Ableton Forum

When there is a crisis like this, and there just happens to be a massive piece of legislation tailor-made for this scenario sitting around, and people are telling us that the world is going to end if we don't pass it....I get deeply suspicious. Same deal as the Patriot Act.

Punky921 wrote:I laugh and fiddle while Rome burns. I am very amused by this whole process.

I, too, will be laughing as I starve

NorthernMonkey wrote:

Baron von Case wrote:How can people be expected to understand something as complicated as the stock market...

Most people haven't got a clue, they base their opinions on tabloid nonsense, political squabbling, and their most recent google web search.

As for the politicians, they remind me of the scene in Life of Brian when Judith bursts in to announce Brian has been arrested and he's about to be nailed to the cross...

"Completely new motion! Uh, that, uh, that there be, uh, immediate action..."

You know the rest.

I've been killing my self trying to understand the pro's and con's of this "bail out".
I'm kinda sorta happy about this decision on the part of the US voting the first draft down, i am also prety sure that we need some kind of fix and that one will be developed.
My problem starts with not really understanding how it will work or what shape the fix needs to be in.

Care to explain in baby steps...

Take a look at this:

http://www.cnbc.com/id/26945250

Homebelly wrote:
Care to explain in baby steps...

you and everyone else... I cannot explain the whole thing,

However, in inimitable internet fashion, I can explain somethings part way, and then let people chime in about how stupidly that's been done with their own half-way explanations, which when pieced together may eventually lead to the whole explanation, or, alternatively, lead to people calling one another names in an entertaining and slighly embarrassing fashion.

Here's as much as I know. There is a market in the buying and selling of debt, particularly mortgage debt.

I am told that market is a 45 *trillion* dollar market.

For some perspective, I am told that the GDP of the World is 70 trillion.

The market in the trading of mortgage debt is unregulated. Financial institutions "package" these debts, then sell them to other financial institutions.

Now, here is the part I don't understand. Apparently, about 10% of these loans are high risk mortgage loans that are "bad debt", that is they are in default.

One way they deterimine "default" is if the debtor has not paid anything against the loan in the first 90 days. The number of loans in default has ramped up at an alarming rate, which is being deterimined as the bellwether of the crisis.

Now what makes this a big deal, apparently, is that this 45 trillion dollar unregulated market is used to *secure* a whole buncha other stuff.

So *if* it is in trouble, everything else is in trouble.

I'm still not totally clear that that if is a big IF, or a foregone conclusion. They seem to be basing it on an extrapolation of the rate of defaults.

What I don't understand is how 10% of things being "bad" pulls down the whole kit and kaboodle.

I also don't understand what a "kaboodle" is, but that is maybe something Evil x n can illuminate in another thread.

Emissary wrote:

NorthernMonkey wrote:

Emissary wrote:I thought America was a lost cause

It is now. You do realise this will have a global impact, including Wales?

i dont think you quite understand that this is a good thing. Now we are going to have a world wide deep recession now rather than a worldwide deep depression in a years time. i know which i would rather. having said that it will probably still be pushed through somehow. it was a small victory i suppose.

The way i understand it is that it will probably work out the opposite of this statement if the US government and treasury doesn't do some thing now.

There seems to be a perceived view that "We" are honoring some rich peoples gamble that didn't pay off. There might be some truth in that, except that the repercussions of not doing so will mean that we end up carrying the can any ways. There is also the aspect that "We" have also been benefiting from these gambles by being given access to cheap credit and unregulated dept.

I'm still coming to grips with all of this.
Mr Monkey...
Can you fill in the gaps???

@ethios4: this hasn't just happened overnight, this has been building for a few years. Many people could see this coming but as with everything else it only becomes newsworthy when it can be called a 'crisis'. But where there's money involved, you're right to be suspicious.

@noisetonepause: exactly, too many think this will not affect them.

@Homebelly: you could probably argue for an eternity over the cause of this mess, but most agree that it at least stems from the bad debts within the US sub-prime markets causing a domino effect across global markets. Basically those bad debts led to interbank lenders getting very twitchy about the real value of those bad debts and as a result stopped lending to other banks - what we all know now as 'the credit crunch'. Now, this has caused two major problems - 1) all of the banks that were heavily reliant on borrowing money to make money (i.e. the heavy lenders) are collapsing as they can no longer get credit - many of these are now being nationalised or taken over by other banks; 2) the bad debts caused by sub-prime are now spread across the globe within many financial institutions and as the debts (or assets) are seen to be very risky, shares prices are plummeting which is resulting in trading drying-up and markets dropping (i.e. no money available for new investment, etc.) - the idea of the US bail-out is to buy up (and effectively finance) those bad debts and allow trading to return to normal levels. What this all means for you and me is that the cost of capital (loans, mortgages, etc.) is rising which hits us all in the pockets, and from there on we start to see rising inflation, rising interest rates, rising unemployment, etc., etc., etc. - now call me old-fashioned but I think that's a bad thing.

