You were. Great post.Originally Posted by juniorspecial
I think a start might be in retaining the one-to-one relationship you describe between a borrower and a lender, perhaps through regulation. Once they made "sausage" out of a bunch of mortgages, the risk becomes difficult to assess and the commodity difficult to value properly -- and your human model of people doing good things or bad things almost irrelevant. The whole batch is spoiled.
I'm going back to worrying about music. Hope all will be well in the end.
Last edited by curt1lp; 10-02-2008 at 04:51 AM.
I believe it's the lack of regulation that allowed the predatory practices to balloon out the way we've witnessed.
I'm no economist, but I can grasp concepts if I get the chance to look enough information over. I've been looking this mess over for a while now; enough to know that something drastic will have to happen to get control of this, and it will be a painful change for a lot of people (of which, these same people are fighting a futile battle against).
It's a semi coming down an icy hill and now we're trying to stop it. Ain't gonna happen...best thing to do is get as many people as possible out of harm's way and let it crash, then try and figure out how to melt the icy slope to make it safe again. I say don't focus on the truck, focus on the ground it's traveling on.
An interesting bit from curt1lp's link:
That section of that article made a ton of sense to me. I'll try to spend some time on verifying those statements from other sources, too...in almost every case of recent banking crises in which emergency action was needed to save the financial system, the most economical (to taxpayers) method was to have the Government, as in Sweden or Finland in the early 1990’s, nationalize the troubled banks, take over their management and assets, and inject public capital to recapitalize the banks to allow them to continue doing business, lending to normal clients. In the Swedish case, the Government held the assets, mostly real estate, for several years until the economy again improved at which point they could sell them onto the market and the banks could gradially buy the state ownership shares back into private hands. In the Swedish case the end cost to taxpayers was estimated to have been almost nil.
...the largest bailout in US or world financial history, the failed TARP—Troubled Asset Relief Program—a proposed $700 billion financial stabilization scheme which, in original version would have allowed Treasury Secretary Paulson or his Treasury successor to use $700 billion, with no oversight or accountability, to buy bad or worthless assets from financial institutions he deems worthy of help. Paulson’s plan, the one essentially rejected on September 29 by the House of Representatives, would have done nothing to recapitalize the troubled banks. That recapitalization could cost an added hundreds of billions on top of the $700 billion toxic waste disposal.
Serious conservative bankers...who went through the Scandinavian crisis of the 1990’s are scratching their head trying to imagine how crass the Paulson TARP scheme was. That crass and politically obvious bailout of Wall Street by the taxpayers, what some refer to as ‘Bankers’ Socialism—socialize the costs of failure onto the public, and privatize the profits to the bankers—is a major factor behind the defeat of the TARP compromise version.
Although, a lot of the solution is going to depend on a paradigm shift in the American public and how they live on what money they have.
"But while we can't get what we want, that seems
Of all things most desirable. Once got,
We must have something else."
Lucretius's words, equally applicable in the digital age as it was in the last century BC:
"...pray do not imagine that those who make the noise are the only inhabitants of the field;
that, of course, they are many in number; or that, after all, they are other than the little,
shriveled, meagre, hopping, though loud and troublesome, insects of the hour."
-Edmund Burke
You mean have the money/interest that banks charge go into the public coffers for uses of the general public (like health care and education) instead of some fat cats' pocket? Egads - that would be liberal socialism! And aren't those dirty words...?
I'm just sayin'...
"...pray do not imagine that those who make the noise are the only inhabitants of the field;
that, of course, they are many in number; or that, after all, they are other than the little,
shriveled, meagre, hopping, though loud and troublesome, insects of the hour."
-Edmund Burke
they passed it,
I feel like I just took out a $7000 loan on something I woul't ever see
do I look like I know what I'm doing?
No sweat......your grandkids can pay it back.
ya know... IIRC, the US runs in deficit mode...
We aren't even able to cover the interest on the national debt we have.
Congratulations Americans, you've just been pre-approved for a $700 Billion line of credit.
VM
If aliens listened to our current top 40, they'd think that the entire planet was populated by sexually ambivalent robots with ethnic insecurity.
With a truckload of pork attached...
so if youve already paid off your house and cars...congratulations!now you get to have debt to pay off some fat cats BMW and swimming pool.i think we should have just let those greedy people go down the tubes.
by the way,when did we start running in deficit mode?it wasnt,by any chance,when we started losing our edge on the rest of the world and exporting our jobs ,was it?
I, for one want to thank the members of this forum to be able to discuss this without getting into political bashing.
It has been interesting and informative!
I have been bashing politicians my entire (adult) life, I just try to be somewhat polite while doing it..
do I look like I know what I'm doing?
