So–
Right now, the house has voted 205 yea and 228 no, with about 9 votes outstanding–133 Republican no’s– is this a renege?– and when the numbers hit the bottom fell out of the Dow (it was down over 600 at one point, but has come back to down 480-500 as I write).
Is the bailout going down?
Update:
Isn’t it great that John McCain went to Washington, got his troops together, and got the deal done? I mean, he did say he was supporting this thing Friday (right in front of me, I saw it). And he said he was making calls to get it done on Saturday.
Update:
Today in Ohio, John McCain took credit for getting it done. “I put my campaign on hold for a couple of days last week to fight for a rescue plan that puts you and your economic security and working families first. I fought for a plan that protected taxpayers I went to Washington last week to make sure the taxpayers of Ohio and across this great country were not left footing the bill. …You know, remarkably some people have criticized my decision to put my country first, but I’ll never be a president who sits on the sidelines when this country faces a crisis. I’ll never do that. I know many of you noticed, it’s not my style to simply phone it in…. [Fighters belong] in the arena.” (Lotus noticed this on Steve Benen’s blog)
Way to go, John, you proved you’re a can-do guy, getting your own party behind your bill. I guess this will be the story of the first half of the week, and then the second half will be the VP debate. What a ride.
Update:
One of these yokels from the house is saying this is all a result of Nancy Pelosi’s partisanship and failure to listen. AND NOW he’s saying the Republicans would have done this through bipartisan leadership when they ran the place. I’m glad I’ve not gone to lunch yet, it might have come back up.
Update:
Here’s the Pelosi speech that was the Republican leader’s alibi for the Republican’s wimp-out.
Update:
MarketWatch headline:
“House to Wall Street: Drop Dead”
President speaking. Expresses disapointment, says he’s going to “talk to my economic advisers after my meeting…” Didn’t say much other than he likes the plan and is disappointed.
Wow! The people are being heard!
IAG: just what are “the people” saying? Do nothing?
Harwood says a senior Dem reports “No chance it’ll pass.” Dow down nearly 600.
it’s bounced from down 400 to down 670 right now at down 573
Barney Frank: “We’ll assess the economic reaction before deciding the next step.”
This is all a plan by McPain to now come in and convince a few repubs to change their votes so he will then be the savior of us all.
am I paranoid to suspect that at least a part of the agenda here is to have Obama inherit a huge economic mess as a housewarming gift?
Why risk another $700 billion if the so-called “Experts”; the very ones that got us in this mess cannot guarantee a fix. If we are rolling the dice, why not roll the dice on the side of the free market and see what happens and let the banks/wall street guys that made the stupid decision take the hit.
Call me crazy but that is my vote and evidently more than the majority of mainstreet’s as well. It is actually a vote for the sovereignty of our our Democracy and appears to be selling well.
OMG!!! this is not good!! How did the Mississippi delegation vote?
By the way it’s a huge “Up Yours” to Bush as well!
I’m guessing:
Childers and Taylor: Prob no
Thompson: Yes
that’s three of four. You folks guess about the 4th.
Huge “Up Yours” to McCain too.
Look at what he just claimed.
AIG 8: I hear you but guess I’m not as much of a risk taker-the devil I know rather than the one I don’t, or some such.
Boehner’s claiming it’s all Pelosi’s fault for “giving a partisan speech.” Putz.
iag: you say that like it’s a good thing.
I thought mark to market accounting was outlawed after Enron. Anyone know when that regulation got lifted?
I just updated the post twice
Actually WITHOUT mark to market you as an investor have no idea what you are buying. House prices in California are down 40%. If you are buying a bank looking at their balance sheet and they still show those mortgage assets at last year’s value and you base your decision on that, you are totally screwed.
It’s better in my opinion to take our medicine now and get it over with. $700b will only delay the inevitable and creates a very un-level playing field. America is entrepreneurial and will bounce back given a level playing field.
“What a ride.”, indeed. Just when we can start counting down the days when this s*%t will be over-113 to be exact-these lying sob’s give us this garbage! ENOUGH!
You got one of those “days ’till Bush is gone” calendars too, Glitter?
I have two-one at work and one at home. Plus, a bottle of champagne chilling in the fridge at home.
Harwood making the point that the GOPers, whose ideology got us into this, are now refusing to do what’s needed to get us out. They’ll pay on Election Day, he says.
