The House just voted against the "bailout"

[troutphisher]

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This is exactly why I have to laugh at Obama, this is the real change he represents.
Like I said an uneducated vote is still a vote, but what a waist it is if you don't research the facts yourself. In this day of instant information, it is easier than ever before in our times to get information.

The Democratic spin machine is in full gear, blaming the bush administration, and throwing up a hollow horse to run the race. They believe we are all to stupid to think for ourselves, or to lazy to find the facts.

Pelosi blew it today, she could have shown some leadership, and not injected bull shit lies, and beat downs. Instead she fell pray to the machine.

The democratic party is slowing trying to change our free economy to a socialist economy.
I just saw John Kerry on TV trying to defend Pelosi, and blaming the Bush administration.

What a fuck'in joke the democratic party has become, and I see no change in the near future they will come back to the middle ground.

[Peddler]

and what a wonderful track record the Repubes have over the past eight years with six of those years having the Repubes in total control of the House, Senate and White House!
I think it's safe to assume where even more Rethuglican leadership will take us.
Vote 3rd. party or please stay home.

As another states...
today's Republican:
Privatize the profits - Socialize the losses  :angel:

Here's the real deal:
http://www.peteyandpetunia.com/VoteHere/VoteHere.htm

[trouthemp]

Staying home and not voting is not the answer. The Obama camp is now manufacturing votes.

I need to offset one of these votes by voting straight Republican ticket. ............ 0--0

[trout_boy_II]

TP - You just don't get it do you?  The potential is for a melt down will affect everyone, not just "those living hand to mouth, and over extended on credit."  What an imperious and stupid comment.  I understand that this is complicated and nobody on Capital Hill gets it either, but it is better for you not to show your ignorance.  I'll stay by my earlier analogy of little kids acting stupid.  For all of Pelosi's "nanny nanny boo boo", the dissenting Republicans, were  just as bad, running home crying to Mommy , "She won't play like we want her to and called us names!"

We need adults in leadership positions, not what we saw today from both parties.  I hope like hell I'm wrong and TP's right about this being a simple flushing of the system like usual.  I too would prefer a simple solution, but I messed with that stuff for too long to think that's a likely outcome.  This one is not a  simple tummy upset.  This is the plague.  You (we) may recover, but we will be scarred.

And TM, I was 50% cash until last Thursday, and am now 20% cash.  Stick with mid caps or smaller as a defensive move, and watch where your cash is.  The bottom is near, but I ain't going to commit more now.  I'll wait and see.

TB

[troutphisher]

I get it just fine TB,

I have managed my money to reduce my risks. I have no dept other then my house payment.
I live in a modest house well below my means. I can ride this out, so it doesn't bother me one bit to see these companies fail.

I just don't believe all the hype about the sky is falling, the markets have seen much worse than an 8% decline. There are companies waiting in the wings to fill the void. They are waiting for fire sale pricing. It happened today with Wachovia, City bank made a great buy.

Those company's who's investment portfolios are heavily laden with bad notes should fail and clean out the system.


Let the free economy work.


What do you find so stupid about my comments on hand to mouth living and over extension?
I don't get that part.

I am not for bailing out those who borrowed more than they can pay, or used creative financing to purchase houses above there means. These are personal choices and should have personal consequences.
If you follow the facts, it was the democratic party that set this system up, then took advantage of the very people they were trying to help.

Why should I now be asked to bail some one like that out? when I had no role in putting them in their situation.

Just as the government needs to be held accountable, the people also need to assume some responsibility.
Take the loss and move on, but don't try to make the rest of us pay for it.

You talk a good story about being independent, but you sound very liberal?

Why stick up for Pelosi? Do you think her comments are correct, and this is all Bush's fault?

[croaker]

TP - You just don't get it do you?  The potential is for a melt down will affect everyone, not just "those living hand to mouth, and over extended on credit."

My idea is, to hell with any more bailouts and let the meltdown happen...
The Rich will get by as will the Poor...  The Middle Class will keep on keepin' on.

