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Post by socal on Oct 9, 2008 14:57:49 GMT -6
The only thoughts I have - are PLEASE... PLEASE someone tell Bush to stay away from cameras while stating something like "We're working as hard as we can on a solution"... That's all we'd friggin need. Edit: I was also thinking to myself that NOW would be the time for a leader to buy up an hour to calm the nation/world... Looks like that may be in the works: www.politico.com/blogs/bensmith/1008/A_halfhour_of_prime_time.html?showall |
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Post by socal on Oct 9, 2008 16:10:16 GMT -6
Crap...
It sounds like Mr. 22% (or 25%) will give another speech tomorrow.
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Post by twinegarden on Oct 9, 2008 16:11:00 GMT -6
Tell me about it, I work in mutual funds. It is horrible.
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Post by NOTTHOR on Oct 9, 2008 17:37:22 GMT -6
I think we should keep every freaking politician away from the camera regarding the condition of the market. Right now, short of the government guaranteeing repayment of EVERY private debt, the market will continue to deleverage and the shitstorm will continue. They could have contained this problem a few weeks ago and for a lot less money than they have recently put on the line, but they chose not to.
Much like I said would happen if the Fed had let Bear go down, the market is freaking out because no one knows who has swap exposure to Lehman and there is a general panic that we could see banks fall like dominoes. Tomorrow is the day of reckoning when the Lehman swaps have to be settled. Lehman had significant debt on its balance sheet. Last I heard, but that was yesterday so it may have changed drastically, was that there could be up to $500 billion in swaps on Lehman outstanding. Uncle Ben and Mr. Paulson better have the checkbook ready because there is a very real possibility we will lose a money center bank, massive insurance company or major investment bank before the close of business tomorrow or opening of the market on Tuesday (I think Monday is a holiday).
I'm sorry guys, I know I rail on the pols a lot, but they absolutely screwed the pooch by not backstopping the Lehman debt a la the Bear deal. Fucking Barney Frank and Chris Dodd and Barack Obama and John McCain and George Bush need to just get the hell out of the way and instead of grilling the Fed and the Treasury say for once in their lives "You know what, I have no idea what the fuck I'm doing and I'll defer to your judgment. I know you threw $29 billion at Bear and wiped out the shareholders, but you averted a contagion. I think you should use that model for every major I-bank or major commercial bank that is on the brink of failure and then we won't have to write a fucking check for $700 billion and bail out the rest of the system when the dominoes start to fall." No, not one of those numbnuts can fucking put their ego aside and admit they have no fucking clue what is going on.
The complete lockdown of the credit market is probably wholly the result of the fact that no one wants to lend money to a bank with unknown exposure to Lehman swaps. If you're a banker and you make a $100 million 7 day loan that will yield a very low percentage return and the counterparty on that loan bites the dust from Lehman exposure, your ass is fired. The bankers' responses right now are completely rational, the risk is way too large for the kinds of spreads they can earn. I believe next week WaMu swaps have to settle. God only knows what's gonna happen when those settle. If we make it through these settlements and have no failures, we might start to see some life pumped back into the credit market and the beginning of a recovery in the stock market. If we have another failure either at the Lehman settlement date or the WaMu settlement date, we'll then have another settlement date a few weeks down the road which could trigger even more failures.
I don't know if there are any recently released books on the recent crisis, but "When Genius Failed" is a great story of a similar (but less dramatic) lock up of the credit market in the late 90's when Russia defaulted on its sovereign debt. LTCM went under and the Fed orchestrated a private bailout. It explains the intertwined nature of the I-banks and some large hedge funds, as well as how counterparty risk on swaps can wipe an I-bank very quickly. I really thought the bankers would have learned their lesson from LTCM, tomorrow and next week we'll find out if they did.
