Stop The Bailouts!
- Thread starter MadJack
- Start date
Giving these disasters money is the worst thing we could ever do. Really does alot for the value of our currency. Making them pay up would cause some short term problems, but bailing them out will be death for the long term.
Quote from Warren Buffet
``I am betting on the Congress doing the right thing for the American public and passing this bill,'' Buffett said on cable channel CNBC today. ``
Let me see -whose opinion should I go with- and investment icon with decades of experience or Tina--
Hmmm being a consevative I have to go with experience--over all hat no cattle--again
okeBuffett is for Obama
Buffett is for Obama
http://www.chicagotribune.com/news/politics/obama/chi-obama_thuaug16,0,7497919.story what ? you are back on Buffett now ?? http://www.dailykos.com/story/2008/9/17/22103/1116/845/602254
Buffett is for Obama
Quote from Warren Buffet
``I am betting on the Congress doing the right thing for the American public and passing this bill,'' Buffett said on cable channel CNBC today. ``
Let me see -whose opinion should I go with- and investment icon with decades of experience or Tina--
Hmmm being a consevative I have to go with experience--over all hat no cattle--again
http://www.chicagotribune.com/news/politics/obama/chi-obama_thuaug16,0,7497919.story what ? you are back on Buffett now ?? http://www.dailykos.com/story/2008/9/17/22103/1116/845/602254
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Quote from Warren Buffet
``I am betting on the Congress doing the right thing for the American public and passing this bill,'' Buffett said on cable channel CNBC today. ``
Let me see -whose opinion should I go with- and investment icon with decades of experience or Tina--
Hmmm being a consevative I have to go with experience--over all hat no cattle--again
you are like the bush/cheney/mccain.... just a few days ago you try to discredit Buffett in this forum... now you have to go with him.... why don't you go all the way and vote obama ? I know, there is that one thing !
Jack, your a small business man what do you think is better? Let it ride take a chance? Do best to fix it? I have not believed much Bush has said las 4 years. But in this case. I have feeling we don't fix it we all will have big problems we dont even know how bad.
What the hell does disagreeing with buffet on his secretary taxes--got do with saying he's been an investment icon with decades of experience.
Are you liberals so one sided you either agree with everything on nothing depending on political affilliation.
There things I like about GW and things I don't--and spoke about both.
You know --there are several things I like about Barney Franks--but that doesn't mean I want a set of nuts on my chin.
I'm shaking my head, I can't respond to this...What the hell does disagreeing with buffet on his secretary taxes--got do with saying he's been an investment icon with decades of experience.
Are you liberals so one sided you either agree with everything on nothing depending on political affilliation.
There things I like about GW and things I don't--and spoke about both.
You know --there are several things I like about Barney Franks--but that doesn't mean I want a set of nuts on my chin.
i don't know, man. i am not up on any of this stuff. way out of my league. from what i have read, i have mixed feelings. also, from what i've read, a bailout is prob just a temp "fix". i have a lot to lose with my retirement accts but hopefully it recovers in 9 years when i start dipping into them. and, hopefully i won't have to dip into them early and take the penalties along with the losses. i'm down around 15% since about april. don't like the idea of my house value going down 30% to 40% more either since i am trying to sell it because it's just too damn big foir us. it was just appraised for about 10% more than it was appraised when i bought it in 2005 but it's been on the market for 1 year now and no bites. way too many houses in this area are for sale and just sitting there. the poor builders are going bankrupt left and right around here and the prices are dropping pretty fast. what a mess.
The two biggest things that bother me is. Is it the final FIX? And if we don't do it does it really mean 1.5 million more job layoffs. Of course I also worry about My IRA since I am retired already. But we cant take another million or two lay offs. My 92 year old Mom still alive God Bless Her. Remembers the depression when growing up and said we don't want anything close to it.
StevieD,
Say it ain't so. Please tell me you're not this naieve. Stevie, they're P-O-L-I-T-I-C-I-A-N-S. It doesn't make any difference...democrat, republican, independent, etc. World systems fail because man is corrupted. Not corruptible...corrupted.
We are born into iniquity.
Read your bible.
Is the united states mentioned at the end of time and does it not say something about working or tilling the soil all day for the food you eat, "consume". Also will we accept the ANTI-CRIST with open arms and we will want the mark of the beast. Makes me mad,real mad.
I need to go to church more often.
I think if everyone understood what the "bail out" is- I doubt there would be as much anxiety--
Heard same stuff when I was at chrysler and we were bailed out---what did it cost the gov/taxpayor in the end--nothing they made 300,000,000 profit.
The most unbelievable thing on this -- is how so many or of the opinion that this is throwing money away and it will all be lost--maybe because thats how the media portrays it.