Others saying the know-nothing vote needs to be ignored or we lose our — and the world’s — whole economy. They’re talking about small businesses, hospitals, etc., not being able to carry on without credit. One told about a car dealer he knows who can’t make payroll this week because he can’t get credit from the bank. Multiply that by millions. “Stop this cut-your-nose-off-to-spite-your-face partisanship!” says Judd Gregg (R) to the House.
According to Bennie Thompson’s office, the entire Mississipp delegation voted against the bailout EXCEPT Chip Pickering.
According to Erin Burnett there is speculation that Pelosi was led to believe she had the votes to pass it but was sabotaged by House Republicans.
According to Jim Cramer market will drop another 2500 points if nothing is done today.
Where’s Erin Burnett now, confounded? She used to work in my MO hometown for years.
One truth telling Repub:
*We’re all worried about losing our jobs,” Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. “Most of us say, ‘I want this thing to pass, but I want you to vote for it — not me.’ “*
iag: America is no longer entrepreneurial after this. We will no longer be a nation of homeowners. The middle class is virtually extinct. This is the last chance for the brakes. Enjoy your orgasm, it won’t last long.
If the asshole worried about OTHER PEOPLE losing their jobs, he wouldn’t have to worry about losing his!
CNBC, lotus.
i agree with the no vote…this will not cure what is happening imo…..let it go…no bailouts period…
How’s your town going to live without its banks, jdog?
lotus @ 21, I believe that the phrase used around here is “I call BS on that!”
Barney Frank and the Democratic party wanted low income people in homes, and that was the beginning of the sub prime mortgage loans, which is the root of the problem. Bush #43 has been trying since 2001 to get some regulation in place over Fannie Mae and Freddie Mac.
Ignore the freaking facts all you want, but neither party can blame the other one for this mess. It is a Washington mess. It is a mess that never would have happened if a person was still required to have at a least 10% cash in hand before getting a mortgage. The Democrats wanted that, the GOP should have stopped it. The GOP tried to stop it, but was unable — not all GOP members wanted it stopped. Both parties have guilty members.
Show me ANYWHERE where Barney Frank, Chris Dodd, or ANY Democrat warned of the looming problem before this year. You can’t. McCain DID warn of it in 2005.
BTW, if you like how this crisis is being handled, you’ll love the year 2018 when Social Security goes belly-up!
Confounded, the people that got us in this mess are the ones telling you the world is coming to an end. Do want to continue to drink at the trough of their lies? I don’t wish for soup lines either but as you said, the middle class is gone. Something has to change. A wise man told me one time, “Same People, Same Process = same Result”. Let’s get back to our democratic roots and hope for a more level playing field. It’s been downhill for the Financial Wizards/Engineers for too long. They are destroying this country my friend, one manufacturing job at a time.
Barney Frank telling the Repugs he’ll talk “uncharacteristically nicely” to the 12 GOPers whose feelings got hurt so badly they’re punishing the country. Says he “would not have imputed this level of pettiness to them.”
Observer said: “Ignore the freaking facts all you want, but neither party can blame the other one for this mess. It is a Washington mess.”
I’ll buy that about the genesis of the mess but not about what happened today. I’ll also note that I don’t sign on for the details of Observer’s analysis, just the conclusion. It’s a Washington bipartisan train wreck.
What happens next? I don’t know.
Meanwhile, Dow: -623.33
Actually, mark to market is required to a certain extent by GAAP (generally accepted accounting principles) set forth by the FASB (financial accounting standards board) — if followed. In the wake of Enron, Worldcom and other scandals involving some creative book cooking (were not following GAAP), congress passed the Sarbanes Oxley Act, which imposed much stricter mark to market rules —- I believe certain assets must be marked to market on a daily basis.
Many financial experts believe that these mark to market rules helped create the current financial crisis and that this new law is overkill. The laterst version of the bailout deal contained language requiring a study of the effect of this mark to market requirement in Sarbanes Oxley, and a report to Congrees with recommendations about modifications to this requirement that would help stabilize the financial markets, but also provide protection against fraud as it was intended.
You have no idea how many people will be hurt before this Reaganomics nightmare plays itself out.
Observer, BULLSHIT. Phil Gramm’s – GWB’s – John McCain’s – YOUR beloved deregulation caused this. The borrowers didn’t cause it, the Masters of the Universe cut loose to do these asinine arcane deals without rules or adult supervision — THEY put us in this soup.