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Post by Saggitariutt Jefferspin (ith) on Oct 9, 2008 17:52:33 GMT -6
Tell me about it, I work in mutual funds. It is horrible. My brother is on his way to a nervous breakdown. The wife isn't far behind. And I thought the equity business sucked... |
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Post by NOTTHOR on Oct 9, 2008 18:17:29 GMT -6
Guys, if we clear the swap shitstorm in the next few trading days with no big failure and get the bailout money into the MBS market so the paper gets a good mark (or suspend mark to market accounting), the liquidity freeze will begin to thaw. Maybe we'll still need to see a Nat City or Morgan Stanley failure and then no more domino failures as a result of swaps to get out of the woods, but the financial panic does have an end in sight. For the stock market to turn or at least stop plunging, we just need to clear the liquidity freeze and get the financial scare behind us. We're probably already pretty close to any bottom levels you'd see for an ordinary course business cycle recession, so don't sweat it, just thank the Lord that you're young and keep making your 401(k) contributions.
I'm getting shat on, but I like my prospects for long term. I'm down to my last 2 grand in play money in my account, so I'm damn near tapped out of being able to buy, which I don't like. There is 20 large in cash just sitting in Ma's E-trade account begging me to bet it all on AHR and PFG, but she won't let me throw it down. She's already got over 50 large in bonds sitting in there and there have been some pretty impressive yields the past few days, but I just don't see enough upside in the commercial bond market to justify the near 100% loss on a default.
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Post by twinegarden on Oct 9, 2008 19:37:04 GMT -6
BTR, I'm with you completely, I don't agree with alot of your posts I think you are really on to something with what you have been saying here.
One thing that I have been wondering about as far as falling stock prices is that with SHITLOADS of people panicking and moving all of their equity funds into money markets, wouldn't the portfolio managers be forced to sell off the holdings in these funds to free up money to back the money market funds. Also, an extraordinary amount of shareholders have been just cashing out their accounts (even people in their 30's, which is fucking retarded). Wouldn't this abundance of stocks for sell be the driving force behind the lowering stock prices. Really it seems like a classic example of simple supply and demand. You have a large portion of America with no control over their bowels and shitting all over themselves by dumping their equity stocks/funds which creates a huge selloff and the only way for the market to clear itself would be to for the price to be lowered to an extremely low price. The worst part is that many, many people are so scared by the media and politicians that they cringe so badly at the suggestion of putting money in that they choose to wait "until the market is better". I try to tell them that by the time they hear good news and see funds performing well again, that they will end up taking their money out of the money market and buy the same funds at a higher price. Many of these knuckleheads can't grasp this concept.
It is soooo refreshing when someone calls in asking how to put money in, especially when they say they want to dollar cost average for the next 6 months.=and beyond.
Sorry if my rambling isn't overly cohesive. I've been dealing with this stuff from 7 am to 8 pm. It is interesting to say the least.
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Post by scotthawk on Oct 9, 2008 20:05:46 GMT -6
I daydream sometimes about being ready to retire, I'm glad that's not the case with what my 401k has done. At least my 401 contributions are buying shit at low prices.
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Post by Iowafan1 on Oct 9, 2008 20:33:04 GMT -6
You think you've seen something with government bailouts of home mortgage defaults and private lending institutions? That was only a precedent.....as well as a preview of bigger (literal) and "better" (not so much) things to come. We haven't even seen the tip of the iceberg yet. Just wait until the credit card defaults and vehicle loan defaults start pouring in. When our beloved government steps in to "help" by bailing them out, we (the "rich") will be picking up the tab for that as well. Welcome to the world of socialized losses. Next up to bat.....socialized income.