FUCK ME IT PASSED!
Don't remind me!FUCK ME IT PASSED!
In the mid to late '70s, the debt began exploding; the GDP didn't increase on pace with the increase of the national debt as well. In the late '80s was the significant increases of the over-printing of money.
Today we have some $60 trillion in obligations and $12 trillion in product, where as the rest of the world averages twice the product as they have debt.
Yeah, we only have 1/4 of the income as we do debt. Sounds like a lot of the American public's spending habits, as well.
"...pray do not imagine that those who make the noise are the only inhabitants of the field;
that, of course, they are many in number; or that, after all, they are other than the little,
shriveled, meagre, hopping, though loud and troublesome, insects of the hour."
-Edmund Burke
I have 1,500 of debt total. THat'll get paid off next april when I get my tax refund. Then, no debt. Cash or don't buy.
thats what we do too...unfortunately the government isnt that smart.
"JPMorgan blamed for Lehman collapse: report" hmm wonder what this is all about.
http://www.abc.net.au/news/stories/2...05/2382557.htm
Another observation -
This is not just a US crisis it seems to be happening all over: http://business.timesonline.co.uk/to...cle4864032.ece
German bank to collapse after failed bail-out: http://www.abc.net.au/news/stories/2...05/2382546.htm
Looking at a hypothetical connection between Iran strike & economy: "Expert: Iran strike would cause 'serious depression'"
http://rawstory.com/news/2008/Fox_gu...will_1001.html
Last edited by curt1lp; 10-05-2008 at 07:03 AM.
Sounds like we might all have to bail out CA now. The flood gates have opened.
...and on the 8th day, God created the Super Reverb and there was ROCK, and it was GOOD!
The Dow just dropped below 10K, gee it really worked well, huh? Glad to see all the fat cats got theirs though.
"No harmonic knowledge, no sense of time, a ghastly tone, unskilled vibrato, and so on. Chuck is one of the worst guitar players I know" -Gravity Jim
Oh, c'mon.
Keep the faith, OA.
The theory will kick in.
Who knows? Maybe another laissez faire generated "great" depression will be exactly the kind of character building crisis we need.
Remember all those stories our parents or grandparents told us?
"Well, I used to be disgusted, now I try to be amused..."
Elvis Costello
I only got one thang to say to them incestuous whores on Wall Street an' in Washington......
Well, I think it'll continue to free fall for awhile before any changes can have effect. You can't pull a huge airliner out of a dive in a matter of seconds...
I was reading the news online just now - and realized I just am sick of worrying about this issue. Hell, I only have about 5K in play money invested by my company on my behalf - in my 403B anyway - so I'm just going to try to live within my means for awhile. I've got a house, a car, food to eat, clothes to wear...
"I'm gonna find myself a girl
that can show me what laughter means
And we'll fill in the missing colors
In each other's paint-by-number dreams..."
Let's say you have two greedy crooks on each side of the table:
1. government (legislators, bureaucrats, activists and regulators)
2. business (lenders, appraisers, investment banks, real estate companies)
The government says, "You HAVE to make more loans to people who deserve to own a home but can't." (Began in 1977 as the CRA, Community Reinvestment Act, and has been amended many times since then.)
Business says, "We'll make billions of dollars of those loans, camouflage risk and pass it on to the next poor sucker". (All the lending and housing activity looks good on the surface.)
Everybody makes money for a while.
But it takes years from 'em to float up like bloated, stinking catfish.
That's about as simple as I can explain it.
Ayatollah of Dumbassollah
facebook: Stephen Doc Watson
What's even worse:
The other night I heared on the radio that it would only take approximately $144B USD to pay off every residential mortgage in the country (including those that are not currently in arrears).
SO WHO'S GITTIN' THE REMAINING $556B, HUH?
I guess they shoulda given Ponzi the friggin' Nobel Prize for economics!
it's gonna be nuttin' but this till Feb '09.....
or they wouldn't know how to make money otherwise!
.
.
Well, turns out the $700B was a made-up amount. Several people who where involved in the process have said that that number was picked to
1) Make sure there was enough in any case because the extent of the problem was (and still is) unknown, and
2) They wanted a number that would really get people's attention so that the problem would be addressed.
Knowing that, how much MORE than that do you think they will actually spend now that the floodgates are open?
And also, if wasn't really a $700B problem, it is now because that's the number people reacted to. Now, that's leadership.
