Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-25-2008, 02:18 AM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
I don't like the bailout, but the net result of the market turmoil and fin services industry melt-down is probably worse.

Hopefully the perps go to jail... if not that they must disgorge.


GWB pushed this along with his chicken in every pot own a house even if you can't afford it policy. He deserves much criticism on that.

However IMO -- he is doing the right thing.

For the average person investing for retirement it is a catastrophe.... now days everyone's retirement is in mainly in mutual funds.

Imagine if your stock funds cut another 25% (from where they are) and it doesn't come back for 10 years because of fear and lack of confidence. Your bond funds value cut by 40% (permanently)... or be marked there for years. Some mutual fund (bond fund) charters will not allow them to hold trash... they might have to begin liquidating it because they can only hold highly rated bonds.

Most major bond mutual fund, ETF, Pensions, etc hold massive amounts of Fannie and Freddie (the companies) and huge amounts of MBS. I am fairly sure the last time I looked the VG total bond index holds almost 36% bonds in Fannie and Freddie and MBS.


So go ahead and rail on the bailout.... but you will pay one way or the other. Even if you only had a govt pension... you will be affected by lower home prices if no one will buy homes (or lend money for purchasers).
__________________

__________________
chinaco is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-25-2008, 07:21 AM   #22
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by Running_Man View Post
As is pointed out in this thread, history is replete with bad financial happenings that effect the economy for 10+ years. Yet the economy continued to grow over that time and standard of living has steadily improved. The likelihood that 3 Federal employees have developed the answer to avoid that and provide comfort for all is very low. Standing in the way of natural order is sure to cause unintended consequences.

These are the same people who saw no problem 18 months ago when it could have been addressed. As a matter of fact a few months ago Paulson was claiming the mere possibilty that the US Government would take over Fannie & Freddie would be taken over would provide confidence to solve problem.
but what would life had been like if there had been no Great Depression or no Depression of 1873 which was even worse? A deflationary event used to hit the US every 40 years with the Great Depression being the last one. in the 1970's the government inflated the economy to keep another depression from happening.

TV among other things had been invented before the Great Depression but didn't see any adoption until the 1950's. Compare that with the 1970's where we had MS, Intel and all the big Internet companies of today either started or had the ideas for them begin and the 1980's saw them start on their first growth stages and all the ideas like the PC game consoles that were made up in the 1970's saw fruition in the 1980's.

same concept as comparing European and US growth. Over the last few years US economic growth has outpaced Europe and other countries by 1% or so. Doesn't seem like much but look at the difference in the standard of living after several decades
__________________

__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 07:22 AM   #23
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by Brat View Post
DH, who is absolutely a-political, said that Bush looked sick (or grim).

I feel like I have been mugged by guys in pins-triped suits, "Your money or your life!"
sort of

NY send more tax money to DC than it gets back. We're taking it back in one lump sum now.
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 07:26 AM   #24
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by Caroline View Post
ok, this is probably the dumbest idea in the world but...

If mortgages are the heart of the problem, then what would it be like to take the trillions that we're going to spend on the bailout and just pay the durned mortgages? Or pay the difference between what the house is worth and what is owed on it? Or turn all those variable rate mortgages into 30-year fixed debts? Something like that could keep the little guy / gal in their homes, AND keep the investment banks afloat, AND keep all that international paper afloat (as opposed to circling the drain as it is now).

It can certainly be argued that it's not fair or right to save those who overextended themselves, but since we supposedly smarter taxpayers are going to take it in the shorts anyway, why not doing something REALLY different and start it at the bottom instead of the top?

Wouldn't we get more social stability / economic stability for our buck that way?
how are you going to manage all this and make sure people actually pay the mortgage? remember that most of these people refi'd themselves to riches and luxury.

much easier to press a computer key and buy up a bunch of bonds. the infrastructure is already in place for this and no new government employees have to be hired to do nothing but write checks
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 09:43 AM   #25
Recycles dryer sheets
 