Dow is down 650 points. Pelosi says they will continue to work.
There’s a lot of better ideas and they have been and now need to be brought forward. Who will do it. Who will lead…Obama? McCain?
Here‘s the Pelosi speech Boehner whined was so partisan it killed the deal. Read it and point out the mean ol’ partisanship in it for me, please, because I just can’t find it.
One potential positive of letting the marketplace make the needed corrections without a govt. bailout is that onverinflated housing prices will go down, making housing more affordable. The real estate markets in many areas of the country were grossly inflated and middle class taxpayers making good money could not afford to buy a house.
I said last week that these are the times that fortunes are lost and fortunes are gained. Those that invested wisely and engaged in solid business decisions will gain. Those who engaged in foolish, risky business practices and investment practices may lose money. What is wrong with allowing that natural cycle to occur? It is as it should be.
Dow down 714.
NASDAQ down 8.25%.
Some things that did it:
1) deregulation
2) the crazy idea of letting everyone walk around assuming we’d bail out Fannie Mae and Freddie Mac no matter what, while at the same time not regulating either, thus meaning we had this institution that had been designed to be public, privatized, and never really taken care of. And this is a Republican and Democratic failing folks.
3) Encouraging the creation of financial instruments that weren’t really regulated and weren’t well understood
The Dow is down 728.86 now. setting a record.
4) Subprime mortgage. The Democrats were not alone in wanting to create subprime mortgages and instruments to securitize them. The entire financial industry joined that orgy.
Is this as big a disaster as its being made out to be? I understand in general terms why this is a disaster. I don’t understand this deeply enough to have any notion what is likely to happen next.
Hey, one of the House Republicans said this plan was Bolshevism. Who is being partisan here?
afotl, the only thing we have to be careful of to stay out of soup lines is our fiat currency and privately run Fed Reserve System. Your bank only holds approx 6 cents for every dollar you got in there. Worst case scenario would be if confidence in the banking system goes away it will get ugly. Most banks in middle America have not had the huge real estate problems and are run by wise business men, but it’s all a confidence game.
Hey folks:
I think this shows every sign of working even better for the House Republicans than Gingrich’s government shut down.
Yep.
Agree with NMC @43 on all bullet points. And I too have the same question.
WaPo:
Guess his white horse threw all four shoes.
NMC, from what I’ve read and heard, it is my understanding that only about 5% of the total mortgages nationwide are truly troubled. And out of that total, most involve properties in California and Florida. IF that is true, it is really hard to grasp how such could cause such widespread calamity.
Maybe we truly have nothing to fear, but fear itself. The chicken littles (including GWB and Congressional leaders) may have unnecessarily turned a relatively painful, but manageable market correction, into a panic based meltdown.
Somebody PLEASE jerk those snotty little brats out of the sandbox and send ‘em to time out! And if they still won’t behave-send ‘em HOME!
95 Democrats voted against the bailout. Is the Speaker so powerless that she can’t persuade 12 of her own party members to switch their votes?
“separated from reporters by a *brown* curtain”-like his horse, this curtain used to be white before detecting so much BS.
Ben Pershing in WaPo: “It’s possible despite weeks of warnings, and a stock market that is cratering as we speak, that a lot of members still aren’t taking any of this seriously enough. And that, ultimately, may be the real reason for today’s vote.”
America is pissed and fed up with the whole D.C. mess folks….Am I the only one that talks to anybody on main street?
What is happening now in the House is a good old fashioned game of “chicken”. Sort of the following mindset: yeah, lets get this thing done, but you first.
The opinion polls of the folks taken over the weekend did not indicate a lot of widespread support for the bailout plan. I am sure that such has had a huge effect on the voting today. Some, I am certain are just holding to their core beliefs. And others, I am certain, are just poll driven politicians, with no core beliefs.
AFOTL, I understand the number troubled may be small, but the scary thing that makes them be “toxic” is no one really has any notion, and they are backed by collateral in varying degrees of free fall. So there is no market for these things that are totally a pig in a poke. It isn’t chicken little– it’s no one will buy shares of an unknown quantity. If anything, it’s the scales dropping from their eyes!
You wanna go buy some shares of some of these mystery bundles?
I’ve updated the post again
lotus @ 36 continues to be a straight Kool-Aid drinking partisan, while NMC @ 43 continues to demonstrate some degree of detached, reasonable objectivity.