"No harmonic knowledge, no sense of time, a ghastly tone, unskilled vibrato, and so on. Chuck is one of the worst guitar players I know" -Gravity Jim
Yep that could well be right..I have a link for that:
http://www.forbes.com/2008/09/23/bai...23bailout.html
"In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number." "
I have no idea how credible this guy is but he says 5 trillion.
http://www.breitbart.tv/?p=182363
BTW some sites say the derivatives are a big problem too and will bite sometime. Apparently according to commentators I have heard there is more money in derivatives market than the entire planet earth is worth!. this guy says "Then you have the whole derivatives worldwide worth about a notional $1,300 trillion. "
Last edited by curt1lp; 10-07-2008 at 05:59 AM.
DK government negotiated with all danish banks and came away with an agreement on a fund of 6.400.000.000 USD (1280 USD pro persona alive here), provided by Danish banks and to be paid as necessary in by the banks during a 2 year period - combined with an unlimited state guarantee towards those same banks. It is only the banks that "benefits", it does nothing to accelerate the economy and thus the stock market still fell. The oversight about the rest of society is cool as we are enjoying zero unemployment and the fruits of 20 years good economic policy - with both expanding and contracting public budgets as demanded by the general economic fluctuations. 9.9 out of ten haven't got a clue about economics, but we are having some sort of balanced confidence about our politicians in general, that you US citizens seem to miss.
The last chapter has not been written yet, and I think that those that see the end of the US super-power need new glasses. On the other hand, some of you need to learn to trust the smarter fellas with proof of graduation from good classic universities instead of brewing up home-made theories and conspiracies. Very un-american to go after those with success, no?
Stop watching movies and TV news.
Start read papers that does not contain nude wimen (more than once a week) and prints long articles in fine print. Your brow will rise ;)
Democracy does only work if voters are informed about facts and armed with valid (accepted by said smart fellas) theories and common sense. THEN morons in suits with slick painless solutions wil have a hard time buying votes for hot air. I mean NO economist in this country worth mentioning denies the GOOD effect of expanding public budgets when times are bad and unemployment rages. Consequently NO voters voices anything but worries "remember to pull back when the wheels are running faster". Formerly it was the "Social democrats" that had trouble using the brake - now it seems the present government - which is right wing and for whom I have voted several times - are lucky that they didn't step on the brake when most of us thought that they should have. The financial crisis will do the stepping that would have been a screecing halt if the brake had been touched. But that's luck. I consider switching side at next election. I lost confidence. But that's messing with my point, that is:
It is not ALWAYS good to cut public spending. Sometimes privates (that's you) will loose too. Likewise: TAXES as in "suck money out of taxpayers pockets and stack them" can be beneficial too.
In India they have sacred cows...
OK...IMHO...this is a stock market crash. 401k's, retirement accounts are now worth 2 TRILLION $$$$ less.
http://news.yahoo.com/s/ap/20081007/...own_retirement
I'll see you guys in the food line.
I'll be the white bearded guy with the 50th anniversary strat with rusty strings.
Stratocasters (2004 Anniversary, 2001 NOS 2 tone SB)74 LP Deluxe GT (humbucker mod) Gibson
2005 Standard Faded Lemon top Gibson
PRS - 2004 Singlecut
1981 J45 (Kalamazoo)
1959 0018E Martin
72 Deluxe Reverb
66 Super Reverb
Mesa Boogie Mk I R.I.
Marshall Bluesbreaker R.I.
Roland Blues Cube BC 30
and then Mondays rise... I am now convinced I do not understand
do I look like I know what I'm doing?
It's called market dynamics.
Investors see bargains now that share prices and P/E ratios have declined. Ergo, they're buying again on the expectation that the economy will ultimately rally.
first we must understand the banking sysetm;
http://www.youtube.com/watch?v=rC720Cl3N-0
http://www.youtube.com/watch?v=nUChu...eature=related
http://www.youtube.com/watch?v=Eg5N_...eature=related
http://www.youtube.com/watch?v=Wjbnq...eature=related
http://www.youtube.com/watch?v=czZiP...eature=related
Last edited by jerryjg; 10-13-2008 at 09:52 PM.
Good work Jerryjg. I personally think currency needs to be hard-linked to some easily quantifiable and noncounterfietable asset such as gold - the gold then stands as marker of goods or labour. I believe this is needed so as to avoid leveraging scams eg 'fractional reserve banking' i.e when a bank that lends more than they own (fiat money which they then charge interest on) on the basis that not all their assets eg deposits are going to be called on at any one time. I call that creating money out of thin air! As far as I can see that creates inflation which devalues the money already in circulation, so its a form of robbery.
IMO:The danger of the present system:
The world is going down the tube because more and more money is getting concentrated in less and less hands, hands that can use that money to corrupt government to get control over an ever increasing share of the the goods and labour of humankind so as to funnel even more wealth and power to themselves. Its a spiraling vicious cycle and it can perpetuate through successive generations of those in power if they are so inclined.
