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Thread: Why Not to Trust the Bailout

  1. #41
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    [QUOTE=E4orBust;2772141]there are certainly parts of the country that are in better shape than others. the problem is the volume of MBS that's being created is way down, and the investors buying MBS is where the money for your mortgage comes from. i live/work in NYC (for a distressed bond/bank loan hedge fund) and while the housing data right now may not be negative right now, it will be soon... it takes time for current events to effect the housing market, but it will happen... from the corporate side, it's becoming rediculously expensive for companies to raise money, and they simply won't be able to afford it... defaults will rise and so will unemployment...

    i just read a few posts that were mis-informed, so i had to say something..

    [B]for example, the taxpayers are very likely to make money on this deal.[/B] the fed will be buying mbs/cmbs/rmbs at well below face value... future recoveries on these securities would have to be zero for the tax payer to lose money... if the bailout has the desired effect and supports the housing market, recoveries will be higher than that, and potentially higher than the price paid...

    i usually don't rant (or post at all), but just had to vent... i will resume simply observing...[/QUOTE]

    :clapper:

    These people don't get it, dude. They are financially misinformed and purely biased. We're talking about a facilitated sale of distressed assets to the Treasury and an increase in liquidity....and some of these morons are talking about Iraq and Karl Rove. Blind idiots.
    Last edited by jetstream23; 09-25-2008 at 01:18 PM.

  2. #42
    [QUOTE=SanAntonio_JetFan;2771964]Actually, we are a country of whiners. We have become a country of entitlements. We are entitled to a home we can't afford. We are entitled to health care and college education. When natural disasters occur, we expect the govt to come in, rescue us, and give us gas cards. Instead of actually creating things of value, we have people creating start-ups to get rich quick. We have teenagers that think working at a fast-food joint is "beneath them". We are still wealthier than we've ever been. A cell phone, a somewhat exotic technology only 15-20 years ago, is something almost every KID has today.[/QUOTE]

    Nailed it right on the head. Nice post.

  3. #43
    [QUOTE=jetstream23;2772159]:clapper:

    These people don't get it, dude. They are financially misinformed and purely biased. We're talking about facilitated sale of distressed assets to the Treasury and an increase in liquidity....and some of these morons are talking about Iraq and Karl Rove. Blind idiots.[/QUOTE]

    yes, it was the comparison to Iraq and Rove that made me particularly puzzled.

    somehow i'm not seeing the connection from Paulson/Bernanke to Rove/Iraq.

    The taxpayer/Fed makes loans every day through the discount window and other mechanisms. they take collateral from the borrowers (recently, this collateteral has been decreasing in credit quality), so the fed's recover on those loans are only as good as the collateral underlying them. this "bailout" is more or less the Fed helping to reduce the bloated and completely illiquid portions of Wall Street's balance sheet and increasing the Fed's balance sheet. To put it another way, the Fed has been "bailing out" the system for longer than any of us have been alive... It's the source of liquidity that keeps the system rolling... heck, the Fed is probably getting a great deal. this paper could be worth well more than they're going to pay.

  4. #44
    [QUOTE=jetswin;2772091]
    You have to let your hatred over the Iraq War subside and realize that this is indeed no joke. [/QUOTE]

    if it were just Iraq i could probably do that

    you and both know he's failed alot more than just Iraq

  5. #45
    E and Jetsteam...

    The connection to Iraq (I made it) was the way in which the bailout plan was being sold to the American public. I said:

    "It's being sold in the same manner that the Iraq war was sold - We are in grave danger... there's no time to think about or discuss this because the alternative is too frightening... if we wait for proof, the smoking gun could come in the form of a mushroom cloud."

    I'm not comparing this economic crisis to the war on terror. I'm comparing the salesmanship of the proposed tactics to deal with them. They are similar. Don't you agree?

  6. #46
    [QUOTE=jetswin;2772151]much better explanation than I offered, I was trying to say the same thing :cool:[/QUOTE]

    you got it buddy, i couldn't let you fight the fight alone...

  7. #47
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    [QUOTE=dcJet;2772205]E and Jetsteam...

    The connection to Iraq (I made it) was the way in which the bailout plan was being sold to the American public. I said:

    "It's being sold in the same manner that the Iraq war was sold - We are in grave danger... there's no time to think about or discuss this because the alternative is too frightening... if we wait for proof, the smoking gun could come in the form of a mushroom cloud."

    I'm not comparing this economic crisis to the war on terror. I'm comparing the salesmanship of the proposed tactics to deal with them. They are similar. Don't you agree?[/QUOTE]

    Actually, I wasn't even referring to you. I was referring to Vincenzo.

