The BIG Bailout

[Mr. Blue]

Originally Posted by Useless Warrior

I would LOVE a detailed explanation about how this will truly effect the average American, from the financial gurus, if the bailout doesn't pass. I keep hearing threats of doom and gloom, but without any real clarification of what the doom really is.

At this very moment, I'm quite happy that I don't have any money.

EDIT: THE BILL HAS FAILED. ANARCHY!!!

That's the thing that bothers me most about it. They keep making it like if it doesn't pass, boom, America shuts down and we put up the Not Open for Business sign.

[Useless]

Originally Posted by Mr. Blue

That's the thing that bothers me most about it. They keep making it like if it doesn't pass, boom, America shuts down and we put up the Not Open for Business sign.

The only thing I've heard so far is that it would be really difficult to get a mortgage. Well, my mortgage is held by one of the strong banks that is actually buying the failing banks and I have no immediate plans to sell my home, so, well, yeah. It's all about the banks' ability/willingness to extend credit.

[Jim]

And the world is taking a shit. No more credit.

[Mr. Blue]

Originally Posted by Useless Warrior

The only thing I've heard so far is that it would be really difficult to get a mortgage. Well, my mortgage is held by one of the strong banks that is actually buying the failing banks and I have no immediate plans to sell my home, so, well, yeah. It's all about the banks' ability/willingness to extend credit.

Also a good dose of American's getting scared and putting their money in their mattress...that's the basics.

[Torn Rose]

"We didnt get it passed cause Nancy was a meanie weinie"

[Torn Rose]

Maybe SuperMcBush will swoop in and save us all!

[Cleo]

So does this mean that if these securities that the government was bailing out do default then trillions of dollars in Credit Default Swap contracts will become due?

[T Pat]

Originally Posted by Cleo

So does this mean that if these securities that the government was bailing out do default then trillions of dollars in Credit Default Swap contracts will become due?

No, they just won't be worth the paper they are written on

I'm looking forward to Mad Money today, Cramer should be entertaining

Bush and McSame sure are influential, NOT

[tickler]

Originally Posted by Useless Warrior

The only thing I've heard so far is that it would be really difficult to get a mortgage. Well, my mortgage is held by one of the strong banks that is actually buying the failing banks and I have no immediate plans to sell my home, so, well, yeah. It's all about the banks' ability/willingness to extend credit.

Hmmm, a lot of companies use their line of credit to do payrolls, buy raw materials, etc.

[elKabong]

While on this subject, what's everyone doing with their existing stocks?

I have a monthly allotment into a diversified trading account and I'm thinking about converting all my existing stocks into treasury bonds, and then continuing to invest from here forward as before.

My thinking is that I should protect what I already have, but still get in on the fire sale that's coming.

Any thoughts?

[SirMoby]

Originally Posted by Torn Rose

"We didnt get it passed cause Nancy was a meanie weinie"

That hurts my feelings. I'm going to go cry in the corner.

[SirMoby]

Originally Posted by elKabong

While on this subject, what's everyone doing with their existing stocks?

I'm embarrassed to say that I pulled everything over a year ago because knew crisis was coming but didn't know exactly where. I've put it in all in CDs and am now earning 5.35% to 5.75%.

I'm even more embarrassed to say that about 1/2 of it I recently moved to Wachovia.

I've been telling people since 2000 this crisis was coming but I just wasn't enough to know how to make a billion on it.

[Maj. Stress]

Originally Posted by SirMoby

I'm embarrassed to say that I pulled everything over a year ago because knew crisis was coming but didn't know exactly where. I've put it in all in CDs and am now earning 5.35% to 5.75%.

I'm even more embarrassed to say that about 1/2 of it I recently moved to Wachovia.

I've been telling people since 2000 this crisis was coming but I just wasn't enough to know how to make a billion on it.

I've been waiting for something to happen a long time too. Anytime you see people fresh out of school with no jobs getting home loans for a really nice house while automakers are laying off workers by the thousand, you know something bad is about to happen.

[LD]

Originally Posted by elKabong

While on this subject, what's everyone doing with their existing stocks?

