are you for or against the recent government financial bailouts?

[LegendKiller]

Originally posted by: SagaLore

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.

It'll stem the tide of the m2m losses, recapitalize the banks, and get lending going again.

Everybody is afraid of being the last guy out, this gets rid of that.

 

[JS80]

Originally posted by: LegendKiller

Originally posted by: SagaLore

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.

It'll stem the tide of the m2m losses, recapitalize the banks, and get lending going again.

Everybody is afraid of being the last guy out, this gets rid of that.

m2m = mark to market for the laymen

 

[SagaLore]

Originally posted by: LegendKiller

Originally posted by: SagaLore

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.

It'll stem the tide of the m2m losses, recapitalize the banks, and get lending going again.

Everybody is afraid of being the last guy out, this gets rid of that.

Wishful thinking much? The losses already happened. Regardless of how much new lending there is, what about everything already lent out? Those investments are failing, so how will new ones magically become profitable during an economic crunch?

You want a BAILOUT plan that works? Lets try something radical and unthought of. Current consumer's credit card debt is around $790 billion. That's close to how much money you want the government to burn - so lets just reset everyone's credit card balances to zero across the board. Put tight caps on everyone's credit limits and the max credit card interest rates. Let people spend again to their heart's content, but never allowing it to reach the previous total.

 

[PrinceofWands]

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

 

[PrinceofWands]

Originally posted by: LegendKiller

Originally posted by: Firebot

Originally posted by: LegendKiller

Originally posted by: Firebot
Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

I don't think that this gets done at a premium of HTM level. It simply can't get done. If it does, there will be more "asks".

keep in mind, that even at par, there is still the spread between interest income, and interest expense, that will make money.

This is a negotiation, what we saw initially will be completely different from what is passed.

This deal is not meant to be a business deal. This is a bailout and a very suspicious one at that, to take away depreciating assets from the bank's hands. I'd really like to see some numbers where it says the bailouts in the early 80's became profitable. It sure as heck didnt happen by buying assets at a premium.

You need to ask yourself why these assets are illiquid. It's because nobody wants them. If these assets were as profitable as you claim, then the banks wouldn't be in the pickle they are and they would be keeping them for their own profitability.

The housing bubble burst is far from over too.

Nobody is buying them because nobody is buying ANYTHING. That's what you don't get, the market is shutting down.

I had a $200MM deal I was about to do. It was a AAA bond backed by an asset that, in the last 15 years, has sustained a maximum of 0.07% losses, which was a bankruptcy of a huge company. It had an average of 0.02% losses, of which 0.0056% affected my deal specifically. Since the facility was concentrated among obligors, it had high enhancement.

My enhancement would have been 19%, or 3,392x average losses. 50% of the obligors were investment grade companies. The assets were physical items, which were secured. The servicer has a BBB rating and 60 years doing this activity. Their business, by nature, is very low risk. However, it is business essential, and drives the activities of 60% of the Fortune 500.

18 months ago, that same bond, would have yielded 30bps over my cost of funds plus 15bps up front. I negotiated to charge them 120bps, plus 50bps up front.

The ROE of that deal would have been about 2000%. Yes, 2000% return on equity.

I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

You'd think, at 2000% ROE, that somebody would do it, wouldn't you?

Nope, nobody is touching it.

I had another deal pitched to me, it would have yielded 8000% ROE with very little risk.

Nope, can't do that, too much "risk".

NOBODY is lending anything. Why? Because everybody is hording equity for the next "mark to market", or the next LEH or BSC to blow up, hurting everybody.

Something has to bend.

What do you think happens when that company can't get financing? What happens to the goods and services it provides to 60% of the Fortune 500? If it can't provide them, then the Fortune 500 has to reduce their own business.

What happens then? People lose jobs. That's what happens.

But almost no one works for the for the fortune 500.

 

[SagaLore]

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

I can sympathize for his worries, but I think he's projecting his fears on the general populace. After reading through many of his replies, it turns out he works in lending, so he may very well lose his job. I really hope he doesn't though, regardless of what happens.

 

[Eli]

Originally posted by: SagaLore

Originally posted by: LegendKiller

Originally posted by: SagaLore

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.

It'll stem the tide of the m2m losses, recapitalize the banks, and get lending going again.

Everybody is afraid of being the last guy out, this gets rid of that.

Wishful thinking much? The losses already happened. Regardless of how much new lending there is, what about everything already lent out? Those investments are failing, so how will new ones magically become profitable during an economic crunch?

