Go economy!

[knucklesplitter]

'Juice would say, "NSFW!!11!"

http://www.buymyshitpile.com/

" What happens on Main Street affects Wall Street.

With our economy in crisis, the US Government is scrambling to rescue our banks by purchasing their "distressed assets", i.e., assets that no one else wants to buy from them. We figured that instead of protesting this plan, we'd give regular Americans the same opportunity to sell their bad assets to the government. We need your help and you need the Government's help! "

[100_Percent_Juice]

Originally Posted by knucklesplitter

'Juice would say, "NSFW!!11!"

Why would I be the one to say NSFW?

[knucklesplitter]

Originally Posted by 100_Percent_Juice

Why would I be the one to say NSFW?

Because you are the only person to call me on that... ever. 1 time. I had to look it up on teh google at the time.

[knucklesplitter]

Interestingly simple math...

http://www.dailykos.com/storyonly/20...082/411/609799

" Now the real question: how many of those loans are in trouble?

Foreclosures were up a steep 79% in 2007, reaching just over 1% of mortgages. The numbers are up again so far in 2008 (though not as steeply). We could top 2% in default this year or next. There are some expectations that foreclosures could triple from today's historically high levels, meaning ultimately 3% of mortgages could be in trouble.

And that's where we get that math problem. 1% of all mortgages -- the amount now in default -- comes out to $111 billion. Triple that, and you've got $333 billion. Let's round that up to $350 billion. So even if we reach the point where three percent of all mortgages are in foreclosure, the total dollars to flat out buy all those mortgages would be half of what the Bush-Paulson-McCain plan calls for.

Then we need to factor in that a purchased mortgage isn't worth zero. After all, these documents come with property attached. Even with home prices falling and some of the homes lying around unsold, it's safe to assume that some portion of these values could be recovered. In the S&L crisis, about 70% of asset value was recovered, but let's say we don't do that well. Let's say we hit 50%. Then the real outlay for taxpayers would be around $175 billion.

Which, frankly, is a number that Wall Street should be able to handle without our help. After all, the top firms on Wall Steet payed out $120 billion in bonuses alone between 2000 and 2006. If they've got that kind of mad money, why do they need us to step in now? And why do they need twice as much as all the mortgages that are even likely to implode? "

[sperry]

Originally Posted by knucklesplitter

Interestingly simple math...

http://www.dailykos.com/storyonly/20...082/411/609799

" Now the real question: how many of those loans are in trouble?

Foreclosures were up a steep 79% in 2007, reaching just over 1% of mortgages. The numbers are up again so far in 2008 (though not as steeply). We could top 2% in default this year or next. There are some expectations that foreclosures could triple from today's historically high levels, meaning ultimately 3% of mortgages could be in trouble.

And that's where we get that math problem. 1% of all mortgages -- the amount now in default -- comes out to $111 billion. Triple that, and you've got $333 billion. Let's round that up to $350 billion. So even if we reach the point where three percent of all mortgages are in foreclosure, the total dollars to flat out buy all those mortgages would be half of what the Bush-Paulson-McCain plan calls for.

Then we need to factor in that a purchased mortgage isn't worth zero. After all, these documents come with property attached. Even with home prices falling and some of the homes lying around unsold, it's safe to assume that some portion of these values could be recovered. In the S&L crisis, about 70% of asset value was recovered, but let's say we don't do that well. Let's say we hit 50%. Then the real outlay for taxpayers would be around $175 billion.

Which, frankly, is a number that Wall Street should be able to handle without our help. After all, the top firms on Wall Steet payed out $120 billion in bonuses alone between 2000 and 2006. If they've got that kind of mad money, why do they need us to step in now? And why do they need twice as much as all the mortgages that are even likely to implode? "

...astonishing.

