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9/17/2008 10:59:28 PM

welp

we're almost back to were we started 8 years ago...

fresh start

9/17/2008 11:31:37 PM

Overseas markets are currently taking a shit.

9/18/2008 12:36:31 AM

not so impressive, eh

9/18/2008 12:44:28 AM

its going to get way worse before it gets better

9/18/2008 6:16:07 AM

to everyone who thinks it's excess regulation that has gotten us into this mess to begin with -
http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/

Quote :

"The Securities and Exchange Commission can blame itself for the current crisis. That is the allegation being made by a former SEC official, Lee Pickard, who says a rule change in 2004 led to the failure of Lehman Brothers, Bear Stearns, and Merrill Lynch. The SEC allowed five firms — the three that have collapsed plus Goldman Sachs and Morgan Stanley — to more than double the leverage they were allowed to keep on their balance sheets and remove discounts that had been applied to the assets they had been required to keep to protect them from defaults."

nice. so the SEC bends the rules for 5 firms to take on much more risk. 3 of those firms are gone, the remaining two are on the chopping block.
Just a big coincidence I suppose, right?

9/18/2008 8:02:06 AM

It doesn't matter what rules were or were not in place. They would have done nothing to prevent this. Even though asset price bubbles and the subsequent bursts happen about every 10 years, the mechanisms that are used to create bubbles are different every time.

Every time this has happened before, new regulations have always been put in place to avoid the same mistakes, but the market always adapts and creates a new way for bubbles to be fueled. Washington is not smart enough or fast enough to put in laws that will prevent the market from finding new mechanisms that will be used to fuel bubbles. (And in this case, preventing a bubble would have meant politicians telling people they would make it harder to enter into home ownership = political suicide)

The economic incentive for people to cash in while a bubble is going up is stronger than any regulation. When we have a bunch of shows on tv showing ordinary people, who know fuck all about finance, how to flip their houses, that's when you know a bubble was unstoppable.

9/18/2008 8:31:05 AM

http://www.reuters.com/article/ousiv/idUSN1720034220080917

It's gonna be another fun day.

9/18/2008 9:09:52 AM

great post skokiann.

shrike, why is wamu having all those losses?

9/18/2008 9:35:48 AM

^^^ Read the post above you. It basically says some guy at the SEC said that regulations that were already in place were relaxed for the 5 companies that are/have already bitten the dust.

9/18/2008 9:39:33 AM

According to Cramer, we're almost out of this.

Why?

Because there are only two brokers left to fail.

9/18/2008 11:10:23 AM

Somehow I don't follow that jive.

9/18/2008 11:12:05 AM

Only Goldman Sachs and Morgan Stanley left to go.

[Edited on September 18, 2008 at 11:19 AM. Reason : tongue in cheek]

9/18/2008 11:19:38 AM

They might be the last stones to go in the pond, but the ripples will be felt for some time.

9/18/2008 11:20:24 AM

Oh I don't know about that.

If the shit hits the fan on these credit default swaps, you'll see A LOT more AIGs.

9/18/2008 11:22:01 AM

As far as I know AIG was the only one insuring investments in the private sector (which I didn't even know could be done). And they were insuring themselves with their own money apparently (which anyone with a brain should know can't be done).

9/18/2008 11:28:14 AM

It's pretty nuts because Goldman Sachs and Morgan Stanley are about the two best run companies on Wall Street. Goldman was actually able to continue to making money throughout this whole crisis while everyone else was reporting loss after loss. The problem is their entire business model is just no longer viable in the current market, so they have to merge with a bank or die a slow death. The entire game has changed.

9/18/2008 11:47:41 AM

Quote :

"For the long haul, definitely. Index funds seem amazing. You mainly have to worry about total economic collapse. "

Yes, a low cost index fund will always give you a positive return over a 10yr period. Always has, even through the great depression.

Im not in the least worried about this causing an economic collapse. LIke i said, this is one sector affecting others... but most of those dying off are directly tied to housing.

What does concern me is our govt spending and hyperinflation. That will fuck over an economy in a heart beat. We arent close to that now.. but looking long term, its very likely with the debts to our current entitlements... that is why govt spending NOW concerns me most. That is why obama is dangerous, now is not the time to increase spending. Mccain is one or two steps in the wrong direction, obama is thousands.

9/18/2008 11:56:18 AM

Quote :

"Well no shit, the market is down and there is uncertainty. Also, you have the fing presidential candidate comparing this to the great depression... Wall street hates uncertainty. Also, as predicted, the proposed increase in capital gains will cause people to not invest as much. Its scary thinking Obama and his spending might be taking office."

