On Sep 27, 6:13*pm, Puddin' Man wrote:
On Sat, 27 Sep 2008 09:46:08 -0700 (PDT), wrote:
On Sep 27, 11:48*am, Puddin' Man wrote:
On Sat, 27 Sep 2008 05:20:13 -0700 (PDT), wrote:
I've not even heard the likes of Bush, etc mention "depression": not certain
why you would.

Do you really expect the president to use word "depression" to make
things worse and start a panic? *

If he and his spin-docs thought it'd serve their purpose, yes.
Whether true or not.

I used the word because this clearly
is the worst financial mess that we've had since the Great Depression
and the possibility for this to spin out of control is very real.

It has already spun out of control.

No, it hasn't. * So far, everything is under control. * Out of control
would be runs on banks both sound and unsound, dumping of US
securities by foreign investors, credit becoming unavailable to any
borrowers whether credit worthy or not, the Dow going down a few
thousand points in short order, etc. * The problem would then extend
to the economy at large, with a resulting drop in GDP, unemployment
going higher to 10%, people taking big hits on their 401Ks, more
layoffs resulting in more foreclosures, etc. * So far, this problem
has been largely confined to certain financial institutions and some
of the home building industry.

The investment banks are very much out-of-control. Were they not, they
wouldn't have their hands out for $770B.



The reference to "spinning out of control" was to the broad credit
markets and economy, not investment banks.






Washington Mutual experienced a net withdrawal of $16Bil in deposit
from panicked customers with money in their bank in the last 2
weeks. * It's not too far fetched to imagine that spreading. * With
credit drying up, banks failing, it's not too far fetched to imagine a
potential scenario where worldwide investors start to panic, pull all
money out of US institutions, start a panic in govt bonds, etc.

I don't even think that is the central issue.

Of course it is one of the central issues which could occur if nothing
is done.

So sayeth the experienced and fully-trained banker. :-)

The US now produces near nothing save WMD's and services.

Complete nonsense. * Boeing, Intel, Microsoft and a whole list of
other great world leading companies make that such a silly statement
that it's laughable. *But when you drag WMD nonsense into a financial
discussion, it does show where you're coming from.

Walk thru any US store and see how long it takes to find any US-made
goods. Estimate the % of US-made inventory.



That observation doesn't translate into the US economy being based on
WMD's, which is nonsense. Guys like you also like to conveniently
overlook the other side of the coin, which is that those low cost
imports provide huge benefits to consumers, by giving them more goods
for less money. In other words, they don't have to work as much to
buy the same goods. Which would you rather have here, companies
like Intel, Microsoft and Boeing or a Nike factory with minimum wage
jobs?








Wall Street
used to have numerous trusted financial institutions. NYC was the
"Money Center" of the world.

And NYC still is the money center of the world.

As production in countries like China
and India has ramped up, foreign investment has become an increasingly
important component of the US economy.

Wall Street, as the foreign investors knew it, is gone. Never to
return. They have acted so irresponsibly that full trust will never
be restored, regardless of what the gov't does/doesn't-do.

There is zero evidence that foreigners have the jaundiced view that
you do of the USA. *

That's why they've been exploring alternative markets for years, now.



They haven't left and they still own huge amounts
of US securities and assets. *And that's because they know the US
economy and assets are basicly sound and good investments. *

They look less so most every day, now.

Yawn. The world has always presented a wide variety of investment
opportunities. And foreigners continue to find America a great
investment opportunity.





If Wall
Street is finished, why do you think Warren Buffet, who is known the
world over as the greatest investor of our time, just put $5Bil into
Goldman Sachs? *Maybe he knows a little more than you.

I didn't say WS is finished. I said it will never again be trusted
as in years past.

Let's see, WS survived 1929, the crash of 87, the debacle of 2001, but
now it's all over just because you say so?





It's still possible to hustle a $ on WS. Buffett got a sweet deal
and maybe sees value in the publicity.

You obviously don't know anything about Warren Buffet either. He has
never sought publicity and has actually kept a low profile. He still
lives in the modest home he bought in the 1950's.





The "Great Investment Banks" of WS are gone, whether you believe
it or not.



Or why you'd think it would be avoidable.
Recessions are part of the normal and expected business cycle.

It's widely recognized that the Great Depression was so severe and
lasted so long because both the FED and the govt refused to take the
steps as it was beginning that would have mitigated it. *In fact, they
what little they did was the wrong thing. * *Just about everyone
agrees that this is no ordinary recession.

1.) We don't even have definitive evidence of recession (yet), let alone
* * depression.

Recessions are declared by a non-partisan board

That you don't even bother to name?

I deliberately didn't use the name just to see if you know anything
about what you pontificate about. It's the National Bureau of
Economic Research. Anything else I can help educate you with?




that reviews data
months after the data is first released, revised, etc. * In other
words, they are looking in the rear view mirror and don't declare a
recession until it's been under way for 6 months to a year. * If we
wait for that to happen, it will very likely be too late and/or even
more of a bailout will be necessary.