Forwarded on to the NASIOC bailout thread: http://forums.nasioc.com/forums/show....php?t=1605042

[knucklesplitter]

I've been discussing this with my friend Joe. This is his somewhat leftist (but informed) response to that article:

" That calculation might work for buying mortgages, but the "purpose" (at least the stated one) of the bailout is to get capital flows working again so businesses can finance their operations, inventories, etc. Mortgages and the derivative securities were the driver for a lot of that, and the multiplier effect might put the total dollar amount much higher than $700 billion. The problem is that I'm not sure buying these troubled assets will get capital flowing again.

Mortgages and real estate were the driver for that capital, and even if the government buys up the bad assets, the economy needs another source of capital flows...with a corresponding promise of return on investment...to get things going again. That's where distribution of wealth comes in. When wealth is concentrated in a few hands, those hands can demand a much higher rate of return than if the wealth were spread over many hands. And with the low rates of return available these days, a lot of that capital won't move out of the risk-free instruments it's currently in without massive stimulus. A massive redistribution of that wealth among many more hands, impossible as it may seem, would do a lot more to get capital moving and would spread risk across more sectors...but that's just plain Unamerican "

He's prolly right that it is not that simple, but still it puts it into perspective.

[sperry]

Someone is proposing just taking that bailout money and making a tax rebate out of it. For example, the AIG bailout would put something like $270,000 into the hands of every adult American after taxes. Talk about redistribution of wealth!

[van]

Originally Posted by sperry

Someone is proposing just taking that bailout money and making a tax rebate out of it. For example, the AIG bailout would put something like $270,000 into the hands of every adult American after taxes. Talk about redistribution of wealth!

Damn!

[sperry]

Originally Posted by van

Damn!

Actually, it's really more like $270 each, due to the author of the plan not realize that in the US "1 billion" is 1,000 million; whereas in Europe "1 billion" is "1 million million".

[Dean]

The thing that needs fixing is the credit markets, not the banks. The banks have already and if this goes through will continue to take huge losses as they sell mortgages at pennies on the dollar.

The reason the credit market can't save itself is actually an accounting issue, not an actual money issue. Companies are forced to mark all their outstanding loans to a ridiculously low price due to the broken credit markets.

Lack of appropriate regulation, reporting and oversight on many levels is how we got here really.

And this is not a $700 billion expenditure!!! It is an asset exchange with up to that value. It is highly likely that the government will make money on this "rescue" because they can modify terms and hold these loans to maturity or resell them without marking to market!!!

If foreclosures are only at 5% and you can buy these loans at $.60/$1.00, you end up making a bundle... Is there risk, yes, but not much really.

[sti deede]

The bill was defeated. http://news.yahoo.com/s/ap/financial_meltdown
Phew.

[Dean]

Originally Posted by sti deede

The bill was defeated. http://news.yahoo.com/s/ap/financial_meltdown
Phew.

Hope the company you work for can continue to pay you now that it has failed...

[sperry]

Originally Posted by Dean

Hope the company you work for can continue to pay you now that it has failed...

Yeah the failure of the bailout isn't exactly great news. Kinda like finding out you're about to get run over by a Hummer instead of a Bus.

[100_Percent_Juice]

Umm. The new season of the office started...

[sti deede]

Originally Posted by Dean

Hope the company you work for can continue to pay you now that it has failed...

I don't see how more debt is going to fix the situation, and as for my company, we'll see what happens, so far we've been doing pretty good. We don't do residential or small commercial projects, which right now are taking the bigger hit. However, I did do private drafting for both of those fields and haven't gotten a single project yet this year, but that's just supplemental income

The biggest issue that we are seeing is the decline of neighborhood growth. The schools we are designing and getting permitted are being filed on the shelf for construction in the next 3-4 years when the market starts to turn around again. Fortunately with still get paid for for the work completed. Unfortunately, it's going to cost event more when the schools are finally build.

Healthcare construction demand is way up, and old people keep getting older and they are dying fast enough. Demand is going to increase significantly as baby boomers starting to reach retirement and old age set in on them.