The "take-away" from that wasn't about investing, it was about investing WRT venture capital (ie new businesses). If it becomes more difficult for businesses and people to invest in new businesses, that's going to have its own set of effects as yet another "side effect" of the credit crisis.

9/18/2008 1:21:47 PM

So what's next, another world war to pull us out of the depression like what happened nearly 70 years ago? I predict Russia and China will get together and pull some sort of shenanigans, and then the U.S. and European allies will get involved. History teaches us that there's nothing more profitable than war. At least I'm beyond the draft age

9/18/2008 4:49:41 PM

There won't be a war. There will be only nuclear holocaust.

9/18/2008 6:20:00 PM

Mo' bailouts

http://money.cnn.com/2008/09/18/news/economy/rtc_speculation/index.htm?cnn=yes

Quote :

"Many details of the plan remained unclear, but it is likely the government would take on tens of billions of dollars in mortgage assets - if not more. "

9/19/2008 8:51:28 AM

This is actually a good thing, although they should have done it year ago when it would have been much cheaper. Instead they waited until the debt piled up to the point where all these major banks are collapsing or on the brink. Still, assuming they can keep most of those mortgages from defaulting, the fed could actually make money off this in the long term while freeing up banks to start loaning each other money again.

9/19/2008 9:02:07 AM

Stay Home...o wait nm

9/19/2008 9:22:32 AM

Quote :

"assuming they can keep most of those mortgages from defaulting"

seems like a pretty big assumption, atleast if you listen to what the market is saying

I interpret these bailouts as our government keeping the "top of society" on the top. The people that run these companies should fail, they had their chance and made a shit ton of money while they were at it, They are more or less the ruling elite, they should be set for life.
This financial crisis is exactly the kind of shake up that allows new competitors to gain some upward mobility and compete in the same markets as these giant banks, a chance at the American dream. Instead our government (most of whom are friends with the "top of society") decides to bail them out so that they can continue with the status quo, making a killing off of the rest of us.

9/19/2008 9:26:45 AM

i actually dreamt last night that gas prices had fallen down to about 2.50 a gallon today.

9/19/2008 9:59:01 AM

Quote :

"I know that, like Iraq, some here are invested in the defeat of the U.S. economy, but the economy apparently has other ideas. The good news just keeps rolling in. "

Quoting the OP because holy shit LOL.

9/19/2008 10:08:47 AM

Quote :

"In standard economic theory, the way that prices in all markets are meant to be set depends on people being rational and having access to all available information," says David Tuckett of the Psychoanalysis Unit at University College London. "This way of looking at things is almost completely wrong," he said. "Markets are operated by human beings."

http://www.physorg.com/news141015420.html

9/19/2008 11:04:31 AM

^ yeah, I read a couple good books this past summer dealing with the information issues in econ. I can't imagine having enough faith in a "rational self-interested" humanity as a whole, which is why I could never be deluded enough to be a libertarian (like most people on here).

Tent cities are cool again:
http://www.msnbc.msn.com/id/26776283



IM-PRESSIVE!

[Edited on September 19, 2008 at 3:20 PM. Reason : countdown to hooksaw coming in to bash the blame america crowd]

9/19/2008 3:15:11 PM

http://www.nytimes.com/2008/09/20/washington/19cnd-cong.html?hp

Quote :

"As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”"

Yeah dudes, Obama was just being an alarmist. Things aren't that bad after all

9/19/2008 4:32:25 PM

again, I hate to say it but I cant wait to see what happens

9/19/2008 4:50:07 PM

Quote :

"There are no easy solutions to a financial crisis of the sort the economy currently faces. It is not possible to change history and we must work with the crisis that the collapse of the bubble has created. However, it is important to recognize that this crisis was entirely foreseeable and preventable."

http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-financial-meltdown-continues/

9/19/2008 6:12:41 PM

Quote :

"Yeah dudes, Obama was just being an alarmist. Things aren't that bad after all "

OMFG THE DOW ENDED 10 LOWER THAN IT STARTED THIS WEEK


start the bailout!!!111111111111111

9/20/2008 8:13:20 PM

[Edited on September 20, 2008 at 8:22 PM. Reason : ]

9/20/2008 8:22:14 PM

^Clever, but as silly as I feel for nitpicking a comic, it ignores the fact that lenders were insured a government bailout long before they ever dug themselves into debt.

9/20/2008 8:26:06 PM

^ Some lenders were, but other ones partook without a guarantee of a bailout, didn't they?

