The Big Question

[tvashtarkatena]

Why 700 billion right now, even if it is (VERY ARGUABLY) a good idea?

 

Wouldn't it be smarter to commit to this thing a few billion at a time and see if how its working, rather than buying the whole supertanker full of cocaine this week?

 

Fuck me, does this admininstration ever think anything through? They're like Butters during one of his superhero fantasies, complete with the tin foil.

 

 

Edited September 25, 2008 by tvashtarkatena

[Mal_Con]

No, that would be a sign of weakness.

[TheJiggler]

Actually no. The higher the authorization the better. The point of this is to restore confidence in the Financial sector. The world needs to know there is a nearly infinite pool of money that can be drawn upon if need be. The idea that banks will be much more willing to loan out money if they know they can get rid of thier poorly perfroming assets.

 

Additionally if there is a small pool only the worst assets will be bought up by the govt. This would be a worse scenario. Right now there is a fire sale on essentially all mortgage backed securities. Nobody wants these. Not beacuse the are worthless, but because nobody knows what they are worth. Basically the govt is going to buy these securities. Supply and demand works and by buying these their value will increase. If we do this, I suspect we'll lose at most 10%.

[tvashtarkatena]

Um...bullshit.

 

The mortgage backed securities are practically worthless because they contain too many defaulted loans, which, after all, is why the investment banks are failing. We, the tax payers, without being asked, are being forced by this administration and our fucking limp dick congress to purchase securities that will not pay out. And it's all with borrowed money, which will double our already Jovian sized debt, which will devalue the dollar to just about nothing, which will result in hyperinflation, which will fuck the average American far more than no bail out at all.

 

This is a transfer of wealth from all of us to the very rich, plain and simple, and it is utter bullshit.

Edited September 25, 2008 by tvashtarkatena

[joblo7]

.........CHANTAGE..........

 

GIVE US YOUR MONEY OR YOU'LL LOSE YOUR MONEY.

 

OK, TAKE A FEW HUNDRED FROM EACH ONE OF US..........

 

PROBLEM SOLVED...... UNTIL NEXT TIME..

 

HEY , IT WORKED WITH ENRON ,

[klenke]

Tvash, do you ever take a moderate stance on anything?

 

Tvash, you should run for President. We need smart people like you to run our country.

[ivan]

Tvash, do you ever take a moderate stance on anything?

 

apparantly, he would make a poor buddhist, which is odd, given that...

 

[JayB]

Um...bullshit.

 

The mortgage backed securities are practically worthless because they contain too many defaulted loans, which, after all, is why the investment banks are failing. We, the tax payers, without being asked, are being forced by this administration and our fucking limp dick congress to purchase securities that will not pay out. And it's all with borrowed money, which will double our already Jovian sized debt, which will devalue the dollar to just about nothing, which will result in hyperinflation, which will fuck the average American far more than no bail out at all.

 

This is a transfer of wealth from all of us to the very rich, plain and simple, and it is utter bullshit.

 

 

Last I heard, the final proposal will include provisions that grant the government warrants/equity in exchange for the securities that they purchase. Still sucks, but better than the original proposal, and probably better than a catastrophic de-leveraging. Agree that this is going to put downside pressure on the dollar, and upside pressure in interest rates - which is going to hurt all of us.

 

At the end of the day - it's the lender's job to make sure that they're likely to get repaid before they give anyone a loan, and the folks who lent the money failed in that job, big-time. Ditto for the irrational subsidization of real-estate borrowing and horrendously crafted laws that Congress contributed to this disaster. If you're parceling out wrath, though, I think that you should spare a good measure for the folks on the retail end of the debacle. The amount of greed, corruption, and outright fraud involved in the average boom-time residential real estate transaction was such that you can hardly consider the average borrower an innocent bystander in this whole thing.

 

Seems more like a transfer from prudent people at all income levels - to reckless spendthifts...at all income levels.

 

 

[pc313]

Actually no. The higher the authorization the better. The point of this is to restore confidence in the Financial sector. The world needs to know there is a nearly infinite pool of money that can be drawn upon if need be. The idea that banks will be much more willing to loan out money if they know they can get rid of thier poorly perfroming assets.

 

Additionally if there is a small pool only the worst assets will be bought up by the govt. This would be a worse scenario. Right now there is a fire sale on essentially all mortgage backed securities. Nobody wants these. Not beacuse the are worthless, but because nobody knows what they are worth. Basically the govt is going to buy these securities. Supply and demand works and by buying these their value will increase. If we do this, I suspect we'll lose at most 10%.

Wow, only 10% thats 70 to 100 billion!! Thats like ten times what it cost us for Enron!!! What a deal!!!

[JayB]

Actually no. The higher the authorization the better. The point of this is to restore confidence in the Financial sector. The world needs to know there is a nearly infinite pool of money that can be drawn upon if need be. The idea that banks will be much more willing to loan out money if they know they can get rid of thier poorly perfroming assets.

