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Happy Valentines Day! OT: Here's a little bird that's super...
Ooooops, no systemic risk. They die (as they should).
The most important point I made was that there is an INTERNATIONAL agreement NOT to let any bank with global systemic risk to fail. Globally, we are seeing (via bailouts) which banks those are.
The second most important point was that shareholders of those banks receiving bailouts may very well, over time, see their share price move up from today's level. Regardless of present day negative equity, time may change that to a positive equity.
This is NOT to say that anyone should make a new investment in these banks; nor is it inconceivable that these banks will not survive without nationalization, breakup, or the government throwing in the towel. Better yet, the capitalism doctrine dictates that these inefficient banks should properly fail & leave room for better banks to flourish. But, ooooooooops, there's that silly international agreement stopping that from happening.
I'm not sure why you think I would ever support kicking in taxpayer money beyond FDIC money to protect shareholders in the Corn Belt Bank situation. Shareholders risked, they lost. Game over.
For those banks with shareholders/bondholders who have seen bailout money come into their bank, investors have already suffered a 60-90% investment loss. Shareholders risked, they are losing, but the game (via bailouts) is not over.
Nowhere, in any post that I have made, is there a suggestion to make those investors whole. My posts have addressed the possibility that, current shareholders who own investments at these degraded levels, MIGHT not suffer further losses -- given negative equity propped by governments -- and MIGHT possibly have the investment appreciate (from THESE levels) going forward should the government targeted 'prop up' succeed.
Now then, that was a mouthful. Regardless, I really enjoyed this discussion... almost like we were across the table from each other. This is good.
Agreed. But, you are jesting with this statement--> " it's terrific that they narrowed this program down to "true first time buyers"" ??
All I could see was a person who has owned umpteen primary residents over the past umpteen years, who has briefly leased for the past 3 years, & who now qualifies for a non-taxable free $8000 if he just signs the bottom line on a home again.
All he would say would be "ain't life grand!"
"If I had money in a 401-k plan last Fall, I would have borrowed against the entire value of the account or rolled it out to an IRA if I could."
Ooooooooops... no loans allowed in the plan. What now?
By the way, all I give a damn about is the 'unwealthy' blue, and sometimes white, collar worker. We might never agree on that one.
Actually, I came back after an exhausting scan of the stimulus package and was focused on the detail of the First Time Home Buyer credit.
I about died when I read the definition of a 1st time home buyer. As written in the plan --> A taxpayer is considered a first-time homebuyer if such individual had no ownership interest in a principal residence in the United States during the three-year period prior to the purchase of the home to which the credit applies.
I am dumbfounded.
We all know they bumped the credit to $8000 but what we didn't know is:
--for those who bought in 2008, the credit must be repaid.
--for those that buy in 2009, repayment is waived provided they stay in the home 3 yrs.
--the new & improved time period is now April 9, 2008 to December 1, 2009.
It's obviously focused on moving homes in '09 and is lopsided in that some buyers must repay and other buyers do not repay based upon the calendar year in which they bought the home.
I know some folks who are not going to be happy with this!
Well now, I see I've struck a cord in you. But, alas, you need to consider this:
Many Americans have 401K/Pension funds which allow them a fixed offering of funds which they can invest among. Many plans have 12 funds, ONE of which is a money market fund. Any working American which can then only move their money from ONE money market fund to one of the other eleven other (bond/stock/international) funds would, by design, be forced to use those alternatives. And YES, I am serious, but it is NOT by choice, but rather by design.
Anyone panicing about MM's who has their money in a closed offering plan has no other alternative. You act as if they have full power over their money and that they can move it at will. That is simply not so. It isn't that I think differently than you, it is that I see the roadblock most folks have in swiftly reacting (and even whether that reaction is prudent or not).
Personnally, I had a great deal in MM's in my profit sharing plan & had NO WHERE TO GO WITH IT ! Alternatives were Growth (Lg/Med/Sm Cap-- 3 funds), or Value (Lg/Med/SmCap-- 3 funds), Intl, Global, Bonds (Govt/Muni/Corp -- 3 funds). That's the eleven funds other than Wells Fargo MM Fund. If I chose to move it from MM funds for fear of my MM fund breaking the buck, I had NO PLACE TO GO but into stocks/bonds.
Most working Americans in plans have the exact same problem.