The challenge to lotus, and anyone else, remains: Demonstrate where ANY Democrat anywhere prior to 2008 warned of this problem.
GOP leaders are on-record at least as early as 2005. You can’t blame Republicans or Reaganomics for a problem the GOP tried to fix but was stopped by Democrats.
Please note again that 95 Democrats (probably including Travis Childers and Gene Taylor) voted against the plan. That’s not a GOP problem, that’s a Pelosi can’t get her business done problem.
WHICH GOP leaders when and where, Observer? Links please. Show us.
As usual, a very simple and clear explanation of the problem:
http://www.youtube.com/watch?v=YBVB1Uc0nko
“some degree” made me laugh, Observer.
Observer, there have been Democrats bothered by the set-up with Fannie Mae and Freddie Mac longer than you acknowledge; I’m not going digging for evidence because it isn’t an interesting rabbit hunt to me. I’ve been aware that there was trouble in the notion that we had this unregulated quasi public institution that everyone would assume was backed by the Fed. Govmt for a long time, and was very aware of Democratic economists and politicians who thought it was potential trouble.
There are folks on both sides who were perfectly willing to pretend the party goes on forever or there are no risks in having no one mind the store (and the cash register wide open). And here we are.
lotus 60: good luck on getting those links.
we’re about to have the biggest point drop in stock market history.
Number 2– September 17th, 2001, the day the market opened after you-know-what.
Dow down -720.42
The S&P 500 is down over 7%.
Dow -735.63
who is the baldheaded guy in the vest going nuts talking to Wolf Blitzer on CNN?
Dow down 748.21
The dollar is holding up quite well today. Oil down. If this would have passed eventually it would have cratered the dollar.
Dow down 777.68
Sheeeeit.
8.75% drop in S&P is 4th biggest percentage drop
Dow drop is not percentage-wise in top 10
In response to NMC, nope, I don’t. But, these properties that are the subject of these mortgages have NOT suddenly just lost all value. Even if the fair market value has gone down to some degree, the property is not worthless.
While I am not enough of a financial wizard to fully understand all of these mortgage leveraged investment vehicles, I do think that it is the mark to market requirements that are thowing a monkey wrench into the financial reports/positions of those companies holding such investments. This requirement may be causing a false perception of the actual value of the investments — actually understating such value
The failure of the Casino Capitalists’ bailout is not a bad thing, not a bad thing at all.
Your real local banks are not in trouble. Bush is in trouble, the Democrats and the Republicans are in trouble. Out of this America might begin moving toward a Real Economy.
We are sick and the body of America is trying to throw off its illnesses. Could be we are beginning to experience a revolution. Maybe we will come to our senses, come home, and renew ourselves.
It sure would be nice to come up for air.
I’m poor so I don’t know much about any of this. Can someone explain to me how this would affect the common person? The ones who don’t have stocks or 2 pennies to rub together? Does it? Will all banks fall or our local banks that have been around since 1800-something be ok? Is it silly to think if you make less than 40k that this whole thing won’t hurt you and if so, how so?
I think the bill they voted on today was inadequate to what was needed, and didn’t mandate any homeowner protection or executive punishment – it was still very lopsided in the direction of "Wall Street."
At this point, I don’t think anything bipartisan can happen, so the Dems just ought to load up a bill with populist protections and re-regulation, make sure it will get credit flowing again, and make it a good bill that any Dem can run on. Maybe insert the taxpayer money at the bottom instead of the top – shore up the failing assets (which are really people losing their homes) instead of buying them up. The starting point doesn’t have to be the Paulson plan.
Screw the Repubs, they don’t need them.
lydia, the banks aren’t lending to each other — the credit system that’s the bloodstream of the whole economy is stopped. As businesses can’t borrow to meet their payrolls, buy their materials, carry on their activities, we’ll see more and more bankruptcies, layoffs, crime, and suicides.
YES, it gets down to those of us who are poor. Just watch how fast it will, too.
If they had the 95 it wouldn’t be enough to overcome the 112. If they had the 112 they could overcome the 95, observer. That’s why of falls on the Republicans voting against the Republican proposed legislation.
lydia, here, read Dana Blankenhorn‘s explanation.
Good link, Lotus. Thanks
Ditto Lotus. But ya know, I wonder how many Americans think this is no big deal because it’s only going to affect the rich. I’d bet more than people realize.
