700 Billion Buy out plan defeated.....

[ProgMatinee]

With 30 years to go til retirement, I'm not overly worried. The cheaper the stocks are now, the more of the company my monthly 401k purchase buys.

 

[IrishJedi]

Okay, the plan passed - why did the market go down again?

Follow the Dow Jones and the Election Polling simultaneously. Put 2 + 2 together and you'll have your answer.

 

[Mesa]

Okay, the plan passed - why did the market go down again?

And you guys really need to lighten up.

Another -370 day (was as much as ~ -800 today) makes it a little hard to lighten up and not worry about such things.

-15.7% on the ol' 401k also makes it a little hard to lighten up. YTD = -$16k

 

[barbelith]

Follow the Dow Jones and the Election Polling simultaneously. Put 2 + 2 together and you'll have your answer.

Then the answer must be that investors don't know history:

https://money.cnn.com/2004/01/21/markets/election_demsvreps/

 

[The Mike]

Citigroup sues Wachovia, Wells Fargo for $60B
1 hour, 45 minutes ago
NEW YORK - Citigroup Inc. said Monday it has filed a complaint in New York Supreme Court against Wachovia, Wells Fargo and the directors of both companies seeking more than $60 billion in damages for interfering with the bank's planned takeover of Wachovia's banking operations.

As if the market didn't need another kick to the head.

 

[Rook]

That's so weird.

 

[Spartan Rex]

Then the answer must be that investors don't know history:

https://money.cnn.com/2004/01/21/markets/election_demsvreps/

From your article:
"Democrats are seen as being pro-regulatory, and more willing to enact laws against Wall Street and laws against CEOs," said Don Luskin, chief investment officer at Trend Macrolytics.

Ironic as the dems opposed regs and tightening lending rules on Fannie and Freddie
that republicans introduced, thus causing this situation in the first place.

So guess what barbelith youre right, investors/voters dont know recent history
according to tracking polls or Obama wouldnt be in the lead.
Ignorance wont be bliss this time around.

By the way what is your most recent non political post in this forum?
I cant find one in all those profile postings.

 

[barbelith]

Ironic as the dems opposed regs and tightening lending rules on Fannie and Freddie that republicans introduced, thus causing this situation in the first place.

While I'm gratified to see conservatives argue in favor of regulation without irony, sadly Fannie Mae and Freddie Mac are a drop in the bucket of this tsunami.

So guess what barbelith youre right, investors/voters dont know recent history according to tracking polls or Obama wouldnt be in the lead.

I think the past eight years have told voters all they need to know about Republican policies. Investors however have almost always voted counter to their interest as per "common wisdom" that conservatives are better for the stock market and the bald historic fact that they are not.

By the way what is your most recent non political post in this forum?
I cant find one in all those profile postings.

Cheers on admitting to being a stalker, but you'll probably want to bone up on those skills - I posted in another part of the forum this morning. But perhaps you can point me to the forum rules that say how many posts a person can make in each section?

 

[ProgMatinee]

Speaking of stalking...the other day for the first time ever I had a person actually stop at my door to see if I was an Obama supporter, I told them I wasn't, which I hope doesn't mean my house gets egged or something.

 

[Spartan Rex]

Cheers on admitting to being a stalker, but you'll probably want to bone up on those skills - I posted in another part of the forum this morning. But perhaps you can point me to the forum rules that say how many posts a person can make in each section?

You posting in a non political thread in this forum is like democrate candidate giving to charity,
it doesnt happen unless theyre being watched.

 

[devilof76]

While I'm gratified to see conservatives argue in favor of regulation without irony, sadly Fannie Mae and Freddie Mac are a drop in the bucket of this tsunami.

A $5 trillion drop. It sure is tempting to think that the fall of a company with such vast liabilities could not possibly have such tsunamic effects.

 

[barbelith]

A $5 trillion drop. It sure is tempting to think that the fall of a company with such vast liabilities could not possibly have such tsunamic effects.

Except of course we're not facing $5 trillion in mortgage defaults.

 

[devilof76]

Where'd I say that there were?

 

[barbelith]

Where'd I say that there were?

I assumed you were misinformed rather than deliberately misleading in your immediately preceding post. We're not talking about a $5 trillion calamity when it comes to FM/FM.

