$700 Billion Bailout - UPDATE II: passed!

[OuchThatHurts]

Can you believe that market is actually rising on hopes of a $700B bailout bill? Even despite bad news coming in from every almost every sector?

They've done everything they can to prop this market up including stopping short selling (which is a necessary part of the market).

Anyone want to try to explain why the DJIA isn't 7,000 right now?

p.s. wow! 700B dollars... I guess it really is a free market!


To anyone who owns one that is...

I only wish I could have put TWO thumbs down up there.

[hotttsauce]

Originally Posted by OuchThatHurts

Can you believe that market is actually rising on hopes of a $700B bailout bill? Even despite bad news coming in from every almost every sector?

They've done everything they can to prop this market up including stopping short selling (which is a necessary part of the market).

Anyone want to try to explain why the DJIA isn't 7,000 right now?

p.s. wow! 700B dollars... I guess it really is a free market!


To anyone who owns one that is...

I only wish I could have put TWO thumbs down up there.

Yea and WAMU aint looking so good!

[OuchThatHurts]

Originally Posted by hotttsauce

Yea and WAMU aint looking so good!

WAMU?!? Never heard of 'em. Oh... you mean JP Morgan!


Thank goodness it was just a small failure. Oh wait! My bad. It's the largest bank failure EVER!

Bailouts and failures are good news because the stock market has started to rally today. Interesting isn't it?

[Pekkerwood]

Wachovia ain't looking so good today. I emergency stopped a pretty huge wire headed to my account in case they fold over the weekend. Felt ok when the stock doubled last week, today pounded. BTW WAMU was scheduled to fail last Thursday b4 the announcement and rumblings of bailouts.

[Pekkerwood]

Let's see. If I owe $600k on my house and pay my bills and my neighbor owes $600k and does not pay his bills, the government will negotiate his balance down to $400k so he can affort his home? When I go to sell he can sell for $400k and totally screw me selling mine. That sounds about right.

[OuchThatHurts]

Originally Posted by Pekkerwood

Let's see. If I owe $600k on my house and pay my bills and my neighbor owes $600k and does not pay his bills, the government will negotiate his balance down to $400k so he can affort his home? When I go to sell he can sell for $400k and totally screw me selling mine. That sounds about right.

So what your saying is that you spent years working the numbers, making sound decisions, were duly diligent in your investments, and did what you could to make wiser decisions than those around you right? I sort of did that myself too. We must be fools! We should have just went down to Wall Street and the banks and borrowed and bought a shitload! We could have been living high on the hog all this time. Boy, do I feel foolish now!

Man, is there somewhere I can buy "bailout" insurance? What I want is to be able to make investments and decisions without risks. Is there a way I can do that? Then I would have to worry about due diligence and all that other petty stuff.

[hotttsauce]

Originally Posted by OuchThatHurts

WAMU?!? Never heard of 'em. Oh... you mean JP Morgan!


Thank goodness it was just a small failure. Oh wait! My bad. It's the largest bank failure EVER!

Bailouts and failures are good news because the stock market has started to rally today. Interesting isn't it?

Don't know that guy, but I think he is in a lotta trouble

[rAJJIN]

The Man

Kane's Avatar

Join Date: Dec 2004
Posts: 910

Ron Paul's Answer to the President
Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

[fr8lnr01]

What government would allow people to invest in a market that is now based on pure speculation. You have better odds investing at the casino. Think about it, once you have lost all of your money they may put you up for the night.

Stock prices are based on speculation not on the company's real value. The buying of contracts betting on the rise of fuel, the failure of banks, the total destruction of America. What the F is are these people thinking about and why would anyone invest their money in such a foolish game? What about all of the retirement portfolios invested in the stock market? Banks invest in the market. The shit is so stupid.

There should be no bailout. The stock-market needs to be corrected and then regulated and overseen better. People that made bad financial decisions should lose their homes and not be given the opportunity to purchase outside of their affordability.

Look at what happened with the tech-boom. Silly litle companies with a speculative future getting IPO's and then going away a few months later. Why is America so blind nowadays. We're like lemmings racing to the sea.