So, I DO NOT believe that "those who quickly remove their funds from money market funds when they fear for their safety are just as likely to purchase stocks as transfer the funds to an FDIC insured bank account", but rather that is their ONLY OTHER CHOICE. Maybe you can see that now?
And, if that is the choice they had to make (and actually made it), then M1 would not be as affected as it would be if that had the choice to move it into an FDIC account.
On your statements regarding M1, I agree.
So there you have it. I hope you read this rather than scan it. I've tried to make sure you understood.
And, if you read the previous linked document, you now know that the 787 billion will be used to leverage trillions. A great deal of money will be whirling.
Here's a from the treasury... trillions.... a little 7 pager that put's it in perspective:
http://www.financialstability.gov/docs/fact-sheet.pdf
Just thought you all might want to see how they come up with the 787 billion and over what time frame...
It's only 8 pages, but it's an eyeopener for pencil scratching..
http://cbo.gov/ftpdocs/99xx/doc9989/hr1conference.pdf
Actually, I don't think I've made myself clear.
Trading curbs are trading curbs. This would not do anything but cost 5 minutes to anyone. But that 5 minutes would help tremendously.
The subject is bringing down our country via an orchestrated electronic panic and what steps might be taken to discern whether it was an orchestrated effort, a temporary panic, or the beginning of a long, drawn out panic which would work its way globally.
Banks historically will allow designated business individuals to wire & transfer monies via the fed through desktop PC entry. I do it every day. However, if a transaction occurred from my PC which is abnormal, the bank will either call me or will call the President of the company prior to executing the transaction.
Simply put, rather than our Treasury being a victim of electronic transfer, possibly a call between the "humans" involved in the transfer would confirm the trades & let the Treasury know why it is happening. Armed with that knowledge (from the biggest pool of transactions, ie: over a billion), the Treasury could better ascertain what to do.
It would help decipher whether it was an orchestrated event, a short term panic, or a panic which would leach its way into other economies. It would be a start.
I don't believe that all money market withdrawals go to the banks & expand M1... that it is contained. Money market withdrawals can move offshore, into mutual funds, into stocks, etc. Banks are not necessarily the recipient of the volume although may be a beneficiary of a portion of the volume.
Regardless, national security is vulnerable if we can not distinguish between a true panic electronically and an orchestrated electronic event. Maybe we have something in place but it certainly doesn't look that way.
No, that isn't what I was thinking.
If there was a rule that was related to withdrawal ceilings, then maybe they could limit the electronic carnage. If 500 billion was redeemed within 1-2 hours, then maybe a rule stating that any redemption over 1 billion required "electronic submission with telephone confirmation". Max calls for that 1-2 hrs would have been 500 & the treasury could talk to live humans one-on-one. It would slow it down, and it would have given them insight as to what was occuring.
Just an idea
What really bothers me about that clip is the phrase "we were having an electronic run on the banks" followed by the narrative that stated that (had the electronic run continued) it would have brought down the US economy and then moved on to global economies.
Shouldn't there be a "halt" on an event like that much akin to a halt in trading? A breathing room time frame? I'm not sure that I would like to be told that I couldn't have my money but, then again, I'm ABSOLUTELY sure that (given all the pentagon funding as well as military funding) I would NOT like to have my country taken down electronically.
They will address this, no?
Ooooooops! Should have stayed HERE & got the answer! Thank you too!!!!
Thanks! I found the clip. It was Paul Kanjorsky (D) Penn talking w/ C-span.
The point (or story) is made beginning 25% into the video.
This is another topic but I wanted to bounce this off of you.
For the past two days, talk radio has played a clip of an interview. I have YET to catch the name of the speaker, but he was quite articulate.
The speaker said that on September 18, 2008 beginning at 11:00am, $550 BILLION dollars was drawn out of money market accounts over a period of two hours. The Fed's saw the draw & opened their window for $120 billion to forestall a panic. When they realized that they could not stop the flow and that further withdrawals would most probably happen, then it was announced that the Fed's would guarantee accounts up to $250,000 at banks and would also guarantee money markets in order to stop the "break the buck". Additionally, Paulson & Bush both pushed the 'urgency to act' on TV & politically.
Talk radio will not let this die as the probable cause may well extend beyond fear and into a 'concerted effort' because the probability of a vast number of depositors all deciding to withdraw a half trillion dollars in a two-hour timespan was off the charts. I believe they are focusing on the two-hour timeframe and the enormous effect it had on the financial system thereafter.
