brianpaxton

So what do you guys think, a MUST, or an epic failure waiting to happen?

There's got to be a ton of traffic to be had around this subject, in the next 6-12 months, any ideas on how to monetize it?

Could a blog-type site, with a topic related URL make some money in this niche?

think.. biggestbailoutinhistory.com or something like that..

Deliguy

i heard the totals for the bailouts are in the 4 trillion mark. Is that right?

If so than if we thought inflation was bad this year, we still got the two most expensive years of the iraq war to pay off which will come around sometime next year plus another 4 trillion which will take its affect about 2010-2011.

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LotsOfZeros

That doesn't sound right. It's possible the bailouts were for banks who collectively control 4 trillion in assets. That might be it. The world's largest public corporation is Exxon-Mobil and their market cap is $413 Billion.

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brianpaxton

I think the US bailout is estimated at $1 trillion, but all sorts of figures are floating around..

of course there's the aid going to Europe also.. $1-200 billion?

What about monetizing this traffic? lol

(ps) I've snatched 2 great .com's based on recent CNN headline terms about the bailout..

LotsOfZeros

either way, it can't help the impending inflation coming

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pocketrockets

Latest reports are putting the bailout figure at $500 Billion

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vinny lingo

Where you might be getting the $4 trillion figure is from the total amount of mortgage liability Freddy and Fannie have. Which is $4 - $5 trillion. That's insane.

LotsOfZeros

Don't forget though, there is some equity backing those loans. The bailout is for the guarantee of those loans and do have some value to them (ie: selling the underlying asset). I don't anticipate home values going anywhere for a few years. Especially on the east and west coast.

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marketsnipers

Bush Administration has accomplished some amazing feats.

nickycakes

There will be more bailouts, there will be some companies going under. We'll likely end up with several very large, much more regulated entities doing the vast majority of the business and we'll likely be better off. This won't be settled within the next 10 years though, that's for sure.


Yes, the economy is fucked right now. Yes, Bush's did quite a lot to fuck it up. The subprime shit really really fucked us, and it's quite sad to see the state of things in many parts of the midwest where there are literally ghost towns where people just said fuck it and left the keys in the mailbox for the bank.

Sadly, there are many who have been getting absolutely filthy rich because of all this, and these are the same people who paid for bush's campaigns and are currently funding mccains. So if you care about this stuff at all (and you should), please DO RESEARCH and go vote.

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beejeebers

I thought most of these, (aig for example), were 2 year loans? Just to tide aig over while they sell off assets to cover the losses and pay back the government...not really a bailout in the "here's some free tax payer money" kind of way.

The real kicker is if an independent business man gets behind in his bills or makes some fucking stupid moves/bad decisions, the government would never bail them out.

aim

If you're implying that Obama is going to fix the mess that we're in, you're living in some sort of fantasy world.

This isn't a republicrat issue. Blaming the economic downfall of the nations largest financial institutions on any one particular person or political party doesn't work.

Everyone is to blame for this mess: the consumers for taking out loans they couldn't afford; the mortgage companies for underwriting these loans; and the fanny mae's and freddie mac's for buying this debt.

This 'bailout' is complete bullshit and is only adding to the facade that America is a prosperous nation... we bailed out companies that failed with money that doesn't exist. How much crazier does it get? The money does not fucking exist. It's not there. We're already 9.5 trillion in debt; let's just add another 1.1... Who's counting?

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Benji49

Yawn...

To get some perspective on things, you guys should go read "The Money Lords" by Matthew Josephson.

He was one of the great Wall Street writers who wrote on American finance from 1925-1950.

Nothing has changed with regard to Wall Street's love of funny money. For example, in 1970, $300 billion dollars (that's 1970 dollars, kids) was wiped out in the stock market because of wampum tactics used by companies such as ITT.

Josephson's book is a forgotten classic. Did you know that Bank of America financed it's national expansion in the 1920s by using boiler room operations to push their paper that was all but worthless by the 1930s?

You take that book the Money Lords, you change a few dates, a few names and it's a chronicle of the 2000s.

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nickycakes

How can you say the current administration isn't to blame for this and then quote national debt figures in the same post?

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aim

The bush administration most definitely is to blame for a lot of the the debt... Just as much as another Presidency during modern history.

Under Bush Sr, the national debt rose from 2.5 Trillion to 4 Trillion. A 150% increase.

Under Clinton, the national debt rose from 4 Trillion to 6 Trillion. A 150% increase.

