Posted on 09/24/2008 10:34:43 AM PDT by HAL9000
Breaking News - Republican officials say the Bush administration will accept executive-pay curbs as part of the bailout. President Bush plans to address the nation Wednesday at 9:01 p.m. EDT on the financial crisis.
OK, one of my big interests is investing and economics. My picks have beaten the S&P500 so far, so I’d like to think I have a little expertise.
Bush explained the cause very, very well. He also made a compelling and sound case for the solution. I like that he didn’t bring politics in — he didn’t say why Fannie and Freddie wound up with these loans.
The 700B is to buy the securities that markets can’t find buyers for because they don’t know if the underlying mortgages are good or not. Because this is stinking up the banks’ balance sheets and preventing them from buying or selling anything until they get rid of this, this is in serious danger of freezing up the entire credit system and very quickly, which, yes, will bring on a huge recession affecting even the goldbugs that have never taken out a loan in their lives.
But, the cost will even itself out somewhat over time (not completely recoup—just even out somewhat) because, of course, the vast majority of the mortgages behind these securities are good and will be paid off. The amount of bad mortgages, to my estimate, is “only” between 150B-250B so the difference should give you an idea of what to expect to recoup.
(While it’s tempting to say “screw Wall Street, let the free markets work itself out”, it’s also notable that this was a problem created by government in the first place as has been discussed elsewhere on FR many times.)
Bush also warned against loading the money with regulations so oppressive that companies refuse to participate.
He also threw a bone to the Dems: if a company takes our taxpayer money, the execs should also not give themselves windfall bonuses. Seems fair — if you need to the government’s money, you can’t afford to give yourself a 2.5B bonus.
That’s what I took from this. YMMV.
My point was that not only is the bail-out not going to be worth the price, but it's fundamentally harmful. Injecting some capital and liquidity in some parts of the market may be necessary, but the only way to prevent a big kaboom is for entities with credit default swaps to arbitrate them in bankruptcy court. A bail-out will just serve to disguise the necessity and inevitability of deflation.
You missed nothing. It’s more bi-partisan drivel ... which means screw the US taxpayer.
If you have over 100,000.00 in the same bank it is not guaranteed.
That was sarcasm.
” I have a natural distaste for government bailouts in general.
But this is not a simple problem; it is very complex and if the system fails it will affect everyone in the country, even people with their cash stashed in their mattress. ‘
Normally sanguine people I trust, whose bailiwick is Wall Street , are popping Tums and Pepcid and Johnny Walker Gold.
Their depression and gloom is contagious.
I’ve never seen them like this before.
I don’t take this situation lightly..like Obama.
Here's something from the FDIC website, 8/26/08.
http://www.fdic.gov/news/news/press/2008/pr08070.html
The FDIC's Deposit Insurance Fund reserve ratio fell. Due to a significant increase in loss reserves, including reserves for failures that have occurred since June 30th, the DIF balance fell to $45.2 billion at the end of the second quarter, down from $52.8 billion at the end of the first quarter. While insured deposits rose only 0.5 percent during the quarter, the decline in the fund balance caused the reserve ratio to fall to 1.01 percent as of June 30th from 1.19 percent one quarter earlier. Because the reserve ratio is now below 1.15 percent, the Federal Deposit Insurance Reform Act of 2005 requires the FDIC to develop a restoration plan that will raise the reserve ratio to no less than 1.15 percent within five years.
Oh, boy, "We have a plan". I ain't no economics expert, but this doesn't sound good at this time.
Cripes - Jack Welch of GE is blaming everybody but the government for this - he’s in on it as well. This is almost as big a sham as the myth of gloBULL warming. These people are on the take, and they don’t want the gravy train to end. So, they continue the facade of blaming “greed” and banks and lenders (those very same lenders who were pressured by the government into giving loans to people that didn’t have a snowball’s chance in Miami of paying it back).
Yes, it is very important to unfreeze the credit freeze. You can have 10-15% unemployment by Christmas. Small companies depend on short term loans to meet payroll. If these companies cannot meet payroll - UNEMPLOYMENT!
I am surprised that people don’t see the connection.
I’m putting this out there for any FReeper to answer.
Here’s my situation:
I make just a hair under 25K a year.
I have a wife and four kids, one disabled.
I rent, because I knew beyond a shadow of a doubt that I’d never qualify for a house loan.
I have about 2K left on a credit card that I am paying off in March
I have about 3.5K in college loans.
I have a 12K, 5-year auto loan.
I have NOT defaulted on any of these, nor do I plan to...as long as I still have a job.
Speaking of my job, they’re planning to cut the entire workforce’s pay by 3%. This came down last Friday.
What I just heard out of the President this evening scares me, but I do not understand how my family and I are going to be affected.
Would some knowledgeable FReeper please suggest to me what the heck is going to happen now, and what I might possibly do? I am NOT a financial genius...obviously.
I expect derision, but if some kernel of truth can come out of it, so be it.
Checking Accounts (including money market deposit accounts)
Savings Accounts (including passbook accounts)
Certificates of Deposit
Not FDIC-Insured
Investments in mutual funds (stock, bond or money market mutual funds), whether purchased from a bank, brokerage or dealer
Annuities (underwritten by insurance companies, but sold at some banks)
Stocks, bonds, Treasury securities or other investment products, whether purchased through a bank or a broker/dealer
For More Information from the FDIC Call toll-free at 1-877-ASK-FDIC (1-877-275-3342) from 8 a.m. until 8 p.m. Eastern Time, Monday through Friday
Maybe you like to borrow a lot of money. Sorry I am tired of paying for it. I like to save. Stop sticking it to me for doing so. And stop inflating the dollar so that my savings are for nothing.
Ride it out and and it will cost a lot more in the long run. It’s difficult feeling helpless in this whole fiasco but we need to invest in this now...investing later won’t be an option.
I’d rather act now then give Obama more money to invest in his socialist programs down the line. Acting now, and being successful, like the surge, will all but ensure that Obama is not elected!
This statement says it all. I would hope that we all at least trust that Bush is acting in good faith.
I had a friend ask me why the raving lunatic Jim Kramer was for the bailout...people like Kramer/Welch/Paulson have agendas...they are not objective..they are short term minded and care nothing about the long term trend of the country.
What are you watching?
He said the Democrats OWN THIS ONE.
Turn off the SAP and listen in English.
An irrational leap of faith. How appropriate a description of the socialist system now being forced upon Americans. Government is now a religion and we must all do our patriotic duty by throwing our wealth into its offering plate, and then maybe one day it will save us all.
My account at BoS (Bank of Sealy) isn’t quite that big :)
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