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  • bailing out wall Street

    In times of high stress, many in the financial world seek solace in watery metaphors. We hear of vast irresistible forces converging in "perfect storms" and unforeseeable events contributing to "100-year floods."

    How could we have expected, let alone prevented, this?

    Count on Warren E. Buffett to cut to the truth. Years ago, referring to reckless corporate debt, Buffett noted (or so the story goes): "You never know who is swimming naked until the tide goes out."

    The tide's moving, and we're starting to get the full, not-so-pretty view. Along with the bare swimmers emerging from the soggy murk, we're being reminded of some of the dumb ideas and reckless choices that helped deliver us to our current debacle. As stunning as the scene seems, we've actually had plenty of experience with this sort of thing. But like some stubborn residents of hurricane zones, we swiftly choose to forget the last tempest and reassure ourselves that things will be different from now on. Why don't we learn the obvious lesson to the contrary? Answers: the timeless power of hubris during periods when profits seem easy, and a set of foolish financial notions that have become prevalent over the past three decades.

    One of those beliefs is the indiscriminate anti-regulatory ideology one hears preached on Wall Street with tent-revival fervor. What makes this thinking so perplexing is that many of the free-market true believers also assume the federal government will save them if they flop. Consider the extraordinary taxpayer-backed rescues of insurance titan American International Group, housing financiers Fannie Mae and Freddie Mac, and, before those, the Treasury-guided merger of Bear Stearns into JPMorgan Chase. It brings to mind the homeowner who rants about getting Washington off his back but wants federally guaranteed flood insurance no matter how close to the Gulf Coast he builds his house.

    Other by-now-familiar attitudes have helped put us in the drink: In good times, there's no such thing as too much leverage. (Remember Michael Milken?) Derivatives don't require oversight, even though almost no one understands them. (How now, Long-Term Capital Management?) And, don't worry, the quantitative geniuses have devised models to eliminate extreme risk. (Enron, anyone?)

    http://www.msnbc.msn.com/id/26793500/

    the other one....

    http://www.businessweek.com/the_thre...paign_id=msnbc
    ‘Some cause happiness wherever they go; others, whenever they go.’
    Oscar Wilde

  • #2
    Sorry guys, but I think this is one HUGE mistake. I don't agree with it and I think tht (A) we should have voted on it, and (B) WS and other BIG companies are too dependent for the Government to help after they have screwed everything to all end. (read FUBAR)

    I think we really screwed beyond belief with this.
    ‘Some cause happiness wherever they go; others, whenever they go.’
    Oscar Wilde

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    • #3
      Bailing out everyone

      Unfortunately, the average person is too dependent on financial companies to allow the industry to fail. Pension funds and 401-K plans are all invested heavily in the stock market. We are unlikely to achieve maximum value from depressed assets by allowing everything to tank at once.

      This debacle shows that we have to have regulation of finance. Because we have corporations and bankruptcy, there is always an incentive to take excessive risk. You should not be allowed to risk $1 million when you have only $500,000.

      Although full disclosure sounds good in theory, it doesn't exist. And the average person (and even very smart ones with time on their hands) does not have enough information to invest wisely and to take timely action in a rapidly-changing market.
      Facts do not cease to exist because they are ignored. -- Aldous Huxley
      Two things are infinite: the universe and human stupidity. -- Albert Einstein

      Comment


      • #4
        This mess can be laid pretty much at the feat of the man whose administration started pressuring lenders to make risky loans largely on just a signature, no money down, in an attempt to get more people into their own homes instead of renting .... even if they couldn't afford to keep them.

        It was not a free market system that led to this debacle, it was unwarranted and ill concieved government meddling that brought this upon us. It was Bill's own doing and it's just something else that will taint his "legacy".

        Between Jimmy and Bill, it's a miracle that we made out as well as we did in the later part of the 20th century. History will judge them harshly I think.
        "That's right man, we've got mills here that'll blow that heap of your's right off the road."

        "Beautiful Daughter of the Stars."(it's my home now)

        >>>>> A Time for Choosing <<<<<

        Retired @ 31yr 2mo as of 0000 hrs. 01-01-10. Yeah, all in all, it was good.

        Comment


        • #5
          Originally posted by t150vsuptpr View Post
          This mess can be laid pretty much at the feat of the man whose administration started pressuring lenders to make risky loans largely on just a signature, no money down, in an attempt to get more people into their own homes instead of renting .... even if they couldn't afford to keep them.

          It was not a free market system that led to this debacle, it was unwarranted and ill concieved government meddling that brought this upon us. It was Bill's own doing and it's just something else that will taint his "legacy".

          Between Jimmy and Bill, it's a miracle that we made out as well as we did in the later part of the 20th century. History will judge them harshly I think.
          Certainly, making risky (actually, ridiculous) loans was a large part of this. But the vast majority of those loans were made during the Bush administration. There also was no government policy encouraging people who could not afford it to take out second mortgages, or to allow appraisers to inflate values. And if people had understood what they were buying in those mortgage pools, they would not have bought the mortgages and the loans would have stopped.

          Both the Democrats and the Republicans are to blame. Regardless of who is to blame, however, we cannot afford to allow the house of cards to collapse suddenly. We will realize more through an orderly sale of assets.
          Last edited by DAL; 09-19-2008, 11:16 PM.
          Facts do not cease to exist because they are ignored. -- Aldous Huxley
          Two things are infinite: the universe and human stupidity. -- Albert Einstein

          Comment


          • #6
            My husband and I are lucky. Sometime 3 years ago, both gainfully employed, looked into buying a house. Started the loan process when he was laid off. I thank god that we didn't get into a loan contract. Things financially went pretty downhill from there.
            "Oh, you hate your job? Why didn't you say so? There's a support group
            for that. It's called EVERYBODY, and they meet at the bar." --Drew Carey

            Comment


            • #7
              Tinga, I'm glad for you also. Most peple want to jump head first into the house, and think of all the wonderful things, but forget how expensive it really is. they forget that every year there are taxes, the problems that pop up are your responsibility and best of all your HOA due and the maintained of the lawn.

              I started looking into it very seriously when a house I have loved from the outside went up. Then it was lease or buy. I had JUST gotten new carpet and renewed my lease for a year. guess what? Someone is now leasing it, said how wonderful it is but as we talked, she had half a tree down and she was working with the owner to help clean up. (that little rain storm we had named Ike)

              theres a lot of $$$ into a house. And yes theres alot of unknowns in the market place too. I told the person doing my 401 stuff to do what my dad did (who did really good)
              buy everyday stock. J&J, Proctorial and gamble, and things like that. everyone has to do house work, brush teeth and have lotions....so why no do the right thing.
              let me make a call.....
              ‘Some cause happiness wherever they go; others, whenever they go.’
              Oscar Wilde

              Comment

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