Let's say we don't bail these companies out and let them all crumble, then what? My question is, how in the hell do we get money? It all has to come to our banks from somewhere right?
| fkusumot said: CDO's were not a result of of the Fed's mismanagement. The management of CDO's is handled by, surprise, no one. They are not regulated. Bad practices by the rating agencies are just a fact. Supposedly a bunch of B-Paper turned into a CDO magically got an investment grade rating. Are you saying they are regulated by the Fed? Are you prepared to discuss credit default swaps or credit derivatives that use CDOs as their reference entity? This started about this time LAST YEAR. That's when the housing bubble started popping and banks were taking big hits, and people were getting fired. There was plenty of time (compared to the 4-5 days Paulson has given us now) to do something. All of the major players understood that this debt was toxic. I'm pretty sure that all the B-Paper companies went out of business at that time. But all those loans are linked together by those CDOs. Which are in turn supposedly insured by the credit default swaps. |
The underlying capital in the CDOs are the sub-prime assets. Without the sub-prime assets, you do not have the sub-prime CDOs. The cause of the boom in sub-prime loans was the Fed's fault. Without its shockingly low interest rates, we would not have the toxic sub-prime debt. The Federal Reserve should be ashamed of the mess it has caused. I am not certain if actions can be taken against Bernanke and Greenspan, but they need to be held accountable for this.
The Fed is going to bailout the companies indirectly, so it really doesn't even matter that the bill didn't pass. I can't say the bill was perfect, but I think it would have done some good. I am pretty mixed on it, but I am not upset that it was struck down.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
Jackson50 said:
The underlying capital in the CDOs are the sub-prime assets. Without the sub-prime assets, you do not have the sub-prime CDOs. The cause of the boom in sub-prime loans was the Fed's fault. Without its shockingly low interest rates, we would not have the toxic sub-prime debt. The Federal Reserve should be ashamed of the mess it has caused. I am not certain if actions can be taken against Bernanke and Greenspan, but they need to be held accountable for this. |
In a sense that's true, but if CDO's regulated at all from the get go this never would have happened. It was when people discovered the actual worth of CDO's that companies started to crash. Sub-prime mortgages on their own aren't the major cause IMO. People investing in CDO's that are composed 50% of subprime loans is the problem.
Low interest rates alone or subprime lending alone would never have caused this whole issue if banks weren't overestimating their reliability and overvaluing them. CDO's created a huge market for subprime loans the the market just adjusted. It was a win-win for EVERYONE at the time, but you should always prepare for the worst case scenario. Subprime backed security is contradictory in itself.
What the fed set out to do was expand the market and allow for more American home owners. The goal was achieved just as they planned, but the government didn't have enoug control over it. I mean, lets say subprime loans and fed rates were never cut, where do you tihnk we would be right now? I highly doubt we would all be enjoying laptops, HDTVs, wireless internet, etc if America wasn't allowed to prosper as quickly as it was. The housing market drove everything for over 10 years, we just didn't prepare for the peak well enough.
Thing Number One: Most of this article is a blistering attack on the reasons why this happened most of which I agree with. That doesn't mean however that removing the causes will fix the problem. If somebody smokes a lot and then gets lung cancer the doctor doesn't just take their packet of cigs and send them home, addressing the cause of the problem isn't the same as addressing the problem itself.
Thing Number Two: He doesn't seem to pay much attention to the flow on effect of the collapse in the financial market - many many other business's need the liquidity that loans afford and without them they also may collapse.
(The above post may contain no traces of knowledge of economics.)
| Rath said: Thing Number One: Most of this article is a blistering attack on the reasons why this happened most of which I agree with. That doesn't mean however that removing the causes will fix the problem. If somebody smokes a lot and then gets lung cancer the doctor doesn't just take their packet of cigs and send them home, addressing the cause of the problem isn't the same as addressing the problem itself. Thing Number Two: He doesn't seem to pay much attention to the flow on effect of the collapse in the financial market - many many other business's need the liquidity that loans afford and without them they also may collapse. (The above post may contain no traces of knowledge of economics.) |
Thank you sir. Question, as things are now (most likely things would change if this arose) could it be possible I could go to by bank and they may not be willing/able to give me my own cash I have in my account?
