Lehman

[One_more_turn]

What I don't like about the outcome of this is that Bank of America, Goldman Sachs, and JP Morgan Chase have become way too powerful.

[Colonâ„¢]

Originally posted by korn469
Spur of the moment actions, even if it involves giving away 1 trillion dollars, won't fix the cause of the problem.

What you've been seeing the past few months are spur of the action moments. Taking on the illiquid assets that's sitting banks books is exactly the kind of systematic measure that goes to the heart of the issue (though it won't be a silver bullet either).

[notyoueither]

Originally posted by korn469


If you are a multibillion dollar company that invested properly its money properly, then you should have a portfolio that's diversified enough to suffer through this. If not then don't you deserve to hit the wall at great speed?

Fine, if it were one poorly run company. However, it's a whole bunch of companies that got into the US real estate ponzi scheme and the consequences are effecting well run companies that steared clear of most or all of the mess.

Governments and central banks are reacting because the consequences of not acting are of 1930s proportions, and would effect people who have nothing to do with any Wall Street firm.

Do you deserve living through massive unemployment for the next 10 or more years? Are you willing to do it to gain the satisfaction of watching the splats on the wall? Those would be your long term prospects of employment hitting the wall along side the fat cats' carcasses, you do realise, yes?

[Dinner]

Originally posted by One_more_turn
What I don't like about the outcome of this is that Bank of America, Goldman Sachs, and JP Morgan Chase have become way too powerful.

I agree but if you want this solved via private industry then there are only so many white knights who can come to the rescue. What's the alternative? Can a foreign company be convinced to ride in? Does the government nationalize? There aren't to many options on the table.

[Dinner]

Originally posted by notyoueither


Fine, if it were one poorly run company. However, it's a whole bunch of companies that got into the US real estate ponzi scheme and the consequences are effecting well run companies that steared clear of most or all of the mess.

Governments and central banks are reacting because the consequences of not acting are of 1930s proportions, and would effect people who have nothing to do with any Wall Street firm.

Do you deserve living through massive unemployment for the next 10 or more years? Are you willing to do it to gain the satisfaction of watching the splats on the wall? Those would be your long term prospects of employment hitting the wall along side the fat cats' carcasses, you do realise, yes?

The real problem. It seems bailouts are needed because the alternative is unthinkable. If that's true then the question is how should the bailouts be structured and what new regulations should be enacted to make a repeat less likely?

[notyoueither]

It sounds to me that the sale of debt needs to be regulated and monitored. I'm sure the cleverer bunnies who do these things for a living will come up with the details.

In the mean time, Joe US Public can look forward to a bill. Some of the rest of us will be paying too.

[Dinner]

On the up side if we followed the "screw it and let them just fail" crowd then China would be on the hook for most of the defaults but that still wouldn't save us from a 1930's style liquidity crisis. In such an event even Mr. I did everything right will end up with **** splatter all over his shirt. Average businesses will have a hard time getting lines of credit much less long term loans and that will effect the wider economy deeping the crisis.

A bailout is a foregone conclusion but I really do think the average taxpayer should get something out of this beyond just the bill. There should be write downs of principle on the size of his mortgage (since real estate has fallen so much huge numbers are now upside down) and ARMS should be converted to low rate fixed mortgages. Make it a condition of the bailout and Wall St will be forced to swallow that pill.

[MarkG]

[fed1943]

Is it the market no longer wise and true?

Or the solution will be to adopt some socialism to the loss and some
liberalism to the profits?

Best regards,

[Alinestra Covelia]

at MarkG's video.

[Kidlicious]

Originally posted by fed1943
Is it the market no longer wise and true?

Or the solution will be to adopt some socialism to the loss and some
liberalism to the profits?

Best regards,

Well the govt is going to buy up $700 billion worth of worthless securities at book value in the hopes that they can sell them for that value. If people believe they can then I guess they still believe in the market.

[Agathon]

Originally posted by Barnabas

These people never learn

It's The Economist. It's not them who never learn, but the schmoes who buy that rag.

It's been amusing this week watching the powers that be trying to find a way to stop the bleeding on the proviso that we will return to more of the same obscene kinds of capitalism in the future.

Millions of middle class people in industrialized countries have developed a massive entitlement complex. Watch for the brunt of any recession to be borne by the most vulnerable members of our societies. Expect more authoritarian governments as the bourgeoisie try to protect their petty little holdings by any means necessary.

I wonder how many people are going to die because of this - especially people in poor countries. I suspect very many.

[PLATO]

Originally posted by Kidicious


Well the govt is going to buy up $700 billion worth of worthless securities at book value in the hopes that they can sell them for that value. If people believe they can then I guess they still believe in the market.

The MBS are worth much more than their book value in reality. Much of the paper that is considered "wortless" or "toxic" is actually performing. The stuff that doesn't still has a liquidation value of 65-80 cents on the dollar. Even in the hardest hit value areas, you are still seeing liquidation go for above 60 cents on the dollar. The vast majority of these funds will at worst break even...most will continue to provide profitable returns. The main problem has been the uncertainty of that return and thus the reluctance of the secondary market to purchase them. This drove their price down and caused companies to have to write them down. This is not an indication of how they will ultimately perform, but rather an indication of the uncertainty of how they will perform...a very significant difference in the end.

[PLATO]

Originally posted by Agathon


It's The Economist. It's not them who never learn, but the schmoes who buy that rag.

It's been amusing this week watching the powers that be trying to find a way to stop the bleeding on the proviso that we will return to more of the same obscene kinds of capitalism in the future.

Millions of middle class people in industrialized countries have developed a massive entitlement complex. Watch for the brunt of any recession to be borne by the most vulnerable members of our societies. Expect more authoritarian governments as the bourgeoisie try to protect their petty little holdings by any means necessary.

I wonder how many people are going to die because of this - especially people in poor countries. I suspect very many.

You know...there might be some truth in what you say. I do want to point out though that a tremendous number of people have homes that never could have qualified for one under the tighter lending criteria that we are seeing now. The vast majority of those people are paying for their houses just fine. Most of the losses have come on non-owner occupied properties where people were trying to turn a quick buck in an appreciating market. In a manner of speaking, the "bourgeoisie" in the U.S. was expanded to include nearly anyone who wanted a house. It is those same people who were included in this "expansion" that are crying the loudest for that authoritarian government. Very interesting how people change when they feel like they have gone from the "have nots" tyo the "haves".

[Kidlicious]

Originally posted by PLATO
This is not an indication of how they will ultimately perform, but rather an indication of the uncertainty of how they will perform...a very significant difference in the end.

I don't know if you know what uncertainty is and how it works in financial markets. It means that people don't believe there is a good enough chance that it will be valuable in the future.