You want a BAILOUT plan that works? Lets try something radical and unthought of. Current consumer's credit card debt is around $790 billion. That's close to how much money you want the government to burn - so lets just reset everyone's credit card balances to zero across the board. Put tight caps on everyone's credit limits and the max credit card interest rates. Let people spend again to their heart's content, but never allowing it to reach the previous total.

Now that's a plan I could get in line for.

 

[BlahBlahYouToo]

Originally posted by: BoberFett

Originally posted by: BlahBlahYouToo
paid every day you say? if you let the credit markets freeze, you might not know when your next paycheck will come.

credit is what makes the financial world go round.

Are the paychecks where YOU work financed over 30 years with no proof of assets or income by your employer? If so, you might want to find a new job.

where did i say that?

 

[BlahBlahYouToo]

Originally posted by: her209

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

And what happens if the banks get bailed out and I still lose my job? Tough shit?

bailout or not, no one is guaranteeing that you won't lose your job.

but i can guarantee that if u lose your job and the economy is in the shitter because this mess isn't cleaned up, it'll be a very long time before you and thousands others find a comparable job to the ones lost.

 

[BlahBlahYouToo]

Originally posted by: waggy
yeap tough shit. nobody cares if you lose your house, cars, life savings etc. nobody will bail you out.

in fact they will bitch because you are not paying more in tax's (those ceo's need there fucking bonus!).

though it seems half the economist on TV are for it and half against the bail out.

but so far now it seems nearly all are for accountability and oversight.

wtf are people still bitching about CEO bonuses?? this goes WAY beyond that.
it's not even about the CEO's anymore.
this is about the entire economy, YOUR job, food on YOUR family's table.

a depression is very REAL and POSSIBLE.

 

[rise]

Originally posted by: Eli

Originally posted by: SagaLore

Originally posted by: LegendKiller

Originally posted by: SagaLore

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.

It'll stem the tide of the m2m losses, recapitalize the banks, and get lending going again.

Everybody is afraid of being the last guy out, this gets rid of that.

Wishful thinking much? The losses already happened. Regardless of how much new lending there is, what about everything already lent out? Those investments are failing, so how will new ones magically become profitable during an economic crunch?

You want a BAILOUT plan that works? Lets try something radical and unthought of. Current consumer's credit card debt is around $790 billion. That's close to how much money you want the government to burn - so lets just reset everyone's credit card balances to zero across the board. Put tight caps on everyone's credit limits and the max credit card interest rates. Let people spend again to their heart's content, but never allowing it to reach the previous total.

Now that's a plan I could get in line for.

seconded

 

[BlahBlahYouToo]

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

i'll admit i'm not very knowledgeable when it comes to all this finance stuff, but you are a fool.

ALL industries will get affected by a depression. yes, even health care, even gov't jobs, social services like schools and your garbage men.
some will get hit harder than others, but it will be felt by EVERYONE including YOU.

 

[mugs]

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

Your claims of extremely high intelligence grow more unbelievable with every post you make.

 

[LOFBenson]

I'd just like to point out that in the entirety of this thread not a single person has even suggested that this plan could possibly fail at fixing this problem even if it does happen. As fast as the government can pour money into the system depositors and investors could be taking money out.

If it does fail: good luck fixing the markets after you've already proven that $700,000,000,000 wasn't enough.

This game, at the roots, is all about confidence. This really could be an all or nothing bet.

 

[Pocatello]

The way I see it, this bail out is a short term solution. It's going to keep a failed system afloat a little longer. After the financial system have stabilized again, the good old boys will continue to do what they are doing, more Americans will lose their jobs until our wage is at equilibrium with third world countries. The US government and the American people need to wake up, control the way we spend our money, stop spending as if the sky is the limit. Businesses should be rewarded for keeping jobs in the US. Stop feeding the bear and the dragon, they only get hungrier and greedier.

 

[PrinceofWands]

Originally posted by: SagaLore

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

I can sympathize for his worries, but I think he's projecting his fears on the general populace. After reading through many of his replies, it turns out he works in lending, so he may very well lose his job. I really hope he doesn't though, regardless of what happens.

Well sure, nobody WANTS innocent people to lose their jobs...then again, he chose to work in a field with idiots, greedy bastards, and so on. These things happen, but it's hardly the end of the world. Losing your job isn't that big of a deal. Christ look how many were unemployed in the great depression, but most still managed to survive...and were generally better people in the end for what they went through.

 

[PrinceofWands]

Originally posted by: BlahBlahYouToo

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

i'll admit i'm not very knowledgeable when it comes to all this finance stuff, but you are a fool.

ALL industries will get affected by a depression. yes, even health care, even gov't jobs, social services like schools and your garbage men.
some will get hit harder than others, but it will be felt by EVERYONE including YOU.