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Post by NOTTHOR on Oct 9, 2008 21:01:45 GMT -6
BTR, I'm with you completely, I don't agree with alot of your posts I think you are really on to something with what you have been saying here. One thing that I have been wondering about as far as falling stock prices is that with SHITLOADS of people panicking and moving all of their equity funds into money markets, wouldn't the portfolio managers be forced to sell off the holdings in these funds to free up money to back the money market funds. Also, an extraordinary amount of shareholders have been just cashing out their accounts (even people in their 30's, which is fucking retarded). Wouldn't this abundance of stocks for sell be the driving force behind the lowering stock prices. Really it seems like a classic example of simple supply and demand. You have a large portion of America with no control over their bowels and shitting all over themselves by dumping their equity stocks/funds which creates a huge selloff and the only way for the market to clear itself would be to for the price to be lowered to an extremely low price. The worst part is that many, many people are so scared by the media and politicians that they cringe so badly at the suggestion of putting money in that they choose to wait "until the market is better". I try to tell them that by the time they hear good news and see funds performing well again, that they will end up taking their money out of the money market and buy the same funds at a higher price. Many of these knuckleheads can't grasp this concept. It is soooo refreshing when someone calls in asking how to put money in, especially when they say they want to dollar cost average for the next 6 months.=and beyond. Sorry if my rambling isn't overly cohesive. I've been dealing with this stuff from 7 am to 8 pm. It is interesting to say the least. Why don't you agree with me most of the time? A ton of cash is getting pulled out of the stock market, that's what's driving prices down. Your typical prole fails to understand the concept of buy low, sell high, they psychologically only want to buy stuff when the chart points up, up, up, without regard to the fact that past performance does not equal future performance. The money market funds are frozen right now, too. Barber just called and told me his money market fund has a moratorium on redemptions because they can't sell any of the commercial paper that is held in the fund. He's pissed off about that because he wants to buy stocks tomorrow. Some gals from JP Morgan came and talked to our department at a lunch yesterday. They reiterated that there is no credit market to speak of, other than for senior secured lending at a huge markup from LIBOR. This will pass, and there will be a day when you look at a big canyon on a stock chart and ask why you didn't buy more or why you didn't buy sooner. You always seem to forget the fear of sitting through a time like this two years removed, though. |
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Post by NOTTHOR on Oct 9, 2008 21:23:04 GMT -6
You think you've seen something with government bailouts of home mortgage defaults and private lending institutions? The problem with not at least backstopping the debt and contractual liabilities of gigantic private lending institutions is that their failure poses tremendous systemic risk. If old school industrial type companies go into bankruptcy, their suppliers, employees and customers will suffer, too. But their assets will continue as productive assets. So for instance, if Ford files for BK protection, their suppliers will get pinched, the employees will lose the union contract and there will be some job cuts. But their factories will keep churning out cars and the creditors will become the new owners. If a big lending institution fails, the employees all get pwnd. The creditors are pwnd because there is no ability to reorganize and very few tangible assets. The businesses and consumers that use the lending facility get pwnd because the credit supply that they had is immediately pinched off. Then that can snowball, Company A goes down and its supplier, Company B goes down, etc. The counterparties on swaps also get pwnd, further contracting credit. We live in an era of incredibly loose monetary policy. This loose monetary policy encourages risk taking, as the risk free rate of return (measured by Treasuries) sucks total ass. Loose monetary policy makes it really easy for banks and consumers to leverage up and inflates bubbles. With nothing constricting the money supply, the Fed absolutely has to be able to stand by and give lending institutions assistance when they get in over their heads. The I-banks and commercial banks have giant leveraged portfolios of fixed income securities. When the underlying assets drop in value, even a little bit, the institutions can be harmed pretty badly, but the common theme to leveraged fixed income portfolios is that if given time and assuming a decent default rate, they always work their way back up. The really sad thing about this is that instead of talking about monetary policy as a key cause and future solution to the problem, we're left with two POTUS candidates who can do nothing but point fingers at each other, while the ex-CEO of Goldman with his hundreds of millions of dollars of wealth decides Bear lives, Wamu dies, Wachovia lives and Lehman dies, all while getting access to $700B of taxpayer money that will probably end up in the pockets of his banker cronies. |
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Post by socal on Oct 9, 2008 21:31:38 GMT -6
The really sad thing about this is that instead of talking about monetary policy as a key cause and future solution to the problem, we're left with two POTUS candidates who can do nothing but point fingers at each other, while the ex-CEO of Goldman with his hundreds of millions of dollars of wealth decides Bear lives, Wamu dies, Wachovia lives and Lehman dies, all while getting access to $700B of taxpayer money that will probably end up in the pockets of his banker cronies. Minor point. Not to dispute your obviously superior knowledge on this (seriously)... but it's not the ex-CEO of Goldman anymore. It's assigned to a 35 yr old former VP of Goldman. www.treas.gov/organization/bios/kashkari-e.html |
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Post by NOTTHOR on Oct 9, 2008 21:49:23 GMT -6
Yeah, I know about that dude socal. When I first saw that shit, I seriously thought it was a fucking joke. Don't get me wrong, I'm sure the dude is serial killer smart and a solid guy, but his resume indicates he only had 4 years at Goldman, he was in a group unrelated to MBS, and he hasn't gone through a fucking bear. Call me crazy, but I want some old sommnabitch with white hair in there who has seen a shit storm before, somebody who came up through Resolution Trust and who isn't connected as all hell to guys currently on Wall Street.