READ HERE, lotus: http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&scp=1&sq=%22barney+frank%22&st=nyt
You may not be able to read that, though, since you tend to view everything through Democrat-partisan eyes.
Why can’t you admit that BUSH tried to avert the crisis. Blame him all you want for his FAILURE, but dammit, he actually tried.
Lydia, right on girl. Let the greedy bastards (Wall Street and the Politicians) that created this stew in their own soup. Sometimes its a lot less stressful not having a lot of money to worry about eh? Lord willing the sun will come up tomorrow.
And hey, and everybody will want the Oxford Eagle to read all about it.
I take it, Observer, that this sentence is the one you want me to see:
”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Yes? And five years ago, during the tall-cotton period of GOP Washington, I can well imagine why he said that. What I can’t imagine is why Rick Davis, Freddie Friend Extraordinaire, is still on John McCain’s payroll.
But, Observer, in 2003 when this was proposed, the REPUBLICANS controlled both houses of Congress. SO, why didn’t it pass into law? Not on account of the Democrats. This is not solely a Bush failure. It’s a Republican Party failure. They sold their souls for corporate gold, only to learn they were doing business with a pin-striped version of the Mafia.
Childers voted “no”. What’s wrong with him? Is he afraid of powerful women, or maybe Barney creeps him out.
http://clerk.house.gov/evs/2008/roll674.xml
somslawyer @ 83, you KNOW it takes 60 votes to pass anything in the Senate and the GOP has not had that kind of a margin since the 1950s. You are being disingenuous.
Mississippi’s congressmen:
Pickering: Yes
Childers, Taylor, Thompson: No.
Childers knows that he already faces many voters who have become very frustrated with Miss Nancy’s rule of the House, and will view a vote for him as one to maintain Pelosi as speaker — fair or not. I am one of those. I would otherwise vote for Childers (and did in the previous election), but will not this time due to Pelosi. I want her out. We will NEVER get a sensible energy plan with her in charge of the House.
Rescuing AIG, U.S. saved Paulson’s Goldman Sachs $20 billion
http://www.nytimes.com/2008/09/28/business/28melt.html?_r=1&hp&o
(today’s vote temporarily stopped more of this crap today)
afotl, if you had your druthers-who’d be the speaker?
If we hadn’t been lied to, cheated on and ignored these past 8 years-maybe we could, in the midst of our anger, hold our nose and let this thing go through. But most people are long gone on trust and are, understandably, so angry they are losing sight of the big picture.
If the man who has been at the helm as we have been screwed over and over again these past 8 years and the one asking us to trust him (and that is all he’s been doing-he certainly hasn’t come forth to explain-in real words- exactly how doing nothing is going to hurt us still) were not one and the same-maybe, just maybe, we’d have just a little more faith.
After all, wasn’t it W who told us-”fool me once-shame on you, fool me—uh-you can’t get fooled again”?
afotl: all well and good for you but most Americans live on the brink of disaster- just one failed paycheck away. Many who planned to retire in the next year or two willhave to work5 or 7 or ten more years. Many Americans have most of their moneyinvested in their own home which they cannot sell or borrow against. Why don’t you just say let them eat cake and be done with it.
confounded-”Why don’t you just say let them eat cake and be done with it.”-Amen-gets my vote for Pith & Vinegar.
“Many who planned to retire in the next year or two”-that WAS me. Now retirement=death.
Capital idea, GG!
I agree with op99 @ 74. Politically, the Dem House might as well go ahead and pass a good-old-fashioned New Deal-styled financial bill that protects homeowners and has a lot of regulation for Wall Street, and do so on a party line if necessary. Both Big Tent Democrat at TalkLeft and digby are saying the same thing right now. We tried a top-down approach with this past bill (and I’m glad it failed), so let’s try a bottom-up approach that tries to stop the mortgages from being defaulted on in the first place. I think the American people would support it.
Confounded, I’m pretty much in that same boat. I’m not “rich” by anyone’s financial definition of the term (even a democrats’ definition) —far from it. But, at the same time, I don’t engage in a lot of risky behavior involving investments, etc. That conservatism runs deep. That is probably why I’m not rich. (I am rich in blessings —including a great wife, son, family, comfortable home, good dog, food on my table(including wild game and home grown veggies), etc. , etc.).