    [QUOTE=VincenzoTestaverde;2771915][B]The current bailout proposal is merely just another in a long line of Karl Rove's political manuevers to try to turn a catastrophic f*ck up by the republicans into a political gain by attempting to turn the tables.[/B] Now, if the bailout is put through McSame can say "be patient", if the bailout isn't put through McSame can argue "I have the solution and the democrats won't let me put it through."

    [B]The bailout will ultimately fail horribly just like pretty much everything else the current republican regime has done.[/B] The only important thing is that it will help [B]McBush[/B] get elected and then 2-3 years from now when we're in another recession they can have a couple orange alerts or gay marriage bills or [B]Bush can get his family friend Osama Bin Laden [/B]to produce another video to try to scare the American public and [B]McSh*tbag's [/B]approval ratings will go back up.

    After the past 8 years with the disaster in Iraq and the current economic crisis I no longer trust anything the republicans propose. It stinks, it's no good, it's trash.[/QUOTE]

    Can you believe someone like that might actually have the right to vote?
    Last edited by jetstream23; 09-25-2008 at 01:40 PM.

  8. #48
    E...

    I'm not in finance as you are so I concede that you know more about this than I do. I understand that you feel that this is a good investment for the government and that it stands to earn money fom it. That is reassuring. I hope you are right.

    I'm still not in favor of government intervention in our markets. You stated that "defaults will rise and so will unemployment" if we do not do the bailout.

    What specifically do you foresee? How much do you think the unemployment rate go up? This is an incredible amount of money we're talking about. Is the pain we are about to experience worth this cost? Why not just take the pain?

  9. #49
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    [QUOTE=dcJet;2772205]E and Jetsteam...

    The connection to Iraq (I made it) was the way in which the bailout plan was being sold to the American public. I said:

    "It's being sold in the same manner that the Iraq war was sold - We are in grave danger... there's no time to think about or discuss this because the alternative is too frightening... if we wait for proof, the smoking gun could come in the form of a mushroom cloud."

    I'm not comparing this economic crisis to the war on terror. I'm comparing the salesmanship of the proposed tactics to deal with them. They are similar. Don't you agree?[/QUOTE]

    OK, I see what you are saying, however this set of circumstances is something that we can actually see...WMD's that was another story.

    spreads on certain trades (treasuries) are in unchartered waters

  10. #50
    [QUOTE=jetstream23;2772210]Actually, I wasn't even referring to you. I was referring to Vincenzo.



    Can you believe someone like that might actually have the right to vote?[/QUOTE]

    sure it may seem rushed, but in under a month, FNM, FRE, and AIG nearly collapsed, Lehman did collapse, and the stock market was down almost 1000 points in 3 days... the fear out there is unreal. i see it all day long. if this went on or goes on much longer (a week or 2) without a meaningful govt intervention, there is a real possibility that the financial system ceases to exist as we know it... i know we've had tough times before, like the deep recession in the late 70s, but the system is infinitely more complex and global today. we wouldn't be able to predict the outcome, and that's a chance we can't/shouldn't take...

  11. #51
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    [QUOTE=E4orBust;2772222]sure it may seem rushed, but in under a month, FNM, FRE, and AIG nearly collapsed, Lehman did collapse, and the stock market was down almost 1000 points in 3 days... the fear out there is unreal. i see it all day long. if this went on or goes on much longer (a week or 2) without a meaningful govt intervention, there is a real possibility that the financial system ceases to exist as we know it... i know we've had tough times before, like the deep recession in the late 70s, but the system is infinitely more complex and global today. we wouldn't be able to predict the outcome, and that's a chance we can't/shouldn't take...[/QUOTE]

    But...but...Iraq. McBush. Why are we giving money to rich Wall Street guys? :rolleyes:

  12. #52
    [QUOTE=dcJet;2772213]E...

    I'm not in finance as you are so I concede that you know more about this than I do. I understand that you feel that this is a good investment for the government and that it stands to earn money fom it. That is reassuring. I hope you are right.

    I'm still not in favor of government intervention in our markets. You stated that "defaults will rise and so will unemployment" if we do not do the bailout.

    What specifically do you foresee? How much do you think the unemployment rate go up? This is an incredible amount of money we're talking about. Is the pain we are about to experience worth this cost? Why not just take the pain?[/QUOTE]

    the simple answer is nobody knows how bad it could get. i agree, it's incredibly socialistic. S&P (certainly not unsubect to criticism, granted) came out a half hour ago and predicted a 23% default rate among high yield bond issuers. that's huge. those companies won't all liquidate and cease to exist, they will need to restructure their capital structures, but it will not be good for all involved...

