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So.... were up 190 points with no bailout...

Discussion in 'Political Discussion' started by mcgraw_wv, Sep 30, 2008.

  1. mcgraw_wv

    mcgraw_wv Rookie

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    Is this the Market correcting itself, or is the impending imploding of our country look like a solid economy that can manage itself via the Free Market?

    Where is the fear mongering today? On the radio I heard Neil Bortz ( spelling ?? ) say how this bailout drum up was the same as the drum up for the Iraq war, and here we are, it didn't happen, and we look ok...

    Or is there anyone out there fighting for Oil mad max style?
  2. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    I believe today's rally (so far, anyway, it's still early enough for a selloff) is based on renewed hopes for a package to be passed. If the government announced is was no longer on the table then I think we'd see continued selling.
  3. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    It's 10 in the morning, McGraw.

    I didn't see Monday as the apocalypse. The fact that you are posting on a 200 point uptick after a 700 point down (measuring by the Dow) should tell you something.

    The 200 points represent people betting that the market will even exist, which the 777 point tumble called into question. The fact that all 777 didn't come back should tell ya something. It's people scraping up the nickels and dimes, all the e-traders, all of that put together. And if it's 500 by end of day, that still does not mean there is liquidity to handle every aspect of finance that scrapes along like an engine without oil.

    I'm not a pro-bailout guy, but I am a sober guy. I don't think "the market will work itself out" is the way to go here.

    My initial thought when they started talking bailout was that the equivalent sum should be used to buy down principle on really struggling loans directly, and let liquidity return as bad paper gets somewhat better -- although that is close to what the bailout does, albeit backwards. It seems like the bailout relieves the liquidity first, and then the government is incentivized to address the underlying bad mortgages, so the taxpayers' new "bad paper" becomes -- in some percentage of cases -- good paper.

    Bubbles and inordinate concentrations of real wealth, created by three-card-monte games resulting in paper wealth which goes away (if you're middle class) and losses that can be foisted on the government (if you're an investment bank) are directly related to the deregulation of the market.

    If we're seeing anything in this crisis, it's that the market, without regulation, is a toxic environment from the point of view of the people.

    Witness all the right-wing republican posters here who are trying to blame Clinton or the congresses of the 90s for deregulation.

    However you slice that particular blame-pie (and rest assured I have my ideas on the subject,) what you are seeing is everybody pointing a finger at someone else as being the guy who SHOULD have regulated the market but didn't.

    The "unregulated markets are good for everybody all the time" theory has taken a disasterous hit these past couple of weeks, I'm afraid. I don't think a 200 point mini-rally fixes that.

    I also think all sense of proportionality has fled from this discussion. We lurch instantly from "nothing's wrong" to tin-foil hat thinking about the "engineered crisis," back to "nothing's wrong."

    What we need to get our heads around is this:

    - since the 80s, we have progressively deregulated markets

    - During that same time span, upon realization that a bubble is collapsing, we have progressively attempted to maintain markets by infusing capital, either through taxpayer money (as in the Greenspan Put in 98), or by aggressively attempting to convince the poor they should buy a home ("the Ownership Society.") This is different from JUST relaxing lending standards -- it was an exponential acceleration of the ditching of those standards, combined with exotic financing vehicles, exotic ways of trading around the securities backed by those deals, and -- unbelievably -- an aggressive sales campaign to convince those who cannot buy to do so.

    - Whichever parts of this can be laid at government's door -- for example, the propaganda campaign to get those who would not buy to do so -- could easily have been undertaken by the market itself.

    - Other parts of this are simply the removal of standards and regulations (for example the "old" formula that one needed 20% down.)

    You're looking at the legacy of market deregulation, my friend, whomever you choose to blame for deregulation. And a 200 point swing that could be gone or doubled by the time I click "submit reply" is not the solution to the liquidity problem in the market right now.

    These events did not make the sky fall, or darken it with physical clouds, or make some gigantic high-pitched whine (at least not a literal one) emanate from New York as credit seized up. But jobs will be gone at an accelerated pace, adding to our already high unemployment. We will be hurting, and it will happen all at once, if we "let the market take its course."

    Like everybody else, I hate the bailout. Like most people, I think we have to do it.

    By the way, the day of whining about your high taxes is -- or should be -- over. Giving the rich and the corporations their tax breaks for 7 years has amounted to 5 trillion dollars in additional debt in this country. That's the equivalent of one 700 billion dollar bailout for every year of the current administration. All we are seeing is a very rapid doubling of business as usual under the reign of George II, in terms of debt. Get your head around that.