European culture has at one time experienced this under the name Feudalism - Our (the world economy) system seems to lend itself to a return of this except that this time the serfs will be under privately owned multicorporations not kings and barons. Of course the corporations will have private armies/law enforcement like the kings of old or alternatively have undue influence on govt armies/law enforcement controlled by govt.
Is there a solution?
not sure there is one, the problem seems to be that a lot of people thrive on competition and rising up the ladder of power and wealth, it seems to be inherent to our species, maybe only personal understanding of the fundemental aspects by not millions but billions of people of where we are and how we got here, will maintain the right balance between the powerful and the powerless (I think that there are also a significant proportion of people that don't want power or a lot of wealth, they are happy to coast along and enjoy life) which ideally would be a relationship which benefits both groups. I don't think this is likely to happen as liberty benefiting education/culture is not encouraged from the top as it might enpower the unknowing masses.
Our only hope as it stands is the internet for dissemination of information. Support free speech on the net. It's a really precious freedom.
disclaimer: I am not an economist this is just my armchair understanding. If this stuff seems crazy look at history over hundreds of years not a few decades - far crazier things have happened AND free societies are historically a rare thing.
Last edited by curt1lp; 10-13-2008 at 11:25 PM.
I got this analysis from a buddy at another forum;
QUOTE-"Not to sound like a conspiracy nut, but this crisis is every bit as manufactured as the great depression. It marks a transition in government and personal property rights that moves our country not towards socialism, but towards a corporatist form of government. The purpose of this crisis is the amalgamation of capital in the hands of the few, not the many.
If you wanted to impose serfdom on a population how would you do it?
Destroy the equity that a person has in their house and thus destroy the concept of ownership.
Destroy the value of currency. If you make a person work for credit you can manipulate the value of goods and services to impose perpetual debt. As the song goes “I owe my soul to the company store”.
Take away personal mobility with high fuel prices, high vehicle prices, reduce the amount of credit available for auto purchases and end production of automobiles. By taking away personal mobility a person no longer has social mobility or class mobility!
Institute a system of apprenticeship and job classification which denies people class and social mobility.
Institute a national ID card that can be turned into a system of internal passport.
Establish a system of cartels that center on raw materials, energy and consumer goods.
Establish a system of patronage where elected officials are bound to the interests of the cartels and not their constituents.
Establish a system of weak and ineffective oversight of campaign contributions.
Establish a system of weak and ineffective price controls on goods and services."- END QUOTE
We have all been bought and sold. We just don't know it yet.
I can't help but wonder what's going to happen when China calls in the bill that we owe them...plus the interest on top of that. And let's not forget the bill for that whole S&L scandal that's going to be due somewhere around 2026.
I see it not as a conspiracy, but market dynamics like phantomman said. During the selloff people panicked. Monday, people got in as quick as they could thinking that they would miss out on the rally....people, including hedge funds, etc... that may continue a while longer but it will swing the other way too.
These swings will probably continue for a long time. I don't try to time the market. Instead, I have sell points for profit for each of the stocks I hold. Problem is, the sell point got a long way away for most of my stocks in the last 3 weeks.
Scary stuff how much the immediate value of the companies fell in just a couple of weeks.
Stratocasters (2004 Anniversary, 2001 NOS 2 tone SB)74 LP Deluxe GT (humbucker mod) Gibson
2005 Standard Faded Lemon top Gibson
PRS - 2004 Singlecut
1981 J45 (Kalamazoo)
1959 0018E Martin
72 Deluxe Reverb
66 Super Reverb
Mesa Boogie Mk I R.I.
Marshall Bluesbreaker R.I.
Roland Blues Cube BC 30
I observed these two things ten years ago:
1: P/E ratios were way out of whack.
2: Easy credit was a problem we all would have to pay for in the end.
It was a great ride, y'all, I made a small fortune.
And went into preservation back in the first quarter.
I haven't lost a dime.
I'm curious as to what you think is a good P/E? Congrats on getting out before this thing started tanking...which actually began in October 2007.
Stratocasters (2004 Anniversary, 2001 NOS 2 tone SB)74 LP Deluxe GT (humbucker mod) Gibson
2005 Standard Faded Lemon top Gibson
PRS - 2004 Singlecut
1981 J45 (Kalamazoo)
1959 0018E Martin
72 Deluxe Reverb
66 Super Reverb
Mesa Boogie Mk I R.I.
Marshall Bluesbreaker R.I.
Roland Blues Cube BC 30
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