Under Bush Jr, the national debt rose from 6 Trillion to 9.5% trillion. A 158% increase.

My point is, politics aside, it doesn't matter who's in the white house.

Both Obama and McCain's economic plans call for an overall increase in the national deficit over 10 years of approximately 4 Trillion Dollars each - economists put that number at closer to $7 Trillion realistically.

This is not a partisan issue.

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Drake

Remember this administration said that the Iraq War would be free, financed with oil money. Then they said it would cost $35 to 50 billion. Bush went apeshit when somoene said that and said it was a lie.

Then people said it might cost $100 billion.

Now people are thinking anywhere from $1 trillion to $3 trillion.

Do not trust the US govt at all when it comes to numbers. They are usually off by several thousand percentage points. This is a good example. Those banks just don't have some problems. They have huge fucking problems with houses they now own that no one will buy unless they are sold at 60 cents on the dollar.

The houses arent worth repairing, maintaining, or even evaluating.

They are all going to be dumped by someone, probably the US govt when they own most of them.

And how solvent is the USA now? Hmmm. Good Times.

nickycakes

Well, I must say, by the time I get tired of renting and buy a house somewhere, the market is gonna be pretty sweet!

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r3p1v

they have to do most of this stuff, otherwise we would probably be in another great depression. I would rather pay more taxes than live through a depression.

they shouldn't have let it happen in the first place though.

guerilla

If you understand cause and effect, as well as basic economic theory about business cycles, you will not only pay more now, but you will definitely get the Depression later. This isn't an either/or situation. It's just putting off the impending bloodbath.

Btw, taxes aren't going up. They are going to debase the currency by printing more money. Everyone will pay more by having a reduced standard of living. Not just taxpayers, but everyone who saves or consumes (anything).

And as usual, no one will be held accountable. Big surprise.

Read this
http://nothirdsolution.com/2008/09/19/toxic-assets/

Then read this,
LewRockwell.com Blog: The Cowardly Lions


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Rasher

Looks like it's time to start buying gold. You can't print more of that

Seriously, although I'm Canadian, I'll be shifting my current savings account from American to Euros.

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r3p1v

Can you give some evidence, examples, or other proof of this?


My understanding is that prior to 1930's the idea was that the government should have a hands off approach to the economy and let things work themselves out. Many said this is the exact reason why things got so bad.

Great Depression - Wikipedia, the free encyclopedia

With an active federal reserve and treasury and these bailout plans, a depression should be avoided.

LotsOfZeros

It amazes me how knee-jerky you all are blaming the Republicans for the bank failures especially when McCain sponsored a 2005 bill warning of this collapse (that the Dems blocked) and there is so much evidence of Obama's ties to Lehman Bros and Fannie Mae.

In fact, Obama was the second leading recipient of money being doled out by Fannie Mae and Lehman lined his greedy pockets as well.

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Rasher

r3p1v, You should read up on what happened in Germany with the Mark.

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r3p1v

I agree, its bs, this crap happens all the time so w/e life will go on. If I needed the money and had the opportunity to make a lot of money by selling people crazy mortgages and not assuming any of the risk, I probably would. But businesses shouldn't be able to do crazy stuff like that, it should have been more regulated because people are stupid and will actually take these stupid mortgages.

guerilla

Regulation is the death of capitalism. The USSR had a heavily regulated industry, and it collapsed because consumers were not allowed to dictate supply and demand. The state is incapable of deciding for everyone what they can and should buy, and at what cost.

The market is self-regulating. People need to lose their houses (that they have not, and cannot pay for) and the people who created a market for these derivatives and securitized debts need to go broke. When there are consequences to bad investments and business, people don't engage in it. How many people sell goods for $1 that cost them $2 to make? Answer: ZERO.

But when the government creates moral hazard by promising to bail out the losers and cheaters, it becomes more profitable to cheat and lose, than to work hard and honest to win.

Regulation is not the answer. The government should be uninvolved. That would make a lot more players behave honestly, knowing there is no one to save their bacon when the shit hits the fan.

In over 100 years of intense regulation, the government is no more capable of controlling the market than it was 200 or 2,000 years ago. The bubbles are getting bigger and more frequent, and people can't connect the dots. They can't see that regulation is increasing the turbulence and making it last longer.

This is all just protectionist BS by Paulson, the former Goldman Sachs ripoff artist. Your wealth is being stolen from you (unless you are buried in debt) in a transfer from Main Street to Wall Street. The sad thing is, you are justifying getting yourself raped. It's like Stockholm Syndrome.