Felt, probably...but minimally for many. The harder you're hit by it, the less prepared you were and the more the fault is your own...not for it happening, but for the effect it was able to have on you.

 

[PrinceofWands]

Originally posted by: mugs

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

Your claims of extremely high intelligence grow more unbelievable with every post you make.

You're free to show me how I'm wrong. I've explained why I don't think it's going to be as impacting on some, and have yet to hear ANY rational refutation of those claims. If it's going to be doom and gloom for all, then show me how. If it appears I'm wrong, you know I'll admit it and apologize...God knows I split my time on this forum about equally between arguing and apologizing for being wrong so it wouldn't be the first, or last, time. Just give me either evidence, or draw a complete and rational picture so that I can see this imagined impact.

 

[LegendKiller]

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

So, who exactly is going to keep paying the taxes needed to support all of that? I'd love to know, when unemployment reaches 25%, like it did during the GD, who will pay for it?

Are you so stupid as to think that companies, small and large, need financing? If nobody is willing to provide it, are you stupid enough to think that they can just keep functioning without money?

I don't think you have one damn idea how the world works. You live on your island, with no rational idea how companies fund themselves, or how they grow. You lack any insight, education, or experience in the areas.

Sorry, but your ignorance won't be my downfall.

 

[LegendKiller]

Originally posted by: PrinceofWands

But almost no one works for the for the fortune 500.

Walmart employes more than 2M alone. About 10% of the workforce is employed by the Fortune 500. That's not "almost no one".

 

[Turin39789]

Originally posted by: LOFBenson
I'd just like to point out that in the entirety of this thread not a single person has even suggested that this plan could possibly fail at fixing this problem even if it does happen. As fast as the government can pour money into the system depositors and investors could be taking money out.

If it does fail: good luck fixing the markets after you've already proven that $700,000,000,000 wasn't enough.

This game, at the roots, is all about confidence. This really could be an all or nothing bet.

Reinforcing failure = fail

 

[Modelworks]

I think a lot of people are against it because of their experience with banks and credit card companies.
When you talk to banks they don't want to give an inch, if you are late on your house payment there is no sympathy from them.
Now they are the ones that want sympathy from us, and people are not forgetting how they have been treated.

 

[BlahBlahYouToo]

Originally posted by: PrinceofWands
You're free to show me how I'm wrong. I've explained why I don't think it's going to be as impacting on some, and have yet to hear ANY rational refutation of those claims. If it's going to be doom and gloom for all, then show me how. If it appears I'm wrong, you know I'll admit it and apologize...God knows I split my time on this forum about equally between arguing and apologizing for being wrong so it wouldn't be the first, or last, time. Just give me either evidence, or draw a complete and rational picture so that I can see this imagined impact.

1a. small biz, big biz, large corps cannot borrow money not only for funding future projects, but to finance their day-to-day operations because of frozen credit markets. so no more growth, but widespread contraction.
1b. individuals cannot borrow money to purchase goods, homes, cars, loans because lending practices will be a lot more tight.

2. companies will fall; those that survive, jobs will be cut. no more income for many.
furthermore, consumer confidence is gone. those who have money, will not spend money because of fear of the economy.

3. from all the job losses, lack of spending, tax revenues will go down. all your public/social services will suffer a hit. yes, that means they will lose jobs as well.
this will happen at the local, state and federal level.

4. people will lose their homes/cars because they cannot keep up with payments. many will file for unemployment, but the system cannot handle the huge increase in applicants. what's worse is the downward spiraling of the whole system because the funding for it is all gone from so many that lost their jobs.

yes, this will affect YOU and EVERYONE. maybe not your company at first, or directly at all. but if it hits another company in your state/town causing lots of job losses (don't forget corporations are taxed as well, quite heftily), then it will affect you sooner or later in some way.

scary isn't it?

 

[Special K]

One interesting point I read last night is that both Paulson and Bernanke will likely be out of office when the new administration takes over. One quote said Paulson could actually be gone in 6 weeks. It's easier to propose risky solutions or solutions that stand to benefit the company executives more than the general economy when you know it will be someone else's mess to clean up.

 

[PrinceofWands]

Originally posted by: LegendKiller

Originally posted by: PrinceofWands

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

Oh get over it...it doesn't affect everything. People who don't work for financially involved institutions/corporations won't be losing their jobs over it for Christ's sake. The world will still need, teachers, police officers, garbage men, etc. The only industries hurt will be financial, and while the common man will pay a bit more for a time the long run would be so much better as to make the argument moot. The guilty deserve to burn for their sins.