I read this on the internet this morning from some random place, and a lot of commenter seem to be agreeing with the person.
| Jandre002 said: In a sense that's true, but if CDO's regulated at all from the get go this never would have happened. It was when people discovered the actual worth of CDO's that companies started to crash. Sub-prime mortgages on their own aren't the major cause IMO. People investing in CDO's that are composed 50% of subprime loans is the problem. Low interest rates alone or subprime lending alone would never have caused this whole issue if banks weren't overestimating their reliability and overvaluing them. CDO's created a huge market for subprime loans the the market just adjusted. It was a win-win for EVERYONE at the time, but you should always prepare for the worst case scenario. Subprime backed security is contradictory in itself. What the fed set out to do was expand the market and allow for more American home owners. The goal was achieved just as they planned, but the government didn't have enoug control over it. I mean, lets say subprime loans and fed rates were never cut, where do you tihnk we would be right now? I highly doubt we would all be enjoying laptops, HDTVs, wireless internet, etc if America wasn't allowed to prosper as quickly as it was. The housing market drove everything for over 10 years, we just didn't prepare for the peak well enough. |
The problem is the Fed's duty is not to expand the markets. It is to maintain a sound money supply and it has been woefully inept in that regard. To be honest, if congress had more control over the Fed, the problem would be exacerbated. Can you imagine the congresspeople setting the interest rates? I would not mind the Fed if competing currencies were allowed. Unfortunately, that is no longer the case.
| Jackson50 said: The problem is the Fed's duty is not to expand the markets. It is to maintain a sound money supply and it has been woefully inept in that regard. To be honest, if congress had more control over the Fed, the problem would be exacerbated. Can you imagine the congresspeople setting the interest rates? I would not mind the Fed if competing currencies were allowed. Unfortunately, that is no longer the case.
|
Yes I can, and I imagine it being even worse than it is now. The Fed may not be perfect, but I would rather have them in control of interests rates than Congress.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
akuma587 said:
Yes I can, and I imagine it being even worse than it is now. The Fed may not be perfect, but I would rather have them in control of interests rates than Congress.
|
Amen to that. That would be a disaster of epic proportions.
as someone who's working in the industry, i'll say these economists are, using a chinese proverb, "talking about military strategy on paper". just because these are phds and economists professors doesn't mean they know what they're talking about. especially when it's economics.
am i biased? probably. but it's also because i see people around me being affected right on the front line, and the very immediate effects.
the problem with all this opposition is simply because the vast majority of people simply don't understand the problem--at all. a journalist that i know of needed to call me to understand what's going on. imagine if the journalist started writing before even knowing what the issue is about.
the average citizen is only beginning to see its impacts. the US auto industry is probably going to be the first real victim in this case if nothing happens, with car loans starting to get turned down.
the amount of ignorance out there is insane. i read about interviews with people on the street and they seem to think that it's the CEO's that are losing money and Washington is giving them back the money. unbelievable the misconception out there.
one thing is for sure: deep recession is sure to result without this "bailout". the worst part is that, there is no guarantee that $700 billion will do much good. i'd say, even with $700 billion, there's a 30% chance we need another $700 billion. that would make the political careers of many of these politicians at serious risk.
there's plenty of blame to go around. maybe only 1% of the population caused this, but the destruction will be felt by everybody. and if everybody just thinks it's none of their business and stands by, guess what, soon enough, it will be.
by and large, $700 billion would be a good investment--but only if accompanied by effective policies and supervision. and as we have learned from iraq, the latter assumption is hardly automatic. and you would just have to hope that paulson and company guesses right most of the time from now on.
the Wii is an epidemic.
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