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Bailout a Done Deal, So What Happens Now?

Discussion in 'Political Discussion' started by Run DMC, Oct 3, 2008.

  1. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    Henry Blodget | Oct 1, 08 8:24 AM
    Now that the government has been terrified into rubber-stamping the bailout, what happens now?

    In our opinion, here's the most likely scenario:

    Hank Paulson & Co. survey the banking industry and decide who will stay and who will go. JP Morgan (JPM), Citi (C), Wells Fargo (WFC), and Bank of America (BAC) will stay. Goldman (GS) will probably stay. Morgan Stanley (MS) might stay. Everyone else in trouble could go. The government doesn't need to save all banks. It just needs to save some.
    Within a month or two, Paulson buys $250 billion of crap assets. He pays more than market value, but not an egregious amount more (because the public will be watching these early rounds). Over the next six months, he buys $700 billion of assets...and then he--or his successor--asks Congress for more money.

    Confidence improves modestly, but banks continue to hoard capital and credit markets stay tight. Loans stay expensive and hard to get. This keeps pressure on the economy.

    The credit crunch filters through to consumers: Credit cards, home equity loans, mortgages, car loans, etc., get more expensive, putting more pressure on consumers and forcing them to cut back further.
    The economic news continues to get worse: American consumers continue to pull back, housing continues to fall (as of July, the year over year declines were still accelerating), companies begin to cut back, which leads to layoffs--which puts more pressure on consumers.
    The global economy continues to weaken: Europe, Asia, and, eventually, emerging markets. This is already happen, and everyone else is later in the cycle than we are.
    The stock market continues to fall, as corporate earnings come under increasing pressure and hope for an early 2009 recovery fades. Analysts are still expecting huge growth in S&P 500 earnings for next year. These estimates will get cut by at least a third.
    The government enacts further measures to try to stop the fall in asset prices (stocks, houses)--including an expansion of the bailout plan--but these don't work. Governments always try to do this. They never succeed. All they do is delay the inevitable.
    A new round of white-collar prosecutions send a new posse of corporate villains to jail. Some will be guilty. Some won't. All will be hated.
    The government announces a new New Deal, finally investing in the country's infrastructure, in the hopes that this will stimulate the economy (which it will). Investments include broadband, green tech, wireless, physical infrastructure, et al.
    Eventually, asset prices will bottom: Housing down 40% in real terms, the stock market down at least 50%. With luck, this will happen by early 2010, so the recovery can begin. Warren Buffett loads the boat with stocks, but by that time, most people are too depressed (and poor) to follow him.

    Unlike Japan, we finally force our banks to write down assets as far as they need to be written down...and then recapitalize them. This is what we should have done in the current bailout, but we'll get it right next time (we hope).

    We gradually begin a long-term economic recovery, one in which consumers save a greater percentage of income, thrift and saving again become admirable qualities, we gradually begins to wean itself off international oil, and the bacchanalian decades of the 1990s and 2000s become an embarrassing memory.
    The stock market finally begins a new, long-term bull market, in which stocks once again return 10%+ per year. Unfortunately, most Americans will be so sickened by the stock losses they've sustained since 2000 that they'll miss many years of it.
     
  2. Holy Diver

    Holy Diver Pro Bowl Player

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    #80 Jersey

    seems to me that the same rich peeps who fukced us before will be in control of about....um......let me do the math here....


    about....


    (carry the 4......divide by 300,000,000)


    700 BILLION DOLLARS





    welcome to China!
     
    Last edited: Oct 3, 2008
  3. PatsFanInEaglesLand

    PatsFanInEaglesLand In the Starting Line-Up

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    #37 Jersey

    I guess McDonalds can now go ahead with there stupid freaking coffee bar.:mad:
     
  4. IcyPatriot

    IcyPatriot ------------- PatsFans.com Supporter

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    #24 Jersey

    Invest in vaseline and KY jelly ... our azzes are going to need it.
     
  5. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    Wow...we're actually coming together...brothers in arms...comrades even.

    What a sad, sorry state ALL of those who see themselves as "the special people" have brought us to. I'm referring to the select few who see themselves as America's elite. Those who somehow feel they have been passed the torch of leading America.

    Too bad they all fukkced up so badly. Partisanship is a method of dividing and weakening the masses. But times like this can actually bring us "regular" people...the MINIONS, together.

    My biggest hope is for us to put aside our differences and see how we have been manipulated and conned. If that happens, God help all those special people:D:D
     
  6. Tunescribe

    Tunescribe PatsFans.com Supporter PatsFans.com Supporter

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    #61 Jersey

    So, you advise getting out of the stock market NOW?
     
  7. weswelker#83

    weswelker#83 In the Starting Line-Up

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    We just bailed out 8 years of Bush bad policies??


