The $700 Billion Bailout Package

iflyboats wrote:

A hostile takeover of the U.S. is not far off, figuratively speaking. China and Saudi Arabia are going to nuke our economy with treasury bonds and destroy what little is left of the dollar. Hyperinflation will wipe out your savings.

US paper is rapidly becoming "sub-prime," no doubt about it.

Time to let the dominoes fall. Let everyone get dragged down. Let people see the consequences and suffer them. I know I will suffer them too. Better now than letting this house of cards collapse 30 years down the line when it is many times its current size.

Sagarin wrote:

iflyboats wrote:

A hostile takeover of the U.S. is not far off, figuratively speaking. China and Saudi Arabia are going to nuke our economy with treasury bonds and destroy what little is left of the dollar. Hyperinflation will wipe out your savings.

US paper is rapidly becoming "sub-prime," no doubt about it.

Sagarin,

The dollar is weak no doubt, and likely to weaken from it's current point, but it isn't as weak as it has been -- today 1 EUR = $1.4671. Wasn't too long ago that 1 EUR = $1.60+.

I think the so-called bailout is, in general, necessary. I don't know enough yet to comment on the details. Which puts me in the same boat as about 535 senators and congressmen.

When all is said and done, those like Flagpole, who have more equity and less debt, will be vindicated. It's not like this is rocket science. Almost 3000 years ago a dude named Solomon (pretty bright guy, even among those who don't think God told him what to write like I do) pointed out that borrowers are eventually slaves to lenders, and that giving loans to folks who shouldn't get them is a pretty unwise choice (they called that "surety" back then).

I do think that the claims that we're entering Great Depression 2.0 are a little overblown. Things could get a lot worse and still not be as bad as the mid-70s. And I lived through those. Some of us have never lived through a genuinely bad economy in our working lifetimes (8 months in 1991 don't count).

Old article, but this is my favorite quote:

"The Obama presidency will be like the Jimmy Carter presidency on steroids. I'm pretty sure it's Obama because the economy will be so bad into the election that as damaged a candidate as the guy is, I don't think a Republican could beat him. I think Ron Paul could've had a slim chance because he was different enough."

http://www.usnews.com/articles/business/your-money/2008/05/30/permabear-peter-schiffs-worst-case-scenario.html

thats real wrote:

I think this is a great summary of the current crises. I also don't think that the average person realizes that shareholders, in particular the executives at these firms have already lost everything. This is not a bailout for them to maintain their luxurious lifestyle, but to keep our entire economy from going to zero.

Bullpucky. Until it's not safe to walk the streets of major cities for fear of being hit by falling money managers or injuring yourself slipping on their splattered remains that have not lost everything. Until that happens they have not lost anything and they need to. It is the greed and mismanagement of these firms that have created this mess and buying out their bad paper is just going to encourage more of the same in the future.

When every one of the people that was involved in coming up with the cockamamie schemes such as derivatives and mortgage repackaging is on a suicide hot-line or in a soup kitchen, when the B schools that taught this corrupt lifestyle have emptied out, and every last conservative that cheered it all on is working as a ditch-digger with an illegal alien as their supervisor, then maybe the government should chip in to pay for burials.

Until that time I say a bunch of people that seriously deserve a butt reaming are going to get one. I say watch and laugh your ass off. All banks stopping loans is a load of crap. The only way banks make money is loaning it out or charging fees. People still have to have bank accounts, so banks will have assets, they're not going to sit on their assets so to speak. It'll be smaller banks, credit unions, community savings and loans, but they'll be there. Life will go on for the smart people.

After a few years of brute force Darminism we'll have cleaned out the riff-raff, we'll have some better dressed people lined up to do yard work, and hopefully someone will have figured out how to render the remains of the fat cats into a nice synthetic fuel.

I have been saying Obama would potentially be like Carter (for many reasons, not all within his control) for some time. I certainly hope not. Not to change the subject, but if he becomes the first African-American to be president, I hope he doesn't preside over abject failure like Carter. That's not in the overall best interest of the country.

To get back on topic, whoever wins in November, they are going to have BIG economic issues to deal with. I predict that taxes will go up (all promises to the contrary notwithstanding) AND the deficit will still go up. And we won't have the money to do a national health care plan (which could be good or bad, depending on your take on that).

LOL

This thread is great...here's a primer for anyone just checking in...read only the posts by Carnivore69, inthebiz, Sagarin, and Warren Buffett. Tune all the others out; they have no "grasp" of the situation.

