks. Especially when it comes to their money, and their jobs.

They're trying to push a bill through the Senate after it failed in the House, and then use that as leverage to pass it in the House?

Why are we still sending them our money again?

I wish people would just think about it. Not about the semantics or other crap. You send money to people who do whatever they want with it, no matter what you think or say, even though your opinion is supposed to matter. Those people are going to do whatever they can to benefit themselves, and thats it.

This whole economy thing happened years before the Great Depression, before there was hardly ANY government regulation in the way we have it today, and guess what happened, the market rebounded in LESS THAN A YEAR on its own entirely separate from any government strings being pulled.

I think we should vote with our dollars and stop sending them the money. If everyone did it they'd be powerless, but everyone is too chicken.

 

[Cuba]

Come on Chicken Little. I personally know 3 people who are first time homebuyers buying foreclosed properties. If lending is so tight, how did they get the loans?

As far as I can tell, nothing has changed. The local stores are still running. My credit card still works. The economy doesn't just stop. Someone will make money off this situation. If your local bank stops lending money, then that's their perogative, but don't extrapolate that one bank to all banks in the USA. One bank who wants to make money, will loan their money out to good credit risks. Investors that buy that bank's debt will buy it because the bank is a good credit risk.

What is going to end up happening is a tightening of credit which means people (read businesses) with good credit = get the loans. Those with bad credit = get denied.

I really don't understand this armageddon day theory.

Company earnings won't be high, economy will be slowed, possible loss of jobs (dead weight probably deserved to lose their job for not doing their job), some businesses will go under because no one will give them credit, home prices continue to fall. Businesses will finally be forced to raise wages to keep the valuable employees. Wage increases go towards more spending. Businesses will start making more money and can start re-hiring. The economy will recover.

The economy needs a reboot. Let it happen.

Did your friends acquire these mortgages before or after the failed bail out and massive decline in the global markets (AKA Monday)? Read line one of what I said. Potentially, yes. All signs are pointing to it and if we do nothing then it will most likely be catastrophic. The definition of "good" credit will change dramatically in this new climate. When you have a tenth of the lending power you did a few weeks ago how can you service everyone with "good" credit? Credit worthiness has no bearing when there is no credit to lend. That is what this is about.

 

[Cuba]

Scarcity and you:

Scarcity and demand together are what drive value. Without either the prices will be low. With one and not the other they stay low. With both you jack up the price.

The problem is when CASH becomes scarce it jacks up the cost of capital. The cost of capital is what drives the economy. Getting a mortgage for 6% becomes a problem when 10 people want a motrgage but the banks only have enough money to lend for one. Who gets the mortgage? The one willing to pay the highest price. The same is true for all loans in a liquidity crisis. If cash is scarce it drives up the cost to the point of equilibrium- when the cost is so high that demand decreases. It would take many years for it to stabilize. Imagine your excitement at actually finding a bank willing to offer you a 20% mortgage rate. I spoke on a worst case because the general population seems to think that this will just pass, not to worry. You should be worried, if nothing is done you should be prepared for what is to come.