Why take out your personal angst on me? Address it to someone who will matter — call your house member and/or senator. Better yet, why not call one or more of the 93 democrats who voted today AGAINST this plan? Including some from Mississippi.
I am not against a good plan. We just haven’t seen one yet. And whether I am for it or against, really matters not. I am not a congressperson, and I have made no calls to Childers or anyone else on this issue. I don’t have a vote on the matter, and haven’t influenced or helped to influence the outcome of this matter so far one iota.
If these good folks you speak of are on the brink of disaster, then they got there on their own —I had nothing to do with it. And I did not profit from it, as I have zero investments in this sector and have nothing to do with the lending business. I did not make the bad loan to them, and I did not force them to sign a note they could not afford, nor purchase things they could not afford or should not have purchased. I didn’t inhibit their educational opportunities to do better, get a better job, and make more money. It wasn’t me who encouraged some of them to skip class, blow off school, blame others for their failure, drop out of high school, etc. etc. etc. To the contrary, at least two days a week, I get a direct opportunity to try to influence college students to learn, grow in knowledge and confidence, and make something of themselves. And I do my very best, teaching both accounting and business law. We even discussed in both of my classes, weeks ago, this impending mortgage crisis and the business ethical lapses that put us in this position — putting profits ahead of what is right — the point that loaning money to folks who can’t really afford the loan is not true compassion, but a disservice to them.
But, if it helps you get through this to demonize me, then fine. Have at it. Pith and vinegar baby…pithy. Hope you feel better.
AFOTL, there are people (businessmen, for one) who made non-risky decisions in reliance on the existence of stable markets. There are people on payrolls of those businesses who are even more innocent of the kind of risky choices your comment implies.
We are all completely interconnected. If the house falls down it falls on everyone in it.
What we have here is a lesson in how there is no Wall Street-Main Street but that we all eat at the same table.
Today the lady that works in the school cafeteria and the school bus driver and the fireman and the school teacher (at least in Mississippi, where all are invested in PERS) took a lick. The total lick for today, I am given to understand, is on the order of 1.1 TRILLION. That is approximately 1.5 times the 700 billion “bail out” price tag that our illustrious house voted down.
You can blame the bad republicans or you can blame the bad democrats. However, if you are rational and you live in Oxford and you vote, you have exactly one person to blame and that is your congressman. He’s the only one you control. I blame the congress, both parties, but he is the only person that represents me in the house.
Like GG at 92 I am looking forward to retirement. My time frame is 25 months. I personally am ready to continue working indefinitely. I prefer to look at the debacle as God’s way of telling me I will be happier working in my dotage. As a practical matter, except for PERS and Social Security, I am not personally hurt that badly. My concern is for the folks that do not live in paid-off houses and do not drive paid-off cars and whose kids are not grown and productive and who may be in economy-sensitive jobs.
There are about three days in my life I shall never forget. I recall very well the day JFK was shot and Roddy Stevens running up to me on the beach to say, “they just shot Kennedy all to hell and the Governor of Texas.” I shall never forget the morning of September 11, 2001. I shall never forget today but this is the most shameful because this was caused by people who were elected to serve the people they represent and who were supposed to know better.
I said it before and I will say it again: it is only money and not health and not the life of your kid or some other really important thing. And it is only money for people that have too much of it as we all in this wonderful country do. Me and AFOTL included. Still and all it is pretty shameful and our jackass President and the darling of the left Ms. Pelosi (and all the assholes in between) bear responsibility.
“AFOTL, there are people (businessmen, for one) who made non-risky decisions in reliance on the existence of stable markets. ”
And there lies one source of disagreement. Anyone who invests “in reliance on the existence of stable markets” is not living in the real world. All stock market investments are risky. And if you are not in a position to assume a lot of risk, you have NO BUSINESS investing in it. There are no guarantees. Over time, and in the long run, the stock market is a good investment tool to grow your money. But, in the short term, it carries great risk, perhaps too much for some.
Mutual funds are a good way to diversify and minimize the risk, but such funds are not immune to risk either, and some are much riskier than others. There are funds managed for all sorts of levels of risk tolerance of the investor.
And keep in mind, there are no true “losses” today from the stock market fall, unless you actually sold your stock shares to realize the loss. IF a plan is announced later this week —which it probably will be — and the market rebounds, then that value will likely come back. And over time, it will likely fully come back, so long as the investment is in a sound company (eg not in junk bonds and high risk hedge funds —if you play in those, and get burned, all I can say is sorry, but you were warned before you invested your money —not much diffence in that and playing the crap table at the casino).