Also see Warren Buffetts post regarding FED draining $125 billion...if you want to understand what that means it means Bennie boy Bernanke has been draining liquidity out of the system...remember he's been promoting this financial mess as a liquidity problem (ie lack of it)...but yet they are removing liquidity themselves...they are either going to blow up a bank to make sure the bailout happens or they will pull some more "strings" to get what they want.

Sagarin, if you are implying you have a 20% return on your 401K this year then you instantly lost credibility with anybody on this board who knows word one about finance.

The best of the best hedge fund mgrs are in cash, have been so for awhile, are hoping to stay even for the year and keep their clients from liquidating their stakes. The rest are under water.

You claim a 20% return on an investment vehicle thru which you cannot short, hedge or likely even buy individual stocks.......please show your work

Say someone was going to a bad part of town and dealing in a heavy cash business and getting paid well. He drove a nice car and left cash out in the open when he parked it. One day some guys got together and robbed him and beat him down badly and stole his car with the bomb.

Do you take him to the hospital or do you tell him that he should have had a security guard with him and let him sit and bleed in the gutter?

That isn't even a good analogy because what we want to do with the bailout is to save our economy, not the guy who got beatdown. But it is one I came up with quickly.

Maybe he had a vial of polio in his car. Wouldn't you focus your energy on making sure that the virus doesn't get out to the public and hold your nose and take the guy to the hospital?

Most people agree that the depression was caused because the govt didn't do much to add liquidity to the market (and Hawley-Smoot Tariff but that is another matter).

The point I am trying to make is that we should worry less right now about punishment. We should deal with the problem and then pass regulation reforms so the problem doesn't happen again.

If we focus too much on punishment we all will probably be screwed. We are going to be screwed either way we go. I would like the option that leaves us less screwed.

nah, it isn't that bad.

The people who were making the big bucks were doing a terrible job with risk managment so some people think they should face the consequences now and in a social darwinism way eat dirt and go under.

But the problem is if they go under our entire economy will catch a bad case of the runs in undies.

I don't having leakage in my shorts so I am for adding liquidity the market so I can continue to hold a job and not have to eat deep fried tacos at Del Taco. I want to be able to eat Fatburger and be able to afford to buy good toilet paper and enjoy my moment on the throne where afterward I can properly wipe with two-ply paper.

Say No to Skid Marks approve the bailout!

They agreed on the bill but will not release details ? are you kidding me ?

They have to meet with the Treasury Department first ?

wtf ???

dazed and confused one wrote:

That isn't even a good analogy ...

Maybe closer would be:

Say someone is in a heavy cash business and drives around your neighborhood with a lot of it sitting on the back seat. You strongly suspect that he has been stealing this money using false pretenses, and some of the money has been stolen from you. One day you see his car is broken down, so you go over to check it out. You see a ton of money in the back seat. He asks you for $70,000 so he can fix his car and continue doing his business. Do you give it to him?

If you left out that you suspect some of the money had been stolen from me, it might work better.

How do you think invesment banks have stolen from you already?

Both our analogies fail and need work.

dazed and confused one wrote:

How do you think invesment banks have stolen from you already?

Face facts, believing Wall St investment banks AREN'T stealing is like believing that hooker you just picked up is a virgin. It's a possibility, but you're awful naive to believe it.

You're dealing with a class of people with the integrity of a gutter snipe. It's possible to deal with them and have them not steal from you, but if you operate under the assumption they won't it's pretty much guaranteed they will.

The mess we're in now is totally due to their greed and desire to get fees and inflated "services" by selling mortgages and equity instruments every unsuspecting schmuck they could find and repackage that risk into something that hid it's underlying criminal basis. These are the same people that were doing LBOs financed with employee's pension plans after they graduated from churning accounts to inflate transaction fees. It's an inherently corrupt culture that drives CEO's to make short term disastrous decisions to pump prices instead of concentrate on the long term stability of their companies. It needs to be snuffed out and replaced by honest people making sane economic decisions in smaller, better managed companies. While the snuffing is going to be painful, it's totally necessary.

More and more lately I feel as though I am living in the story of Atlas Shrugged. Anybody else feeling this way?

yes, I agree there are some greedy mofo in investment banks and they don't often act in the best interest of the consumer. But I don't consider convincing someone to buy an asset with high commissions or service fees that is not suited for the individual equalivalent to stealing. It is close but different.

There are a lot of parties who got us into this mess. Credit rating agencies, borrowers who borrowed too much, too complex of investment instruments where no one knows there true value set up by Wall Street, relaxing of regulations ect.