Have you heard anything about this?
If you had written that question in '98 to '00, a multitude of posters would have jumped on the question.
The question would have been "What price do you think dot.com's with negative net worth should sell for?" Obviously (then) they sold for hundred's of dollars per share, split, & ran up even more.
But banks with negative net worth can be salvaged as the business base is in tact that, given time & prudent business practices, can reverse the negative back into a positive provided the bad bets can be covered or unwound.
I believe there is an international agreement NOT to allow a bank with large systemic risk to fail. The Lehman fallout was immediately recognized as brutal & systemic.
That would lead anyone to review the TARP fund allocations & a clear picture of which banks are vital jumps out at the reviewer.
Anyone with long term holdings in those 'select' TARP banks should, over time, see price recovery. It doesn't really matter that it's right or wrong, or (gulp) how much it costs. It matters that they abide by the international agreement.
That's my read on it so far. Of course, I could be wrong, but it certainly appears that way.
".... unless Pres. Obama erects a fence to prevent them from leaving "
LOL !!!!
His biggest lie might be that he can succeed in fixing these problems to the benefit of taxpayers...
This a good time for you to read this clear explanation about ETF's & ETN's. I thought about you when I read it. It is you who trades DXO?
Here's the article (WELL worth the read):
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Why ETNs are Riskier Than They Look
by Ron Rowland (for Money & Markets)
Friday, February 6, 2009
... What you may not know is that there is a new investment that looks a lot like an ETF but is actually a whole different species. I'm talking about ETNs: exchange traded notes.
On the surface, ETNs share many of the characteristics of ETFs. You can buy and sell them on the stock exchange throughout the day, their performance closely mirrors an index, and they give you access to specialized market niches like commodities and currencies.
However, There is One Gigantic Difference ... An ETN Is Really a Bond!
That's why they're called "notes" rather than "funds." Yet it usually doesn't pay interest at a fixed rate, like say a Treasury bond would. Instead your "interest" is the return on a designated index.
Let's look at an example:
The iPath S&P GSCI Crude Oil ETN (OIL) is very popular right now. It's designed to track the return of a crude oil price index. This gives you a way to participate in the crude oil market without using more complicated and risky tools like futures.
When you buy the OIL ETN, are you actually buying oil? No, you're not. What you are buying is a promise from the issuer — British banking giant Barclays, the corporate parent of iPath — to pay you a return linked to the performance of the Goldman Sachs Crude Oil Return Index at some date in the future.
So with OIL you don't get any oil, directly or indirectly. All you get is a promise from Barclays Bank that you'll be repaid when the ETN matures, with no claim on any particular assets. You are now an unsecured creditor of Barclays.
This brings up another question: What guarantee do you have that Barclays Bank will be around to make good on its promise? Answer: none.
If Barclays should fail for any reason — even something completely unrelated to this particular ETN — the promise you bought could go up in smoke. You'll be just another creditor when the bankruptcy court divides up whatever is left of Barclays.
Now compare this to an ETF ...
In the U.S., ETFs are regulated under the Investment Company Act of 1940. They are chartered as separate corporations. The ETF's board of directors hires a manager to keep things going and you, as an investor, own shares of the corporation.
If the manager of an ETF goes bankrupt, what happens to the assets of the ETF? Nothing. There might be a temporary disruption while the board finds a new manager, but the underlying stocks, bonds or other instruments in the fund will be secure. Not so with an ETN.
Think it can't happen? It already has!
The now-defunct Lehman Brothers launched three ETNs in early 2008 under the "Opta" brand name. The ticker symbols were EOH, PPE and RAW. Look them up and you'll find they aren't around anymore.
When Lehman failed in September, owners of those three ETNs found themselves holding the short end of the stick. Now their money is tied up in one of the most complicated bankruptcy cases ever. It could be years before they get anything back, if ever.
There are other examples, too. Investors in a Bear Stearns-issued ETN narrowly escaped the same fate last year when that embattled company was taken over by JP Morgan Chase.
Even scarier, most of the major ETN issuers are not exactly as stable as the Rock of Gibraltar. Far from it. Going back to our Barclays example, BCS stock has been cut in half in just the last month.
Why? Analysts think Barclays is so shaky the U.K. government may have to nationalize it. The company has taken billions in write-downs on the same kind of toxic derivatives that are bringing down other large banks.