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r3p1v

I think that's possible, but I don't see why tax payers wouldn't be able to pay off the debt over time. The government could possible make a profit on some of this too. The current plan for AIG is to give them a loan of 85 billion at something like 10% interest + the government gains control of 80% of the company. If that actual works and keeps AIG afloat (I'm skeptical) but then the govt will make a lot of money off of that.

waraas

We are moving to a socialist government. No more free housing.

We arn't even bailing them out, we are just helping them out temp.

Its also kind of scary to think that the FDIC has only has 50 billion in there accounts, and they said they need more money to to cover the costs of these banks failing. Were will they get this money? They will print it.

I really dont have an option other then they shouldn't "bailed out" those banks. Let them fail. let this thing sort itself out other then having the government buy and control everything.

Yes its time to invest in gold and ak-47s

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guerilla

Think rationally. If you have lost trillions of dollars, can you wipe out those losses by creating trillions on a computer and depositing those in your bank account?

Honestly. Think it through. Where is the money coming for this? The US is already running a massive budget deficit, and has $50+ trillion in unfunded long term liabilities. How are these banks being bailed out?

When you post back a decent answer, or that you don't know, I will explain it to you. But I want to see you admit ignorance or use your brain. It's not my job to provide answers when you have the internet at your fingertips.

Hoover and FDR were protectionists. Look up the Smoot-Hawley Tariff. Even the Federal Reserve admits it caused the Depression. But the public education system encourages an anti-capitalistic mentality, that only through state power and socialism was the Depression solved. On the contrary, the Depression would have been over in 2 or 3 years, if Hoover and FDR had not put in price fixing and created industrial cartels. By trying to prop up prices and wages, they created shortages which ground commerce to a halt.

Read this and understand it.
The Social Imperative of Sound Money by Llewellyn H. Rockwell, Jr.

Friedman was a monetarist crackpot. And Bernanke is a moron too.

Ask yourself, is it possible to print (money) out of debt? That is what Friedman and Bernanke argue. That when the economy goes into a recession, the correct answer is to debase the currency, and dump new money into the economy.

Well guess what happens when you dump more money into the economy? You dilute the value of existing savings. And it is impossible to distribute the money evenly, so whoever gets it first, gets to buy more goods and services than everyone who didnt get new FREE money, leading to shortages (contracting supply) which raises prices (inflation).

If you like to read, let me recommend Murray Rothbard's "America's Great Depression". It is a free PDF or you can buy it at several places online. It is a complete analysis of the Depression that should expand what you probably learned in public school.

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guerilla

I don't see how they can. In 1980, America was the largest world creditor. Not it is the world's largest debtor.

People are living off debt now. The Chinese and Japanese owe several trillion of the US debt, and they receive taxes in interest payments ($500 billion a year just in interest alone).

There are unfunded liabilities for SS and Medicare that total over $50 trillion. That money has also been raided and spent already.

You should look up "David Walker GAO Tour"

That's propaganda. They might make a nominal profit. Like how $1 in 1913 is worth $0.03 now. They might make money but adjusted for inflation, it will be a loss. It is impossible to convert bad debt and foreclosure into good debt, just as it is impossible to convert lead into gold.

Who is paying the inflated prices for government profit? The citizens who use AIG. So it's just another way of taxing. It's actually how the communists do it. You don't pay taxes, almost everything you buy a share or all of the profit goes to government.

Anyway, this conversation makes me nauseous. I gave you some things to check out, please make use of them. It is in your best interest to be informed.

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guerilla

Oh yeah, here is a hint too. Guess who gets new money and credit first?

Yep, the same people that want a bailout. The banks, Wall Street etc. That is where the FED releases new credit into the system. They get it first, and then charge you interest to get some of it in the form of loans.

Nice, ain't it?

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r3p1v

Ok, thanks, I will do some reading and decide for myself.


Right now though, I think regulation, to a normal degree, is a must. We absolutely need agencies like the FDA. And people are stupid, so they should be protected from making stupid decisions that eventually affect everybody. I don't think businesses should be able to crash the entire system. I think that if we had adequate regulation this whole mess could have been prevented.

guerilla

Hopefully, you will be able to move beyond this. Regulation is always ex post-facto. It doesn't stop problems, it just tries to prevent them from happening twice. And even at that, it fails.

