These are tulmultous times. No more investment banks on Wall Street
Jstas
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http://money.cnn.com/2008/09/21/news/companies/goldman_morgan/index.htm?cnn=yes
When I saw that this morning, for some reason I got a sinking feeling in my stomach.
While I understand the motivation to the actions and changes put in place, I fear what kind of a sign this might be for the future. Granted, I know it's not 1956 where you could sneeze and make a hundred bucks but if the investment banks are going down the tubes so quick and investor confidence is shaken so much that 5 GIANT names in the industry all go down the dumper in a matter of 2.5 weeks, that's a scary proposition.
I can see how these changes are for the better but these changes are honestly dependant on a few things to go a certain way. If they don't, it could be a bigger problem than it is now. Investment banks don't drive the money, they drive the economy. It's the commercial banks that handle the money behind the investments and if confidence in them shakes to the point where there is a rush on the banks, we'll see 1929 all over again. No deposits in the bank, no money to make loans. No loans and credit, no interest payments from the bank. No interest, no income and banks default.
Oh and yeah, there's the FDIC but you know what funds the FDIC? The Federal Reserve. If we have to bail out a bunch of commercial banks and deplete the Federal Reserve too much, the FDIC doesn't mean anything. It actually doesn't mean much right now. The whole purpose of the FDIC is to instill consumer level confidence in banks and investments. There really is no tangible benefit from the FDIC.
When I saw that this morning, for some reason I got a sinking feeling in my stomach.
While I understand the motivation to the actions and changes put in place, I fear what kind of a sign this might be for the future. Granted, I know it's not 1956 where you could sneeze and make a hundred bucks but if the investment banks are going down the tubes so quick and investor confidence is shaken so much that 5 GIANT names in the industry all go down the dumper in a matter of 2.5 weeks, that's a scary proposition.
I can see how these changes are for the better but these changes are honestly dependant on a few things to go a certain way. If they don't, it could be a bigger problem than it is now. Investment banks don't drive the money, they drive the economy. It's the commercial banks that handle the money behind the investments and if confidence in them shakes to the point where there is a rush on the banks, we'll see 1929 all over again. No deposits in the bank, no money to make loans. No loans and credit, no interest payments from the bank. No interest, no income and banks default.
Oh and yeah, there's the FDIC but you know what funds the FDIC? The Federal Reserve. If we have to bail out a bunch of commercial banks and deplete the Federal Reserve too much, the FDIC doesn't mean anything. It actually doesn't mean much right now. The whole purpose of the FDIC is to instill consumer level confidence in banks and investments. There really is no tangible benefit from the FDIC.
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You're just jealous 'cause the voices don't talk to you!
You're just jealous 'cause the voices don't talk to you!
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Whatever will happen, I bet my money on a Gold/Dow relationship of close to (2-3.5):1, whatever the nominal values may be. I'm not convinced that we will fool the world indefinitely with our inflationary monetary policies.
On a side note, the promised debt for social services will be another "bailout" that will make this $700Billion bailout look like small change. IMO this is just the beginning.Pioneer VSX-1018
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On a side note, the promised debt for social services will be another "bailout" that will make this $700Billion bailout look like small change. IMO this is just the beginning.
DING DING DING DING!!!! We have a winner!
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Yep, The Clinton admim wrote an IOU against SS to "Balance the Budget"
and tore apart our intellicgence services to save some bucks also...
My b-in-law sold bad Mort Portfolio's and said Fannie Mae will likely total around 200+ billon of bad paper when it's all said and done. -
And in any case, even without a disaster scenario, it still looks bad. Sinking dollar equals rising oil. Rising oil and printing dollars by the truck load equals rising inflation. Rising inflation leads to stagnation and/or economic recession. Economic recession means we can't pay for the rescue plan in any case. Where this leads is anyone's guess, but I would bet it's not to lower taxes any time soon.... When I saw that this morning, for some reason I got a sinking feeling in my stomach.
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I have no idea what to do about it. We've weathered a difficult year on the markets this far, but now it really does look worse. When we thought the light might be at the end of the tunnel, somebody just lengthened the tunnel and it's nowhere in sight. Good reason for a sinking feeling.Alea jacta est! -
And in any case, even without a disaster scenario, it still looks bad. Sinking dollar equals rising oil. Rising oil and printing dollars by the truck load equals rising inflation. Rising inflation leads to stagnation and/or economic recession. Economic recession means we can't pay for the rescue plan in any case. Where this leads is anyone's guess, but I would bet it's not to lower taxes any time soon.
