There goes your 401k again
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This was the bailout plan...
Source: http://www.cnbc.com/id/26808715—Up to $700 billion to buy assets from struggling institutions. The plan is aimed at sopping up residential and commercial mortgages from financial institutions but gives Treasury broad latitude.
—Up to $50 billion from the Great Depression-era Exchange Stabilization Fund to guarantee principal in money market mutual funds to provide the same confidence that consumers have in federally insured bank deposits.
—The Fed committed to make unspecified discount window loans to financial institutions to finance the purchase of assets from money market funds to aid redemptions.
—At least $10 billion in Treasury direct purchases of mortgage-backed securities in September. In doubling the program on Friday, the Treasury said it may purchase even more in the months ahead.
—Up to $144 billion in additional MBS purchases by Fannie Mae and Freddie Mac.The Treasury announced they would increase purchases up to the newly expanded investment portfolio limits of $850 billion each. On July 30, the Fannie portfolio stood at $758.1 billion with Freddie's at $798.2 billion.
—$85 billion loan for AIG, which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.
—At least $87 billion in repayments to JPMorgan Chase [JPM 47.05 --- UNCH (0) ] for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers [LEH 0.2151 --- UNCH (0) ]. Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.
—$200 billion for Fannie Mae and Freddie Mac. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.
—$300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.
—$4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
—$29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
—At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.
-Peter
1991 240SX
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I prefer the Warren Buffet approach to stocks: Buy when everyone is selling and sell when everyone is buying.
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DaveH;238851 wrote:
As young as all of us are (yes even me) it's always time to buy.True.....just buy more when cheap.....kinda like shopping at Sams Club
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True free markets need to be left alone by the government. Their interference will just create more of a mess. Let the rich corporate companies learn from thier mistakes. No more bailing out companies that give their CEO 23 million dollar severence packages for failing a company. Most investment banks should have enough to cover deposits based on the law.
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I'm seriously pressed to find a single industry that has been better for the public after deregulation.
Insurance: Nope
Airlines: Nope
Banking: Nope
Investments: Nope -
fast food baby!
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tjamz;238945 wrote:
I'm seriously pressed to find a single industry that has been better for the public after deregulation.Insurance: Nope
Airlines: Nope
Banking: Nope
Investments: NopeI am not talking about deregulation....I am talking about free markets. Insurance has made huge profits, only one company really is in this mess which is AIG. The airlines would be suffering if government control or not. Banking is just fine at the local and regional level, it is the investment banks that screwed everything up by becoming too greedy. By having the markets free from government control creates more competition and allows them to get profits or losses. So when they are profiting everything is fine, but when they fail it is not the governments job to step in. We are based on Keysnian economic policies with deficit spending to create more growth which is not working anymore and effecting the markets. I was a firm believer that this type of economics can work for a while but eventually you leverage too much out and create inflation. The dollar isnt worth anything because the interest rates are driven by the market anymore but by the government. Also, creating money out of thin air is killing us. These things affect the market tremendously. I for one am not supporting bailing out wall street because they errored in judgement and gave out loans and credit to undeserving people. They failed as a private organization and should declare bankruptcy like everyone else should. This would be the best for the market and allow the best companies to come forward and take their spots. Government stimulation has not been working because our economy has gotten so big. Look at the stimulas checks that we got...5.5 billion worth in a 13 trillion dollar economy. Figure 3 billion got spent on what it was supposed to with multiplier factor only puts it at 3 trillion of stimulus. New economic policies need to be put in place...period.
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tjamz;238945 wrote:
I'm seriously pressed to find a single industry that has been better for the public after deregulation.Insurance: Nope
Airlines: Nope
Banking: Nope
Investments: NopeActually, the reason we are in this financial mess is because of regulation. The feds were basically forcing lenders to lend to people who had no business owning a house, all in the name of fairness. Poor people deserve homes too right? So borrow them money for one even tho there is no way they can pay it back. Credit was basically way too easy to get, and lenders weren't worried about it because they had freddie and fannie to back them up. If they were truely on their own in the free market they never would have given the loans that they did.
DaveH
'94 Supra- 7.77 @ 176mph -
now now kids settle down. havent you heard walmart sells steak now? if people with a McJob can raise their kids on steak, the economy is just fine.
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24valvenotak;239091 wrote:
now now kids settle down. havent you heard walmart sells steak now? if people with a McJob can raise their kids on steak, the economy is just fine.At 4:00am its time to put the crack pipe down man.....