The whole thing pisses me off because people are looking for someone to blame when they made their own decisions. It's like a person that gets an elective surgery and dies. You made your bed.... lie in it.

[pesty4077]

Hey, I am still waiting for my bailout money for my business, Oh. I am sorry. I don't grease enough politicians, and I don't make ridiculas money. For all of you that recieve your stimulas checks for $300-$600, you only have to pay back $2000 Sounds like a loan shark.

[OuchThatHurts]

Bailout bill failed. Doesn't matter too much though because we are still throwing 100's of billions at these companies.

This will just be a more piecemeal approach.

Financial securities are not looking too good right now. I would advise you guys make some portfolio adjustments if you are heavy (or even light) on financials. What I'm saying is this: GET THE HELL OUT OF FINANCIALS!!!

At least until the dust settles (which may take a while).

[buffbabeca]

all this makes my stomach turn.. considering i work for a bank.. one that is gladly still making money

[-OC-]

I really hope the $ your bank is "Making" will be worth the paper its printed on tomorrow, that will be the 'Decider" after they get their hold up, errr I mean "bailout" money.

Just like what happened to the Ruble in 1991, if we lose what is left of our dollars worth, our Republic IS OVER.

The ONLY thing I'd be buying into at this point is gold, a gun, and food stores; we are in too much chaos to anything else right now.

[OuchThatHurts]

Originally Posted by buffbabeca

all this makes my stomach turn.. considering i work for a bank.. one that is gladly still making money

That's likely because you work for a bank that did not do a lot of sub-prime lending or mortgages in general. While these banks will take a hit along with the rest of the sector, when this whole credit blunder impacts on the surface, these banks (like yours) will be a good investment opportunity because you will get the shares at a premium or next to nothing with good upside potential.

If the damn gov would stop propping up the economy and let it make a natural correction, it will recover that much quicker. Throwing taxpayer dollars at this mess is just prolonging the agony.

[OuchThatHurts]

Originally Posted by -OC-

I really hope the $ your bank is "Making" will be worth the paper its printed on tomorrow, that will be the 'Decider" after they get their hold up, errr I mean "bailout" money.

Just like what happened to the Ruble in 1991, if we lose what is left of our dollars worth, our Republic IS OVER.

The ONLY thing I'd be buying into at this point is gold, a gun, and food stores; we are in too much chaos to anything else right now.

Not true. This is the kind of irrational thought process that creates panic. And when people are panicky, they make stupid decisions. Markets rise and fall and that's that. This is not the end of the world. And any moron panic selling depreciated securities to buy overpriced gold or commodities at this stage of the game has little or no money because anyone with any substantial wealth would not be making that particular trade off right now.

If you did happen to get caught in an equity bind you just have to be long and strong. I converted and filled up my cash accounts months ago. That's when you should have done it - when everyone saw this time bomb on horizon. It's too late for that now. You may be able to cut some of your downside by getting back in at lower prices but knowing when that entry point will be, only time will tell. For now, our dollar is hanging as well as other currency with a few exceptions.

[-OC-]

Hey Ouch, would you kindly give me a tutorial, or straight answer on what happens, or I should say where does the money go when my stock becomes devalued? You know, the extra money.

Also when our money is based out of "Thin air" or credit and not backed by something "Hard" where is the stability?

Also where are the rock solid, fool proof protections that greedy insiders won’t be selling me up river? (You know the general greedy type that supposedly got us in this mess in the first place)

I guess we live in two different worlds, I can understand buying/investing in real estate, precious and semi precious metals, and maybe even other currencies, but buy in large, the others I see only a big revolving swindle, ran by you know who, sorry.

[OuchThatHurts]

Originally Posted by -OC-

Hey Ouch, would you kindly give me a tutorial, or straight answer on what happens, or I should say where does the money go when my stock becomes devalued? You know, the extra money.

Also when our money is based out of "Thin air" or credit and not backed by something "Hard" where is the stability?

Also where are the rock solid, fool proof protections that greddy insiders won’t be selling me up river?