 

Additionally if there is a small pool only the worst assets will be bought up by the govt. This would be a worse scenario. Right now there is a fire sale on essentially all mortgage backed securities. Nobody wants these. Not beacuse the are worthless, but because nobody knows what they are worth. Basically the govt is going to buy these securities. Supply and demand works and by buying these their value will increase. If we do this, I suspect we'll lose at most 10%.

Wow, only 10% thats 70 to 100 billion!! Thats like ten times what it cost us for Enron!!! What a deal!!!

 

How much did the demise of Enron cost the treasury?

 

 

[prole]

The amount of greed, corruption, and outright fraud involved in the average boom-time residential real estate transaction was such that you can hardly consider the average borrower an innocent bystander in this whole thing.

 

Whether they were "innocent bystanders", duped by the media, lenders, or the American myth, they are the ones left holding their personal grab bag of bankruptcy/bad credit cat-shit for the rest of their lives while the bankers take their tropical vacations and theraputic shopping excursions.

[tvashtarkatena]

Oh, I've got plenty of wrath for those individuals who overextended themselves. We all get multiple credit card offers in the mail every week, which is an annoyance, but no one puts a gun to our heads and forces us to actually get every credit card and max them out.

 

An awful lot of expensive vehicles, vacations, adornments and over the top remodels were purchased with 'equity' money. I don't want to bail those people out, either.

 

I'm still for the 'do nothing' option. I think, in the not very long run, it would cost us all less. The Bush administration is using is standard scare tactics to redefine this from 'rewarding avaricious and irresponsible behavior' to 'helping the middle and lower class'. Bullshit. If Bush really wanted to help that constituency, rather than his hyperweathly base, he'd push through health care for all, recind his tax cuts for the wealthy, end this expensive war, and invest in energy independence in a real way, rather than this 'trickle down' investment. The increase in gap between rich and poor and erosion of our middle class indicates that trickle down economics is a mythical veneer for concentration of wealth in the hands of a few.

 

I want to see the Bush tax cuts rescinded before I help pony up any money for Wall Street. It would also be nice to see Wall Street put up some of their personal assets for collateral on this bailout, you know, like all the rest of us schmoes have to do when we borrow money to get ourselves out of a jam of our own making. This bail out, it seems to me, is Plan Z, not A.

Edited September 25, 2008 by tvashtarkatena

[JayB]

The amount of greed, corruption, and outright fraud involved in the average boom-time residential real estate transaction was such that you can hardly consider the average borrower an innocent bystander in this whole thing.

 

Whether they were "innocent bystanders", duped by the media, lenders, or the American myth, they are the ones left holding their personal grab bag of bankruptcy/bad credit cat-shit for the rest of their lives while the bankers take their tropical vacations and theraputic shopping excursions.

 

Maybe, maybe not. If the bankers who made the worst choices have most of their personal wealth tied up in equity stakes in their banks, they'll lose it in direct proportion to the amount of RMBS sludge that they shovel onto the TARP.

 

As for the dipshits that shoehorned themselves into the American Nightmare via their stated income, Libor-Indexed, Neg-AM, 3/27 Cash-Out Option ARM...it should suffice to say that I'll be doling out any sympathy I have on a case-by-case basis.

[prole]

As for the dipshits that shoehorned themselves into the American Nightmare via their stated income, Libor-Indexed, Neg-AM, 3/27 Cash-Out Option ARM...it should suffice to say that I'll be doling out any sympathy I have on a case-by-case basis.

 

That these instruments were allowed to be created at all as a result of deregulation is 80% or more of the reason we're in this mess. Yes people got themselves in the pickle, but they were quite literally sold on this crack-rock by the people getting the bailout. I'd also add that those sellers were possibly the only people who understood how dangerous those instruments were.

Edited September 25, 2008 by prole

[olyclimber]

Libor-Indexed, Neg-AM, 3/27 Cash-Out Option ARM loans don't kill people! PEOPLE KILL PEOPLE!!!!!

 

 

[video:youtube]i-6L_hT3QtQ

[prole]

Exactly.

[ivan]

i'm an idiot w/ money, but i didn't screw myself w/ debt, despite being the sole provider for a family of 4

 

why should i acquiesce to a plan i don't even faintly comprehend engineered to help a heap of fucks w/ more money then me who willingly stuck their nuts in a buzz-saw?

[RuMR]

bawahahahaha!!! Especially like "RIGHT NOW"...this feels eerily familiar to the "We gotta invade Iraq RIGHT NOW, cuz Saddam has WMD's!"

 

 

[fear_and_greed]

Look on the brightside, at least in the future there will be no unemployed Americans as the state controlled coal mines will always need more bodies. Maybe China will even permit a transfer of all the able bodied men aged 13-40 to work in their coal mines until their US bonds are paid off.

[tvashtarkatena]

bawahahahaha!!! Especially like "RIGHT NOW"...this feels eerily familiar to the "We gotta invade Iraq RIGHT NOW, cuz Saddam has WMD's!"

 

 

But, but Nancy Pelosi is telling us that Congress won't fall for it this time....

[tvashtarkatena]

Oh, and eerily, half of Americans are against a bail out plan...just like the invasion of Iraq.

 

Can we get the Confederacy together again? I think Washington needs a little burnin' right about now.

