wendyinoc_IHB
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I trust this board more then our elective officials. Can it really solve the problem? Were not at the bottom yet.
Can someone explain the bailout to me??
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25inIrvine_IHB
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I dont even think the big guys running the companies can explain it to you yet. There are so many things still up in the air that have not been decided.
To me, this won't fix the fundamental problem of housing prices vs. income and Bush just admitted that housing prices was the start of all this, so how could a bail out help if prices are still too high compared to income?
So I guess my gut instinct is that it will keep these companies from going under, but it will not stop prices from falling and it will not stop these companies from getting losses in the future. Correct me if I'm wrong, don't these companies still have toxic loans on the books that aren't toxic yet? Like for example, an option arm that hasn't reset yet?
To me, this won't fix the fundamental problem of housing prices vs. income and Bush just admitted that housing prices was the start of all this, so how could a bail out help if prices are still too high compared to income?
So I guess my gut instinct is that it will keep these companies from going under, but it will not stop prices from falling and it will not stop these companies from getting losses in the future. Correct me if I'm wrong, don't these companies still have toxic loans on the books that aren't toxic yet? Like for example, an option arm that hasn't reset yet?
Anonymous_IHB
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serious weapon_IHB
New member
[quote author="wendyinoc" date=1222334610]I trust this board more then our elective officials. Can it really solve the problem? Were not at the bottom yet.</blockquote>
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
But the dead shot is that stupid Republicans caused this mess... And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
But the dead shot is that stupid Republicans caused this mess... And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.
NoWowway_IHB
New member
By far, the best metaphor for understanding the bailout is by Rachel Maddow and the Halloween Candy illustration:
http://www.youtube.com/watch?v=VjAKPutvMjM
http://www.youtube.com/watch?v=VjAKPutvMjM
awgee_IHB
New member
First, the government is <b>NOT</b> going to buy loans. That is what Paulson and company are misleading the American public to think, but it is not true. The TARP will be buying derivatives; tranches of CDOs, (mortgage related assets). They are next to worthless. The banks will not sell them for their market value because the banks are highly leveraged and can not afford to show that they are insolvent.
Paulson will buy the next to worthless derivatives for way above market prices as a bail out for his banker friends. He will sell the "mortgage related assets"/derivatives, at their market prices for a huge loss, and then he will buy more. He will not hold more than $700,000,000,000 worth at any one time, but as soon as he sells some for huge losses, he can buy more.
The government does not have the money to do this. The government will borrow, (print), the necessary money.
All the rest of the nonsense, ie. executive compensation, warrants, foreclosures, etc. is bs designed to confuse and obfuscate the issue that Paulson will be tranfering huge amounts of wealth from the taxpayers to already wealthy bankers, and this bailout will not solve any economic problems. It only delays them and makes the consequences worse.
Paulson will buy the next to worthless derivatives for way above market prices as a bail out for his banker friends. He will sell the "mortgage related assets"/derivatives, at their market prices for a huge loss, and then he will buy more. He will not hold more than $700,000,000,000 worth at any one time, but as soon as he sells some for huge losses, he can buy more.
The government does not have the money to do this. The government will borrow, (print), the necessary money.
All the rest of the nonsense, ie. executive compensation, warrants, foreclosures, etc. is bs designed to confuse and obfuscate the issue that Paulson will be tranfering huge amounts of wealth from the taxpayers to already wealthy bankers, and this bailout will not solve any economic problems. It only delays them and makes the consequences worse.
no_vaseline_IHB
New member
<a href="http://www.youtube.com/watch?v=VjAKPutvMjM ">Here's the link to the Rachel Maddow clip.</a>
optimusprime_IHB
New member
[quote author="GOTTI" date=1222343920][quote author="wendyinoc" date=1222334610]I trust this board more then our elective officials. Can it really solve the problem? Were not at the bottom yet.</blockquote>
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
<strong>But the dead shot is that stupid Republicans caused this mess.</strong>.. And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.</blockquote>
Interesting....I didn't know an Republican administration ran the White House back in the 90s...
http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html(need to have subscription)
This Mess Started a Long Time Ago
By Rev Shark
RealMoney.com Contributor
9/25/2008 11:10 AM EDT
URL:http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html
As this bailout plan takes shape, you can be sure there is going to be lots of discussion about who to blame. Of course, the discussion will be largely politically motivated and the truth will be greatly obscured unless you do some digging. Worst of all, there will be plenty who will focus on a single cause and ignore all the different factors that came into play over the years.