Look at the drug war. I think Nixon said it would be won by '74 or '76. How is that going? The FDA? Helps drive up the price of medications, and limits availability to needed experimental drugs. Also is starting to interfere with (cheap) natural product medicine.

Regulation and bailouts are socialism for the rich. Who do you think writes Chris Dodd's legislation? It's a known fact that his lobbyists write it for him, and he just puts his name to it.

The market is the sword of damocles over the heads of would be monopolists and rip off artists. What the government does with regulation, is convince you that if you let them hold the sword, they will drop it at the right time, but when the right time comes, they convince you to give a reprieve (bailout).

Don't get me wrong. This is an excellent racket. If you can get in on it.

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aim

...and someone who actually knows what they're talking about comes in to pwn this thread.

+rep guerilla

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Sawya

Voting doesn't matter. Different ideologies, conservatism, neo-liberalism, socialism, also don't matter.

The run is run by elites and it is only their idealogy that matters. This is 1. the world must be run by an elite group of people and 2. they must be part of this elite.

r3p1v

Ok, I think I understand most of your points guerilla, but I still disagree with most of it. Or in other words I don’t think inflation will get radically out of control to the point where money is useless as a result of this. Maybe I’m wrong, I honestly don’t know, but I think we will be ok 5-10 years from now without having to go through a brutal depression.

The government can afford to sit on these toxic assets, which allows the banks to recover. Then the fed can raise interest rates to combat the inflation and we are basically back to normal. Tax revenue increases because the economy gets better. The new president manages the deficit and imposes new regulations to keep lending responsible.

Honestly I don’t know a whole lot about economics and especially not politics. But I find it hard to believe that the ideologies and theories that existed prior to the great depression are accurate. I guess time will tell though.

steveyoung

Watch this.
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guerilla

There is nothing wrong with disagreeing with me.

You think, or you know? My opinion is not based upon gut instincts or well wishes. I'm talking about measurable, historical effects of propping up a failing market by flooding the economy with massive amounts of liquidity created not by production, but by literally typing a number into a computer.

If everything is ok in 5/10, you'll be smarter for having thought this thru. if not, you'll be kicking yourself in the ass. But I wouldn't risk not preparing for a bad outcome. Whatever TV and radio you listen to, you're not hearing the other side of the financial experts who are screaming that this is bloody murder, and potentially the setup for a huge meltdown.

Who is the government? It's you. The government represents you. So can you afford to sit on the bank's toxic assets? Can you afford to buy junk derivatives that are pretty much worthless with your hard earned cash?

The banks can't "recover" until these bad debts are liquidated (taken off the market at a reduced cost or zero). All the government has done, is said, "we'll take all of these worthless securities, and we'll spread the losses among 300 million citizens and a few thousand foreign investors. They will eat the losses for you, and you can clean up your balance sheet".

In other words, you and everyone you know, is paying off the bad decisions of the banks. And most insidiously, you will be paying through inflation, so your savings will debase, and your purchasing power will shrink. You're actually going to lose some of your standard of living in order to make this happen.

That's the theory. But in an economy with defaulting houses, and a stagnant growth profile, high interest rates will be suicide. It will be like the early 80s all over again, people will be walking away from their homes. Remember, these people getting bailed out, already can't afford their interest only, zero down low interest rate mortgages. Who says they will be able to afford them in 2 or 3 years if rates triple? Not to mention that they will be paying $500k mortgages on $300k properties. Who thinks that is likely to happen?

Taxation is theft. The more tax the government takes, the less capital there is for growth in the economy. The government should be slashing spending and taxes right now, instead of buying up toxic debt it can't afford.

The President doesn't manage the economy. He has no constitutional authority to do so. The Congress and Treasury are supposed to be responsible for fiscal and monetary matters, not the private FED or the President. If the President is running the economy, that's pretty much a monarchy.

Well, no recession lasted longer than 2 years generally prior to the Depression. Once the FED showed up, the gold standard collapsed twice ('33, '71), and there were Depressions in the 30s and late 70s.

What you find hard to believe, admitting you don't know, is not worth a damn. There is nothing stopping you from educating yourself. Find out for your sake. Know for sure. Guessing and hoping and thinking won't put shoes on your feet and food in your belly if the shit hits the fan.

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bestcorp

This plan is a two-edged sword. It will help us get out of the housing crisis and hopefully put a bottom to this recession but in the end, all the people who got us in the situation got a free pass on this one, thus leaving the taxpayer with the bag to hold.