While I am not near as optomistic as this fellow from Wall Street Journal the article does go a long way in explaining what bail out consist of.
I think there is opportunity to make some money--with the downside a minimal loss--
Now consider the rislk of modest loss at worse with possible gain in the end--to collapse of banking/mortgage sector if nothing is done.
The Paulson Plan
Will Make Money
For Taxpayers
By ANDY KESSLERArticle
In 1992, hedge-fund manager George Soros made $1 billion betting against the British pound. In 2007, John Paulson's Credit Opportunities fund correctly bet against subprime mortgages, clearing $15 billion for the year and $3.7 billion for him. Warren Buffett is now hoping to make big money on Goldman Sachs.
Chad CroweBut these are small-time deals. My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion -- yes, with a "t" -- for the United States Treasury.
Here's what's happened so far. New technology like electronic trading meant that Wall Street's bread-and-butter business of investment banking and trading stocks stopped making much money years ago. So investment banks took their enormous capital and at first packaged yield-enhanced, subprime mortgage loans into complex derivatives such as collateralized debt obligations (CDOs). Eventually and stupidly, these institutions owned them for themselves -- lots of them, often at 30-to-1 leverage. The financial products were made "safe" by insurance products known as credit default swaps, a credit derivative from companies such as AIG. When housing turned down, the mortgages and derivatives were worth a lot less and no one would lend Wall Street money anymore.
Then the piling on started. Hedge funds could short financial stocks and then bid down the prices of CDOs stuck on Wall Street's balance sheets. This was pretty easy to do in an illiquid market. Because of the Federal Accounting Standards Board's mark-to-market 157 rule, Wall Street had to write off the lower value of these securities and raise more capital, diluting shareholders. So the stock prices would drop, which is what the shorts wanted in the first place. It was all legit.
There is a saying on Wall Street that goes, "The market can stay irrational longer than you can stay solvent." Long Term Capital Management learned this lesson 10 years ago when it got its portfolio picked off by Wall Street as its short-term financing dried up. I had thought the opposite -- hedge funds picking off Wall Street -- would happen today. But in a weird twist, it's the government that is set up to win the prize.
Here's how: As short-term financing dried up, Fannie Mae and Freddie Mac's deteriorating financials threatened to trigger some $1.4 trillion in credit default swap payments that no one, including giant insurer AIG, had the capital to make good on. So Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship. This removed any short-term financing hassle. He also put up $85 billion in loan guarantees to AIG in exchange for 80% of the company.
Taxpayers will get their money back on AIG. My models suggest that Fannie and Freddie, on the other hand, are a gold mine. For $2 billion in cash up front and some $200 billion in loan guarantees so far, the U.S. government now controls $5.4 trillion in mortgages and mortgage guarantees.
Fannie and Freddie each own around $800 million in mortgage loans, some of them already at discounted values. They also guarantee the credit-worthiness of another $2.2 trillion and $1.6 trillion in mortgage-backed securities. Held to maturity, they may be worth a lot more than Mr. Paulson paid for them. They're called distressed securities for a reason.
Now Mr. Paulson is pitching Congress for $700 billion or more to buy distressed loans and CDOs from the rest of Wall Street, injecting needed cash onto balance sheets so that normal loans for economic activity can be restored. The trick is what price he will pay. Better mortgages and CDOs are selling for 70 cents on the dollar. But many are seriously distressed (15-25 cents on the dollar) because they are the last to be paid in foreclosures. These are what Wall Street wants to unload the quickest.
Firms will haggle, but eventually cave -- they need the cash. I am figuring Mr. Paulson could wind up buying more than $2 trillion in notional value loans and home equity and CDOs for his $700 billion.
So the U.S. will be stuck with a portfolio in the trillions of dollars in bad loans and last-to-be-paid derivatives. Where is the trade in that?
Well, unlike Mr. Buffett or any hedge fund, the Treasury and the Federal Reserve get to cheat. It's not without risk, but the Feds, with lots of levers, can and will pump capital into the U.S. economy to get it moving again. Future heads of Treasury and the Federal Reserve will be growth advocates -- in effect, "talking their book." While normally this creates a threat of inflation and a run on the dollar, and we may see dollar exchange rates turn south near term, don't expect it to last.
First, with Goldman Sachs and Morgan Stanley now operating as low-leverage bank holding companies, a dollar injected into the economy will most likely turn into $10 in capital (instead of $30 when they were investment banks). This is a huge change. Plus, a stronger U.S. economy, with its financial players having clean balance sheets, will become a safe haven for capital.