ATOTL: You didn’t get my point. I’m not talking about the stock markets, I’m talking about mid-to-large sized business that make decisions based on how the credit markets work. Suddenly they’re not.
There was a guy whose business was installing large airconditioning equipment in factories on NPR this afternoon. He placed bids on jobs based on the fact that 90-120 terms were standard. He knew when he’d get paid, and made the bids. Between then and now, the manufacturers squeezed down to 30 day terms because they are getting squeezed on their access to financing. That may not sound like a big deal, but what happens if (a) He can’t borrow the money to bridge that difference or (b) doesn’t have the cash?
He seemed to think he could survive. Not everyone will be able to. But how did he expose himself to the stock market?
AFOTL at 98. I am not picking a fight with you. I agree essentially with everything you say. I particularly agree that everything in time will bounce back — assuming we have a system left.
However, you do not have to look too far to find situations where there have been global changes in standards of living that have not recovered for generations. We all recognize the confidence/emotional component of markets. Everybody was having a good laugh at Paulson down on his knees before Pelosi.
Why should he care, the fact is this: Paulson could start shredding his holdings tonight and would die long before he stopped being a millionaire. He cares because he does not want to see the collapse of the system on his watch.
It’s all about confidence. Take away the world’s confidence in the safety of investing in U.S. securities and we have all got problems. The problem with the congress farting around while the markets collapse is just that. Today Exxon Mobil lost 6 1/2 points and is within 5 or 6 points of its 52 week low. Several bond funds were particularly hard-hit. Is this rational or panic? I don’t know. I am saying it is a panic. I would rather have Exxon stock or bonds of utility companies than cash. To liquidate is panic. That is what is happening.
It took WWII to “fix” 1929. I am looking forward to being dead in 16 years and might not survive to see the great recovery. And then of course is the cost (as of WWII).
Nah, stability is pretty nice, even if we all have to shoulder the load. At least that’s my two cents worth.
Immediate credit at an affordable price based on a quick phone is the lubricant of the economy. Imagine Nissan in Madison County: assume that Wednesday, October 1, is payday and that all workers are paid by direct deposit. Assume the payroll totals $20 million (I just made up that number, just follow me). Now Nissan likely doesn’t just leave $20 million sitting around in its checking account. So Nissan’s cash flow person picks up the phone, calls its bank and says, “Lend me $20 million at 12:01 am Wednesday and we’ll pay you $20, 250,000 (I made that up too … maybe a beancounter on here can provide more realistic figgers). Just like they’ve done scores of times before.
But this time, bank says, “Sorry, Mate. Our credit lines are stretched tighter than a G-string. I can cover your payroll, but you’ll have to pay back $21 million.”
Cash flow man says, “What? We can’t pay that kinds interest. No way.”
Bank says, “It’s your payroll and your problem. I’ve got a solution for you, but it’s gonna cost a lot more than before.”
Clock ticks on. Nissan has a payroll to cover. They can get the money, but it costs a lot more. Some other similar that doesn’t have the financial resources of Nissan—say, Chrysler maybe—faces the same challenge. But Chrysler can’t get a bank—any bank—to cover it’s payroll. So Chrysler has to tell the world Wednesday morning, “We can’t make payroll and we have lost our lines of credit. We’re shutting the doors and turning out the lights until somebody gets the economy squared away.”
Imagine a similar scenario for Mississippi state government’s payroll, and all the school district payrolls, and so on across the spectrum.
And who do we have in the US House of Representatives?—a buncha gutless flakes exhibiting more interest in their personal reelection bids than in the national economy.
Way to go boys and girls. Way to go. I hope everyone of you sports an American flag lapel pin—otherwise I wouldn’t know whose side you’re on
Ben in 101 states how this all plays out.
There’s been some talk here regarding the lack of leadership from Pelosi. Well, she managed to get what she promised from her side of the aisle-2/3 vote. And-was promised the same from Boehner.
Rachel Maddow just posed the question of leadership and lack of such on the Republican side of the aisle. The 3 titled leaders, Bush, McCain and Boehner, were all for the bill but only managed 1/3 vote.