LotsOfZeros

I think we should start a Congressional White Caucus.

Seriously though:
This proves the genius behind the Obama campaign management. How those guys were able to spin this the way they did to shamelessly point the finger at the Republicans prove just how bold (or soon to be proven: stupid) they truly are. People will either eat it up, or see Obama for what he truly is: someone not to be trusted.

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barman

Over entire government is incompetent. Your vote does not matter. This country is fucked and it had it coming.

On that note, Ron Paul 08!

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guerilla

I just realized I had a ton of errors in an earlier post. Bolded

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erect

Holy shit, now there's something I did not know, thanks for the link. Seeing that FREDDIE & FANNIE were created by democrats for democrats it would be interesting to see what, if any, contributions are made to republicans.

Someone give me a link if you can as I'm off to do some homework on economic trends through some of guerilla links.

Thanks for the awesome thread everyone including r3p1v who inspired guerilla's posts. Also, it's great seeing educational posts directed to someone without belittling them (which is very anti-WF). I don't have that ability so rep+ to guerilla for the humble lesson for us all.

guerilla

If you want info, I can probably find you links. Just give me an idea of what you are looking for.

Also, I linked to Rothbard's AGD above. You want to start at section 3. He was a great economist, but I think a better economic historian. The first 2 sections are fairly technical, but the story telling and analysis kicks in during Section 3, and really makes the Depression less of a mystery (where did all the monies go?) and more of a tragic comedy.

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LotsOfZeros

@guerilla, +Rep for the Econ lesson. Good info.

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_poto_

you're all missing the boat here...

this mess is because of derivatives...
Web of Debt - IT’S THE DERIVATIVES, STUPID! WHY FANNIE, FREDDIE AND AIG ALL HAD TO BE BAILED OUT

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BillyHayes

So your waiting for price increases to buy your house? Smart!

guerilla

The market is not at bottom. Don't think the government is going to print up $700 billion and give it to Wall Street (not the people with mortgages to pay) and the market will pick up in price.

This is strictly a subsidy for the rich. The homeowners in distress are not getting much if any help. That money is going straight to the people who set up this mess as a payoff.

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guerilla

That article was idiotic. They did not HAVE to be bailed out. If there was any value in their assets, the market would have bought them at fair value.

The issue is, these companies are nearly worthless. Some are speculating that this is why BOA bought up Merril Lynch. So the combined companies would be "too big to fail" and also get to feed at the trough, instead of collapsing like Lehman.

The author of that article calls for a New Deal. She hasn't done her homework. FDR prolonged the Depression with the New Deal. She says that he allocated capital to the right markets to stimulate the economy. The market always allocates capital better than the government, otherwise the USSR would still be in business. What FDR did, was steal everyone's gold @ $20 an ounce, then later reopened the gold window @ $35 an ounce, which devalued the currency by 75%. That was his "new capital". He just stole savings by debasing the currency.

What stimulated the economy was women getting skilled at factory labor, massive industrial investment for the war, and unfortunately a lot of young men dying in the war, which lowered the unemployment rate (sad but true, it also happened during Vietnam).

It also didn't hurt that post WWII, America held all of the world's gold under the Bretton Woods agreement, and had the world's reserve currency. That is what has allowed the country to go so far into debt with the Saudis, Chinese and Japanese.

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_poto_

guess you missed the overall point about CDS contracts...

to sorta agree with you, derivatives contracts are worthless paper... and when these big companies start to have to deleverage their derivatives contracts (sell them on the market) they quickly wind up going down the toilet because of the lack of real value in them... bad paper...

the fact is the large financial companies are all interconnected with these bloated derivatives contracts so that if one large one fails, it starts off a chain reaction taking down dozen and eventually hundreds of other companies that are connected due to their CDS contracts...

the government isn't just rewarding big players here... and the government sure as hell doesn't care much enough about the mortgage market to drop a trillion dollars on it... what the government is trying to do is keep the derivatives market from melting down which would force a massive global deleveraging/liquidation on a scale never before seen...

I'm not an expert on the great depression era or what brought us out of it... I wasn't trying to argue anything of the sort by posting a link to that article... I was merely trying to raise awareness of derivatives which most people seem to gloss over or ignore these days, yet derivatives were the main underlying cause of AIG, Fannie and Freddie being bailed out...

I also agree that they should have let these companies fail and be auctioned off... but I understand the reason they won't allow that...

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