The root cause of the problem goes way back to the early 1990s. In December 1993, an article in the National Review stated:
"Quietly, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous."
That is the move that eventually produced the glut of bad subprime paper. Ironically, it was caused by increased government regulation to cure percieved ills, and more regulation is what so many are looking to implement at this point.
Unregulated trading of derivaties became a problem only because the underlying instruments were corrupted by government intervention. Certainly, bankers and the folks on Wall Street should have know better than using leverage of 30 to 1 and more, but here we are again, trying to intervene in the system, and this is sure to have all sorts of negative fallout down the road.
The market action, while positive, is still a bit skittish. Oil and commodities are weak, and gold has pulled back, and some folks actually have the faith to buy retailers.
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
<strong>But the dead shot is that stupid Republicans caused this mess.</strong>.. And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.</blockquote>
Interesting....I didn't know an Republican administration ran the White House back in the 90s...
http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html(need to have subscription)
This Mess Started a Long Time Ago
By Rev Shark
RealMoney.com Contributor
9/25/2008 11:10 AM EDT
URL:http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html
As this bailout plan takes shape, you can be sure there is going to be lots of discussion about who to blame. Of course, the discussion will be largely politically motivated and the truth will be greatly obscured unless you do some digging. Worst of all, there will be plenty who will focus on a single cause and ignore all the different factors that came into play over the years.
The root cause of the problem goes way back to the early 1990s. In December 1993, an article in the National Review stated:
"Quietly, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous."
That is the move that eventually produced the glut of bad subprime paper. Ironically, it was caused by increased government regulation to cure percieved ills, and more regulation is what so many are looking to implement at this point.
Unregulated trading of derivaties became a problem only because the underlying instruments were corrupted by government intervention. Certainly, bankers and the folks on Wall Street should have know better than using leverage of 30 to 1 and more, but here we are again, trying to intervene in the system, and this is sure to have all sorts of negative fallout down the road.
The market action, while positive, is still a bit skittish. Oil and commodities are weak, and gold has pulled back, and some folks actually have the faith to buy retailers.
[quote author="optimusprime" date=1222381953][quote author="GOTTI" date=1222343920][quote author="wendyinoc" date=1222334610]I trust this board more then our elective officials. Can it really solve the problem? Were not at the bottom yet.</blockquote>
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
<strong>But the dead shot is that stupid Republicans caused this mess.</strong>.. And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.</blockquote>
Interesting....I didn't know an Republican administration ran the White House back in the 90s...
http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html(need to have subscription)
This Mess Started a Long Time Ago
By Rev Shark
RealMoney.com Contributor
9/25/2008 11:10 AM EDT
URL:http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html
As this bailout plan takes shape, you can be sure there is going to be lots of discussion about who to blame. Of course, the discussion will be largely politically motivated and the truth will be greatly obscured unless you do some digging. Worst of all, there will be plenty who will focus on a single cause and ignore all the different factors that came into play over the years.
The root cause of the problem goes way back to the early 1990s. In December 1993, an article in the National Review stated:
"Quietly, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous."
That is the move that eventually produced the glut of bad subprime paper. Ironically, it was caused by increased government regulation to cure percieved ills, and more regulation is what so many are looking to implement at this point.
Unregulated trading of derivaties became a problem only because the underlying instruments were corrupted by government intervention. Certainly, bankers and the folks on Wall Street should have know better than using leverage of 30 to 1 and more, but here we are again, trying to intervene in the system, and this is sure to have all sorts of negative fallout down the road.