We are currently expanding to 2 other marketing areas, higher education and government projects. The company is spending a lot of time and energy making sure that we don't have our eggs in to few baskets. We have many offices to support and they share work to even the work flow.

I've also been working myself into some strategic positions to make sure I'm not the first to go. I'm our office sustainable advocate, which is a major role in the corporate plan to conduct business and design sustainably. I'm also the cad person (god save us all) and the self proclaimed planner of all things fun. I'm not saying I'm free and clear, but so far things in my area of the work are looking pretty stable.

Edit: (I forgot to mention) I'm one of 2 people on our office that is working in BIM, using Revit. Which our company has just said they will be making standard as of 09/09/09. Because if my current role I'll be doing some of the in house training and troubleshooting until everyone else is up to speed.

[Dean]

If your company doesn't borrow money on a regular basis, you are better than most, but be aware that your customers won't be able to borrow any...

We are not talking about the situation a week ago, we are talking about a whole new near zero lending environment as a possibility...

Old people can get old, but unless the health care companies have cash on the balance sheet to fund their projects, nobody is going to loan even them any and your project list will quickly drop to zero except possibly federal government funded ones. How many of those do you have and can tehy support your whole company?

The reason congress is getting 20:1 against the rescue plan calls from constituents is because the masses do not understand how dependent our entire economy is dependent on the credit markets.

Do you think Toys-R-Us pays cash up front for the toys they bring in for the holiday season?....

Do you think your mechanic pays cash for the parts he puts into your car when he gets them from the local parts store and they pay cash up front when they get them from the distributor and the distributor pays up front from the manufacturer and they from the raw materials provider and subcontractors?

Every one of those happens on CREDIT!!!

These and countless other day to day business to business, consumer to business and even business to employee monetary transactions could be blown out of the water.

Our economy lives on short term credit and many of those markets are either broken, or on the verge.

If we get to the point where the U.S. has to run on a cash up front basis, no job will be safe except maybe the farmers.

We are no longer just talking about recession, but the real possibility of a depression. "Grapes of Wrath" kind of stuff... That is some scary $4!+ and may be the price of inaction...

[Kevin M]

...or the conservatives can sack up and pass a major spending bill before an election in order to save the country, at risk of losing their seats, rather than presiding over said Depression.

[sperry]

Originally Posted by Dean

If your company doesn't borrow money on a regular basis, you are better than most, but be aware that your customers won't be able to borrow any...

We are not talking about the situation a week ago, we are talking about a whole new near zero lending environment as a possibility...

Old people can get old, but unless the health care companies have cash on the balance sheet to fund their projects, nobody is going to loan even them any and your project list will quickly drop to zero except possibly federal government funded ones. How many of those do you have and can tehy support your whole company?

The reason congress is getting 20:1 against the rescue plan calls from constituents is because the masses do not understand how dependent our entire economy is dependent on the credit markets.

Do you think Toys-R-Us pays cash up front for the toys they bring in for the holiday season?....

Do you think your mechanic pays cash for the parts he puts into your car when he gets them from the local parts store and they pay cash up front when they get them from the distributor and the distributor pays up front from the manufacturer and they from the raw materials provider and subcontractors?

Every one of those happens on CREDIT!!!

These and countless other day to day business to business, consumer to business and even business to employee monetary transactions could be blown out of the water.

Our economy lives on short term credit and many of those markets are either broken, or on the verge.

If we get to the point where the U.S. has to run on a cash up front basis, no job will be safe except maybe the farmers.

We are no longer just talking about recession, but the real possibility of a depression. "Grapes of Wrath" kind of stuff... That is some scary $4!+ and may be the price of inaction...

I can't disagree with any of this.

However, the "fix" is not stealing billions of dollars from the taxpayers to prolong the situation. Plain and simple: our economy is broken. The actual fix is to let it fail and build a new one either with proper regulation, or with zero regulation and the understanding that when shit hits the fan there is no bailout.