:drunken_smilie:
DaveH
'94 Supra- 7.77 @ 176mph -
But Dave, this latest round isn't about the bad mortgages, it's about the bad practice of allowing mortgages to be traded as commodities. I agree w/ you about the too easy to get credit thing...I have available CREDIT CARD credit of over $100,000 w/ 4.99% APR FIXED RATE. Don't get me wrong, i'm glad I have that much available, but seriously...that is low interest....and this is just me.
After I was divorced in '99 I had horrible credit (long story)...but was still able to get low interest cards for tens of thousands of dollars within 2 years...was able to buy a house w/ ridiculously low interest within 3 years...etc...and I wasn't making dick for money back then. Fortunately, things worked in my favor and I'm doing significantly better now.
Again, this has nothing to do with the banking/investment banking crisis we are seeing now. Had there been regulation against trading mortgages in your investment portfolio, things would be different....meaning only the banks that took the mortgages on would be on the hook and not the bank AND the investment banks that the mortgages were traded to to hedge their wagers.
This is not sounding the way I intended...but hopefully you get the idea of where I was going with this...if not, i'll try and explain better.
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tjamz;239155 wrote:
But Dave, this latest round isn't about the bad mortgages, it's about the bad practice of allowing mortgages to be traded as commodities. I agree w/ you about the too easy to get credit thing...I have available CREDIT CARD credit of over $100,000 w/ 4.99% APR FIXED RATE. Don't get me wrong, i'm glad I have that much available, but seriously...that is low interest....and this is just me.After I was divorced in '99 I had horrible credit (long story)...but was still able to get low interest cards for tens of thousands of dollars within 2 years...was able to buy a house w/ ridiculously low interest within 3 years...etc...and I wasn't making dick for money back then. Fortunately, things worked in my favor and I'm doing significantly better now.
Again, this has nothing to do with the banking/investment banking crisis we are seeing now. Had there been regulation against trading mortgages in your investment portfolio, things would be different....meaning only the banks that took the mortgages on would be on the hook and not the bank AND the investment banks that the mortgages were traded to to hedge their wagers.
This is not sounding the way I intended...but hopefully you get the idea of where I was going with this...if not, i'll try and explain better.
It really isnt from the trading of mortgages....not all mortgage trading is bad. Its just the ones from the idiots that got interest only loans or ARM loans. Then their houses which were overly inflated in price came down to real values and now they cant make payments or cash in. I blame the companies for their bad business practices and they should go bankrupt. Time for change...
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The majority of loans are resold to other agencies. Packaging up a bundle of loans into a CDO allows them to be resold. The money you are loaned has to come from somewhere.. and allow investors to buy a stake in a bundle of loans is a perfectly reasonable way of doing it.
My best friend is the head software developer at a fund that specialized in CDOs.. (collateralized debt obligations).. and ran a "distressed fund". His software was able to do the per-instrument analysis in packages of CDOs and their fund was actually fine.
THere were a lot of agencies complicit in the CDO meltdown.. Moody's was doctoring the ratings on some of the securities... other people didn't have the capacity to do proper due dilligence on what they were buying.
As is always the case -- people that took risks got burned badly. The system worked.
My dad personally runs a hedge fund of his design based on derivatives trading. He's managing a few hundred million dollars (iirc). He's an actuary and works for (primarily) the American operations of a global insurance firm. His company isn't tanking.
The smart people that did what they were supposed to are fine.
In many cases the behavior we saw from people doing things they weren't supposed to was because the government was giving them the wrong signals. People felt that investing in Fannie/Freddie was "Safe" because the Fed was buying their debt (Wtf?). People felt that making loans to risky borrowers was good because the feds said to do so. Then when home prices skyrocketed (higher demand -> higher prices) the feds lowered rates to make credit for shaky folks even more affordable ( compounded demand -> compounded prices).
It might be a nice heartfelt good idea for everyone to have their own house, as the democrats have wanted, but it has an absolutely obvious effect on home prices -- they go up. When that happens, you can either print more money and loosen lending requirements, as the fed did, or you can say "at some point our social agenda is going to have to meet its economic maker". The democrats never went for the latter.
There have been multiple attempts to chisel away at the structural problems in the lending and housing industry. They have been blocked at every juncture by democrats. Ask fucking bill clinton about it -- he'll tell you that democrats blocked increased fannie/freddie oversight and that contributed to our current mess.
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DaveH;239101 wrote:
At 4:00am its time to put the crack pipe down man.....:drunken_smilie:
It would be irresponsible to smoke crack in broad daylight.
But that doesn’t change the fact that my post was not accurate. ...
The economy is fine. Bush is on it. Relax. ... Im sure he is praying right now.
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