777 Points!

  • GQjock

    Posts: 11649

    Sep 30, 2008 10:14 AM GMT
    Are we in for a nuclear winter when it comes to the Banking markets and stocks in general over the next coming months?
    We lost 1.4 Trillion dollars yesterday after the vote in the House fell short of what was needed to pass the Bailout Plan
    Two thirds of the republicans and one third of the democrats voted no on it

    Do you think the bailout should be resurrected?
    ... and will it work?

    I'm torn, I'm not sure that it's going to do anything
    but then again if we Don't do anything is there going to be more of this
    and bond markets are going to suffer

    I feel like I'm having a gun put to my head icon_confused.gif
  • HndsmKansan

    Posts: 16311

    Sep 30, 2008 12:08 PM GMT
    I know how I will be spending the rest of the week, talking and reassuring clients....

    I'm beyond frustrated
  • Posted by a hidden member.
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    Sep 30, 2008 1:54 PM GMT
    A bank is mainly just a retail operation like any store. Its inventory is cash, which it "sells" to loan-seekers. It buys that inventory from the public, rather than a distributor, by paying interest on deposits.

    If the bank has no cash to "sell", it basically has no business. So its customers, the people and companies that normally come to it to buy money, have nowhere to go, and whatever uses they would have put that money to are shelved.

    This is simplistic, I know, but it's exactly what happened to Japan in 1990. Due to a hyper-inflation of Japanese real estate, their six largest banks made trillions of dollars in loans that would never be repaid, essentially sucking up all their inventory. The result was a recession that lasted 15 years.

    This is why the people who claim that this is just a case of throwing money at fat cats on Wall Street really have no idea what they're talking about. You may argue the details of the bailout plan---the cost may be excessive, the lack of oversight is an appalling power grab--but the danger is real, and apparently not well understood by the public or even by the posters on here who think they'll somehow "be okay" if the system is allowed to collapse.

    Even the self-employed need to have someone to buy whatever they're selling. If the business cycle grinds to a halt, it will affect them too, no matter how smug they are right now. And before anyone starts talking about drama, it CAN happen here. It DID happen in Japan. We're not talking about parallels to 1929---we're talking parallels to 1990, and in an economy and post-housing bubble eerily similar to our own.
  • jc_online

    Posts: 487

    Sep 30, 2008 2:54 PM GMT
    This patriot Birkheimer has sent the following bail out plan all over the internet - you may have already seen it. He wrote it in response to the AIG mess, which is old news considering the gravity, or potential gravity of the problem, but does it have any worht? I'm not an economic guru, so I want to know what you guys think. Would a plan like this hep stabilize the Market and benefit the economy long-term?


    I'm (Birkheimer) against the $85,000,000,000.00 bailout of AIG.

    Instead, I'm in favor of giving $85,000,000,000 to America in
    a We Deserve It Dividend.

    To make the math simple, let's assume there are 200,000,000
    bonafide U.S. Citizens 18+.

    Our population is about 301,000,000 counting every man, woman
    and child. So 200,000,000 might be a fair stab at adults 18 and up..
    So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

    My plan is to give $425,000 to every person 18+ as a
    We Deserve It Dividend.

    Of course, it would NOT be tax free.
    So let's assume a tax rate of 30%.
    Every individual 18+ has to pay $127,500.00 in taxes.
    That sends $25,500,000,000 right back to Uncle Sam.

    But it means that every adult 18+ has $297,500.00 in their pocket.
    A husband and wife has $595,000.00.

    What would you do with $297,500.00 to $595,000.00 in your family?

    Pay off your mortgage - housing crisis solved.
    Repay college loans - what a great boost to new grads
    Put away money for college - it'll be there
    Save in a bank - create money to loan to entrepreneurs.
    Buy a new car - create jobs
    Invest in the market - capital drives growth
    Pay for your parent's medical insurance - health care improves
    Enable Deadbeat Dads to come clean - or else

    Remember this is for every adult U S Citizen 18+ including the folks
    who lost their jobs at Lehman Brothers and every other company
    that is cutting back. And of course, for those serving in our Armed Forces.

    If we're going to re-distribute wealth let's really do it...instead of trickling out
    a puny $1000.00 ( 'vote buy' ) economic incentive that is being proposed by one of our candidates for President.

    If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!

    As for AIG - liquidate it.
    Sell off its parts.
    Let American General go back to being American General.
    Sell off the real estate.
    Let the private sector bargain hunters cut it up and clean it up.

    Here's my rationale. We deserve it and AIG doesn't.

    Sure it's a crazy idea that can 'never work.'
    How do you spell Economic Boom?

    I trust my fellow adult Americans to know how to use the $85 Billion
    more than I do the geniuses at AIG or in Washington DC.

    And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

  • Posted by a hidden member.
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    Sep 30, 2008 3:26 PM GMT
    jprichva: “You may argue the details of the bailout plan---the cost may be excessive, the lack of oversight is an appalling power grab--but the danger is real, and apparently not well understood by the public or even by the posters on here who think they'll somehow ‘be okay’ if the system is allowed to collapse.”

    jprichva, as usual you’re spot on with this comment. The stuff I've read here and elsewhere on the internet is just horrendous. People’s concern for oversight is particularly overblown. Yes, Paulson asked for too much unchecked authority in the initial plan, but oversight comes in two forms, both of which the bailout bill would have addressed adequately IMO.