    Why?
     
    Last edited: Oct 3, 2008
  8. PatsFanInEaglesLand

    PatsFanInEaglesLand In the Starting Line-Up

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    #37 Jersey

    Ask your buddy Barney "Brothel" Frank he is just as culpable is this mess as Bush.
     
  9. weswelker#83

    weswelker#83 In the Starting Line-Up

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    No , no , no stop that crap . Bush is our national HERO , you can't talk about the hero that accomplished his mission to put this country to its knees.

    Mission Accomplished .
     
  10. PatsFanInEaglesLand

    PatsFanInEaglesLand In the Starting Line-Up

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    #37 Jersey

    Your response is typical. Don't answer the question.
     
  11. PressCoverage

    PressCoverage Banned

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    As is your lie that Barney Frank ran a brothel... Typical.

    The forum can almost predict your homophobic response to come.
     
    Last edited: Oct 3, 2008
  12. PatsFanInEaglesLand

    PatsFanInEaglesLand In the Starting Line-Up

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    #37 Jersey

    What a naive democrat party pawn you are. It is laughable.

    [​IMG]
     
  13. PressCoverage

    PressCoverage Banned

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    Really? Then prove he ran a brothel... Otherwise, shut up and go burn a cross.
     
  14. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    No it was 14 years of bad policies and blocking of reforms by Barney Frank, Chris Dodd and their cronies (Raines and Johnson the BO economic advisors.
     
  15. MrSparkle

    MrSparkle Third String But Playing on Special Teams

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    Now we suffer and our recovery will be more and more dragged out. I see this as a delaying tactic that allows some very rich people the opportunity to get their money out with us holding the tab. Our dollar is going to crash. Wall street is going to crash and it didn't have to be this way. We are being sold out and it's not going to be pretty.

    I wish I understood this enough that my opinion even mattered, let alone have an idea of what we can or should be doing now. I don't even know if there is anything that can be done. I think the only thing to do is let it crash and pick up the pieces. It's not a question of if, but when. Washington is doing everything possible to delay it but it's going to happen anyway.

    God, I hope I'm just another idiot and I'm wrong.
     
  16. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    Did you read Blodgett's post? We are going to survive this. It's going to get ugly for the next 12-18 months in the stock market.2002 lows here we come. Real estate is going to drag on lower to at least 2013-2015 in my opinion. It's going to be ok. The days of easy credit for everyone are over. Get used to it. Now, we will finally be able to buy things for what they are truly worth as opposed to being built on a bubble of hot air. I welcome these changes. I keep dollar cost averaging into my diversified index funds stock portfolio. We will have a good run from 2015-2030. These things come in 15 year cycles.
    Charts don't lie:
    Chart of SPY.jpg
    Nasdaqcrash.jpg
     
  17. MrSparkle

    MrSparkle Third String But Playing on Special Teams

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    I don't know who that is. I read many things from many sources. Some good, some way the **** out there. I've always had a nack for seeing things as they are. I'm not always right though so maybe I'm not as good as I think I am :D.

    I see the trends and I do believe things are cyclic. I also see people interfering with cycles and changing/modifying them. If left alone I have no doubt they would go as you say.

    I like your view better then mine, I hope you're right.
     
  18. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    me too!
    Here's my buddy's website for a clearer look at that S&P 500 chart:
    ILOSTMYSHIRT.COM
    In 2002, I bought into SPY at 800. I did my research and looked at the historical chart from the entire 20th century to arrive at that number. There is serious long-term historical support at 775-800 on S&P 500. If that doesn't hold, all bets are off. I think it will. Every rich c*cksucker on planet earth presently has a vested interest in the global( U.S. dominated) financial system working. I think we will pull through. :D
     
    Last edited: Oct 5, 2008
  19. MrSparkle

    MrSparkle Third String But Playing on Special Teams

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    Cool, thanks. Question, what is with the volume of trades being off the chart this crash but somewhat more normal last crash (2002). The volume of trades is spiky as hell. Is this not a horse of a different color. People pulling out funds left and right. Banks not wanting to lend to other banks. So much money sitting safely on the side while companies like McDonalds can't borrow money. This seems different to me bro. Tell me I'm wrong.
     
  20. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    I think it will be quite normal and healthy actually to retest 2002 low. Would I put all my money at stake on that bet? Uh, no. I will keep buying in via 401k all the way down. I'm not selling what I have in there, which is now down 20%. I'm 40 years old and I will roll with it. I've got a pile of cash in a few saving accounts and I don't plan on risking it. I will buy a house with that cash in a few years. I sold my condo in FL in 2004 and haven't owned since. I am a very conservative investor after getting torched in 2001.
     
    Last edited: Oct 5, 2008

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