I have no idea what to do about it. We've weathered a difficult year on the markets this far, but now it really does look worse. When we thought the light might be at the end of the tunnel, somebody just lengthened the tunnel and it's nowhere in sight. Good reason for a sinking feeling.
I'll say. Oil wouldn't be as expensive if we had responsible monetary policies. Get rid of the quasi-private Federal Reserve and implement a strong dollar policy. No longer debasing our currency through inflation (creation of new money) would be an excellent start. But that wouldn't fit the agenda of neither major party....
If we had a non-intervention foreign policy we would be better off. But as long as we fight a war on terror that never can end we will enrich the private companies as our wars have become privatized. Amazing how we privatize the wars but socialize the losses of irresponsible financial companies....
Imagine what would have happened if we didn't help overthrow elected government in Iran back in the 50s. It was obvious that it was just because of the oil. Imagine what would have happened if we didn't invade Iraq because of the oil. Our foreign policy is as responsible as our flawed monetary (fiat) policy for high energy prices and our dependence on foreign oil.
But who gives a f**k about policies anyways. There won't be any changes coming anytime soon, otherwise we'd have Presidential Candidates that would make sense and convince us that they are about change. Address the root of the problem, the Federal Reserve and budget deficits.Pioneer VSX-1018
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Who will be left to buy the Kharma Grand Exquisite? Dentists?
http://www.kharma.com/products/exquisite/index.htm -
The answer to that question is "beyond imagination"Old School Polk wrote: »Who will be left to buy the Kharma Grand Exquisite? Dentists? ...
. Follow the link above and you'll see what I mean (top right of web page).
By the way kgingras, since you are new to CP, I think there is some rule about political discussion in the Forum (avoiding it, that is), so don't get yourself in trouble! I can't find a link to the rules to check (I probably should not have mentioned "taxes").Alea jacta est! -
Well, that isn't going to help your sinking feeling, Jstas ...Alea jacta est!
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I'll say. Oil wouldn't be as expensive if we had responsible monetary policies. . No longer debasing our currency through inflation (creation of new money) would be an excellent start. But that wouldn't fit the agenda of neither major party.If we had a non-intervention foreign policy we would be better off. But as long as we fight a war on terror that never can end we will enrich the private companies as our wars have become privatized. Amazing how we privatize the wars but socialize the losses of irresponsible financial companies.
Imagine what would have happened if we didn't help overthrow elected government in Iran back in the 50s. It was obvious that it was just because of the oil. Imagine what would have happened if we didn't invade Iraq because of the oil. Our foreign policy is as responsible as our flawed monetary (fiat) policy for high energy prices and our dependence on foreign oil.
But who gives a f**k about policies anyways. There won't be any changes coming anytime soon, otherwise we'd have Presidential Candidates that would make sense and convince us that they are about change. Address the root of the problem, the Federal Reserve and budget deficits.
^^+1000 ^^ . Today, you have to dig for credible facts because what is being reported is often at odds with general accounting practices. The U.S.'s 'books' are 'cooked', and the media won't report otherwise. . . . , while I have my tinfoil on.
There are rumblings of OPEC attempting to price Oil in non-dollar denominations, which would end their obligation (and others) to prop up our currency in order to buy the commodity at a fair and consistent price. That would be one hell of a huge trigger, and would make this week look like christmas. I'm sure there will be huge pressure coming from DC and all those that are dollar invested for this reason.
It seems we have a war every 20 years or so, whether we need it or not. It's spectacularly profitable for the bankers because the .gov is forced to borrow more and more of it's own money from the Fed/world banks, at interest. The fun part is that the US taxpayer gets to pay the interest, on those no-bid contracts for the friends of the pols, with currency/wages that continually lose value the more it's circulated. . another hidden tax.
Both Parties are funded and beholden to same special interest parties, so in effect the candidates are functionally the same. The wars that are not in our best interest will continue to be fought and we will all be propagandized and 'feared' into supporting them. It's not like we don't fund and arm both sides anyway. We will be in every corner of the globe with over 600 known military bases, because we need to protect and control the profits and the natural resources. It's not for our national interest, or a just cause, it's for the global interests, and in my opinion, in exchange for being able to float all this debt and negative yield Treasuries. It's also likely the reason we retain the best credit rating despite have a worse than third world balance sheet.