    First of all, the bill provided for some Congressional oversight. Do people really want Congress directly managing which financial instruments to buy after it has done such a terrific job managing the country’s fiscal health? Congress has a long history of being a worse economic steward than the agencies to which it delegates authority (think FTC or the Federal Reserve), and there are institutional reasons to expect the pattern to continue. Secondly, the bill provided for some judicial oversight. The problem with extensive judicial remedies is partly that judges don’t necessarily have much economic experience themselves, but more that the markets don’t have a good model of judicial behavior – they think of it as kind of random. The very point of the Treasury intervention is to inject stability to increase liquidity. If actors view the transactions with the Treasury as still subject to uncertainty, uncertainty will still negatively impact their willingness to extend credit.


    ~~~~~~
    jc_online – the Birkheimer idea is terrible. Besides the inflationary implications (which might not actually be too much of a concern in today’s economy), the money is basically coming from debt. The problem is that if you give the money to most people, they’ll blow it on consumption rather than investment – leaving future taxpayers to pay the principal and the interest, with no additional way to pay the interest. The bailout represents a better investment of borrowed funds, because the economy needs liquidity to grow (thus generating the money to pay back the government debt – assuming sufficient taxation).
  • Posted by a hidden member.
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    Sep 30, 2008 3:31 PM GMT
    But was this 7% decline in value on paper only? It was a trillion of paper worth, not actual funds or assets? If someone had tried to SELL the actual 'amount' or 'value' lost - would they have received a trillion? I've had occasion to sell off parts of my portfolio...and NEVER have they netted their on paper value.
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    Sep 30, 2008 3:40 PM GMT
    RunintheCity saidBut was this 7% decline in value on paper only? It was a trillion of paper worth, not actual funds or assets? If someone had tried to SELL the actual 'amount' or 'value' lost - would they have received a trillion? I've had occasion to sell off parts of my portfolio...and NEVER have they netted their on paper value.


    The 7% decline I think you're talking about is the drop in the NYSE, but it was a decline of actual value, not face value. For common stock, the face value ("par value") is just the price at the initial offering and doesn't really mean anything. When you buy stock, you're buying a piece of ownership - not debt! A debt's face value can be important, but it's a different topic.

    (edit: well, it’s a different topic than your question. Debt obviously is what the credit mess is all about!)
  • Posted by a hidden member.
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    Sep 30, 2008 3:41 PM GMT
    i'm just thankful it fell by 777 and not 666... pat robertson would've had a field day with that.

    anyway, the stock market is a ridiculous little play time party. how can it fall and recover so much each day? it's absurd. totally asinine. one of my ltr's was with a day trader. fucking waste of time - they LOOK for stuff to get upset or excited about in order to create turbulence. they do it on purpose.

    all of these "crises" are self-fulfilling proficies. if people wouldn't panic just because cnn says they should, there wouldn't be half the problems there are.

    who cares if we lost 777 points yesterday, if over a third of that is regained the next day? i call bullshit. someone's laughing their ass off at wall street right now. (other than me)
  • Hagan_F

    Posts: 210

    Sep 30, 2008 8:00 PM GMT
    Rebounded over 500 by mid-day. I am pretty sure this will pass.
  • Posted by a hidden member.
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    Sep 30, 2008 9:01 PM GMT
    i refer back to what i said earlier today. these people just look to create opportunities to buy and sell. there's nothing else to know.
  • CuriousJockAZ

    Posts: 19119

    Sep 30, 2008 9:06 PM GMT
    Yes, interesting that the Doom & Gloom predicted by those trying to railroad the $700 billion bailout is possibly just a bunch of HY-P-E
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    Oct 01, 2008 5:27 AM GMT
    i think jc_online has an incredibly helpful idea - and not just b/c i'd use the money exactly as he described... is there a reason (other than political bs) why the government doesn't explore an option similar to his suggestion??? i'm gonna use his idea in a story for the newspaper... i need to tell him so - i think it's a great idea, and not for personally greedy reasons. it actually sounds like it'd work.
  • Posted by a hidden member.
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    Oct 01, 2008 5:38 AM GMT
    hmm... and maybe we ought to spend a little of that money teaching people how to do simple math.
  • Posted by a hidden member.
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    Oct 06, 2008 4:15 PM GMT
    yeah, i just realized something:

    each person would get $425, not $425,000

    so, there you have it.
  • GQjock

    Posts: 11649

    Oct 06, 2008 4:21 PM GMT
    CuriousJockAZ saidYes, interesting that the Doom & Gloom predicted by those trying to railroad the $700 billion bailout is possibly just a bunch of HY-P-E


    Somebody obviously spoke a little too soon icon_confused.gif
  • coolarmydude

    Posts: 9190

    Oct 06, 2008 4:39 PM GMT
    CuriousJockAZ said, "Yes, interesting that the Doom & Gloom predicted by those trying to railroad the $700 billion bailout is possibly just a bunch of HY-P-E"

    GQjock said, "Somebody obviously spoke a little too soon"




    As always!





  • coolarmydude

    Posts: 9190

    Oct 06, 2008 4:53 PM GMT
    NNJfitandbi said, "Seriously, no one should be listening to the experts at this point because NO ONE KNOWS what the repercussions should be. There is a rational case to be made for putting money in guaranteed accounts or treasury notes until we have a better sense of what's going on."


    I don't find comfort in that rationale. You don't give your money to someone who says pay me this and I'll do such and such for you when you have no idea what it is that they're doing. This bailout is absolute proof that we have way too many unqualified elected officials. If I were in office, I would have voted against it. Mediocre legislation is a slap in the face of the taxpayers, the Founding Fathers and the Constitution.



    Where's that vomit emoticon?