The market action, while positive, is still a bit skittish. Oil and commodities are weak, and gold has pulled back, and some folks actually have the faith to buy retailers.</blockquote>
The problem described in the article you linked to was called "redlining". The "thought" was that it was discrimination, not fiscal prudence that led to banks looking at the ability to repay loans in their decisions on granting loans. If you dig deep enough, you will find that a certain community organizer worked with ACORN to fight "redlining" in Chicago.
This is a shot in the dark... The gov. is going to buy all the bad loans that dumb people applied for and "Predatory" lenders signed off on. The gov is going to absorb those bad debts banking on the fact that maybe one day they can flip those loans for a profit. And because of the lack of regulation, we the taxpayers are most likely going to be on the hook.
<strong>But the dead shot is that stupid Republicans caused this mess.</strong>.. And they know this. Except for last Monday when the fundamentals of the U.S. economy were strong. You know, the day when the DJI(-504 pts) crashed like McCain's bomber in Vietnam.</blockquote>
Interesting....I didn't know an Republican administration ran the White House back in the 90s...
http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html(need to have subscription)
This Mess Started a Long Time Ago
By Rev Shark
RealMoney.com Contributor
9/25/2008 11:10 AM EDT
URL:http://www.thestreet.com/p/rmoney/revsharkblog/10439291.html
As this bailout plan takes shape, you can be sure there is going to be lots of discussion about who to blame. Of course, the discussion will be largely politically motivated and the truth will be greatly obscured unless you do some digging. Worst of all, there will be plenty who will focus on a single cause and ignore all the different factors that came into play over the years.
The root cause of the problem goes way back to the early 1990s. In December 1993, an article in the National Review stated:
"Quietly, behind the scenes, the Clinton Administration is preparing for the biggest regulatory crackdown of recent years. Attorney General Janet Reno is linking up with banking regulators and with HUD Secretary Henry Cisneros to end the supposed epidemic of discrimination against minorities in making home loans. The implications for society at large are ominous."
That is the move that eventually produced the glut of bad subprime paper. Ironically, it was caused by increased government regulation to cure percieved ills, and more regulation is what so many are looking to implement at this point.
Unregulated trading of derivaties became a problem only because the underlying instruments were corrupted by government intervention. Certainly, bankers and the folks on Wall Street should have know better than using leverage of 30 to 1 and more, but here we are again, trying to intervene in the system, and this is sure to have all sorts of negative fallout down the road.
The market action, while positive, is still a bit skittish. Oil and commodities are weak, and gold has pulled back, and some folks actually have the faith to buy retailers.</blockquote>
The problem described in the article you linked to was called "redlining". The "thought" was that it was discrimination, not fiscal prudence that led to banks looking at the ability to repay loans in their decisions on granting loans. If you dig deep enough, you will find that a certain community organizer worked with ACORN to fight "redlining" in Chicago.
serious weapon_IHB
New member
<a href="http://www.comedycentral.com/videos/index.jhtml?videoId=185197">Explanation of how this mess was started by WJC. Explanation starts at 3:30</a>
Hmm... A competent former Commander in Chief vs. Some online contributor named Rev. Shark. I think I'm gonna have to go with the former Prez. explanation on this one.
And Rev Shark... It's "Derivative" and "Perceived".
Hmm... A competent former Commander in Chief vs. Some online contributor named Rev. Shark. I think I'm gonna have to go with the former Prez. explanation on this one.
And Rev Shark... It's "Derivative" and "Perceived".
optimusprime_IHB
New member
Franklin Raines.... wiki him ...
What else do you think Bill Clinton would say?
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos
What else do you think Bill Clinton would say?
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos
serious weapon_IHB
New member
[quote author="optimusprime" date=1222384558]Franklin Raines.... wiki him ...
What else do you think Bill Clinton would say?