Europe is threatened by an angry Russian bear. The Far East, especially China, has its own post-Olympic banking house of cards of non-performing loans to deal with. Interest rates will tick up as the economy expands -- a plus for the dollar. Finally, a stronger economy driven by industry instead of financials means more jobs, less foreclosures and higher held-to-maturity payouts on this Fed loan portfolio.
You can slice the numbers a lot of different ways. My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion -- the greatest trade ever. Every hedge-fund manager will be jealous. Mr. Buffett is buying a small piece of the trade via his Goldman Sachs investment.
Over 10 years this could change the budget scenario in D.C., which can also strengthen the dollar. The next president gets a heck of a windfall. In the spirit of Secretary of State William Seward's purchase of Alaska for $7 million in 1867, this week may be remembered as Paulson's Folly.
Mr. Kessler, a former hedge-fund manager, is the author of "How We Got Here" (Collins, 2005).
Heard same stuff when I was at chrysler and we were bailed out---what did it cost the gov/taxpayor in the end--nothing they made 300,000,000 profit.
The most unbelievable thing on this -- is how so many or of the opinion that this is throwing money away and it will all be lost--maybe because thats how the media portrays it.
While I am not near as optomistic as this fellow from Wall Street Journal the article does go a long way in explaining what bail out consist of.
I think there is opportunity to make some money--with the downside a minimal loss--
Now consider the rislk of modest loss at worse with possible gain in the end--to collapse of banking/mortgage sector if nothing is done.
The Paulson Plan
Will Make Money
For Taxpayers
By ANDY KESSLERArticle
In 1992, hedge-fund manager George Soros made $1 billion betting against the British pound. In 2007, John Paulson's Credit Opportunities fund correctly bet against subprime mortgages, clearing $15 billion for the year and $3.7 billion for him. Warren Buffett is now hoping to make big money on Goldman Sachs.
Chad CroweBut these are small-time deals. My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion -- yes, with a "t" -- for the United States Treasury.
Here's what's happened so far. New technology like electronic trading meant that Wall Street's bread-and-butter business of investment banking and trading stocks stopped making much money years ago. So investment banks took their enormous capital and at first packaged yield-enhanced, subprime mortgage loans into complex derivatives such as collateralized debt obligations (CDOs). Eventually and stupidly, these institutions owned them for themselves -- lots of them, often at 30-to-1 leverage. The financial products were made "safe" by insurance products known as credit default swaps, a credit derivative from companies such as AIG. When housing turned down, the mortgages and derivatives were worth a lot less and no one would lend Wall Street money anymore.
Then the piling on started. Hedge funds could short financial stocks and then bid down the prices of CDOs stuck on Wall Street's balance sheets. This was pretty easy to do in an illiquid market. Because of the Federal Accounting Standards Board's mark-to-market 157 rule, Wall Street had to write off the lower value of these securities and raise more capital, diluting shareholders. So the stock prices would drop, which is what the shorts wanted in the first place. It was all legit.
There is a saying on Wall Street that goes, "The market can stay irrational longer than you can stay solvent." Long Term Capital Management learned this lesson 10 years ago when it got its portfolio picked off by Wall Street as its short-term financing dried up. I had thought the opposite -- hedge funds picking off Wall Street -- would happen today. But in a weird twist, it's the government that is set up to win the prize.
Here's how: As short-term financing dried up, Fannie Mae and Freddie Mac's deteriorating financials threatened to trigger some $1.4 trillion in credit default swap payments that no one, including giant insurer AIG, had the capital to make good on. So Treasury Secretary Henry Paulson put Fannie and Freddie into conservatorship. This removed any short-term financing hassle. He also put up $85 billion in loan guarantees to AIG in exchange for 80% of the company.
Taxpayers will get their money back on AIG. My models suggest that Fannie and Freddie, on the other hand, are a gold mine. For $2 billion in cash up front and some $200 billion in loan guarantees so far, the U.S. government now controls $5.4 trillion in mortgages and mortgage guarantees.
Fannie and Freddie each own around $800 million in mortgage loans, some of them already at discounted values. They also guarantee the credit-worthiness of another $2.2 trillion and $1.6 trillion in mortgage-backed securities. Held to maturity, they may be worth a lot more than Mr. Paulson paid for them. They're called distressed securities for a reason.
Now Mr. Paulson is pitching Congress for $700 billion or more to buy distressed loans and CDOs from the rest of Wall Street, injecting needed cash onto balance sheets so that normal loans for economic activity can be restored. The trick is what price he will pay. Better mortgages and CDOs are selling for 70 cents on the dollar. But many are seriously distressed (15-25 cents on the dollar) because they are the last to be paid in foreclosures. These are what Wall Street wants to unload the quickest.