Just this week, Moody's Investor Services downgraded Barclays debt — which includes all the iPath ETNs — to Aa3 from Aa1. Traders reacted by demanding wider bid-ask spreads on iPath ETNs, which means investors owning those ETNs could take a shellacking.
I'm not just picking on Barclays here. All the banks that issue ETNs are having similar problems. Other top ETN issuers include ...
Deutsche Bank (DB)
Morgan Stanley (MS)
Goldman Sachs (GS)
Swedish Export Credit Corp (FUE)
HSBC Bank (HBC)
Would you loan your money to any of these companies? That's exactly what you are doing when you buy their ETNs! Yet most of them are so weak they've had to be bailed out by the government and/or the Federal Reserve in the last few months.
So ... Am I Saying You Should Always Avoid ETNs?
No. I believe that they can provide a way to trade in markets that are hard to access otherwise. What I'm saying is that you need to understand the risk you are taking before you buy.
Sadly, many investors have no idea that they are accepting this kind of credit risk when they buy an ETN. They think it is just a new kind of mutual fund. They don't know they can lose their money even if their market predictions are totally accurate.
What's even more infuriating is that the ETN issuers don't always go out of their way to let people know the difference between ETFs and ETNs. Barclays at least had the good sense to market their ETFs and ETNs under two different names: iShares = ETFs; iPath = ETNs.
Other companies leave it up to you to know what you're buying. You see "PowerShares" in the name and assume you are buying an ETF. Not so — some ETNs carry the PowerShares name.
Nor is it clear which bank is behind which ETN — sometimes it varies even within the same ETN family. So you have to dig through the prospectus to find out exactly who is getting your money.
Even Morningstar, the very pillar of unbiased fund data, lumps ETFs and ETNs into the same category in their database. Worse, they don't always include "ETN" in the fund names.
What Should You Do?
I suggest avoiding ETNs completely if there is a very similar ETF available. And if you do buy an ETN, make sure you aren't exposing too much of your portfolio to any one ETN sponsor — and keep an eye on the issuing companies.
Right now there are roughly 87 ETNs available to U.S. investors. I don't have enough space to list them all here, but I'm giving you a list below that shows some of the larger ones. Refer to this list — and know what you're buying.
(DJP) iPath DJ-AIG Commodity Index Total Return
(DXO) PowerShares DB Crude Oil Double Long
(INP) iPath MSCI India Index
(DGP) PowerShares DB Gold Double Long
(OIL) iPath S&P GSCI Crude Oil
(RJA) ELEMENTS Rogers Agriculture
(DRR) Market Vectors 2X Short Euro
(GSC) Goldman Sachs Connect S&P GSCI
(RJI) ELEMENTS Rogers Total Commodity
(COW) iPath DJ-AIG Livestock
There you go! Seeds within the problem exist to solve the problem: "... has advocated banks sell their most valuable assets in order to fund their misguided lending operations... "
My father (in Los Angeles area) says that employment agencies are sooooooo laden with applications that they have signs on the windows much like 'no vacancy' in that they state "no further applications'. There's nowhere for the unemployed to go! He further stated that the traffic going TO Mexico was greater than the traffic IN from Mexico-- that the lack of jobs has caused many illegal aliens to go back to Mexico. He then went on to say that LEGAL aliens are making the same move.
I never thought I would EVER hear something on that order. My guess is that Elroy could chime in on this subject....
Emmett, what is boggling is this statement:
Every problem has in it the seeds of its own solution. If you don't have any problems, you don't get any seeds.
Norman Vincent Peale
Set aside the "no problems" portion of that paragraph & focus on the first sentence.
If the banking problem has in it the seeds of its own solution, then what is the solution & what in the world is the seed?
I could go on & on... I could even list the destruction of the bad seeds that, by the nature of it all, reside right along side the 'good' seeds.
What a nightmare of thought that sentence has given me.
The rapidity of the the downturn is faster than the human emotions that usually accompany a slow moving recession. If 3.6 million jobs have been lost since the beginning of the recession (Q4'07), AND half of those losses are in the last three months, then nothing has hit home in the human conscience yet. Also, a continuous (month after month) of hard times is effectively just-now-starting in the millions of private homes affected by job losses.
Trust me, the disenchantment & bigtime worries will manifest this year.