Measures:
The Fed no longer publishes the money supply (M3) report, so there is no formal number of monetary inflation. Credible analysts have it at almost 14% right now. That's newly printed, fiat money that debases the dollar proportionally in a world of perfect exchanges. The .gov/Fed/GAO has changed the CPI formula (price inflation) as well. Using the pre-Clinton formula for Consumer Price Index currently shows 9% rise, so that reinforces the 14% inflation figure. GDP growth is measured and adjusted for inflation. By using the old, pre-Clinton measurement, we've been in a recession for quite some time. Some analysts believe that's it's a double dip recession/depression that began in Q4 of 2000/2001. Fudging the numbers and changing the formula doesn't make it NOT a recession.-Ignorance is strength - -
Great point and the bailout is just another classic example of this. The same reasons why we have spent hundreds of billions on Homeland Security, fear sells. There is no reason to rush into this and whenever I hear people say "we must act immediately" I cringe. It's $700B and there is no need to get this done within a few days.SKsolutions wrote: »The wars that are not in our best interest will continue to be fought and we will all be propagandized and 'feared' into supporting them.
No question the impact would be big if nothing is done as banks would slow their lending to businesses and individuals BUT they would only slow lending where there is high risk, something they should have been doing in the first place. Some businesses would fail and then others would step in and take their place, it's always been that way. The hype is way overblown and the politicians are too scared to take a stand.
You know what amazes me most right now? How there is still a tremendous flow of funds in US treasures but of course nothing goes on indefinitely in the financial markets. Putting your money in treasury bills guaranteeing you a (nominal) loss of e.g. 3% is f**ked up in my opinion. It's irrational behavior and I think it's only a matter of time until the market will come to its senses. And you just know that this behavior has to do with the potential/future failures of US Financial Institutions.SKsolutions wrote: »It's not for our national interest, or a just cause, it's for the global interests, and in my opinion, in exchange for being able to float all this debt and negative yield Treasuries. It's also likely the reason we retain the best credit rating despite have a worse than third world balance sheet.
Also, one cannot ignore the fact that this is a Presidential year and I'm sure the President's working group on finance most likely worked very hard at pumping up this market...short term manipulation often comes at a long term cost and I doubt that it will be any different this time. If the USD could lose ~40% of its value over the past 6 years it shouldn't come at a surprise when "our" currency can "outperform" it's negative trend in the years ahead, severalfold.
Have you seen what the US Stock market looks like from a foreign currency perspective? Me thinks the time will come when people around the world will start putting their money in foreign markets. How will that affect u.s.?
It wouldn't surprise me one bit if we'd have a "bank holiday" within the next 10 years and your savings dollars would be replaced with a new currency at a hyper inflationary rate. It wouldn't be the first time a currency exchange would take place here. In 1737 Massachusetts devalued its fiat currency by 66% with the introduction of a new currency, Connecticut inflated their currency by 900%, Rhode Island 2,300%. Fiat currency doesn't really have a strong "track record" and we know what often happens to those that say "this time is different" and/or "but it can't happen here"....Pioneer VSX-1018
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Wow, you guys really know how to drag a thread in a really different direction.Expert Moron Extraordinaire
You're just jealous 'cause the voices don't talk to you! -
With reallllly long posts too ... Now where is that rule about politics in the forum? Did I just imagine it? I can't find where the rules about posting are any more. My brain must be numbed by dizzying losses.Wow, you guys really know how to drag a thread in a really different direction.
Off to a bumpy start this morning again, but after yesterdays ups and downs, openings aren't always a good indication in any case.Alea jacta est! -
Wow, you guys really know how to drag a thread in a really different direction.
I think we're still vaguely on topic no? Perhaps a few tangents here and there but still good discussion although I admit I'm getting a little bored of this stuff.
On a more exciting note, I just pulled the trigger on a new Emotiva XPA-2. Now if AV123 could only get their act together I could move up to 5.1. Then that will give me an excuse to get the XPA-3!Pioneer VSX-1018
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You two are talking politics and injecting your own political views in to why things are the way they are. Right now, I think you are way off base in your assessments because these problems go much father back than you are allowing.
I'm not going to discuss politics here because I have strong views that very few people agree with or if they do, they fear siding with me. But yeah, I started talking about investment banks and the economic situations that got us here. You all started talking about "propagandized " wars and scare tactics and such. "Propagandized", is that even a word? You're off topic and I for one don't care about your misguided and ill-informed opinions on world events especially when they are fostering paranoid delusions about the banking system and economy in this country.Expert Moron Extraordinaire
You're just jealous 'cause the voices don't talk to you! -
WSJ
You have to me a member to see the whole article but not all investment banks are done. I work for one of them. I'm not saying they are not feeling the pressure right now; they just did a better job of mitigating risk with the amount of level 3 assets on the books than that of Bear, Lehman, etc.... -
No more WaMu (I know, it's not an investment bank, but still) ... No deal today ... Where are we going to be by Monday I wonder.Alea jacta est!
