[JadeEast]

Quote:

Originally Posted by marvin /img/forum/go_quote.gif Asking Christopher Leinberger what he thinks about suburbs is akin to asking Hitler what he thought about the Jews. He may yet be correct, but his case is fairly thin and overly reliant on cherry picking data points.

Godwin's law - Wikipedia, the free encyclopedia

It's just such a bad analogy.

 

[marvin]

Quote:

Originally Posted by JadeEast /img/forum/go_quote.gif Godwin's law - Wikipedia, the free encyclopedia It's just such a bad analogy.

A blight on the world and the cause of many of societies ills? I don't think it's a farfetched comparison at all.

 

[Hi-Finthen]

Clear explaination of whats going on (still trying to understand myself, and also note that this is all new ground for these forensic regulators of this crisis, as in ongoing learnin curve ie. timing and choices of intervention, or even when not to ie. Lehman ) : Diamond and Kashyap on the Recent Financial Upheavals - Freakonomics - Opinion - New York Times Blog

Also thought the comments to the read were well stated...

 

[frozenice]

Quote:

Originally Posted by marvin /img/forum/go_quote.gif Lower->middle class minority flight from the cities to older less expensive suburbs has a tendency of bringing the problems of the cities to the suburbs. When this happens, whites tend to flee again to newer, more expensive suburbs that the lower->middle class minorities can't yet afford to live in. Why bother to construct a house that will last forever if this is the case?

The fact is the middle and lower classes could never afford to live in the suburbs - it just isn't an economically viable idea. They just don't earn enough or pay anywhere near enough taxes to make it viable. There are a lot of costs involved and unless you increase wages by a factor of five or ten times or bring the costs of things such as medical care, transportation, energy and education down by a factor of five or ten times it just doesn't work.

 

[AlanY]

It looks like the government is contemplating two additional bailout programs totalling $1.2 trillion this weekend. That's not small change... roughly 10% of the entire US economic output in a given year. And I have no doubt the cost will balloon... these assets they're proposing to acquire, particularly the lower tranches of CDOs, are not tangible assets and will likely never recover more than 5% of their value.

So frustrating.... and they'd better do this right, because even the Federal government doesn't have a gun big enough to spend that kind of money over and over.

 

[AlanY]

We should probably keep this focused on finance and economics.

 

[Happy Camper]

And the killer of it all is that the taxpayer is not asked but has to come up with the money. If my business fails, what line do I get into for a bailout?

 

[RYCeT]

IMHO, the government in this case (more likely Paulson and Bernanke) has to take the lesser of evil. They tried to save the economy by small steps (Forcing Lehman to bankrupt and providing loan to AIG) however it doesn't work. AIG failure cause the market to lose all confidence and start dragging good financial company which should have enough capital to withstand this storm (ex: Morgan Stanley, Goldman Sach) Short selling is out of control, seeking their target in each financial company which in this market's situation create disaster. If the SEC has banned short selling a week before, AIG might not need a bailout. They have sufficient assets to withstand this storm.
Bernanke and Paulson were forced to take drastic measures. As Paulson said, "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said.
Generally, I don't agree for government intervention in the market but this problem is too big and the consequences is dire to our lives. Time will tell if they did the right thing but this move is necessary. I just hope our next government will build a surplus budget and start building our assets. We can't afford to add more to our debts. We should start paying it back. We should be the one who invest or buys other country's debt instead of China or middle east countries did what we should do. If Singapore, a small country, have temasek, we should have one as well.

 

[DrBenway]

Quote:

Originally Posted by AlanY /img/forum/go_quote.gif It looks like the government is contemplating two additional bailout programs totalling $1.2 trillion this weekend. That's not small change... roughly 10% of the entire US economic output in a given year. And I have no doubt the cost will balloon... these assets they're proposing to acquire, particularly the lower tranches of CDOs, are not tangible assets and will likely never recover more than 5% of their value. So frustrating.... and they'd better do this right, because even the Federal government doesn't have a gun big enough to spend that kind of money over and over.

The idea that this government would do this to the American taxpayer is beyond comprehension. Sure, yeah. Big government is a bad thing, until Wall Street fall down go boom. Help me Daddy! Help me! Help me!

Can you imagine what a titanic investment like this could have done for energy independence? An investment of this magnititude could have built out nuclear power infrastructure that could potentially have eliminated our dependence on foreign oil.

So the taxpayer takes one on the front end, while rampant profiteering sends the economy into a tailspin, and then another on the back end, when we are asked to clean up the resulting mess.

And something tells me nothing is going to change because of all this.

 

[RYCeT]

Quote:

Originally Posted by DrBenway /img/forum/go_quote.gif Can you imagine what a titanic investment like this could have done for energy independence? An investment of this magnititude could have built out nuclear power infrastructure that could potentially have eliminated our dependence on foreign oil.

At least it was spent on our own country and might save our economy unlike Iraq war which cost around 500 billion year to date, spend on another country and we got nothing in return.