These are expensive little (?) guys. We had 4 Euclids operating in an underground mine in the early '80's (limestone: mine was 122 acres, 147 feet below ground, floor to ceiling depth of 47 feet). We blasted daily @ 4:00pm. & the Euclids carried out the limestone on a semi-curved road & brought it to the crusher on the surface. Our tire bills were horrendous. We all looked "height challenged" when we stood next to the tires.
An engineer worked on the curves in the road & straigtened them out only fractional degrees. The result? We cut our tire bills 92%. Amazing, but the quantity of material these units move is incredible & the more curves in the route, the higher the cost of operation.
I wonder how much money (in weight) they would hold? Even more so--> how many tires would we use finding out???
We use dump trucks instead of wheelbarrows?
Not sure that I agree with that statement in its entirety.
To say "These guys want government to get out of the way when it was government getting out of the way that allowed this to happen in the first place" isn't a complete picture. It's part, but not all.
The government domestic, foreign, and monetary policies along with lax oversight & reliance on inept government advisors all provided, in some manner, a roadway for the bubbles, abuse, debt, lack of oversight, and problems we are faced with now. Free enterprise is going to take all the rope afforded it and, sometimes, stretches that rope (for good or bad). And, when free enterprise is in survival mode, it can clean house much better, and more efficiently, than any other mechanism. (IMHO)
Most of those guys, in all fairness, have brought the abuse to the attention of readers/listeners for years to no avail.
There is a business cycle which (arguably) has moved from 4 yrs to 3.6 years (but for how long, I don't know). The mere fact that bubbles occur mandates that they occur within some business cycle at some unknown time.
In the Fall of '07, Dan Denning (Australia) tossed out the idea that he wanted to advise his readers to move to cash and wondered what other published authors thought about that advice. Though most of the authors responded over a period of weeks, they all acknowledged that "cash" actually WAS a position, but that each author nixed the idea that it might be better than diversification or some other type of investment. These were long drawn out discussions. Denning participated in them as well.
Actually, Denning was about 2 months early, but his 'read' on what was coming was incredibly accurate. Out of the clear blue sky, and when the Dow was moving to its all time high, Denning braved the question of moving to cash at the shock & awe of all other investment advisors. I really have to hand it to him for braving the criticism (which proved unfounded) which sailed at him.
Nice rally! I can see why Nick is selling into it!
Dan Denning chimed in with his take on things. Thought you might like to read his thoughts today.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Whiskey & Gunpowder
By Dan Denning
February 6, 2009
Melbourne, Australia
The Real Causes of Depression
... Recessions are perfectly natural in the business cycle. Human beings take risks with borrowed money during a growth phase. Some risks pay off. Some don't. A recession is a reckoning up of the risks. The bad investments are liquidated, asset values readjust, and the next cycle begins.
You can only get a depression when the government and the monetary authorities take unusual steps -driven by political motives- to prevent the natural process of recession. This is why today's policy moves are setting us up for a Depression. And it's not the first time.
It's widely believed that the Great Depression had its origins in the slow response of the Fed to the banking collapse that followed the stock market crash. That failure, so the theory goes, was followed by too little fiscal innovation and government spending by then U.S. President Herbert Hoover.
But all of that claptrap is exactly wrong, we humbly suggest.
The Depression was a foregone conclusion the minute the business cycle was hijacked by manipulation of the credit cycle. A recession is natural. A Depression is always man-made.
That's right; the origin of the Depression is in the credit boom that preceded it. The credit boom of the 1920s made it inevitable that the natural rhythm of the business cycle would be amplified and made more severe. The boom was boomier. The bust was...worse than it had to be.
It was made worse by government policies that put America into debt, allocated capital in the most inefficient hands possible while crowding out business investment, and locked in wages and prices higher than they ought to have been, further delaying the vigorous rebound in employment and wages you usually get in a recovery.
To repeat, recessions are a natural and unavoidable part of the business cycle. Depressions are the bill you pay for trying to avoid recessions with even looser monetary policy and more government spending to stimulate consumption. What you need is a cleansing break. What you get is a money-induced fever of pointless economic activity, full of noisy cash registers, signifying nothing.
So here we are on a Friday, waiting for the Depression. How soon we get one depends, in some small part, on what Timothy Geithner comes up with next week and world stock markets receive it. Geithner unveils his plan to rescue America's banks and get the credit crisis behind us on Monday. It had better be a good plan.