[JayB]

As for the dipshits that shoehorned themselves into the American Nightmare via their stated income, Libor-Indexed, Neg-AM, 3/27 Cash-Out Option ARM...it should suffice to say that I'll be doling out any sympathy I have on a case-by-case basis.

 

That these instruments were allowed to be created at all as a result of deregulation is 80% or more of the reason we're in this mess. Yes people got themselves in the pickle, but they were quite literally sold on this crack-rock by the people getting the bailout. I'd also add that those sellers were possibly the only people who understood how dangerous those instruments were.

 

The instruments are fine, actually. So are naked currency futures - in the right hands.

 

In the securities market, the law requires that a broker determine a client's wealth and sophistication when they establish an account, and use that to calibrate the amount of risk that they allow them to take on. Put a guy with 15 years of trading experience and five million in liquid assets into an account where they can trade the riskiest options, you're fine. Put grandma into the same account, you're going to jail.

 

This system matches risk with the capacity to bear any losses that it might generate. People still have the freedom to make idiotic decisions and lose everything, but the laws insure that they earn the right to roll the big dice, and know what they're getting into. I've long argued for something like the rules that govern access to risk in the securities market to govern access to debt in the credit market.

 

With regard to "deregulation," that's a rather nebulous term that distorts the nature of the dispute at the center of the argument. Whether a given rule for participants in the marketplace is constructive or destructive has quite a bit more to do with their content than their size or number. If additional regulations increase transparency, require participants in regulated transactions to declare any conflicts of interest, limit or eliminate the potential for information asymmetry to distort transactions, limit the potential for the government to stifle competition and play favorites, etc - then principled advocates of "deregulation" will gladly support the addition of these regulations to the set of rules that govern commerce.

 

Had anyone been tabling additional regulations that would have reformed the set of rules that make realtors and mortgage brokers meet the minimal standards that securities brokers have to abide by, phased out the mortgage interest deduction, applied the same capital gains rate to rental properties and second homes that applies to securities, eliminated FNMA and Freddie and the massive and dangerous distortions that they introduced to the mortgage market, etc - I would have gladly supported all of them, even though I fall squarely into the "de-regulation" camp because I object to the government stifling competition, and using tarriffs, subsidies, price-controls, and other bits regulation to pick winners and play favorites.

 

 

 

 

[JayB]

Oh, I've got plenty of wrath for those individuals who overextended themselves. We all get multiple credit card offers in the mail every week, which is an annoyance, but no one puts a gun to our heads and forces us to actually get every credit card and max them out.

 

An awful lot of expensive vehicles, vacations, adornments and over the top remodels were purchased with 'equity' money. I don't want to bail those people out, either.

 

I'm still for the 'do nothing' option. I think, in the not very long run, it would cost us all less. The Bush administration is using is standard scare tactics to redefine this from 'rewarding avaricious and irresponsible behavior' to 'helping the middle and lower class'. Bullshit. If Bush really wanted to help that constituency, rather than his hyperweathly base, he'd push through health care for all, recind his tax cuts for the wealthy, end this expensive war, and invest in energy independence in a real way, rather than this 'trickle down' investment. The increase in gap between rich and poor and erosion of our middle class indicates that trickle down economics is a mythical veneer for concentration of wealth in the hands of a few.

 

I want to see the Bush tax cuts rescinded before I help pony up any money for Wall Street. It would also be nice to see Wall Street put up some of their personal assets for collateral on this bailout, you know, like all the rest of us schmoes have to do when we borrow money to get ourselves out of a jam of our own making. This bail out, it seems to me, is Plan Z, not A.

 

When things settle down enough that we can return to arguing about tax rates again, I'll be a happy man....

[Alpinfox]

The mortgage backed securities are practically worthless because they contain too many defaulted loans...

 

Worthless? Aren't the properties still there as collateral? If that is the case, even with dropping housing prices, there is still a real asset represented by those securities right? House prices have dropped at most ~40% in places like Florida/Vegas/Phoenix, but that means that 60% of the value of those assets is still real and attainable. Right?

 

Please correct me if I'm wrong.

 

 

 

 

[TheJiggler]

Um...bullshit.

 

The mortgage backed securities are practically worthless because they contain too many defaulted loans, which, after all, is why the investment banks are failing.

 

Firstly this is just wrong. Investment banks (or those banks formerly known as investment banks), are defaulting because they can't borrow. They can't borrow because nobody knows the value of their balance sheet.

 

Secondly, calling mortgage backed securities "practically worthless" is a strech. How many people that you know are currently in forclusure? Lets assume that 10% of people with mortgages are in or will be in forclosure (this number is ridiculously high). We'll also assume that a house in forclosure is absolutly worthless (not true). What is the value of the mortagage backed securities backing these houses? 90%.

 

The problem is nobody knows who will be forclosed upon. It could be that in a given bond 90% of the houses in it are being forclosed upon. But you can't really know this. So nodoby will buy them. The number I heard, and I could be totally wrong, is that mortgage backed securities right now are selling for 22 cents on the dollar. Do you reall believe the value of the US housing market is down 78% in the last 2 years?