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Post by socal on Oct 9, 2008 21:51:00 GMT -6
The problem with not at least backstopping the debt and contractual liabilities of gigantic private lending institutions is that their failure poses tremendous systemic risk. If old school industrial type companies go into bankruptcy, their suppliers, employees and customers will suffer, too. But their assets will continue as productive assets. So for instance, if Ford files for BK protection, their suppliers will get pinched, the employees will lose the union contract and there will be some job cuts. But their factories will keep churning out cars and the creditors will become the new owners. If a big lending institution fails, the employees all get pwnd. The creditors are pwnd because there is no ability to reorganize and very few tangible assets. The businesses and consumers that use the lending facility get pwnd because the credit supply that they had is immediately pinched off. Then that can snowball, Company A goes down and its supplier, Company B goes down, etc. The counterparties on swaps also get pwnd, further contracting credit. We live in an era of incredibly loose monetary policy. This loose monetary policy encourages risk taking, as the risk free rate of return (measured by Treasuries) sucks total ass. Loose monetary policy makes it really easy for banks and consumers to leverage up and inflates bubbles. With nothing constricting the money supply, the Fed absolutely has to be able to stand by and give lending institutions assistance when they get in over their heads. The I-banks and commercial banks have giant leveraged portfolios of fixed income securities. When the underlying assets drop in value, even a little bit, the institutions can be harmed pretty badly, but the common theme to leveraged fixed income portfolios is that if given time and assuming a decent default rate, they always work their way back up. The really sad thing about this is that instead of talking about monetary policy as a key cause and future solution to the problem, we're left with two POTUS candidates who can do nothing but point fingers at each other, while the ex-CEO of Goldman with his hundreds of millions of dollars of wealth decides Bear lives, Wamu dies, Wachovia lives and Lehman dies, all while getting access to $700B of taxpayer money that will probably end up in the pockets of his banker cronies. Another point... you state: "very few tangible assets" "incredibly loose monetary policy" "really easy for banks and consumers to leverage up and inflates bubbles" "banks have giant leveraged portfolios of fixed income securities" "leveraged fixed income portfolios" Again, not disagreeing with you. But don't you see the slightest bit of a fundamental problem with this? Now, to get all philosophical..... Yes, it's the engine that allows the current economy to work. But if the vast majority of the economy is ethereal, doesn't allowing the whole process to crash and begin with a non mystical foundation make more sense? Damned straight it will require ungodly adjustments --- but I believe the meltdown effecting everyone may have already progressed too far. And in the end, we will all be proles... (we already all are, some of us just pretend we aren't) But everything would be on a stable footing, as nothing physically has changed. Only the promise/lie that is a treasury note- is removed. Anyways, enough of my utopian daydreaming. Those with the true power will see that everyone returns to the trough soon enough. |
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Post by socal on Oct 9, 2008 21:53:30 GMT -6
Yeah, I know about that dude socal. When I first saw that shit, I seriously thought it was a fucking joke. Don't get me wrong, I'm sure the dude is serial killer smart and a solid guy, but his resume indicates he only had 4 years at Goldman, he was in a group unrelated to MBS, and he hasn't gone through a fucking bear. Call me crazy, but I want some old sommnabitch with white hair in there who has seen a shit storm before, somebody who came up through Resolution Trust and who isn't connected as all hell to guys currently on Wall Street. Not to further piss on your day... but don't forget... We are still under the same administration that brought us Mr. "Heckuva job" Brownie... the horse lobby lawyer. |
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Post by NOTTHOR on Oct 10, 2008 6:45:29 GMT -6
