Today's Financial Woes

[andyzee]

I know this thread may border on political if not outright political. Mods, if you don't like it, do delete and accept my apologies.

I believe that we have at least temporarily avoided what had the potential of being the worst financial downfall in history. For this I'm happy, but at the same time very displease with the way the world economy is going.

Banks made bad decisions, suffered huge losses and as a result our economy started going into a downward spiral that was getting extremely scary. A number of financial firms started going into bankruptcy or got brought out. Things were not looking good.

Last week Bush announced a plan for the federal government to buy out these bad debts. This was needed to stop the spiral, so to a certain extend a good thing. This saved us for the time being and for a long time to come.

Now, for my displeasures:

• The firms involved are big. Although on the surface they may seem like American companies, in reality, at this level, there is no such thing as an American company. Their downfall would have effected the economy on a global level.
• Stock holders are global
• Employees are global
• Why is the United States tax payer bailing these companies for bad decisions made by their management. Decisions that were driven by global stock holders?

Some of my thought, what's yours

 

[Warp Daddy]

I
[*]Why is the United States tax payer bailing these companies for bad decisions made by their management. Decisions that were driven by global stock holders?
[/LIST]
Some of my thought, what's yours

Simple cynical answer: Because "we" are EASY low hanging fruit --because they CAN !!

We are "OWNED" Ever heard of special interests ( they AIN"T us )

Sorry for the rant -- but iam really angry about this toal fiasco and have NO faith in these guys at all

 

[deadheadskier]

....if it goes according to plan and the government is able to sell off the securities as a profit meaning the American public is on the hook for far less than the 700 billion, it's a marginal success. If it also stabilizes the credit systems such that companies can pursue growth, consumers can acquire credit and these are accomplished through 'real', not funny money, even better.

however,

If it becomes blatant cronyism where by my money is bailing out rich old white guys such that they can make more money, receive the same golden parachutes and continue in their crooked ways screwing american citizens and investors around the world, then the plan can go F itself.

for it or against it, total leap of faith either way. There is so very little integrity and honesty left in this world, I can't believe either side with any amount of confidence.

SUCKS

What I do want is for every crooked son of bitch to go to jail. From the ones that made bad loans all the way up to the top aholes who sold the debt. Each and every one of them. I'll happily contribute 3 grand of my tax money to house those bastards in a dark cell.

Not in every detail, but I saw this coming. I was unemployed during the summer of 2004. For chits and giggles I decided to apply for a job with a mortgage broker...ameriquest to be specific. I was living in Florida and all you read about was the boat loads of money people where making in mortgages and real estate. They basically told me that 50% of my time would be going door to door soliciting people for loans whom I KNEW did not have the income to pay back the loan. The company said don't worry about it, build up equity would cover them. WRONG

Hence the crap we are dealing with today

 

[Warp Daddy]

. There is so very little integrity and honesty left in this world, I can't believe either side with any amount of confidence.

SUCKS

What I do want is for every crooked son of bitch to go to jail. From the ones that made bad loans all the way up to the top aholes who sold the debt. Each and every one of them. I'll happily contribute 3 grand of my tax money to house those bastards in a dark cell.

Agree on this point with you and yes it DID not take a genius to see this day coming

 

[Moe Ghoul]

Notional value of OTC derivatives is about 450 Trillion dollars. Anyone that thinks this bailout is putting out a fire is seriously mistaken. At best, they are kicking the can down the road to get through the election. 700 billion is just a primer, market psychology masturbation, allowing further failures to go to the backdoor to dump their illiquid (fraudulent unregulated contracts) and stay out of the headlines long enough to get thru this election. They'll be back all wide eyed and shocked and asking for more dough. If they let it burn to the ground and start over, it will be a lot less painless than when it happens the next time. Maybe we should consider the timing of this "crisis". I already voiced my opposition to my "representatives".

 

[wa-loaf]

What I do want is for every crooked son of bitch to go to jail. From the ones that made bad loans all the way up to the top aholes who sold the debt. Each and every one of them. I'll happily contribute 3 grand of my tax money to house those bastards in a dark cell.

Agree on this point with you and yes it DID not take a genius to see this day coming

x2

Everyone is talking about limiting the compensation of the CEOs of the banks getting help. I think a requirement should be new leadership as well. These guys either knew what was going on and kept going anyway OR were not bright enough to see what was happening. Either way there is no way they are fit to continue to lead these companies.

A bright spot is that the FBI has started to investigate a lot of the companies. And it sounds like congress isn't going to entirely roll-over to the administration and wall street.

 

[wa-loaf]

....if it goes according to plan and the government is able to sell off the securities as a profit meaning the American public is on the hook for far less than the 700 billion, it's a marginal success. If it also stabilizes the credit systems such that companies can pursue growth, consumers can acquire credit and these are accomplished through 'real', not funny money, even better.

Someone described it like a gambler with $50 on the slots. You start gambling with the fifty you lose some and you win a little and then put your winnings back into the slot machine, lose some, win a little, back into the slots . . . until you have nothing left.

We will see nothing back from the $700 billion.

 

[andyzee]

x2

Everyone is talking about limiting the compensation of the CEOs of the banks getting help. I think a requirement should be new leadership as well. These guys either knew what was going on and kept going anyway OR were not bright enough to see what was happening. Either way there is no way they are fit to continue to lead these companies.

A bright spot is that the FBI has started to investigate a lot of the companies. And it sounds like congress isn't going to entirely roll-over to the administration and wall street.