</blockquote>
"I did not have sexual relations with that woman."
What else do you think Bill Clinton would say?
</blockquote>
"I did not have sexual relations with that woman."
serious weapon_IHB
New member
[quote author="optimusprime" date=1222384558]
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.
optimusprime_IHB
New member
[quote author="GOTTI" date=1222385573][quote author="optimusprime" date=1222384558]
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.</blockquote>
What did Clinton do.... you're living in it.
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.</blockquote>
What did Clinton do.... you're living in it.
serious weapon_IHB
New member
[quote author="optimusprime" date=1222386595][quote author="GOTTI" date=1222385573][quote author="optimusprime" date=1222384558]
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.</blockquote>
What did Clinton do.... you're living in it.</blockquote>
Whatever you say Megatron.
BTW...Rev Shark writes for Jim Cramer's site so he's not some blowhard. Plus he manages $100mm or so. So I would actually read him instead of someone on the daily kos</blockquote>
So? What did Clinton do? Oh yeah, he ran and made this country prosper for eight years.
Do all Republican's have trouble with vocab? That clip was from the Daily Show, not Daily Kos. Besides, 236.com blows the Daily Kos and Fox News away. More informative than the Kos and waaaay funnier than the stuff that I've seen on Fox.</blockquote>
What did Clinton do.... you're living in it.</blockquote>
Whatever you say Megatron.
IrvineRenter_IHB
New member
You guys have an uphill battle convincing the country that the housing bubble was Bill Clinton's fault. The subprime phenomenon began in 1994, when Newt Gingerich and the Republicans took over the House. The housing bubble took off in 2000 and went through 2006, a period when Republicans held the Presidency, the House and the Senate. Interesting that all that time under Republican control was unable to fix whatever mistakes Bill Clinton made that caused this problem. I can understand the Republican's need to spin this. If they actually have to take responsibility for the policies that caused this problem or let it go unchecked, they will get slaughtered in November. Personally, I don't think Clinton or Bush did much to create the problem. I do think lax Republican oversight exacerbated it, particularly since they shun regulation. However, if the Democrats had been in charge, I doubt it would have been any different. Regulators are always pressured to look the other way when times are good. This happened under a Democratic Congress with the S&L disaster and under a Republican Congress with the housing bubble. Let's be real, though, blaming Bill Clinton is complete bullshit.
optimusprime_IHB
New member
[quote author="skek" date=1222395102]From the President's speech last night:
<blockquote>[A]s markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.</blockquote>
Peter Orszag framed it best -- there are two problems the bailout plan can address and no one has identified which (or both) we are pursuing. One, the plan can address the liquidity problem by providing a market for securities no one else will touch. This does not require overpaying for the assets, it merely requires a willingness to buy the assets. <strong>Two, the plan can address the solvency problems of banks who are holding worthless securities but have not yet marked to market. The only way the plan can help these banks is to overpay for those assets</strong>.</blockquote>
Is Orszag factoring in the $500 billion worth of write offs from marking to market, the banks have written in the past year and a half?
<blockquote>[A]s markets have lost confidence in mortgage-backed securities, their prices have dropped sharply. Yet the value of many of these assets will likely be higher than their current price, because the vast majority of Americans will ultimately pay off their mortgages. The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal. And when that happens, money will flow back to the Treasury as these assets are sold. And we expect that much, if not all, of the tax dollars we invest will be paid back.</blockquote>
Peter Orszag framed it best -- there are two problems the bailout plan can address and no one has identified which (or both) we are pursuing. One, the plan can address the liquidity problem by providing a market for securities no one else will touch. This does not require overpaying for the assets, it merely requires a willingness to buy the assets. <strong>Two, the plan can address the solvency problems of banks who are holding worthless securities but have not yet marked to market. The only way the plan can help these banks is to overpay for those assets</strong>.</blockquote>
Is Orszag factoring in the $500 billion worth of write offs from marking to market, the banks have written in the past year and a half?