Another point... you state: "very few tangible assets" "incredibly loose monetary policy" "really easy for banks and consumers to leverage up and inflates bubbles" "banks have giant leveraged portfolios of fixed income securities" "leveraged fixed income portfolios" Again, not disagreeing with you. But don't you see the slightest bit of a fundamental problem with this? Now, to get all philosophical..... Yes, it's the engine that allows the current economy to work. But if the vast majority of the economy is ethereal, doesn't allowing the whole process to crash and begin with a non mystical foundation make more sense? Damned straight it will require ungodly adjustments --- but I believe the meltdown effecting everyone may have already progressed too far. And in the end, we will all be proles... (we already all are, some of us just pretend we aren't) But everything would be on a stable footing, as nothing physically has changed. Only the promise/lie that is a treasury note- is removed. Anyways, enough of my utopian daydreaming. Those with the true power will see that everyone returns to the trough soon enough. Leverage in and of itself isn't bad. Every business needs the ability to borrow money. Revenues are never matched with cash outflows. Leverage juices up profits. Profits absolutely are the driving force behind economic growth. The problem is that if you wipe out all 5 investment banks and all money center banks, the country would very likely enter into a very deep depression. The quick destruction of capital and the complete freezing of the credit market would bring virtually all economic activity to a halt. What they need to do is preserve the system right now. Then, the Fed absolutely needs to raise rates relentlessly and prevent bubbles from inflating. With higher interest rates, bubbles can still form, but they rarely inflate as high as they do with very low interest rates. The problem is that even though the Fed is allegedly an apolitical animal, the government as a whole has a very strong vested interest in keeping rates low. Low rates stimulate economic activity and increase tax rolls. The government is also the biggest borrower on the planet, lower rates mean lower interest payments for the government, that means a smaller deficit. Two steps to prosperity: 1) Save the banking system 2) Reform the Fed |
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Post by Iowafan1 on Oct 10, 2008 7:02:21 GMT -6
www.myeyewitnessnews.com/news/local/story.aspx?content_id=627b4173-a45c-4cb1-91da-2cc1e028116f&rss=59....and then there is this from my current home of Memphis.....Just checked in at home and saw where more than 69,000 customers had their electricity cut off in an eight month span between January and August of 2008. Keep in mind that the entire population of Memphis is only 675,000, so we are looking at more than a tenth of the population having their power cut off because they couldn't pay their bill. My guess is that this is probably indicative of the Country as a whole. Where am I going with this? Government bailouts of lending institutions and mortgage defaults already ongoing.....credit card, personal loan and vehicle loan default bailouts on the horizon......I'm thinking government paid utilities can't be far behind with our liberal socialist government "helping" those in need.
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Post by NOTTHOR on Oct 10, 2008 7:13:31 GMT -6
www.myeyewitnessnews.com/news/local/story.aspx?content_id=627b4173-a45c-4cb1-91da-2cc1e028116f&rss=59....and then there is this from my current home of Memphis.....Just checked in at home and saw where more than 69,000 customers had their electricity cut off in an eight month span between January and August of 2008. Keep in mind that the entire population of Memphis is only 675,000, so we are looking at more than a tenth of the population having their power cut off because they couldn't pay their bill. My guess is that this is probably indicative of the Country as a whole. Where am I going with this? Government bailouts of lending institutions and mortgage defaults already ongoing.....credit card, personal loan and vehicle loan default bailouts on the horizon......I'm thinking government paid utilities can't be far behind with our liberal socialist government "helping" those in need. Well, when Obama mandates a percentage of power has to come from renewable sources that cost more than coal or nuclear, what do you think that will do to electricity prices? The collective "we" end up paying for those who can't or don't pay their utility bills anyway. If the cash is coaxed out of your pocket from the utility company or the government has little practical impact. |
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Post by Iowafan1 on Oct 10, 2008 7:34:52 GMT -6