So, who exactly is going to keep paying the taxes needed to support all of that? I'd love to know, when unemployment reaches 25%, like it did during the GD, who will pay for it?

Are you so stupid as to think that companies, small and large, need financing? If nobody is willing to provide it, are you stupid enough to think that they can just keep functioning without money?

I don't think you have one damn idea how the world works. You live on your island, with no rational idea how companies fund themselves, or how they grow. You lack any insight, education, or experience in the areas.

Sorry, but your ignorance won't be my downfall.

Ahhh, thank you for making it an actual debate. Now we can talk about facts rather than fear.

First, a history lesson. Unemployment in the GD was on 4 fronts: displaced agricultural (the biggest portion), growth services (construction & manufacturing), financial services (specifically lending & market related), and a very small portion of small to mid-sized publicly traded corporations without depth or assets (ie, businesses that don't make or serve directly but rely on strong market performance for all revenue).

Now then, why won't it be the same? First, we're no longer an agrarian society, so the largest portion of displaced workers don't even exist any longer. Impacts in this sector will be mostly non-existent. Growth services have also largely gone away, to be replaced with service industry positions. The construction jobs that remain would be threatened except that: a) they're often government contract jobs, or at least subsidized and b) there have already been large reductions in the previous four years due to the construction slowdown. Therefore impacts in this sector will be extremely low. Financial services will be hit...hard. However, this is an EXTREMELY small number of jobs overall. Funded corporations will also be hit, but again, they do not make up a very large percentage of total jobs in the nation.

We've seen unemployment as high as 14% during my lifetime in many areas without it being considered a catastrophe, or GD era fear-worthy. I speculate that this is about the maximum level we'd be likely to hit from a financial institution crisis. Maybe 3-4% higher, but still not hitting those previous highs.

Now let's talk about taxes, and why it won't greatly impact government funded jobs. Just after the implementation of income taxes these revenues grew to be the largest source of government revenue. Before the GD about 2/3 of total tax revenues were due to income taxes. By the height of the depression this fell to 2/5 of total tax revenues. This is a reduction of about 25% of total government revenue. It was impacting, yes, but not lethal. The pre GD levels are about where we are now as well. Therefore even if it had the same impact as before (which I doubt, for the reasons above), it would result in only a 25% reduction in federal revenue at the height.

So why do I think it won't even be that bad? Three main reasons:

a) during the GD there was no established classical liberalism...it wasn't accepted that the government could be the agent of action and control in all things. The 'New Deal' was almost completely new to the American mindset. Today, that is standard procedure. This means that time, money, and energy aren't needing to be spent trying to get the idea established. The government is used to acting to affect such things, and the people are used to it being done. This should result in faster, better, and more efficient actions by the government to reduce overall impact.

b) there is a strong holdout myth that the 'New Deal' is what ended the depression. Now, I (and probably you) know that that isn't so...but average joe thinks it is and the government caters to average joe. There will be a HUGE outcry for government programs and jobs to save us. This means government jobs will become the safest of all in such an emergency.

c) we're in much of the same pickle as we were pre-GD with regards to debt/deficit, tax breaks, etc. If you look at taxes before and after the GD you'll see that there was a HUGE swing towards taxation...not only income taxation (with a vastly increased progressive schedule), but surtaxes, excises, etc. We could argue the wisdom of such actions all day, but you can't argue that the increases in those taxes didn't bring in more revenue for the government. The government knows that, and would likely act in a similar fashion, thus averting (or at least mitigating) the crisis. This would have the added benefit of creating a large enough revenue to 'hopefully' combat the debt/deficit once the crisis passes...providing we can finally get a balanced budget amendment, trim the truly unnecessary government programs, etc.

About half of my family owns their own businesses. They did it without financial institution loans. The same is true for many small business owners across America. Now yes, hurts into small business loan programs would hurt future attempts to enter the fray, but it's not much of an impact to existing small business. Larger corporations, especially those who rely heavily on capital investments, would be impacted greatly. However, those are relatively small portions of the workforce. Remember that far more people work for small companies, themselves, or the government, than work for publicly traded corporations (between 1 in 8 and 1 in 10, depending on which stats you believe). Since we know that not all of them would fail, we know that the total number of people impacted would be much lower still, resulting in an insignificant impact nationally.

Personally I'd LOVE them to fail, as I blame much of the current problems on them anyway. A business produces a good or service for the consumer...a corporation produces money for the rich at the expense of the common man. Good riddance if they fail.

So again, looking at history and the current situation, how are most people going to be seriously affected? I'd like better evidence if you want me to get on board.