[peter p]

The credit markets freezing effects everyone, whether you need credit or not.   For instance, most businesses depend on the ability to issue commercial paper for short term financing.  This ST financing can be used for many things, paying bill during slow periods, capital project etc.  Take away this ability, and a lot of commerce has the potential to come to a screaming halt.  An example that may hit closer to home, there is a good chance your local flyshop uses some sort of financing to stock all the new toys for 09 we like to look at or use a bridge loan to get through the winter.   It also can affect people's ability to get some simple things like student loans, car loans etc.    

This isn't just about saving a couple of companies.  I believe that boat has come and gone unfortunately. 

[Woolly Bugger]

It's Pelosi's lack of leadership.

[fleming13]

I'm sure this will make everyone feel better about our Gov.   o-o  This crap ticks me off to no end.  What a stupid comment, at least do some decent research to get your numbers!

"In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

And the whole article.

http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html

Wow, we actually pay these folks.  8@S

[flatlander]

After reading these comments it appears we are far enough removed from the 30's to allow history to repeat itself.  You guys who are against the bailout...I don't get it (well I do...but).  How are you invested?  Don't you have money in 401K's?  Maybe you are all sitting on gold.  This thing could spread through solvent companies like wildfire...if the credit markets totally seize up it's going to effect a whole lot of companies beyond the ones that made risky sub-prime mortgage bets...maybe your company or the one you work for.  We're teetering on the abyss here. 

TP, I respect your opinion greatly but have you factored in hyper-inflation in your equation?  Maybe none of it comes true, but at best, I think we're looking at another long stretch like the 70's where nothing good happens economically.

[trout_boy_II]

In spite of my comments, I too respect TP's positions and comments even if I don't always agree with him.  He generally does much more homework than the rest of us and is consistent with his thoughts.  But I think he's missed the point in this case (I hope I'm wrong for all our sakes) and that's what I'm speaking to.  Flatlander and Peter p are on the right track.  The issue here is not if some guy stretched on a mortgage and gets to stay in the house at the expense of the tax payers.  I doubt this will happen very often, even with new legislation (and particularly this current legislation.)  The issue is whether the banks and subsequently, business in general has enough cash to operate.  Banks do not keep a hoard of cash in the vault, waiting for you to come by and get some.  They stay fully invested and leverage that even further.  Much of their daily cash needs are covered at the end of the day as all of them enter the repo and brokered CD market, etc. about 4:00 to cover their book for the day.  They have repo lines set up with counterparties (other banks or broker/dealers - which we used to have until they went broke last week) where they ask for cash (say $500 million today, even for a relatively small bank) and they offer collateral of somewhere between 104-110% or whatever is agreed upon to the counterparty for the privilege of borrowing the $500 million.  Between banks there is a contract "add on" that specify all of the details of that, including what is acceptable collateral and when you have to provide it.  Banks with better credit ratings may not have to provide collateral to back their borrowing until set amount.  Most of the NY and foreign banks would demand that they not post collateral until a fairly large number - could be $25 - 50 million.  Smaller banks or banks with lower tier 1 capital positions (which usually resulted in lower rating agency ratings) may or may not have any unsecured borrowing available to them. 

So when the markets began to freeze up, collateral values were dropping and banks were either having to post more collateral which they may not have had or they had to break the repo.  At the same time, banks that had received unsecured ("uncollateralized") allowances in the past, were now being required to post 100+ % collateral, which they may not have had.  This froze things big time.  That's why the Fed said they would accept collateral that they normally would not have taken at the discount window and why they allowed broker/dealers access when they had not in the past - just to get money moving again.  It worked for a little while, but it could not get the markets back into equilibrium (read that as trusting one another) and the bailout/rescue plan becomes the alternative.

So, why does the government want to buy these potentially crappy assets?  I think it is to establish "trust" again in the market place.  Trust doesn't mean would you let that bank date your sister ( ) it means that you believe they can do what they say they can and that what they say their true net worth is, is, well, true or "transparent".  Without resolving that, banks don't want to lend to one another and that freezes things up.  Will that affect "Main Street"?  You bet it will.  Good credit, bad credit, no credit (which I also advocate by the way) will be affected because the general economy will go in the tank, unemployment will shoot up, and you can guess the rest.