www.myeyewitnessnews.com/news/local/story.aspx?content_id=627b4173-a45c-4cb1-91da-2cc1e028116f&rss=59....and then there is this from my current home of Memphis.....Just checked in at home and saw where more than 69,000 customers had their electricity cut off in an eight month span between January and August of 2008. Keep in mind that the entire population of Memphis is only 675,000, so we are looking at more than a tenth of the population having their power cut off because they couldn't pay their bill. My guess is that this is probably indicative of the Country as a whole. Where am I going with this? Government bailouts of lending institutions and mortgage defaults already ongoing.....credit card, personal loan and vehicle loan default bailouts on the horizon......I'm thinking government paid utilities can't be far behind with our liberal socialist government "helping" those in need. Well, when Obama mandates a percentage of power has to come from renewable sources that cost more than coal or nuclear, what do you think that will do to electricity prices? The collective "we" end up paying for those who can't or don't pay their utility bills anyway. If the cash is coaxed out of your pocket from the utility company or the government has little practical impact. It's just the entire psychology of Government intervention in every f'ing thing we do. The DOW has dropped 1200+ point in the week since the last time they "helped" via the taxpayers who actually pay taxes. The whole concept of government bailouts and takeovers reeks of the end of individualism, entrepreneurship, as well as severe hesitation of private and personal investors to put their finances toward anything that stands a remote chance of being taken over by our government. |
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Post by Iowafan1 on Oct 10, 2008 7:36:12 GMT -6
DOW to 7,500 in two weeks or less.
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Post by socal on Oct 10, 2008 7:36:17 GMT -6
Another point... you state: "very few tangible assets" "incredibly loose monetary policy" "really easy for banks and consumers to leverage up and inflates bubbles" "banks have giant leveraged portfolios of fixed income securities" "leveraged fixed income portfolios" Again, not disagreeing with you. But don't you see the slightest bit of a fundamental problem with this? Now, to get all philosophical..... Yes, it's the engine that allows the current economy to work. But if the vast majority of the economy is ethereal, doesn't allowing the whole process to crash and begin with a non mystical foundation make more sense? Damned straight it will require ungodly adjustments --- but I believe the meltdown effecting everyone may have already progressed too far. And in the end, we will all be proles... (we already all are, some of us just pretend we aren't) But everything would be on a stable footing, as nothing physically has changed. Only the promise/lie that is a treasury note- is removed. Anyways, enough of my utopian daydreaming. Those with the true power will see that everyone returns to the trough soon enough. Leverage in and of itself isn't bad. Every business needs the ability to borrow money. Revenues are never matched with cash outflows. Leverage juices up profits. Profits absolutely are the driving force behind economic growth. The problem is that if you wipe out all 5 investment banks and all money center banks, the country would very likely enter into a very deep depression. The quick destruction of capital and the complete freezing of the credit market would bring virtually all economic activity to a halt. What they need to do is preserve the system right now. Then, the Fed absolutely needs to raise rates relentlessly and prevent bubbles from inflating. With higher interest rates, bubbles can still form, but they rarely inflate as high as they do with very low interest rates. The problem is that even though the Fed is allegedly an apolitical animal, the government as a whole has a very strong vested interest in keeping rates low. Low rates stimulate economic activity and increase tax rolls. The government is also the biggest borrower on the planet, lower rates mean lower interest payments for the government, that means a smaller deficit. Two steps to prosperity: 1) Save the banking system 2) Reform the Fed Yes... this makes sense in the world we currently inhabit. But it obviously has some major flaws. When the money distributed by the fed can be leveraged to over 9 times via escalating series of loans - the potential abyss looms larger by the original billion. At this point, the problem isn't really "saving the banking system"... It's re-convincing the banking system & the general public that the banking system is sound... and actually real. Oh, to have things as simple as the Bailey Savings & Loan saga... |
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Post by socal on Oct 10, 2008 8:03:11 GMT -6
www.myeyewitnessnews.com/news/local/story.aspx?content_id=627b4173-a45c-4cb1-91da-2cc1e028116f&rss=59....and then there is this from my current home of Memphis.....Just checked in at home and saw where more than 69,000 customers had their electricity cut off in an eight month span between January and August of 2008. Keep in mind that the entire population of Memphis is only 675,000, so we are looking at more than a tenth of the population having their power cut off because they couldn't pay their bill. My guess is that this is probably indicative of the Country as a whole. Where am I going with this? Government bailouts of lending institutions and mortgage defaults already ongoing.....credit card, personal loan and vehicle loan default bailouts on the