I have a monthly allotment into a diversified trading account and I'm thinking about converting all my existing stocks into treasury bonds, and then continuing to invest from here forward as before.

My thinking is that I should protect what I already have, but still get in on the fire sale that's coming.

Any thoughts?

A lot depends on your age, but that sounds like a good safe thing to do. Of course if value comes back in a few days, you'll miss out.

[Torn Rose]

Originally Posted by SirMoby

That hurts my feelings. I'm going to go cry in the corner.

There there.... there there...

[SheepGuy]

I sold my house a year ago. I liked the place, and I miss it, but I'm pretty sure I did the right thing. Next summer I'm moving to a cheaper part of the country and if the madness continues I should be able to buy a nicer place there for a bargain.
I'm hoping the madness doesn't continue though, because I get paid in Ameribucks, and it's real good for me when they're worth more than Canuckbucks.

[webpimp]

I too have been following this very closely and I believe that we really need to be worried about this credit freeze that is just going to get worse.

I predict that several sponsors will go under in 2009. The sponsors that are operating in the red will not be able to pay you on time, and some will close up shop without paying you the remaining earnings on your account. Some sponsors will get bought out by the big guys if they are lucky and you will keep getting paid.

I think this is the immediate problem for all of us, rather than the consumers not having credit cards to buy memberships. But make no mistake, porn sales will go down because people will be too busy looking for a job.

Honestly, I don't know enough about finance and economics to either support or oppose this bailout plan. But I've learned more about this crisis from reading this thread than I learned from all 9 of Bush's mini-addresses.

[Useless]

Originally Posted by webpimp

I predict that several sponsors will go under in 2009. The sponsors that are operating in the red will not be able to pay you on time, and some will close up shop without paying you the remaining earnings on your account. Some sponsors will get bought out by the big guys if they are lucky and you will keep getting paid.

That's the only point I agree with you on, but I you could have predicted that before this crisis.

I predict everything will be fine for the average American. Sure, if you purchased a home within a the last few years, you probably aren't going to want to sell it for several more years since its market value is about to drop, and your 401K's value means you won't be able to retire tomorrow, otherwise, I've seen no reason to believe that we need to start looking for soup kitchens.

[LD]

Originally Posted by Useless Warrior

That's the only point I agree with you on, but I you could have predicted that before this crisis.

I predict everything will be fine for the average American. Sure, if you purchased a home within a the last few years, you probably aren't going to want to sell it for several more years since its market value is about to drop, and your 401K's value means you won't be able to retire tomorrow, otherwise, I've seen no reason to believe that we need to start looking for soup kitchens.

I tend to agree BUT...if we continue the policies of deregulation, and if the middle class continues losing wealth while wealth concentrates at the top of the economic ladder, we're fucked. 2/3 of our economy runs on consumer spending, and when their wages cannot keep up with prices, the economy grinds to a halt. Conservatives like to remind us that it is the wealthy that creates jobs...I like to remind them that it is the non-wealthy that buys the shit they sell, and if nobody is buying, there's no economy.

[webpimp]

Originally Posted by Useless Warrior

I predict everything will be fine for the average American. Sure, if you purchased a home within a the last few years, you probably aren't going to want to sell it for several more years since its market value is about to drop, and your 401K's value means you won't be able to retire tomorrow, otherwise, I've seen no reason to believe that we need to start looking for soup kitchens.

I hope you are right about that, and deep down I hold that feeling that everything will be ok. But first we have to get through a recession and I hope it's not an ugly one.

Originally Posted by LusciousDelight

I tend to agree BUT...if we continue the policies of deregulation, and if the middle class continues losing wealth while wealth concentrates at the top of the economic ladder, we're fucked. 2/3 of our economy runs on consumer spending, and when their wages cannot keep up with prices, the economy grinds to a halt. Conservatives like to remind us that it is the wealthy that creates jobs...I like to remind them that it is the non-wealthy that buys the shit they sell, and if nobody is buying, there's no economy.

