If the Fed had just let the market correct itself naturally last summer rather than trying to rig the game every time something negative occurred, things probably would have turned around now. They bail out AIG and it will help the markets for a day or 2, but things will then fall apart when the next shoe drops. Wait until the credit card defaults start hitting, the stimulus package only delayed that inevitability from occurring. Once the people who are maxing out their credit cards and paying the 30% penalty vig in order to avoid foreclosure finally capitulate, look out below on commercial banks.
Originally posted by redsoxnationIf the Fed had just let the market correct itself naturally last summer rather than trying to rig the game every time something negative occurred, things probably would have turned around now. They bail out AIG and it will help the markets for a day or 2, but things will then fall apart when the next shoe drops. Wait until the credit card defaults start hitting, the stimulus package only delayed that inevitability from occurring. Once the people who are maxing out their credit cards and paying the 30% penalty vig in order to avoid foreclosure finally capitulate, look out below on commercial banks.
1) Without the past bailouts, the market still would have been sunk, but probably not to this degree. They kept it afloat, but kept pushing back the cost in hopes that it would recover.
2) Most reports I've read have suggested that people have been paying off their credit cards at the expense of their loan payments, largely because they already had negative equity, since they were even less likely to be foreclosed that a late paid mortgage with actual recovery.
It is the policy of the documentary crew to remain true observers and not interfere with its subjects.
AIG is actually a bigger problem. Regional banks (money.cnn.com) in the US could have major ripple effect from AIG crashing. And, I'm still looking for an article I saw earlier today that had a very clear discussion about the exposure that some non-trivial overseas banks (besides the domestic ones) have on AIG.
I'm no expert, but by my best understanding, it goes something lie this: A bunch of banks, in the US & overseas, took out insurance through AIG against high-risk loans they were giving. Because those high-risk loans were insured by somebody, the respective banking regulators then let those institutions offer yet more loans, based on the security of that first round. Bt if AIG fails, *&* various of those loans start to default (which is looking likely), then those institutions start to fail in a domino effect.
At least that's what I understood of it.
(I just can't figure out where the prudent bear should be holed up!!! Not even sure whether Prudent Bear Fund will work!)
If these loan default ie student loans and mortgages does the consumer have to buy it all back or do they have to scramble to get another loan? Won't be easier just to wipe out the loans through bankruptcy or does the new bankruptcy laws we put in effect just delay the inevitable part of buying all of it back? How long can the U.S. government buy these banks out and not destroy our economy?
Originally posted by Doc_whiskeyWatch a re-run of Mad Money tonight on CNBC, Jim Cramer did a pretty good job of breaking it down.
Is this the same Jim Cramer who told everyone that Bear Sterns was a BUY BUY BUY days before IT went under?
I'll pass... ;-)
On the bright side, Cramer did upgrade the Bluth Company to 'risky.'
“How is it that I am a good actor? What I do is I... pretend to be the person I’m portraying. You’re confused. Case in point: in Lord of the Rings, Peter Jackson comes to me and says ‘I would like you to be Gandalf the Wizard,’ and I said ‘You are aware that I am not really a wizard?’ and Peter Jackson said ‘I would like you to use your acting skills to portray a wizard for the duration of the show.’ So I said ‘Okay’ and then I said to myself ‘Mmm.. How do I do that?’ And this is what I did: I imagined that I was a wizard, and then I pretended, and acted, in that way on the stage. How did I know what to say? The words were written down for me in a script. How did I know where to stand? People told me where to stand." -- Sir Ian McKellen, Extras
There was no chance that the Fed would have let AIG fail - the absurd part of it is they could have done the bailout on Sunday evening instead of allowing the company to lose all of it's value and put the market in turmoil
AIG originally had until 9/25 to provide a restructure plan (i.e - sell off assets) - Merrill and Lehman going under made the Fed force AIG into a corner immediately - without a "buyer", so to speak. Which they knew - but instead of coming with the bailout at that moment, we had a cat and mouse game.
Today should be interesting. The Fed held off on the "feel good" lowering of the interest rate - I'm sure they will come back to that; the larger problem is that AIG, as we know it, is now in the hands of the government, pending a fire sale. Would YOU buy a stock like that?
Demonstrations are a drag. Besides, we're much too high
Here's a good article, for reference, detailing what a hole we are in. I probably shouldn't even start on the need for America to become Imperialists - and not half-assed ones that are afraid to get some rape and pillage blood on the hands. What's the world doing walking around with OUR money?
Now, everyone has the same question: how much worse can this get? This lack of confidence is self-fulfilling and endangers other financial institutions. These are companies that refinance themselves in the capital markets every day. They depend on the confidence of lenders. But, if that disappears, their solvency is threatened. This is where we are now.
- from the article linked above
Who me? You know I'm a shareholder I'm a sucker.
I've got WaMu also.
FLEA ADVICE - Don't forget at tax time to check into writing off the loss(es) (key word is "worthless") - AND QUIT BUYING STOCK ;-)
Demonstrations are a drag. Besides, we're much too high
Originally posted by emmaI hadn't even heard about Merrill Lynch selling themselves to Bank of America!
(Even as high as it is right now, gold is startin' to look better every day!)
(edited by emma on 16.9.08 1703)
If you bought it when you typed it, you would already have made around $100 per ounce after gold soared while everything else plummetted. If everything is going to implode, let Goldman Sachs suffer after all the times their former employees who get big positions running things for the government have 'helped' their former employers. Anyway I can get the matching part of my 401k in lottery tickets?
Hmmmm... I've always been of the belief that the Great Depression / New Deal-era was the time when states truly became dependant on the federal government for subsistence. (Maybe I'm also thinking of the Great Society...)