 

[devilof76]

Yeah, I was deliberately opiating the masses.

No, I was assuming that if a company that bore that kind of liability went under, the odds that derivatives composed of their assets would probably not fare well. But I'm just a philistine. Pay no mind.

 

[devilof76]

Some more 'opium' for those who were inclined to distrust the 'wisdom' of Congress and the Federal Reserve.

https://www.realclearmarkets.com/articles/2008/09/in_times_of_crisis_trust_capit.html

And surprisingly, alternatives to the problem aren't exactly without precedent.

https://online.wsj.com/article/SB122264844037784117.html?mod=rss_opinion_main

For further illumination:

Ever heard of the Panic of 1907? There's a reason. "Markets swiftly recovered." The faster that this can happen today, the faster that we will recover. Yes, government intervention in our economy for the last 10 years means that a large amount of assets are far overpriced and these assets must be revalued, and losses will occur. It will mean that bankers that were foolish enough to overvalue these assets will lose their companies. However, these distressed assets are limited to two sectors of the economy (sub-prime mortgages, and credit default swaps) and in the case of sub-prime the underlying assets (homes) still have value, as do the remainder of assets in all the other sectors. The devaluation of the overvalued assets will mean a recession, but the quicker banks are restored to health, the quicker capital begins flowing and the economy revives.

The question is, aren't capital infusions from the government to recapitalize companies just as good? Here are some key differences to think about, and they are differences that are so fundamental that I counter that even an attempt by Hank Paulson to "look" like a free market will still fail. In a free market:

1. Capital is not used to prop up unhealthy balance sheets. Assets that are truly overvalued are written down quickly. Losses are taken quickly. Propping up bad decisions by pretending that they weren't bad only compounds the problem. Govt money most assuredly will mix it's aims, seeking to rescue those who do not deserve it, either out of altruism or the "too big to fail" doctrine. Government will buy assets before private investors would (since they claim that no one is stepping in, when really no one rationally would step in, at that price) and so guarantee the taxpayers a loss.

2. The people doing the recapitalization have proved themselves adept at managing these operations. In effect, the successful are taking over the unsuccessful. With a regulator making decision, who know if he is capable or not.

3. The people doing the recapitalization have a strong incentive to value assets properly - they put their own money on the line. Transparency of target balance sheets is demanded or no deal. I considered some sort of system where Paulson was required to put every last cent of his personal fortune against his restructuring decisions in direct proportion as a motivator. That certainly incentivizes him, but because of #2 it does nothing to assure that he's capable of making the proper decisions, only that he's motivated.

4. Prior management teams are almost always disposed of. The key here is less that we get rid of the old CEO's but that their replacements are proven to be capable. I don't worry for an instant that Paulson could depose a CEO, but I strongly doubt his decisions on a replacement.

5. The rule of law and sanctity of contract are preserved. In the seizure of WaMu, Treasury seized the company and by fiat destroyed all contractual priorities set forth in the capital structure. This act alone has exacerbated the liquidity problem because now any potential lender to a distressed bank risks losing his entire investment regardless of pre-negotiated terms, to arbitrary exercise of force. Henry Paulson's money comes paired with the potential for wholesale rights violations.

The use of government to attempt this function necessitates rights violations, spends money indiscriminately, and preserves the structures which created the panic at taxpayers expense. The proposed bail-out illustrates perfectly the concept of chasing bad money with good. Voluntary action by the free market instead "cleans house". It cannot be otherwise, no matter how well-intentioned the government.

 

[ProgMatinee]

Here's a few ideas for people to survive these tough times:

1. Cancel your $50+ cell phone.
2. Cancel your $35+ internet connection.
3. Cancel your $75+ cable.

You just saved almost $2,000 a year.

 

[The Chaver]

Or when you have democrats ruling congress and ignoring Bush's warning of not putting oversight of Fannie May and Freddie Mac. He's requested that action be taken for the past year and a half and was ignored and overruled by a democratic congress that wanted to live a fairytale where even harry the hobo can own a home.

Republican,democrat,same thing.

 

[devilof76]

Republican,democrat,same thing.

Pretty sure the appropriate term is bureaucrat.

 

[barbelith]

Essential reading for anyone interested in moving beyond the "post-fact" conservative propaganda machine:

https://www.mcclatchydc.com/251/story/53802.html