America's Financial Crisis

[arziv]

Re: America's Financial Crisis

Tighten your belts and braces, the gorillas of wall street are at it again. They will fleece the populace whist opiating them with mass sports and mass entertainment. Hard times are ahead, whilst the wall steet ghouls dance like dervishes around the bonfires.

[gmd]

Re: America's Financial Crisis

What Comes After Senate Approval of the Bailout Bill?

Congressional leaders need to look to more than just passing the bill in the House.

Robert Kuttner | October 2, 2008 | web only

With the Senate’s passage of the bailout bill, 74 to 25, Democrats in Congress need to begin preparing right now for a second package to do the job properly. They also need to begin the tightest possible monitoring of Secretary Paulson’s actions and their effects on financial markets. Here is what is likely to unfold over the next few weeks:
The House will pass the bill after at least twenty more Republicans agree to support it. A few more Blue Dog Democrats may switch their votes to no, in protest against the trillion dollars of tax breaks added by the Senate as sweeteners for Republicans.

But Speaker Nancy Pelosi is now under severe pressure to deliver at least the 140 Democrats that she produced on the last vote, which failed because only 66 Republicans voted aye. If the measure were to fail again, this time because of Democratic defections, the Democrats would get the blame for the deepening financial carnage.

After the bill passes, we will see short-lived euphoria. The stock market will rally, and credit will begin to unlock. The overnight borrowing rate between banks will temporarily drop. But, after a week or two, as Paulson begins using his authority to buy up bad paper, the bloom will be off the rose—because there still so many unexploded grenades in the financial system.

Hedge funds will likely be the next casualty, as investors begin withdrawing large sums of money and the funds need to sell assets at depressed prices. Hedge funds typically prohibit their investors from withdrawing funds for a set period, called a lock-in, often two years. This allows hedge funds to pursue highly speculative strategies, knowing that their investors won’t sell out when times get rough. By coincidence, the lock-in period for many hedge fund investors begins expiring this week.

It will also be clear that relieving banks of bad mortgage-backed bonds is not solving the underlying foreclosure crisis. And even if the Securities and Exchange Commission uses its new authority to suspend “mark-to-market” accounting rules, so that banks do not have to downgrade the value of the junk still on their books, it won’t change the underlying reality that banks have taken huge losses and are now severely undercapitalized.

So what should the congressional leadership do?

First, prepare for the likelihood that Congress will have to act again, possibly before the election, almost surely before next January. Hold hearings with expert witnesses on the alternatives to the Paulson plan. The two most important ingredients of a better plan are direct government refinancing of distressed mortgages, and direct government equity investment in troubled banks with government either taking full control of getting a major ownership share.

Second, the House should, at the very least, add to the bailout bill even tighter monitoring requirements. Failing that, Congress should keep Paulson on a very tight leash, so that he blows through as little of the $700 billion as possible on a strategy that can’t work.
Congress should prepare, in detail, to rescue the rescue. The need could materialize either before or after November, but it will surely land squarely on the desk of the next president. And since that president is increasingly likely to be Barack Obama, he and the Democrats need to begin preparing yesterday.

article

[gmd]

Re: America's Financial Crisis

Welcome back. Good to see you here again. I hope the family is well.

Shnorakalutzyun enker. Ameninch lav e.

[Azad]

Re: America's Financial Crisis

"This really is an economic Pearl Harbor," Buffett said. "That sounds melodramatic, but I've never used that phrase before. And this really is one."

"In my adult lifetime, I don't think I've ever seen people as fearful economically as they are now," the 78-year-old Buffett said.

http://biz.yahoo.com/ap/081002/buffett_economy.html

[jgk3]

Re: America's Financial Crisis

Well, for starters, people have to get off the tube if they want to probe deep enough to learn anything about the big picture of things, where they are headed.

The other thing is, we think of the world in terms of money and we always have. "Money Talks" is a real phrase and it applies very much in this world. But how often do we think of where this money is coming from? In our everyday lives, we don't really have to, because it works. It's the same with computers, do you have any clue how the hell this stuff is working? How when you even press a key down on your keyboard, it suddenly appears visually in front of you, and then you can click a button on a mouse to save and send it on the internet (which is a whole other can of beans)?

No. Because we don't have to. But if our computer started having problems, maybe then our curiosity would begin to appear.

Well now, money is going to have problems and people are gonna get more curious. The civil authorities will deal with them accordingly. If people feel their answers are being explained by a television screen, that's good enough for the authorities, but eventually, the tv is gonna have to cut more and more on the bs if it wants to convince its audiences, and at some point, it's going to hit a nerve with the authorities who'll need to resort to other means in order to keep their whole world from falling apart.

About small farmers Azad... I believe greatly in giving them protection for their land and production rights and giving them financial incentive for their productivity, whilst also giving them the financial support to pursue means of production that are neither wasteful nor polluting. But again, who cares? You go to the supermarket, you find all the groceries you want, you just don't care how it got there! At least this applies to most people.

People start caring when there's a panic, that's human nature applied to the masses. The authority's job in such an instance is to continue it's pursuit for controlling information and to offer "a solution". Any solution, so long as it shuts the people up. If their solution fails, they'll tend to resort to a more rigid one the next time.

[Azad]

Re: America's Financial Crisis

One of the main factor that will make it harder for the markets to rebound all over the world is investors' morale. If it keeps going in these directions ... we are headed for civil unrest in many countries or even WWIII. We kept people on this planet busy working and producing materials we really don't need. We disfranchised the small farmers all over the world by selling them modified grains which made them dependents on the American "ADMs". Once the world economy is out of track it is going to create a larger stress on the food supplies ... good luck after that.

[jgk3]

Re: America's Financial Crisis

pretty crazy eh? Hopefully the 700 Billion figure can give the taste of what's really at stake to more people who will probe further than what the media talks about. Basically, our entire system is based on an ignorant trust for inflated money of ridiculous proportion that will never in a million years account for the real capital assets that are available in this world. What does that mean for folks like us? I guess we'll (re)learn as we go along.

[crusader1492]

Re: America's Financial Crisis

The plane hitting the budget office in the Pentagon is too much

700,000,000,000...pfft. Try 1,000,000,000,000,000 (one quadrillion )

[jgk3]

Re: America's Financial Crisis

700 Billion is nothing.... http://www.youtube.com/watch?v=McKzLRmM7u4

Enjoy, and wake up

[Armenian]

Re: America's Financial Crisis

Thanks. Been reading on and off for a while and decided I would get involved again. Some interesting topics lately and I enjoy the posts I have seen lately.

Welcome back. Good to see you here again. I hope the family is well.