    Another way to put it... with the 5 trillion racked up BEFORE this bailout, the amount of taxpayer money being made available, if all of it is used and none of it is redeemed even at fire sale prices, is about 5 years of interest payments on debt already borrowed.

    Of course, the bailout also adds to that debt.

    All this to say:

    1) Deregulation is what effed us in the first place, and
    2) The old playbook is likely out the window. Adam Smith is nice to have on the bookshelf, now invest in a couple of Keynes' works. He's back.

    PFnV
    Last edited: Sep 30, 2008
  4. PressCoverage

    PressCoverage Banned

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    Gold... Buy some...

    Period.
  5. STFarmy

    STFarmy Rookie

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    I saw four horseman in the sky. One was riding a pale horse, and there was someone following behind him....
  6. mcgraw_wv

    mcgraw_wv Rookie

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    If the Dow goes to 10000... what does that mean? Our economy is in the tank, our country is on the brink of destruction, and life as we know it is over....

    OR

    Does it mean that we need to return as a society to a life more liek in the 90s where not everyone has a 300k house, and not everyone has 3 Plasma TVs, and not everyone has a 20k SUV, and that not everyone chases every get rich scheme...

    It's a correction, and our economy, our real value, and morals have become so inflated over the past 10 years, that a return to the value, of the 90s wouldn't be so bad...

    We can not push growth at the expesne of everything else... keeping a job here in America is worth more than saving .001 per widget... Giving tax breaks to companies KEEPING jobs is worth more to us as a society then giving tax breaks to those who export jobs...

    There is VALUE in putting country over profit...
  7. PatriotsReign

    PatriotsReign Rookie

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    I think your second statement is the valid one. We have to remember, the stock market is not the economy. I don't know where or why people started to talk like it IS the economy. It reflects economic trends, but not on a day to basis.

    The problem we have is that no one can tell us where our economy is right now. I heard a CNN investment advisor/commentator Suze Orman say she doesn't see our economy returning to health until about 2015!

    "How long is this down cycle going to last? Probably two, three, four years. I don’t want to say what I’m about to say. I don’t think you’re going to see a lot of light at the end of the tunnel until about the year 2015."

    Anderson Cooper 360: Blog Archive - Financial light at the end of the tunnel could be 2015 - Blogs from CNN.com
  8. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    Remember Black Monday in 1987?
  9. PatriotsReign

    PatriotsReign Rookie

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    I do...I was 28 years old.
  10. STFarmy

    STFarmy Rookie

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    And it reflects fickle trends at that. They're jumpy nervous nellies, and many of them manipulate the trends to make money. I go nuts when people use it as an economic barometer.
  11. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    I think the trickiest thing is that we're arguing likelihoods not crystal-ball certainties (like frinstance, it's a lock that the Pats will beat the Dolphins:mad:)

    Here's a little screed by one of the pro-bailout voters:

    Commentary: America can't go cold turkey on credit - CNN.com

    I think it sums up my thoughts on a "let it all tank" vs. "get some liquidity out there" option.

    "Bailout vs. no Bailout", in all probability, boils down to "Cold Turkey" versus "cutting down."

    Cold Turkey carries an elevated chance of an immediate hit that's too big to absorb, and therefore creates upheavals disproportionate to the total number of dollars lost. Once a job is gone, for a long time at least, that job is gone. If we bleed jobs over a period of a couple of years, the possibility is that the spiral can be controlled. If we axe 5% of them in 3 months -- i.e., if unemployment goes from 6% to 11% by January -- we carry those lost jobs for the period of "recovery," to the extent that recovery happens. But again, it's the probabilistic nature of the outcomes that has all our heads spinning. Hey, what if nothing happens? What if it's the same outcome? Then aren't we being dumb by not sharing the pain with Wall Street? These questions give me pause, but I don't get how the leadership of the Senate and House (on both "sides",) and the Administration, are all so taken in by the crisis, if the reality is "Eh, doesn't matter." I know what Michael Moore says, and I know what Lou Dobbs says... it does not make sense to me.

    (That said I would prefer that we address the loans at the consumer end and let the liquidity follow, although I am not so sanguine that the liquidity would follow soon enough to avoid exactly the same problems that doing nothing would invite. Add to that the fact that the same Wall Streeters immediately benefit, because once again their "bad paper" is good paper now, if it does work. We can't have a net positive effect on jobs and still punish "The Street," from that point of view.)

