Black Monday - Sept 29, 2008?

FluffyMcDeath said:
It's being sold as a bailout of the whole economy but it isn't. Britain is interested in the passage of this bill as it would bail out a lot of UK banks with bad "investments" (i.e. bad bets) in US instruments too. But it really is for fat cats and not for the economy as a whole.

If the issue is liquidity, i.e. having money in the system, then the US government could set up it's own credit window and loan to where the money is needed directly like to the businesses that need rolling credit to run. They could nationalize the Federal Reserve to do it, and that would also handily solve a giant chunk of their debt problem at the same time as the government would then owe the money to itself and not to the Federal Reserve.

The mortgages that are going bad are not that many compared to the total number (yet) but there is too much leverage so a few failures turn into big failures further up. The government can do something about getting these loans renegotiated at the banks cost (as it should be because they're gonna lose on default anyway) and they can, but the biggest problem is all the leveraged derivatives that are private side bets between institutions that don't have regulation.

Those bets are then traded as money but they don't really have any value (so it's as if a giant counterfeiting operation has generated tens of times the money that used to be in circulation). These instruments have been used to acquire (not make, just get a hold of) wealth. Now, if they are worthless, then all the power that goes along with having all that "money" goes away. That's what's being protected. The power that goes along with the money. If the people that have it can get the government to take all their worthless money and turn it into "real" money then they will be very happy even if they only see 50c on the dollar. To try to make sure they can get that they will squeeze the economy by withholding liquidity and shouting about what a crisis it all is. They can easily manage this as there aren't that many big institutions that need to collude to do the job - so they can blackmail the entire country (as they have done before) to try to get their guy in the Treasury to be given near dictatorial powers to transfer taxpayer obligation in return for bad bets.

That's what's going on. The wealth that was always there (real things, like cars and roads and food etc) still exists, but the accounting system is being gamed. The government can fix the problem by fixing the accounting system rather than pledging the productive income of the US population in virtual perpetuity to the people who made the mess.
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I'm with Fluffy on this one 100%
 
minator said:
It's interesting how this is perceived completely differently over here.

Over in the US it seems to be seen as a bailout of the fat cats so it's understandable that it's rather unpopular.
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The system is clearly broken. Throwing more money in without shoring up rules is akin to getting a crappy hand in poker then doubling down hoping that last card will pull you out.

Being from the UK a couple of rules you have across the pond that might do us well. The first would be a limit on CEO salary. I'd recommend 25 times the lowest paid full-time employee. The 2nd would be a small transaction fee for trading. This would be used to replenish the $700B to pay for losses in the market. Some think it'd slow down trading here, might be a good thing. England has something similar yet the trading market is active there, so it appears to have not stopped it from that aspect.
 
FluffyMcDeath said:
Meanwhile metals fell, oil stayed around $100 USD and the USD gained against the Euro and other world currencies, plus all the markets ended up. Sounds like disaster.
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I believe the financial market has enough money to deal with this themselves. What likely happened is Bush said 'bail out coming' so the institutions locked their vaults and waited to see would happen. Now that a bailout isn't going to happen those monies will start flowing again.
 
Oh oh. Look out - there may be a back door.

Then again, there is that other back door that in the case of an "Emergency" (including economic) Bush can do whatever he wants and tell us it's good for us.
 
Here's an article from the past looking forward to what has recently happened that tells you a bit about what kind of "bailouts" and "solutions" politicians seem to come up with in a crunch.

Of course, politicians don't come up with these things. They are written for them by lobbyists and special interests. The politicians just rubber stamp them for donations. (Except the honourable ones, thank goodness for them).
 
Here are two articles that explain why the bailout is "necessary".

Article 1
Article 2

In short, though they go different routes, the reason is roughly the same. The bailout is necessary because the US is no longer really in charge. The US is so far in hoc to the rest of the world and the rest of the world wants its money back and they'll let the US sink to the bottom of the sea if they won't cough up.
 
Interesting story here. The suggestion is that it's not going to make a difference whether there is a bailout or not as the entire system is broken.
 
minator said:
Interesting story here. The suggestion is that it's not going to make a difference whether there is a bailout or not as the entire system is broken.
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You ever play Monopoly (TM)? Well, the world is like that. You start out even and then you play until some bugger owns everything. Then you keep trudging around the board for flippen' ever and ever taking out loans as you go just to pay the winner on every square you hit. Too make enough money to go around covering all the huge debts the "banker" starts adding zero onto bills and around and around you all still trudge.

Eventually everyone but the winner is in hock to the tune of gazillions of dollars when a few bright sparks realize that it's just Monopoly money and they walk away from the game abandoning their huge Monopoly debts leaving the "winner" with a bunch of plastic hotels and no friends. (Unless they can get the government to keep you in the game against your will).
 
FluffyMcDeath said:
minator said:
Interesting story here. The suggestion is that it's not going to make a difference whether there is a bailout or not as the entire system is broken.
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You ever play Monopoly (TM)? Well, the world is like that. You start out even and then you play until some bugger owns everything. Then you keep trudging around the board for flippen' ever and ever taking out loans as you go just to pay the winner on every square you hit. Too make enough money to go around covering all the huge debts the "banker" starts adding zero onto bills and around and around you all still trudge.
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Monopoly was made in the 30s. It was definitely a reflection of the times... You know high home prices, 'free market' that couldn't oversee itself, an economy run by Republicans, and the resulting depression. How history ebbs and flows...ebbs and flows... President Obama can look to FDR for a way out...
 
What the f*** happened to "A government by the people, for the people" :?:

http://finance.yahoo.com/tech-ticker/ar ... ights-Back

The public has spoken about the bailout and the answer, at least for now, is "no way." Amid great drama, the House voted down the plan, 228 to 205.

Congress has been flooded by angry phone calls and emails from many constituents opposed to the $700 billion bailout. So even Members inclined to support the legislation have been subjected to intense pressure from the American public.
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And yet the plan passed Senate vote last night. :x
 
redrumloa said:
What the f*** happened to "A government by the people, for the people" :?:

http://finance.yahoo.com/tech-ticker/ar ... ights-Back

The public has spoken about the bailout and the answer, at least for now, is "no way." Amid great drama, the House voted down the plan, 228 to 205.

Congress has been flooded by angry phone calls and emails from many constituents opposed to the $700 billion bailout. So even Members inclined to support the legislation have been subjected to intense pressure from the American public.
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And yet the plan passed Senate vote last night. :x
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The Senators are probably more worried about a bigger flood of angry calls and emails from people who have lost their jobs, seen their pension value go through the floor, seen their savings lost, their local town devastated because the small businesses, who have a 90 day wait between delivery and payment, have closed because they can't get a credit line for the interim, etc, etc, etc,....
 
I recently read a good comment -- If Palin's church can get together and pray to eliminate the gay certainly if all the Christians in the US got together and prayed for an economic windfall to get us out of the crisis it'd all be solved overnight.
 
faethor said:
I recently read a good comment -- If Palin's church can get together and pray to eliminate the gay certainly if all the Christians in the US got together and prayed for an economic windfall to get us out of the crisis it'd all be solved overnight.
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let's crack the whip and get those damn christians praying!!
 
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