What can you expect? Well, for one, we'd be really surprised if there wasn't a suspension-at least for a period-of mark-to-market accounting. This would prevent the banks from having to realise losses on securities they don't intend to sell, but are currently held on the books at values well below market value.
Another element will be buying "toxic" assets from the bank. At what price? You'll find out soon enough. It probably won't be fair value. But it won't be so far below fair value that it forces the banks to realize huge losses and require even larger infusions of taxpayer capital....
... And while the Austrian theory of the credit cycle is becoming vogue now for its successful prediction that a boom in credit leads to a later bust, a lot of Austrian theory is also focused on entrepreneurship and human action and wealth creation. If you spend some time in that part of the Austrian textbook, you might actually be encouraged about the future.
Why?
Entrepreneurs love recessions. Not only is it a chance for investors to buy assets at a discounted price, it's a time of reorganisation of economic life. People still have everyday wants and needs. And in a recession, there is much less competition. Most people are inclined to be conservative and take fewer risks with their capital.
This is why the entrepreneur is the hero of Joseph Schumpeter's capitalism. The capitalist provides surplus capital. But real business innovation and risk-taking comes from the entrepreneur. During a recession, he can form a long-lasting relationship with his customers. But what does that have to do with the current situation?
For the better part of one hundred years global trade has expanded, bringing more and more people into the world trade system. We suspect now that it must contract and eventually reorganise itself into smaller, more scalable systems. These smaller systems will produce and use energy more efficiently because they have to....
..... There is only one way through a time like this. You have to have a plan. You have to use your own brain. And you have to have some idea of what's coming so you can put yourself in a position to avoid the calamity and profit from the opportunity.
All easier said than done. But what else are you going to do? Wait for your government check? More on "The Plan" next week.
And in the meantime, keep an eye on the efforts of the people who have the most at stake in the current system -the banksters and the Feds- to keep it alive. We reckon there is only one logical way for them to go, and we'll tell you about it next week too.
Regards,
Dan Denning
www.dailyreckoning.com.au
Well Hark & Hail Mary!!! We both narrowed our agreement to exact same issue (see my post 45666)!!
No, I don't follow their advice with investments. But Faber is right on the risk to be borne by shareholders & bondholders. Glad we agree!
We are on the heels of the infamous Sucker Rally? The rally that, when over, causes the most downside action?
Or, just a mini rally with countertrend labels?
Did you listen to Faber (post 45614) this morning?
I don't have any respect for the 'let it break' Schiff solution but I DO have some respect for Faber's "guarantee the deposits & push the risky assets onto the preferred/bond/common risk takers".
I will think more on this throughout the week, but so far I think it is a fair solution to toss around. At first glance, I like it. I'm waiting for my second glance opinion (and it always comes... ).
And I'll stand by what I said: I enjoy candid conversation that is NOT filled with politically correct jargon (it doesn't matter if I agree with them, it matters that they are 'candid'). I guess even a talking head can be candid but I've not seen too many of them.
By the way, I'm only being 'nice' because Nick makes us be nice. If he weren't such a tyrant, then I'd let 'er rip.
LOL !!! "Nick the Tyrant" !! LOL! That'll be the day!
Peter is a massive bundle of common sense that interviewers tap into but find that they have a hard time absorbing his point-blank, non-sugar coated conclusions. I truly enjoy listening to him because he is devoid of politically correct conversation.
It's odd that this morning we have Faber and Schiff giving candid views that nail problems while, at the same time, we have Bill Gross (quite protective of his bondholders) suggesting with vague rhetoric that the government inject trillions (rather than billions) at the problem. Gross wants ZERO pain, an extension of la-la-land zero-risk to investors, and even winced at a possible "mini D" (depression) in our future.
If debt is mortgaging our future for the pleasures of today, then if the government incurs even MORE debt to increase the pleasures of today, then who gets the displeasure when all this is due??? What a horrible debt burden to saddle on our younger generations who, by all manner of observation, don't deserve a lifetime of payment to cover the loss & rampant gambling of 1990-2009 banker/investment firms. Nor do they deserve to fund bonus payments for bad executives.
Again, JMHO
I agree with Faber on this. Listen to this mornings' interview... he got it right....