This bullshit of "they're too big to fail" is just that: bullshit. I fully understand that we're looking at a possible depression. What I don't understand is how $700B from the taypayers does anything but prolong the inevitable. I'd much rather get this crash over with sooner rather than later. The fundamentals of our economy are anything but sound. Pumping more money into it doesn't uncorrupt the fundamental greed that got us into this situation. Only the failure of the institutions that got us here will, and the shitty part of that is that a lot more than just the financial market are going to go down the tubes with it unfortunately.

Now perhaps there's a smarter bailout plan that could work. But having the taypayers buy out bad debt from companies that deserve to be out of business to take it off their books so they can continue with their poor practices is not it. The bailout plan was way too short sighted, and gave way too much power to the gov't folks making the decisions. Congress made the right call on this one IMO.

[AtomicLabMonkey]

Congress is going to have to do something. Not just for the sake of the country, but because all those people in Congress have a decent chunk of money and they're watching their own portfolios disappear as the markets tank. It's in their own personal best interests to intervene.

[sperry]

Originally Posted by AtomicLabMonkey

Congress is going to have to do something. Not just for the sake of the country, but because all those people in Congress have a decent chunk of money and they're watching their own portfolios disappear as the markets tank. It's in their own personal best interests to intervene.

Yeah, they're between a rock and a hard place:

Do something and lose their jobs, do nothing and lose their money.

...actually, it's about time they ended up in that situation. For far too long they've been able to make being a public servant profitable.

[van]

interesting idea

Give the Public $600 Billion
By John C. Dvorak

The administration talks a big game about economic stimulus packages and claims that the public is the winner when taxes are low or they are simply given a handout to spend. So take $600-plus billion and give each man, woman and child $2000 each. That will distribute all this money. A family of 5 would have a nice $10,000 nest egg for a down-payment or to rent a house and pay off their credit cards thus sending the money back into the system.

The trickle-down bail-out is designed to go to the same people who gave themselves huge salaries and ran these firms into the ground? It gets them off the hook. They can then slither out of town when they all should be tarred-and-feathered.

Why not let the public buy up the mortgages at these low-ball prices and move in? Why can’t that be arranged? Use the FHA to do it if the banks cannot. Why do the crooks get to re-buy the bad mortgages at the low price? So they can gouge later?

There has never been economic stimulus from the top down when the money is given to these weasels. These are people who will sell dollars and buy Euros, or horde the money or move to Switzerland to spend the money there. All of the CEO’s of these failed companies have offshore villas. The average Joe spends his money in the USA, not Europe. It stays in circulation. Good things happen.

According to the pro-bail-out “experts” the economy should have melted down on Tuesday hurling us into a depression. Instead the market went up. So how does that work?

Start looking at this bail-out and you start to see that it is an exit strategy for Paulsen and his friends at Goldman, Sachs. There was a need to rush it through before anyone discovered what it was all about.

No oversight, a finance Czar, more free reign than ever.

Exactly why is there such a rush? It’s like the sleazeball salesman telling feeble-minded customers that they MUST buy now. It just makes no sense.

It wouldn't be a "quick fix" but interesting angle none the less,trickle up economics? thoughts?

[Nick Koan]

I'm against it on principal. John C. Dvorak is generally, at best, bat-shit-insane and incredibly short sighted.

It sounds good, but Dvorak is generally known for making myopic predictions.

[van]

Originally Posted by Nick Koan

I'm against it on principal. John C. Dvorak is generally, at best, bat-shit-insane and incredibly short sighted.

It sounds good, but Dvorak is generally known for making myopic predictions.

I'll concede that Johns a little insane but thats what keeps him interesting. He does make a lot of long term predictions, but I havent known of him long enough to see if they come true or not, thats the beauty of loooong term predictions.
Btw, I'm against it on principal as well but its interesting to think about.

[cody]

[ScottyS]

Originally Posted by cody

Don't forget the -50 bar for "Your Kids"