    I can't predict an unemployment rate. and without getting into a very possible doomsday scenario (i sit next to a fellow Jets fan who could have you peeing yourself out of fear with his rants), it could be very bad... we will both be available to discuss further, but since our normal tailgate (E4) is somewhere under Xanadu, we've been generally near 16D... and since i've matured a bit since college, though only slightly, i will be sans face paint...

  13. #53
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    Where are the BO is a socialist POS guys?

    oh they support Bush's takeover of private companies, gotcha....

  14. #54
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    [QUOTE=Mean Bro Green;2772240]Where are the BO is a socialist POS guys?

    oh they support Bush's takeover of private companies, gotcha....[/QUOTE]

    Nope. This is just the lesser of two evils.

    Do you want a small kitchen fire in your house or for the whole house to burn down? Both suck. One sucks less.

  15. #55
    Am I getting this right?

    Banks and mortgage companies resell the mortgages to Wall St banks who in turn bundle them up and sell them as securities/bonds. These bonds are then sold to insurance companies or some type of investors.

    If this is right, who along the way didn't figure out the actual value of the securities they were purchasing. Were the buyers lied to about the value of what they were buying or was an honest assessment given and the investors gambled on making a profit?

  16. #56
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    [QUOTE=jetstream23;2772255]Nope. This is just the lesser of two evils.

    Do you want a small kitchen fire in your house or for the whole house to burn down? Both suck. One sucks less.[/QUOTE]

    This is not a small kitchen fire. It's socialism.

    Some action is necessary. Sure. But the specific absence of oversight and accountability in the bailout plan is incredible. It's sheer arrogance and an insult to taxpayers. Warfish is right. Heads need to roll here. What do you think would happen if the proposal was put this way...in return for a bailout the senior execs at each bailed out firm must resign their positions and surrender all holdings in the company. Think they'd agree to that?

  17. #57
    [QUOTE=chicadeel;2772265]Am I getting this right?

    Banks and mortgage companies resell the mortgages to Wall St banks who in turn bundle them up and sell them as securities/bonds. These bonds are then sold to insurance companies or some type of investors.

    If this is right, who along the way didn't figure out the actual value of the securities they were purchasing. Were the buyers lied to about the value of what they were buying or was an honest assessment given and the investors gambled on making a profit?[/QUOTE]

    In a way the were lied to. The Subprime mortages where insured and bundled with good mortages. Since they were insured they were bundled with good mortages and all went out as triple A rated.

  18. #58
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    [QUOTE=chicadeel;2772265]Am I getting this right?

    Banks and mortgage companies resell the mortgages to Wall St banks who in turn bundle them up and sell them as securities/bonds. These bonds are then sold to insurance companies or some type of investors.

    If this is right, who along the way didn't figure out the actual value of the securities they were purchasing. Were the buyers lied to about the value of what they were buying or was an honest assessment given and the investors gambled on making a profit?[/QUOTE]

    They're packaged with other loans in some cases and assigned a rating (ratings cos another problem) where the trouble lies is they mixed up the crap loans with good loans. For the most part MBS were assigned a very high rating being they are backed by Fannies and Freddie (:rolleyes:). It's been years since I was involved with mortgages so I assume this to still be true.

    The original mortgages get split up so many times they are spread all over the place to different banks, funds, pension funds, derivative products, etc.

    Believe it or not every investment is a gamble, however after the io/po mess years ago in mortgages I'm surprised this was allowed to get so out of control.

  19. #59
    [QUOTE=Mean Bro Green;2772240]Where are the BO is a socialist POS guys?

    oh they support Bush's takeover of private companies, gotcha....[/QUOTE]

    700+ billion so that wall st can recover without being hurt, that's smart use of money.

    but 40 million so that poor kids in the ghetto can have health insurance, that's dirty filthy communism

    it's a very fine line - basically right wingers only support welfare for the rich. the poor can go to hell.

  20. #60
    [QUOTE=bitonti;2772321]700+ billion so that wall st can recover without being hurt, that's smart use of money.

    but 40 million so that poor kids in the ghetto can have health insurance, that's dirty filthy communism

    it's a very fine line - basically right wingers only support welfare for the rich. the poor can go to hell.[/QUOTE]throw that money towards the banks.they will have a better handle on the actual value of this debt than the fed will.

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