And, if you have to cut & paste the link, I think it is WELL worth the listen...
http://www.bloomberg.com/avp/avp.htm?N=av&T=Faber%20Says%20U.S.%20Stimulus%20May%20Lead%20to%20%60Dire%20Consequences'&clipSRC=mms://media2.bloomberg.com/cache/vJxYIrQzGc8Q.asf
"... boggling sums of the RTC bailout..."
Here it is from my previous post. Keep in mind that we are STILL financing this RTC cost until year 2035:
"...Between 1989 and mid-1995, RTC closed or otherwise resolved 747 thrifts with total assets of $394 billion. The COST to the taxpayer was $130 billion. (The cost of $130 billion to dispose of $394 billion in assets ended up 33% of total assets handled). The $130 billion was financed by the US over a 40 year period. INCLUDING 40 YEARS of INTEREST, that brings the grand total to the taxpayer to $500 billion ... to uhmmmmmmmm... dispose of $394 billion...."
A bad case of the Big Head? That is a polar opposite of what this nation needs right now. Best to move aside & listen to a more experienced voice. No matter what plan they come up with, the voice of experience would lend great credibility to nailing down what the free market will DO with the proposed solution. What works in theory does not always work in practice.
Summers needs to deflate some ego. That's all it could possibly boil down to.
LOL!! This is r-e-a-l-l-y a keeper! Good goin', Nick!
Court, you should wrap yourself up in a comfortable chair and read "The Forgotten Man". It is Schloes (sp) indepth look at the Great Depression (politics/self interests/theory/policy/ the public. I am nearly halfway through it and it is very, very enlightening and mirrors many of the conditions, people, policies, and headlines of today. It is as if I am reading current news.
It is apparent from the book and from the reality of 'today' that the biggest problem is the velocity in business decisions and actions. Washington has 'talked the talk' since the initial bailout gunk of November & is trying to find a solution. Meanwhile, business is MAKING their necessary moves & severing workers, closing businesses, foreclosing on homes, and solving the problems (for their own survival) of their companys. The velocity of those 'moves' is enormously different than the 'planned' solution. Just look at how much different the employment landscape, the projected earnings, the housing debacle, & everything else is AS COMPARED to last November. Just a few short months of business survival mode has changed the entire playing field. And, yet, the same political solution is on the table. Not good.
I truly recommend this book. You will love it.
Oooooooops. Too soon. Agreed.
I'm a little confused here, Richard. If a TARP recipient has lost 12 billion & pays out 4 billion in bonus money to "retain their best", their argument is d-e-a-d in the water. Those folks just lost them billions... and they will be rewarded for that? And... they are considered valuable???
I can find alot of (sic) valuable people who will lose a great deal of money for our company and I should pay them horrendous bonus money to keep being so (sic) valuable???
It's not the 'argument' about bonus money, it's the PEOPLE who they are giving it to & the LOSS those people caused.
JMHO
Emmett (oh, we DO love a r-e-a-l name)...
The "top-dog" jeweler in Lexington has just started buying anything gold (new/used/broken). This is a real sign that he intends to profit because he is one of the few jewelers who attends the big diamond "invitation only" offerings in Austria (or is it Switzerland? Who knows). He caters to upper class clientele-- horse farm owners, old money, etc-- and buying gold from the general public is not something I would ever expect him to do. Alot like Tiffany's buying gold.
But he is an entrepreneur & he only does things which yield him profit. A sign of a big uptrend? I don't know, but I certainly hope so!
Not meaning to combine two separate subjects, but this article jumped at me. Yesterday, Obama said that the stimulus package must be passed or "castastophic" result will be forthcoming. I wonder if the author of this article has provided the basis of that statement... here's a clip from the article:
"Sprott believes there is a chance that a U.S. Treasury auction will fail as countries use their resources to quell financial turmoil in their home markets, leaving less to help finance the world’s largest economy. That outcome will have a “catastrophic” impact, he said. "
Hey guy... remember that we bought a generator that used to power a University of Kentucky mobile kitchen unit back in the late '90's? That generator is a Kohler... it's huge... but we never hooked it to the house. This summer, it WILL be hooked up! Gotta test it first since it's been idle so long, but we'll get ourselves up-to-snuff with the NH crowd! Thank goodness!
The power is out again... this morning it was -3 degrees... but we have a 8000 watt generator on the lights & Buck Stove fan. I hope this is over soon because I have a baaaad case of cold TOES! It is heaven to get to work... lots of electricity here!