Join Date: Jan 2007
Posts: 222
Quote:
Originally Posted by chinaco View Post
I don't like the bailout, but the net result of the market turmoil and fin services industry melt-down is probably worse.
Here's one thing I don't understand: they let Lehmann go belly-up, and that turned out alright. After they declared bankruptcy, the real value of some of their assets was determined, and Barclays swooped in and picked up a still-healthy part of their business. Isn't this how it's supposed to work? Why can't they let this happen for other companies like AIG? So far the only explanation I've heard is from Buffett, who said something along the lines of "everyone trying to deleverage at the same time"=bad. Still don't quite see how that's catastrophic.
__________________
CompoundInterestFan is offline   Reply With Quote
Old 09-25-2008, 09:55 AM   #26
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Lehman was very low on the CDS list, unlike AIG which wrote hundreds of billions of $$$ worth of CDS's. don't forget that after Lehman went belly up a lot of MM's lost value and this caused a stampede out of MM's. only reason things calmed down is the government stepped in again
__________________
al_bundy is offline   Reply With Quote
Old 09-25-2008, 10:21 AM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,196
Quote:
pins-triped suits
Brat, you'll be hearing from the folks in the grammar thread pretty soon.
__________________
Al
TromboneAl is offline   Reply With Quote
Old 09-25-2008, 10:22 AM   #28
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,072
Quote:
Originally Posted by TromboneAl View Post
Brat, you'll be hearing from the folks in the grammar thread pretty soon.
I'm pretty sure that just happened...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 09-25-2008, 10:33 AM   #29
Thinks s/he gets paid by the post
bright eyed's Avatar
 
Join Date: Jan 2007
Posts: 1,891
Quote:
Originally Posted by al_bundy View Post
how are you going to manage all this and make sure people actually pay the mortgage? remember that most of these people refi'd themselves to riches and luxury.

much easier to press a computer key and buy up a bunch of bonds. the infrastructure is already in place for this and no new government employees have to be hired to do nothing but write checks
If you ref'd your mortgage and purchased a big screen, nice cars and other toys, we could have the government agree to refi your mortgage but you have to give us your stuff. Sarah Palin can put them on ebay! and the taxpayers will recover some of the money from the bail out and have a huge reservoir of cheap luxury items to purchase with the stimulus check they will issue in the next year or so...
__________________
If i think of something clever to say, i'll put it here...
bright eyed is offline   Reply With Quote
Old 09-25-2008, 11:54 AM   #30
Thinks s/he gets paid by the post
 
Join Date: Oct 2005
Posts: 4,898
Quote:
Originally Posted by haha View Post
China was loaded to the gills with Fannie/Freddie MBS. They were leaning on Paulson.

Ha
YES! I have had a gut feeling that there was a subtext to this whole thing and that some international lender is really pissed and let Paulson know what would happen if we didn't make good on our bad paper.

Unfortunately there's no way to prove it. That's why all Paulson, Bernanke and congresspeople are so lame in their explanations of what will happen if this bailout doesn't happen. There's no way they can say to the American taxpayer, the Chinese will stop lending us money and then we are screwed! The truth is too embassassing. Also, the Chinese would be really pissed if Paulson blamed it on them.

And, of course, GW obviously knows this and that's why he looked like a deer in the headlights (or a zombie!) as he read his speech last night.
__________________
Zoocat is offline   Reply With Quote
Old 09-25-2008, 01:10 PM   #31
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
My understanding from the speech is the 700 billion will be used to buy the illiquid securities. These are the securities that Bear Stearns cannot sell and many other financial companies (Vanguard, Fidelity, T Rowe Price et al) probably hold some of these too.

My further understanding is that 700 billion is being used because this is the value of the loans (at the times the loans were made). They are worth much less than 700 billion now. As the mortgage are repaid, the treasury is going to keep the payments to repay the 700 billion.

That is what I got out of the speech. Can someone tell me if this is too simplistic?
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 09-25-2008, 05:38 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Apr 2006
Posts: 1,487
Quote:
Originally Posted by ziggy29 View Post
Hoo-boy. If this one avoids the Soap Box, it may be a miracle...
as herein evidenced, miracles do happen!
__________________
d is offline   Reply With Quote
Old 09-26-2008, 02:39 PM   #33
Thinks s/he gets paid by the post
bright eyed's Avatar
 
Join Date: Jan 2007
Posts: 1,891
Jon Stewart's staff is always hard at work!

__________________
If i think of something clever to say, i'll put it here...
bright eyed is offline   Reply With Quote
Old 09-27-2008, 03:21 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Brat's Avatar
 
Join Date: Feb 2004
Location: Portland, Oregon
Posts: 5,913
My "pins-triped suits "

Quote:
Originally Posted by TromboneAl View Post
Brat, you'll be hearing from the folks in the grammar thread pretty soon.
Sorry for the typo.

I just got a cast off my right arm after hand surgery for a bad break (a tale I have withheld as others have greater problems). I am re-learning how to move my fingers and turn my wrist as the nerves want to construct a cast of it's own under my dermis.
__________________

__________________
Duck bjorn.
Brat is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What Obama's speech say about his leadership. clifp Other topics 98 03-28-2008 02:52 PM
The speech - "The New Way Forward "--by President Bush janeeyre Other topics 96 01-18-2007 03:04 PM
MOVED: The speech - "The New Way Forward "--by President Bush Cut-Throat Life after FIRE 0 01-14-2007 07:31 AM

 

 
All times are GMT -6. The time now is 05:21 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.