So–Maddow asked-if they aren’t the leaders, then who? It must be the guy, Cantor, who led the opposition. When he came before the cameras today to explain why he was able to get a 2/3 no vote, guess what he said? Holding up a copy of Pelosi’s speech he said “This”. Apparently he was/they were offended by speaker Pelosi’s speech.
So, the leader of the republican party pulled a partisan stunt because of a partisan act (perceived or otherwise) regardless of the worst financial crisis since 1929. na na na na na na-said just like a 4 year old.
The dilemma we are in is one of the role of money lending in a capitalist free market economy. The money lenders are saying they can no longer make money on the money they have lent. They cannot roll it into cash, into new borrowing. Therefore the money lending gravy train is coming to an end. They want the borrowers to buy them out so that they can lend more money to a few, a very few, of the borrowers. The moral hazard question is whether the borrowers are going to yield to this, this graduated fraud, by the money lenders. They were fought off today, but they will be back. Even our presidential election candidates are on their side.
Steve @ 104: You would have loved Calvin Coolidge and Herbert Hoover.
The blame for this mess falls directly in the lap of the Baby Boomers. You are so blinded by your political love fest and corresponding hatred you can’t think straight. You want to whine about all the bubbles and instability while blaming it all on the Republicans when the true blame belongs to the person in the mirror.
Yes, you are the ones that allowed Bretton Woods to be repealed and turned the fiat currency Creature loose. You put the power to create money out of thin air in the hands a small group of ever powerful individuals and damned us all to life of inflationary serfdom. You wonder why the middle class is disappearing. Well you are the ones that wanted Socialism Security, many receiving more than 100 times what you ever paid in. You would rather whine about the instability while you continue to suck at the government sugar tit. Well do us all a favor and suck it up and try to change this thing for the better…for your grandchildren’s sake.
I know I am swinging at wind mills and I am interrupting your Monday night episode of Dancing with the Stars, but it will get no better if something isn’t done. God Bless the Republicans AND the 95 Blue Dog Dems for listening to the people. Maybe it’s a start. We can only hope. Tell a 10 year old you have a money problem and you are going print up a few stacks of 100 bills to take care of it and he’ll tell you are a freakin crook. Now how is this plan any different? Steal from our future generations for your own comfort…just like you always have. Despicable
Oh and I might as well throw in the 1.5 million inconveniences God calls children that are killed every year. What a harvest we are reaping.
LETTER TO OUR CHILDREN
http://www.gold-eagle.com/editorials_08/shepherd092908.html
I hope you’re glad you got that off your chest, IAG, because it didn’t seem to respond to anything going on here.
Whew! Poor Boomers. That’s a whole lot of guilt to carry around. Well, buck up Boomers-take one for the gipper and get everybody else off the hook, woncha?
Ben Cole — I would have loved neither of them. The situation is simply not the same.
But, let me ask you this: Would you have wanted FDR to lead a campaign to buy all the bad and worthless stocks the Masters of the Universe were buying during 1924 – 1929? Doubt it very much.
If one wants to have the “Main Street” Americans spend $700 billion to buy bad loans I would suggest a better set of investments would be in a new WPA or CCC. Main Street America would truly benefit from such expenditures.
I cannot imagine FDR and those close to him (some of whom I have known) and many more with true roots in democratic politics would have ever yielded a program of purchasing the bad money lender “assets.” It is, quite simply, unimaginable. I trust you will agree. . . . . .
Most of the Democrats who voted no have a chip on their shoulders regarding Wall Street and corporate management. They have seen executives and Wall Street brokers rewarded for downsizing, outsourcing, mergers, etc. that closed plants and reduced wages and benefits. These are some of the Democrats who opposed NAFTA and other trade deals, and think the Republicans have rigged taxes, trade, and other policies for Wall Street.
The Republican opponents, on the other hand, have generally supported the President and Wall Street without dissent until today.
IAG at 106, I have to say that is a most feckless comment. I heard recently on an NPR program about the horde of 25 year olds being, like, bitter at the boomers, and I really can’t imagine a stupider point of view.
tiredlawyer, having to dance with the spam gods, wants to add:
IAG goes Palin on us at 106.
AFOTL@34: thanks for expounding on mark to market, that helps.
GG at 92: condolences, sincerely.
AFOTL: re-read your post at 40. “Those who invested wisely will gain?” My “angst” is at the smug blame this puts on anyone hurt by this crash, including those most innocent of any blame.