 

[Konig]

Quote:

Originally Posted by RYCeT /img/forum/go_quote.gif IMHO, the government in this case (more likely Paulson and Bernanke) has to take the lesser of evil. They tried to save the economy by small steps (Forcing Lehman to bankrupt and providing loan to AIG) however it doesn't work. AIG failure cause the market to lose all confidence and start dragging good financial company which should have enough capital to withstand this storm (ex: Morgan Stanley, Goldman Sach) Short selling is out of control, seeking their target in each financial company which in this market's situation create disaster. If the SEC has banned short selling a week before, AIG might not need a bailout. They have sufficient assets to withstand this storm. Bernanke and Paulson were forced to take drastic measures. As Paulson said, "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said. Generally, I don't agree for government intervention in the market but this problem is too big and the consequences is dire to our lives. Time will tell if they did the right thing but this move is necessary. I just hope our next government will build a surplus budget and start building our assets. We can't afford to add more to our debts. We should start paying it back. We should be the one who invest or buys other country's debt instead of China or middle east countries did what we should do. If Singapore, a small country, have temasek, we should have one as well.

next govt to build a budget surplus? Are they selling F-22s to China and Middle East soon?

 

[DrBenway]

Quote:

Originally Posted by RYCeT /img/forum/go_quote.gif At least it was spent on our own country and might save our economy unlike Iraq war which cost around 500 billion year to date, spend on another country and we got nothing in return.

True enough. But I think this additional burdon placed on the Ameican public has disaster written all over it. It is nothing more than a massive, onerous tax assessment. And what are we told, over and over, about the effect of heavy taxation on the economy? I would rather see the incidence of this disaster fall on the criminals responsible for it.

Greed is good? I'd laugh, if I didn't feel so much like crying.

 

[Hi-Finthen]

Quote:

Originally Posted by RYCeT /img/forum/go_quote.gif IMHO, the government in this case (more likely Paulson and Bernanke) has to take the lesser of evil. They tried to save the economy by small steps (Forcing Lehman to bankrupt and providing loan to AIG) however it doesn't work. AIG failure cause the market to lose all confidence and start dragging good financial company which should have enough capital to withstand this storm (ex: Morgan Stanley, Goldman Sach) Short selling is out of control, seeking their target in each financial company which in this market's situation create disaster. If the SEC has banned short selling a week before, AIG might not need a bailout. They have sufficient assets to withstand this storm. Bernanke and Paulson were forced to take drastic measures. As Paulson said, "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion," Paulson said. Generally, I don't agree for government intervention in the market but this problem is too big and the consequences is dire to our lives. Time will tell if they did the right thing but this move is necessary. I just hope our next government will build a surplus budget and start building our assets. We can't afford to add more to our debts. We should start paying it back. We should be the one who invest or buys other country's debt instead of China or middle east countries did what we should do. If Singapore, a small country, have temasek, we should have one as well.

Agreed and well said.

Again the incentive for profits and greed with the short sellers contracts led to exasperate the bad situation to be worse and the hands off philosophy of government staying out of the marketplace with controls, regulation(10% magins on short leverage) or allowing its continuation during crisis, as well as enforcement of existing regulation and oversight effectiively accelerated the downward spiral, all of which now can be addressed(hopefully), now that taxpayer monies are involvolved.

But make no mistake. if the taxpayer bill is 1 trillion, all of 500 Billion has been cashed out by the flippers, movers and shakers by their fees durring the bubble. And now they are on the side willing to scoop up the low hanging fruits of their busted bubble with their "money made" over these past seven years of loose credit. I see a pattern!

The one possible bright side is that, if done right, bailouts don't ultimately have to cost a lot of money. If the government buys assets when everybody's panicked and sells them when markets have calmed down again, it could even turn a profit. But break even too would be a lucky break to the taxpayer, owing to the same host of charecters that influanced this mess, or windfall, depending upon ones position of view in terms of liquidity to take advantage of the opportunitys, I dare say that were created by policy manipulation by politicians influanced by lobbyists .

 

[jbusuego]

Hey, I hope they bail me out too

I have to much debt because of this hobby

 

[AlanY]

Quote:

Originally Posted by Hi-Finthen /img/forum/go_quote.gif The one possible bright side is that, if done right, bailouts don't ultimately have to cost a lot of money. If the government buys assets when everybody's panicked and sells them when markets have calmed down again, it could even turn a profit.

The problem with this argument is that the assets involved in the current crisis are generally not "assets" in the classic sense. It's not mortgages that are causing the largest losses... it's CDOs (and other MBS based on those mortgages, plus credit swaps). Unlike a mortgage over property, which is likely to recover a significant portion of its value, the lower tranches of a CDO are completely worthless once a certain number of foreclosure losses have occurred.

There is no prospect for recovery of much of these assets. I wouldn't have as much of a problem if the government were buying tangible assets, as they did during the Great Depression and during S&L. But spending government money to save the financial industry from CDOs, derivatives, and swaps? The taxpayer is going to bleed for this.