Absolutely we live in a consumer-based economy, and I agree that if the middle-class goes down then the rest of the economy tanks with it. Globalization might help soften this fall, since there is a market for American products in other parts of the world. But it comes at a cost of losing tons of domestic jobs to cheap labor overseas.

When it works, it's a big circle jerk and everyone gets off. When it doesn't work, it's a downward death spiral.

[ArtWilliams]

Consider this:

- (Big money center) banks often deposit money with each other.
- Good banks won't place their money with poorly performing banks for fear of risk.
- As a result, all inter-bank deposit activity suffers (liquidity).
- The amount of money then available to loan out to businesses and consumers (or available as lines of credit) decreases because only with a liability (deposit) or capital on their books can a bank finance an asset (loan).
- less loans means less economic activity means less jobs.
- if your loans can't be funded then watch for your credit card limits and lines of credit to be reduced. In extreme cases, watch for your loans to be called (paid down or repayment) -- even if you are current in your payments!

Also consider:

- Lehman Brothers was the largest commercial paper market issuer in the country.
- If companies can't easily issue commercial paper then they can't finance short-term inventories which means they have to lay people off.
- Yes, someone will take Lehman's place but that doesn't happen over night. (Remember they were put into bankruptcy and not bought out.)

The problem with the bailout:

- It rewards bad companies for doing bad things, however, there are few options available.
- Banks not funding each other can have a big domino effect.
- During the depression 2/3 of the banks in the U.S. went bankrupt. Imagine the carnage if that were to happen today? What would happen in your town if 2/3 of the banks were gone along with everyone's savings?
- Short of the Fed being allowed to fund the good banks and, thereby increase liquidity, I am not sure what else they can do. And that last option would involve setting up some sort of state bank which I am sure would not be popular with the House Republicans. Also, who decides "good"?
- Long and the short of it is that ARMS were a small problem but left too long and they became a big one.
- A component of fraud is also likely as some are saying that ARMS were packaged and sold as AAA mortgages.
- There will be considerable inflation of prices AND devaluation of the U.S. dollar whatever route is picked to solve this mess.

I don't know if that adds anything to the conversation but I thought I would add my 2 cents.

Originally Posted by Useless Warrior

I would LOVE a detailed explanation about how this will truly effect the average American, from the financial gurus, if the bailout doesn't pass. I keep hearing threats of doom and gloom, but without any real clarification of what the doom really is.

At this very moment, I'm quite happy that I don't have any money.

EDIT: THE BILL HAS FAILED. ANARCHY!!!

[Useless]

I'm rolling with the Cato Institute. Let the market work itself out.

One of the commentators on CNBC keeps saying that this will hurt the man on Main St. in the short term if there is no bailout. How? Fewer toys on the shelves during Christmas? More difficult to get a new car loan? Idiots who shouldn't be getting home loans won't? 401K values decrease until the market comes back up (and it will)? Fucking fear mongers.

Screw that. I want Sodom and Gomorrah, and I want it now!

[ArtWilliams]

That will work but is likely to be much more harsh in the short-term.

Originally Posted by Useless Warrior

I'm rolling with the Cato Institute. Let the market work itself out.

One of the commentators on CNBC keeps saying that this will hurt the man on Main St. in the short term if there is no bailout. How? Fewer toys on the shelves during Christmas? More difficult to get a new car loan? Idiots who shouldn't be getting home loans won't? 401K values decrease until the market comes back up (and it will)? Fucking fear mongers.

Screw that. I want Sodom and Gomorrah, and I want it now!

[Useless]

Originally Posted by artwilliams

That will work but is likely to be much more harsh in the short-term.

I don't mind.

Being that there is nothing even similar to a guarantee if the bailout goes through, I don't see it as a risk worth taking. Every single expert, when told something similar to, "this bailout is just as likely not do anything," completely agrees with the statement. That's scary.

I vote: chaos.

[LD]

Everything eventualy works itself out, even the fall of The Roman Empire. It's just the misery we go through during the transition....sorta like waiting for the Barbarians to settle down and become Europe. Not something I would anticipate with glee.

But fuck it, bring it on...