Firms will haggle, but eventually cave -- they need the cash. I am figuring Mr. Paulson could wind up buying more than $2 trillion in notional value loans and home equity and CDOs for his $700 billion.
So the U.S. will be stuck with a portfolio in the trillions of dollars in bad loans and last-to-be-paid derivatives. Where is the trade in that?
Well, unlike Mr. Buffett or any hedge fund, the Treasury and the Federal Reserve get to cheat. It's not without risk, but the Feds, with lots of levers, can and will pump capital into the U.S. economy to get it moving again. Future heads of Treasury and the Federal Reserve will be growth advocates -- in effect, "talking their book." While normally this creates a threat of inflation and a run on the dollar, and we may see dollar exchange rates turn south near term, don't expect it to last.
First, with Goldman Sachs and Morgan Stanley now operating as low-leverage bank holding companies, a dollar injected into the economy will most likely turn into $10 in capital (instead of $30 when they were investment banks). This is a huge change. Plus, a stronger U.S. economy, with its financial players having clean balance sheets, will become a safe haven for capital.
Europe is threatened by an angry Russian bear. The Far East, especially China, has its own post-Olympic banking house of cards of non-performing loans to deal with. Interest rates will tick up as the economy expands -- a plus for the dollar. Finally, a stronger economy driven by industry instead of financials means more jobs, less foreclosures and higher held-to-maturity payouts on this Fed loan portfolio.
You can slice the numbers a lot of different ways. My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion -- the greatest trade ever. Every hedge-fund manager will be jealous. Mr. Buffett is buying a small piece of the trade via his Goldman Sachs investment.
Over 10 years this could change the budget scenario in D.C., which can also strengthen the dollar. The next president gets a heck of a windfall. In the spirit of Secretary of State William Seward's purchase of Alaska for $7 million in 1867, this week may be remembered as Paulson's Folly.
Mr. Kessler, a former hedge-fund manager, is the author of "How We Got Here" (Collins, 2005).
Given the current economic circumstances, we really have no choice but to shore these companies up. Most people have no idea what would happen if foreign investors loose confidence in our markets but if they do, it could trigger a worldwide economic collapse. I thought Bush's speech last night was the best he has given to date and while that is not saying a lot, it really was very good.
As he said, action has to be taken immediately and we can shake out the blame later on.
As he said, action has to be taken immediately and we can shake out the blame later on.
One viewpoint............The Young Turks
One viewpoint............The Young Turks
http://www.youtube.com/watch?v=1OTM8Y3a5zQ
One viewpoint............The Young Turks
http://www.youtube.com/watch?v=1OTM8Y3a5zQ
I concur with the hold out Republicans in Congress who are against the bailout. Let the financial institutions fail. Institute strict regulatory financial rules for future institutions requireing strict compliance for good companies and lets go through our recession and clean house.
Too much crap on Wall Street and K Street buying politicians. Don't squander this first step in giving this country a long needed and yes, albeit painful bath. Get rid of the crap the controls wall street, then get rid of the crap that controls K street.
Guess what, we will have a country of the people, for the people and by the people. When George Bush, his treasury secretary and fed chair tell you to do something right away, you better think about it. Tell me one time he has benefited anyone, anyone other than his corporate friends.
George W. Bush in 7 years = 500 trillion in Iraq and 700 trillion buying bad paper. 1200 trillion dollars, let me say that again, 1200 trillion dollars this guy has spent on an invasion, killing 4500 Americans and buying bad mortgages to bail out his banker friends.
I really want to thank all my Madjack briends who voted for this guy in 2000 and 2004. At least I can tell my grandkids as we are sitting around the cave waiting for my grandson to bring home some fresh caught squirrel for dinner that I was alive during the term of the worst president in the history of the United States.
Eddie
Too much crap on Wall Street and K Street buying politicians. Don't squander this first step in giving this country a long needed and yes, albeit painful bath. Get rid of the crap the controls wall street, then get rid of the crap that controls K street.
Guess what, we will have a country of the people, for the people and by the people. When George Bush, his treasury secretary and fed chair tell you to do something right away, you better think about it. Tell me one time he has benefited anyone, anyone other than his corporate friends.
George W. Bush in 7 years = 500 trillion in Iraq and 700 trillion buying bad paper. 1200 trillion dollars, let me say that again, 1200 trillion dollars this guy has spent on an invasion, killing 4500 Americans and buying bad mortgages to bail out his banker friends.
I really want to thank all my Madjack briends who voted for this guy in 2000 and 2004. At least I can tell my grandkids as we are sitting around the cave waiting for my grandson to bring home some fresh caught squirrel for dinner that I was alive during the term of the worst president in the history of the United States.
Eddie