    My worry is that for the serious addict (in this case, of credit), neither cold turkey nor gradual withdrawal works unless the addict is ready. And if congress tells the people they don't really need to be ready, they can keep borrowing through unrealistic tax cuts, etc., then we never fix a big part of what ails us: the national part of the debt we're all carrying.

    Interesting times... I wonder if this is finally the crisis that gets Americans to understand the differences between millions, billions, and trillions... I think that understanding is key to our future.

    PFnV
  12. mcgraw_wv

    mcgraw_wv Rookie

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    They say Credit Markets are freezing up...

    Would it be so bad that business can't spend money they haven't made yet, and that business and society spends based on what they've Earned, and NOT borrowed against what they possibly could earn?

    Good... Credit Markets are freezing up... Rush just made a good point on his show, creditor are not giving out credit and selling their assets when there is a looming large pay out via the government in the works... The best solution would be the government to just say " there will be no golden parachute "...
  13. NovaScotiaPatsFan

    NovaScotiaPatsFan Rookie

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    I dunno, to sell someone has to have enough money to buy... ;)
  14. PatriotsReign

    PatriotsReign Rookie

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    Same here STFarmy! It's a joke. The hardest thing to understand is that when and if a bailout passes, the markets will jump upwards. Even though the economy is going to get worse, not better for the foreseeable future.

    There is no reason for optimism that the investment market will be getting any better when you consider;

    -Accelerating unemployment
    -Declining consumer spending
    -Continued declining real estate market
    -Tighter credit
    -Poorer foreign investment performance
    -Declining demand for durables

    All of this is going to take years to turn around. And even the stock market fluctuations will level off in time. Investors will become much less reactionary and enticements for day-traders dwindle. In the long-run, the investment markets will return to solid & prudent decision making on performance. The days of making money off "betting" on the markets will disappear.
  15. Real World

    Real World Moderator Staff Member

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    When the market dropped close to 800 points, that meant somewhere in the neighborhood of a $1 trillion in lost wealth. We can all debate how relevent the Dow Jones is to the actually economy, but a $1 trillion disappearing in a single day doesn't help. Furthermore, credit doesn't just mean some retard getting a $400,000 mortgage on his $50k a year salary. It means construction loans for projects that employ workers, commercial loans that fuel business, and lines of credit that enable people, and business', to float recievables, and still operate to their maximum. Beyond all that, there's still the uncertainty surrounding some banks (my biggest concern).
  16. mgcolby

    mgcolby Woohoo, I'm a VIP!!! PatsFans.com Supporter

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    Not to derail this thread but this is the best thread I have read on here in a while, if not ever. No name calling, calm logical discussion and none of the my side is better than your side crap.

    Congrats, it is just to bad that it took something like this to make us put aside our differances.

    Now back to the calm, rational and logical discussion to which I have nothing to add, as I am not an investor or an economy guru or novice for that matter. But this thread has been educational for me.

    Thanks.
  17. STFarmy

    STFarmy Rookie

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    This is the way of humanity. We always squabble amongst each other, unless in the face of shared danger. If you find this intriguing, I suggest you read Watchmen by Alan Moore and Dave Gibbon. Yes it's a graphic novel (comic book), but it's fantastically layered and philosophically deep.

    Not to derail the thread.
  18. MrBigglesWorth

    MrBigglesWorth Rookie

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    Greed and list for power creatd this mess.

    Deregulation and all these other schemes like derivatives/swaps were just vehicles to get the greed and power lusted for.

    I get a kick out of govt wanting to create another agency to monitor this money if the bill is passed. didn't candidates say govt needs less govt and not more govt?

    the thing that is most troubling is we have two opposing forces going on:

    saving versus spending

    for so long we have been taught to spend spend spend and really people need to save in their actual bank accounts. I do think wealth in the form of 401k's or mutual fund is too stable to count. though it does count a bit.

    what incentive is their to save now? interest rates bite and have done so for a while. the fed is not going to raise rates to further stall the economy

    During WW2 the government sold war bonds to finance the government.

    I honestly think govt should sell bond with high earning interest rates above current market levels that are guaranteed encouraging people to save and in turn this money could be used to get the economy going.

    Just an idea.
  19. scout

    scout Rookie

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    #15 Jersey

    I bought 100 shares of GE today.
  20. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    YOU D1CK!

    just kidding

    PFnV

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