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SKsolutions wrote: »^^+1000 ^^ .
There are rumblings of OPEC attempting to price Oil in non-dollar denominations, which would end their obligation (and others) to prop up our currency in order to buy the commodity at a fair and consistent price.
If I remember correctly, Saddam Hussein started requiring Euro's for oil payments.
Also, Hugo Chavez (sp?), the dictator/president/whatever of Venezuela requires Euro's for oil payments.
As I've mentioned many times, I don't know jack squat about this stuff, but I do know this much: all the oil boys start demanding Euro's instead of dollars and it's a bad thing for us. Real bad.Sal Palooza -
No more WaMu (I know, it's not an investment bank, but still) ... No deal today ... Where are we going to be by Monday I wonder.
Another sweet deal for JPM. Just like the Bear Stears bailout they got. Not surprising considering that JPM was double-represented when the quasi-private Federal Reserve was created.
I would like to know how much money the Fed injects in "liquidity"... Pioneer VSX-1018
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This isn't about politics it's about mine and your 401K. These are savings that I hoped to use in retirement.
Has anyone looked at what they are worth now compared to 6 months ago?
Who is running the show here? If you aren't pissed with these actions or lack there of then nothing will bother you.
The people with big money are cashing in as we speak and will do fine with the bail out but we little people will take a BIG hit on our 401K.
Retirement? I dodn't think so. -
Why the government is bailing out Wall Street institutions instead of aiding struggling homeowners, especially when many financiers stand to earn millions of dollars in bonuses?
Why does this decision need to be made by this weekend?
Is the finacial health of the US that fragile? -
This isn't about politics it's about mine and your 401K. These are savings that I hoped to use in retirement.
Has anyone looked at what they are worth now compared to 6 months ago?
Who is running the show here? If you aren't pissed with these actions or lack there of then nothing will bother you.
The people with big money are cashing in as we speak and will do fine with the bail out but we little people will take a BIG hit on our 401K.
Retirement? I dodn't think so.
Well I guess it depends on how close you are to retirement. If close then I'd be worried, If not then think about how cheaply you're getting units for.Pioneer VSX-1018
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Well I guess it depends on how close you are to retirement. If close then I'd be worried, If not then think about how cheaply you're getting units for.
Ever play Monopoly? Every one that is over 50 just got a Go To Jail Card.
The thing that really pisses me off is that the Big Wigs have bailed out of this mess months ago.
I want the FBI and IRS to investigate people that make money on stocks this year. Insider trading?
Are other countries having the major finacial institiutions also going bankrup?
Or is this just in the US? -
Ever play Monopoly? Every one that is over 50 just got a Go To Jail Card.
The thing that really pisses me off is that the Big Wigs have bailed out of this mess months ago.
I want the FBI and IRS to investigate people that make money on stocks this year. Insider trading?
Are other countries having the major finacial institiutions also going bankrup?
Or is this just in the US?
Actually the FBI is conducting investigations into some of the CEO's and other upper level execs of these companies.Pioneer VSX-1018
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I've got 8 years until I retire for good and my 401 is in fair shape. I saw this coming last year and moved my cash into what can be considered safe (in today's climate, who knows how long it will last?). While I'm not reaping the huge gains I made earlier, I'm not taking any loss either. If I was younger, I'd still keep ploughing the money in, just in a "safe" area until this works itself out.
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bikezappa wrote:Why does this decision need to be made by this weekend?
Is the finacial health of the US that fragile?
It is perception...nothing more. If nothing happens over the weekend the heath/stability (or lack thereof) will technically be no different than Friday...EXCEPT...for the perception of investors, consumers, etc...and that is a frightening thing. If you have ever seen a "run" on a bank you know what I mean.
Perception COULD become reality and the "perception" that the financial system is failing (and acting accordingly) is exactly the thing that could cause the system to collapse.
The rhetoric over the "bailout" is utterly stupid and is just another reason that shows how the politicians on both sides are **** with us. They are more concerned with blame than a fix. Each side wants to blame the other for the problems and take credit for the fix. It disgusts me. :mad:
The reality of the situation is if the govt does the bailout correctly...they could actually make money on the whole deal. Think of them as an investor that has ready cash available to make huge purchases of real estate at deep, deep discounted prices. They have no real incentive to turn the property quick so they can hold on to the assets until the market improves and then systematically sell at a more appropriate time. THIS PLAN is exactly how most of the worlds richest real estate tycoons (were talking Forbes world 400 richest types here) made their money. At worst over the long run it will be a wash or small cost with the real possibilty of substantial gains.
The banks could hold on to these assets and do the same thing IF they had the capital. That's the problem...they don't have enough capital or the resources to raise more. The govt doesnt have that problem.