So says the doomsday enthusiast.



2.) Comparisons to the Great Depression are not the least bit
* * appropriate. Economic conditions then and now are very, -very-
* * drastically different.

Really, pray tell those very very drastic differences? * *

If you don't want to hear, I or anyone else can hardly tell you.



The markets, the players, the gov't. Everything is different.

Thanks for that verbose explanation.





The problems
then were caused by far too much leaveraging of assets and greed
turning into fear. * Very similar to what is occuring today. * Who do
you think knows more about the risks to the banking system and
economy? * *You or Bernanke?

Bernanke and Paulson are investment bankers that have proven
themselves to be irresponsible. Bernanke's responsibility is to
Bernanke and his ilk, not to you or I.

Wrong and misinformed again. Bernanke spent most of his career in
academia. He taught at Stanford, NYU, Princeton, etc. Only a few
years ago he was appointed to the FED.








The "bailout" violates the very free-market principles that these folks
purportedly worship. If that doesn't tell you something, you sho'ly,
sho'ly aren't listening.

I agree it's not desirable for the govt to do this. *I believe in free
markets to the fullest extent possible. *

So do they. But only when it is convenient and profitable for them.

These institutions that are going to be assisted, have already taken
huge hits. * It hasn't been profitable to them, nor will it make it
profitable. * Bear Stearns is wiped out, the investors lost
everything. * Same thing at Lehman. * Both of those companies are gone
and tens of thousands of employees have lost their jobs. *Under the
current plan, the govt is going to be buying these sub-prime loans
deeply discounted. * The institutions are NOT being made whole.

You choose not to see.

The irresponsible "executives" of the investment banks put Jesse James
and Cole Younger to shame. They walk away with millions. 'Tis they
that will be "bailed out".

But you would rather have the economy go down on principle. * I notice
none of the liberal Dems in Washington, who are always anti-business,
are claiming the risk to the economy isn't real. *Obama agrees in
principle with the bailout too.

They all get contributions from those that will benefit. They are
(directly or indirectly) bought and paid for.



I and 300 mil Americans will also benefit by not having the economy
plummet. Is that so bad?








But when the choices are
either doing something that could prevent a severe recession or
worldwide depression, or just standing by and letting this spiral, I'm
not going to let the country go down in flames because of
principle. * * It's not the first time this has been done. * And in
the major prior cases that I can think of, ie Chrysler, Mexico, the
govt wound up getting all it's money back or actually turned a
profit. *Also, consider that even if this just turns into a severe
recession that lasts several years, the resulting loss of tax revenue
to the govt could easily approach the $700Bil.

You assume a.) doomsday and b.) gov't spending, essentially the
nationalization of the investment banks mutant loan bundles,
will save us. It's just not rational.

Only not rational to you. *

And, currently, most of the Republican House of Reps.

As to whether it's a potential doomsday,
I'm not willing to take that gamble.

You believe precisely what they want you to believe.

My, I wish I could be enlightened like you, so I could go around
claiming the US economy is based on producting WMDs.

The US economy is largely based on (often hostile) militarism.
This reality is commonly denied by the propagandists.

Spoken like a true kook.





We've spent $1 trill on the war in Iraq. * It seems to me, coming up
with $700Bil for this, with a good chance that much of the money will
be recovered, isn't unreasonable. *If you're against this plan, as I
asked before, what is your plan? *From the above, it sounds like it's
do nothing and let the chips fall where they may.

Very close to the mark, that last.

If practical, I'd support unbundling the loans, separating speculative
loans from those on primary residences.

If you pay attention, most of these problem loans ARE on primary
residences.

That's like saying there was no real estate speculation whilst values
were climbing and climbing, and loans looked virtually cost-free.
After the crash in housing values, all they had to do was walk away.
Lost only a payment or 2.


What does that have to do with the fact that most of these sub-primes
loans are on primary residences? Meaning your attempt to draw some
distintion matters not.




Let the former default, provide
some re-financing for foreclosures on the latter. And that's all. Maybe
$50B.

Refinancing for foreclosures? * That's totally stupid. * By
refinancing, the govt would be paying off the existing mortgage in
full, letting the current lender completely off the hook. *

Now we get to the basis of your arguments. You don't know what
refinancing is. 'Tis simply re-writing a mortgage contract,
possibly with differing terms. Nobody gets "off the hook".
Instead of being obligated to the investment bank, the borrower
would be obligated to the gov't. Might keep some honest folk from
losing the roof over their heads.



I'll let others decide who doesn't know what they are talking
about. A refinance generally means that the original mortgage is
paid off by the new lender, who then holds the new mortgage. In this
case, your proposal for the govt to refinance them, means the govt
would pay off the loan and become the new mortgage holder. Paying
off the original lender most certainly lets them off the hook.