I guess we live in two different worlds, I can understand buying,investing in real estate, precious and semi precious metals, and maybe even other currencies, but buy in large, the others I see only a big revolving swindle, ran by you know who, sorry.

No. I don't know who and neither do you. Stock and real estate speculation is a free market - investor vs. investor. Don't try to pull me into an argument about level playing fields and market manipulation or any other conspiracy theories.

Certainly we live in two different worlds. I own or have stake in multiple small businesses with sustainable income and positive cash flow with little or no debt and have personal liquid assets and net worth that exceed my current personal debt which is very little. It took years to get to where I am.

You're a young kid. You probably have little or nothing unless you inherited. If you didn't inherit, then you may have a mortgage, school loans, or car loans and I'm going to presume that your mortgage and auto, plus credit cards, etc. exceeds your assets. So in a sense, you're part of the problem. You have zero or less than zero financial net worth. Now don't get bent. You're not alone and I'm assuming a lot here. But if you did inherit, whatever you might have lost (or gained) is by your own doing unless you had trustees that made good decisions for you.

So either you inherited and your parents did well in their choices or you didn't inherit and you are likely in debt. Now maybe you've been squirreling away your dollars living in cheap apartment, riding a bike to work, etc. But in all likelihood you have no real-world knowledge or experience to be mounting this discussion. If you do, I certainly do apologize.

But no. I see no need to give you a tutorial. If you don't understand what happens in the win/lose battle of stock and real estate speculation than you have no place in this discussion. If you do understand what happens to that money, then you probably have realized now that I may have some of it myself.

Thin air? There are no rock-solid proof guarantees, son. It's a game of win or lose. Nobody is forcing you to invest in company stocks. And everything else mentioned considered "hard" is no different than any other backed security since those things only have value if somebody wants them. The more they want it, the more it's worth. I don't care what it is.

Here's a good quote from a great old flick:

"Money itself isn't lost or made, it's simply transferred from one perception to another. This painting here. I bought it 10 years ago for 60 thousand dollars. I could sell it today for 600. The illusion has become real and the more real it becomes, the more desperately they want it."

[-OC-]

Wow, reduced to personal attacks. No straight answer?

Ouch there is nothing wrong with admitting it's a giant roulette wheel, just be real and say that's what it is. I am just concerned with the guy holding the brake making the ball fall on whatever slot or color that benefits him or his "Friends" on that particular day. And as far as inferring my concern over humans greed, one of the oldest sins there are being twisted into a "Conspiracy" well...

And as far as the insult of me frittering or however you put it, parent’s money, how dare you, I won't even dignify that crap.

I'd ask ya to take a look at that (That really low personal attack), I wasn't asking for an argument, I was asking for an answer to a question that local brokers I have talked to (During the time I was helping my father payoff his reverse mortgage) could never give me, at least a straight sounding answer anyway.

That was my real intention.

[OuchThatHurts]

Originally Posted by -OC-

Wow, reduced to personal attacks. No straight answer?

Ouch there is nothing wrong with admitting it's a giant roulette wheel, just be real and say that's what it is. I am just concerned with the guy holding the brake making the ball fall on whatever slot or color that benefits him or his "Friends" on that particular day. And as far as inferring my concern over humans greed, one of the oldest sins there are being twisted into a "Conspiracy" well...

And as far as the insult of me frittering or however you put it, parent’s money, how dare you, I won't even dignify that crap.

I'd ask ya to take a look at that (That really low personal attack), I wasn't asking for an argument, I was asking for an answer to a question that local brokers I have talked to (During the time I was helping my father payoff his reverse mortgage) could never give me, at least a straight sounding answer anyway.

That was my real intention.

I took the time to reread what I posted and I just simply cannot see where I attacked you personally. I made my comments very general. You asked me to give YOU a tutorial which is a personal question and my answer was directed to you personally. If you weren't prepared for a personal response, in the future, do not ask personal questions.

And I won't admit to anything of the sort (roulette) because I don't agree with you.

[confuzed_guy2000]

Funny this whole bailout creeps up right before the Bush cartel is about to leave office. Of course we better hurry up and push it through or the sky might fall.