We haven't gotten there quite yet, and I hope I've got this all wrong and things are just fine, but if this happens, the theory of "just let them eat cake" will be one that could significantly affect all of the US and not just a slack homeowner.    I don't like the "medicine" any more than you do, but I'm not smart enough to figure another way around it and I'm not willing to bet the ranch.  I do think it is the federal government's job to protect the US in the face of such a significant potential negative outcome, even if a few folks don't "get what they deserve".

BTW, I can't stand Nancy Pelosi either and as I said before, she screwed up bad!  I don't know why TP felt I was supporting her.  I again, I am not a liberal, except in comparison to TP.  But having said that, Attila the Hun is a liberal...

My point is that it doesn't't matter who in Washington is responsible for the screw up's at this point – there is plenty of blame to go around if you want to focus on that, which those idiots in Congress seem fixed upon, but we need real leaders to solve the problem and worry about that later.  The dissenting Republicans picking their toys up and going home is just as bad as Pelosi's ranting in my opinion.  How any of them can claim moral justification for their actions is beyond me.  They are politicians after all.

Sorry for the long post, and I only touched on the complexity of the situation and there is much that I do not understand, but I figured 35 years of messing with that stuff gives me some insight that might be helpful to the rest of you.  I just hope I'm wrong!

Peace.

TB

PS  If the fix on Mark to Market, as is being thrown around by the dissenting Republicans becomes an issue, I'll wade in again, but for now, you've heard way to much from me and I will shut up and go fishing.

[troutjedi]

Vote Bob Barr

[flatlander]

TB,
What is the downside of suspending Mark to market right now?

[trout_boy_II]

TB,
What is the downside of suspending Mark to market right now?

Reality!

This essentially is what the Japanese did after the crisis they experienced with their banks in taking back foreclosed properties that led to a 10 year stall in their economy.  I am a fan of transparency and ultimately, market forces establishing prices.  As flawed as it might be, the bill before congress that was voted down did not ignore reality (i.e. the actual current value of the paper), but established a market for it where there now is none.  To suspend "Mark to Market", would be the ultimate in the Emperor's New Clothes, IMHO.  We are faced with a real problem, but pretending we don't have one is silly. 

For those who are unfamiliar with the term, Mark to Market (M-M) essentially means that an investor must value his trading portfolio to it's actual worth daily based on what the market said it is worth, not based on the face value of the paper.  I'm sorta surprised that fiscal conservatives are in favor of this (assuming I understand their position - I may be missing something) since it is not relying on Market forces (bring up America the Beautiful in background) to deal with the rapscallions!  Suspending Mark to Market would allow paper bankrupt firms to pretend to not be bankrupt.  Now, the end of this approach is similar to the one proposed by the government, it assumes that after the markets "normalize", the real value of those portfolios is more than what they are today, but I think this approach is rife with opportunities to fool the public even more and I don't think it is a good idea.  It will not fool the markets, however.

Commercial banks have trading portfolios and they have investment portfolios.  The trading portfolio has different capital requirements and must be marked to market.  Investment portfolios, which includes commercial and retail loans in the broadest definition, do not have to be marked to market, but do have to be adjusted either through Loan Loss Provisions or Impairment Rules (FASB something - I forget), to their "real" value.  That value, however, is not today's value but a reasonable estimate of "ultimate" value.  Essentially, it is the value that you can get the regulators to accept.  There is much more flexibility in that number than M-M.  The problem that occurred with the synthetics (and this is not a new problem) is that the trading of synthetics like mortgage backed securities, Credit Default Swaps, etc.) is over the counter and essentially not regulated.  So when the OTC market became non existent, the investors used "Mark to Model" values instead to establish current value, i.e. Monte Carlo simulations, Black-Scholes models, etc.  And there was some subjectivity on these, although few really thought they were good predictors of real value so lenders to these institutions decided to quit lending, thus the whole cash crunch.  IMHO, suspending M-M is not the answer because lenders into these markets will still not be comfortable with the real N/W of their borrowers - the other banks.  Therefore, I doubt they will be forthcoming with new credit. 

It's complicated for sure and I easily could be missing something here, but the very fact that suspending M-M is being banded about on the Hill proves they don't have a clue.  In my opinion of course.

I'm going fishing!

Peace.

TB

[Woolly Bugger]

TB -- "no eternal reward will forgive us now for wasting the dawn"


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