I do not believe that, overall, it was illegal activities, just bad choices. Those choices are driven by today's business model which is no longer what is good for the company, but what is good for the stock. Companies no longer worry about their long term future, they are more concerned about short term profits and answer to stock holders. That said, I believe that any CEO that now says, we may take a slight loss today to increase our profits a year or two from now, may as well just type up his resume. Loans were made during a bad situation, because business demands a constant increase in profit.

I previously worked for a retailer, as far as the stock market was concerned, the single most important factor when it came to quarterly and annual reports was same store sales. The fact that the company was healthy, that it was constantly making a profit, was secondary to same store sales. To me, that was unbelievable, how long can same store sales constantly go up?

 

[snoseek]

I was under the impression if this is handled correctly then the American taxpayer could actually gain from interest from these ridiculously large loans over time. It would make sense to me to let induvidual homeowners negotiate their debt with companies, give them a chance to pay on these loans or everyone will. I hope they can take politics and greed out of this issue a figure out a sensible approach.

 

[ERJ-145CA]

Someone described it like a gambler with $50 on the slots. You start gambling with the fifty you lose some and you win a little and then put your winnings back into the slot machine, lose some, win a little, back into the slots . . . until you have nothing left.

We will see nothing back from the $700 billion.

That's how I play slots. That's not how you're supposed to do it?

 

[wa-loaf]

I was under the impression if this is handled correctly then the American taxpayer could actually gain from interest from these ridiculously large loans over time. It would make sense to me to let induvidual homeowners negotiate their debt with companies, give them a chance to pay on these loans or everyone will. I hope they can take politics and greed out of this issue a figure out a sensible approach.

It's not loans it's purchasing the junk securities from the banks to give them liquidity. If the securities are worth more at some point in the future we make some money back, but the odds on that are long.

 

[ERJ-145CA]

When my wife and I bought our townhouse in January we decided to buy a place well under our budget so we wouldn't be house poor. We didn't feel a need to buy a huge place that we really couldn't afford but I guess a lot of people did. Also a smaller place means smaller gas and electricity bills. We also made sure we got a fixed rate mortgage at a low interest rate, I didn't want to get sucked into an ARM or option ARM and be screwed in a few years.

 

[Moe Ghoul]

I do not believe that, overall, it was illegal activities, just bad choices. Those choices are driven by today's business model which is no longer what is good for the company, but what is good for the stock. Companies no longer worry about their long term future, they are more concerned about short term profits and answer to stock holders. That said, I believe that any CEO that now says, we may take a slight loss today to increase our profits a year or two from now, may as well just type up his resume. Loans were made during a bad situation, because business demands a constant increase in profit.

I previously worked for a retailer, as far as the stock market was concerned, the single most important factor when it came to quarterly and annual reports was same store sales. The fact that the company was healthy, that it was constantly making a profit, was secondary to same store sales. To me, that was unbelievable, how long can same store sales constantly go up?

IT wasn't illegal, it was UNREGULATED. That's where the political angle comes into play.

 

[Moe Ghoul]

It's not loans it's purchasing the junk securities from the banks to give them liquidity. If the securities are worth more at some point in the future we make some money back, but the odds on that are long.

If the Fed pays "Hold to Maturity" prices for collapsed OTC derivatives that will never recover, that would represent an outrageous premium to their true value. If the Fed pays what the collapsed OTC derivatives are presently worth, they could do the entire bailout for one dollar, ok, one Euro.

 

[GrilledSteezeSandwich]

I know this thread may border on political if not outright political. Mods, if you don't like it, do delete and accept my apologies.

I believe that we have at least temporarily avoided what had the potential of being the worst financial downfall in history. For this I'm happy, but at the same time very displease with the way the world economy is going.

Banks made bad decisions, suffered huge losses and as a result our economy started going into a downward spiral that was getting extremely scary. A number of financial firms started going into bankruptcy or got brought out. Things were not looking good.

Last week Bush announced a plan for the federal government to buy out these bad debts. This was needed to stop the spiral, so to a certain extend a good thing. This saved us for the time being and for a long time to come.

Now, for my displeasures:

• The firms involved are big. Although on the surface they may seem like American companies, in reality, at this level, there is no such thing as an American company. Their downfall would have effected the economy on a global level.
• Stock holders are global
• Employees are global
• Why is the United States tax payer bailing these companies for bad decisions made by their management. Decisions that were driven by global stock holders?

Some of my thought, what's yours

Does it really matter that much if you don't have money in the stock market???

 

[wa-loaf]

Does it really matter that much if you don't have money in the stock market???

Yes.

 

[GrilledSteezeSandwich]

Yes.

Will this turn out to be as bad of a financial burden to the US than the war in Iraq????

 

[snoseek]

Does it really matter that much if you don't have money in the stock market???

You are lucky to be in a safe biz but when it's 12 bucks for a rack of shitty beer we're both screwed.

 

[Warp Daddy]

Steeze :----------- Re -read Moe's thoughts to get a feel for the potential downline effect ------------------

 

[wa-loaf]

Will this turn out to be as bad of a financial burden to the US than the war in Iraq????

If banks can't make loans the economy grinds to a halt. No one can get loans to buy houses and cars. Business can't make capital improvements, The folks who build houses and cars and in construction lose jobs, they stop buying stuff, which hurts business' more, more folks lose their jobs . . .

That's the story they're selling anyway.