9/20/2008 8:46:09 PM

9/21/2008 2:52:02 AM

^^ true. the only banks with de-facto guarantees were fannie and freddie

9/21/2008 8:53:18 AM

I had some time to kill and read quite a bit of this thread, and all I can say is "wow". So much cheerleading going on from certain posters, I just hope they didn't invest in the market in the same way.

9/21/2008 9:03:21 AM

couple good interviews I've heard today

http://www.pbs.org/moyers/journal/09192008/watch2.html
http://www.npr.org/templates/story/story.php?storyId=94686428

9/21/2008 10:57:22 PM

^^^^ Holy crap! That's a huge jump. Is that graph for serious?

On the other hand, it suggests we're not completely screwed. Japan and Italy aren't exactly impoverished wastelands.

9/22/2008 10:16:59 AM

Quote :

""In standard economic theory, the way that prices in all markets are meant to be set depends on people being rational and having access to all available information," says David Tuckett of the Psychoanalysis Unit at University College London. "This way of looking at things is almost completely wrong," he said. "Markets are operated by human beings.""

The mathematical models are built using these assumptions but the question is not whether the assumptions are literally true but whether the model performs better than one with an alternative set of assumptions.

For example, you could easily say most standard physics assumes that the mass of an object is concentrated at a single mathematical point. This is obviously false objects, have volume.

9/22/2008 11:19:56 AM

Well, yes. It's a truism that no model is perfect. The only completely accurate model of our universe is our universe.

9/22/2008 11:22:02 AM

hey Conservatives..... listen up. Your boy Newt G. is talking, and he's making a hell of a lot of sense

Quote :

"But because this gigantic power shift to Washington and this avalanche of taxpayer money is being proposed by a Republican administration, the normal conservative voices have been silent or confused. It’s time to end the silence and clear up the confusion. Congress has an obligation to protect the taxpayer. Congress has an obligation to limit the executive branch to the rule of law. Congress has an obligation to perform oversight. Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess. There are four major questions that have to be answered before Congress adopts a new $700 billion burden for the American taxpayer. On each of these questions, I believe Congress’s answer will be “no” if it slows down long enough to examine the facts."

the "4 questions" and more at
http://corner.nationalreview.com/post/?q=ZGE5MmE0YmRiODA3YTRiNzFlN2FmNDU5N2I0ZDc3YTE=

9/22/2008 4:43:30 PM

I don't agree with everything Gingrich says, but I don't think anyone can deny that he's a smart guy who puts America first. That's something I think we could use a lot more of in Washington.

9/22/2008 4:59:13 PM

yeah, and I don't necessarily agree with his 4 proposals.
The key point, though, is that the Administration cannot throw the blame of this mess to Congress if they don't come up with approval for a $700B handout within days of the request.

This mess has been a long time coming, and it's far from over, and drunkenly handing out a trillion dollars isn't going to save us.

9/22/2008 5:03:17 PM

$700B revolving credit line to buy assets from financial institutions
+ $200B in preferred stock of Fannie and Freddie
+ $200B loaned to banks via the Term Auction Facility, with which banks can pledge toxic paper as collateral
+ $144B in additional mortgage backed securities allowed to Fannie and Freddie
+ $ 85B loan to AIG
+ $ 87B in repayments to JPMorgan for providing financing to underpin trades with units of Lehman Brothers
+ $ 50B from Exchange Stabilization Fund to shore up money markets
+ $ 29B in financing for JP Morgans takeover of Bear Stearns. Fed took $30 billion in toxic paper as collateral, with JP Morgan liable for the first $1B in losses, and the Fed responsible for the remaining
--------
=$1,495,000,000,000
/
138,000,000 approximate number of U.S. taxpayers
-------------------
= $10,833 in liabilities per taxpayer.

Not a complete list

http://www.cnbc.com/id/26808715

9/22/2008 5:52:37 PM

This is a financial PATRIOT Act, and it's absolute bullshit.

We're expected to:

- buy $700 billion skunk investments that the private sector doesn't even know how to value properly on a revolving credit line

- tolerate a total lack of oversight to the purchase and disposal of these securities by the Treasury Secretary

- to shoulder the financial burden of bailing out not only domestic, but foreign banks

9/22/2008 7:54:56 PM

- to allow the government to spend $1.5 Trillion without so much as an afterthought, when at the same time allowing them to claim they can't spend one tenth of that much on healthcare, infrastructure, education, unemployment, tax refunds, or anything that would actually help normal Americans

9/22/2008 8:40:27 PM

Uh it's called "freedom" buddy learn to love it

9/22/2008 8:42:56 PM