I am a capitalist through and through and in normal circumstances have no problem letting institutions that made bad decisions fail and let their investors lose their investment. Risk/Reward and all that. BUT this is a totally different situation because of the scope and the trickle down effect it will have on everyone. In this case it needs the govt to help...because it really is for the benefit of the Nation as a whole. I hate that is the case...but it is!"Just because youre offended doesnt mean youre right." - Ricky Gervais
"For those who believe, no proof is necessary. For those who don't believe, no proof is possible." - Stuart Chase
"Consistency requires you to be as ignorant today as you were a year ago." - Bernard Berenson -
Britain had a "significant" takeover about six months ago: Northern Rock. They were a type of bank unique to the U.K. that used to be known as "building societies" (they specialize in home loans). They too ran into liquidity problems and suffered a "run" on the bank, initially borrowing billions from the (central) Bank of England.... Are other countries having the major finacial institiutions also going bankrup?
Or is this just in the US?
Banks in France and Germany are more like Bank of America: large diversified institutions with national presence and not specifically investment banks. There was one large rescue of CrAlea jacta est! -
bikezappa wrote:Are other countries having the major finacial institiutions also going bankrup?
Or is this just in the US?
Yes this is a worldwide issue. Europe is starting to have serious issues as well. It is also not the first time a major economic power has had problems in their financial sector. A few years ago (mid to late '90s) several of Japan's large banks failed as they went through difficult financial situation similar to what we are seeing. Mergers and acquisitions brought them out of it along with govt intervention and they recovered. It will recover here...but not without some pain."Just because youre offended doesnt mean youre right." - Ricky Gervais
"For those who believe, no proof is necessary. For those who don't believe, no proof is possible." - Stuart Chase
"Consistency requires you to be as ignorant today as you were a year ago." - Bernard Berenson -
Excellent summary of the situation, Sir, IMHO and if I may be so bold!...
Perception COULD become reality and the "perception" that the financial system is failing (and acting accordingly) is exactly the thing that could cause the system to collapse.
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The reality of the situation is if the govt does the bailout correctly...they could actually make money on the whole deal. ...
... this is a totally different situation because of the scope and the trickle down effect it will have on everyone. ...Alea jacta est! -
I am a capitalist through and through and in normal circumstances have no problem letting institutions that made bad decisions fail and let their investors lose their investment. Risk/Reward and all that. BUT this is a totally different situation because of the scope and the trickle down effect it will have on everyone. In this case it needs the govt to help...because it really is for the benefit of the Nation as a whole. I hate that is the case...but it is!
Thank you!
As for WaMu, the bank failed. But the gubment stepped in and foisted the failed bank off to JP Morgan. For those that have assets in WaMu, they may have lost value but they did not go away. They are still there and honestly, a buyout and restructuring under JP Morgan is far better than a bailout because that essentially means that your new bank HAS the assets and capital needed to pull your failed WaMu from the trenches. That's a good thing!
And bikezappa, I usually respect the things you have to say because you offer insight and differing opinions without the drama but honestly, shut up dude. You can **** about your retirement but if EVERYTHING you have is in one place well, now you are the poster child on why you should diversify your portfolio. It helps minimize risk and loss if risk matures.
As far as having a retirement, I don't want to hear it. I have to worry about my own retirement completely because there will be no gubment assistance like what most retirees are getting now. On top of that, I will likely have to help support my parents in their retirement. So I get to pay in to a system all my life only to be denied the benefits of that system due to mis-management by wonderful people who we all know but I'll leave nameless on Capitol Hill. Given the current fiscal crisis and the state of the Social Security system, I might as well work until I'm dead 'cause it's the only way I can ensure that me and my family have what they need to survive.
And yes this discussion has turned to politics. Talking about economics and how things are going down and what the gubment is doing to resolve it is one thing. But blaming one politician's actions for all of the problems or even an entire party of policticians for the problems is discussing politics. Our economy is based on a free market. It failed all by itself and it is not the government's place to step in and meddle unless something is going to harm the good of the country. The banking problem was caused by banks exploiting a loophole that had the potential to pay off in a big way or fail in a bigger way. Well, we know what happened. Should the government have stepped in sooner? Maybe. But that would have stifled growth and forced inflation causing another decade long recession after we just got out of one. What should have happened was banks should have handled risks better and consumers and investors should have ignored the dollar signs and studied the risk instead of getting themselves in over their heads.
But hey, that greed is an ugly thing and it rarely brings good.Expert Moron Extraordinaire
You're just jealous 'cause the voices don't talk to you!