horizon......I'm thinking government paid utilities can't be far behind with our liberal socialist government "helping" those in need. Well, when Obama mandates a percentage of power has to come from renewable sources that cost more than coal or nuclear, what do you think that will do to electricity prices? The collective "we" end up paying for those who can't or don't pay their utility bills anyway. If the cash is coaxed out of your pocket from the utility company or the government has little practical impact. Whoda thunk... Even with a GOP led Senate/House/Whitehouse... including HUUUGE tax cuts, some people still wouldn't be able to pay for their utilities. It's really too bad those people haven't learned the miracle of bankruptcy... I wonder if the amount of Lehman's bankruptcy would be greater than or less than the sum of all delinquent utility bills nationwide??? To go on a rant here... Iowafan... you truly make me sick. Your side would much rather a family be forced to bring a baby into this world - where it will have to starve or freeze to death??? Seriously, what's your goal? Are you not aware that people do come on hard times? Unless you're sitting on a mattress full of gold - your situation is much closer to those that had their power cut off than you would like to admit. Now assuming you lose your job or whatever business you run is no longer able to sell anything... how long will you be able to sustain the life you'd like to lead for yourself & your loved ones with that mattress 'o' savings? Day 1 of the "post mattress" era, I'd love nothing more than to hear you bitch about how "the government" isn't doing enough to help. In the end, this fits with my original theme. For example, would a lending institution be better off repo'ing ungodly numbers of cars to put in an auction where nobody is buying? Or would it be better left in the hands of the current owner, where it will be best utilized & likely paid for when possible? No doubt the auto loan lending institutions will bitch to the government about not having enough money to pay their bills (including the $million executive salaries) and thus require a bailout. Unfortunately, unlike vehicles / utilities... should those institutions be late on their own bills, the repo man can't do much. |
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Post by twinegarden on Oct 10, 2008 9:35:44 GMT -6
Well the market is down another 400+ points and it has only been open for 2 hours.
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Post by twinegarden on Oct 10, 2008 9:44:17 GMT -6
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Post by NOTTHOR on Oct 10, 2008 11:18:20 GMT -6
It's really too bad those people haven't learned the miracle of bankruptcy... I wonder if the amount of Lehman's bankruptcy would be greater than or less than the sum of all delinquent utility bills nationwide??? ___________________________________________ In the end, this fits with my original theme. For example, would a lending institution be better off repo'ing ungodly numbers of cars to put in an auction where nobody is buying? Or would it be better left in the hands of the current owner, where it will be best utilized & likely paid for when possible? No doubt the auto loan lending institutions will bitch to the government about not having enough money to pay their bills (including the $million executive salaries) and thus require a bailout. Unfortunately, unlike vehicles / utilities... should those institutions be late on their own bills, the repo man can't do much. Well, the capital losses on the Lehman bankruptcy will wipe out a lot of tax receipts for years to come. As for the second point I've left above, lenders realize that they will take a loss on bad loans. In some instances, they are willing to work with the borrower to negotiate a lower principal. That is their right. But you call the person with the car with the late payment the "owner" of the car, that is wrong. The onwer of the car is the finance institution. Secured lenders rely on their ability to recover collateral in the event a borrower defaults. If government enacts a system whereby the rightful owner of property cannot repossess the property that it owns, credit will become even tighter. The Cook County Sheriff announced the other day that he is going to stop doing foreclosures. To the proles, he sounds like a noble man, protecting serf from their feudal property owning lords, but when a news channel asked a mortgage banker what he thought of the policy, he said point blank that he will not lend another penny in Cook County until he knows his security interest will be recognized. Two of the things that have made our country so prosperous are the desire of capitalists to take risks in order to make money and the respect for property rights. If foreign capital begins to believe the US is a banana republic that does not enforce property rights, we're freaking toast. |
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