NorthernMonkey wrote:
@Homebelly: you could probably argue for an eternity over the cause of this mess, but most agree that it at least stems from the bad debts within the US sub-prime markets causing a domino effect across global markets. Basically those bad debts led to interbank lenders getting very twitchy about the real value of those bad debts and as a result stopped lending to other banks - what we all know now as 'the credit crunch'. Now, this has caused two major problems - 1) all of the banks that were heavily reliant on borrowing money to make money (i.e. the heavy lenders) are collapsing as they can no longer get credit - many of these are now being nationalised or taken over by other banks; 2) the bad debts caused by sub-prime are now spread across the globe within many financial institutions and as the debts (or assets) are seen to be very risky, shares prices are plummeting which is resulting in trading drying-up and markets dropping (i.e. no money available for new investment, etc.) - the idea of the US bail-out is to buy up (and effectively finance) those bad debts and allow trading to return to normal levels. What this all means for you and me is that the cost of capital (loans, mortgages, etc.) is rising which hits us all in the pockets, and from there on we start to see rising inflation, rising interest rates, rising unemployment, etc., etc., etc. - now call me old-fashioned but I think that's a bad thing.

Now.
I'm totally behind the idea that some thing needs to be done.
I also understand the repercussions of not doing any thing, or of not doing enough.
However.
It did seem to me that the original Bill, that has just now been voted down, seemed to be as much a power grab as it was a fix. A kinda-sorta financial PATRIOTS act.
And this is the part i'm not clear on.
Is that a legitimate concern?

Homebelly wrote:Now.
I'm totally behind the idea that some thing needs to be done.
I also understand the repercussions of not doing any thing, or of not doing enough.
However.
It did seem to me that the original Bill, that has just now been voted down, seemed to be as much a power grab as it was a fix. A kinda-sorta financial PATRIOTS act.
And this is the part i'm not clear on.
Is that a legitimate concern?

That's a tricky one. When you work in any financial market politics hardly ever comes into it - it's all about the creation and sustainability of wealth. However, when I watch TV or read a newspaper it seems to me that this situation has turned into a media circus and EVERY political party around the world is using it as a platform to denounce other parties which I think has led to even more confusion and suspicion; think of all of the untruths that have done the rounds in the media, this situation is a million times bigger! But to answer your question, no, I don't believe the bailout is an attempt at a power grab; I think it's an attempt to stop the US going into financial meltdown.

Edit: "The Dow Jones index lost 770 points - 6.9% - its biggest one-day point drop yet as Congress surprised observers by not backing the rescue plan."

thankfully, the house republicans got some balls and stopped this absurd bill... the calls to Congress have been more than at any time in recent memory, and running overwhelmingly against the bill...

Dennis Kucinich (a man of some integrity) said this: "The $700 bailout bill is being driven by fear not fact. This is too much money, in too short of time, going to too few people, while too many questions remain unanswered. Why aren't we having hearings...Why aren't we considering any other alternatives other than giving $700 billion to Wall Street? Why aren't we passing new laws to stop the speculation which triggered this? Why aren't we putting up new regulatory structures to protect the investors? Why aren't we directly helping homeowners with their debt burdens? Why aren't we helping American families faced with bankruptcy? Isn't time for fundamental change to our debt-based monetary system so we can free ourselves from the manipulation of the Federal Reserve and the banks? Is this the US Congress or the Board of Directors of Goldman Sachs?”

quoted from this article
http://www.counterpunch.org/whitney09292008.html

deva, you've just perfectly demonstrated my points above.

Here's some real facts for you: http://news.bbc.co.uk/1/hi/business/7641173.stm

Some reading for anyone interested


"Just Say No!" to the Robin Hood-in-Reverse Bailout
http://www.counterpunch.org/gibbs09292008.html

The Rise Of The American Oligarch Class
http://www.informationclearinghouse.inf ... e20892.htm

Bloomberg Analyst: $700 Billion Bailout Could Balloon to $5 Trillion
http://www.prisonplanet.com/bloomberg-a ... llion.html

The People vs. the Banksters
http://www.counterpunch.org/whitney09272008.html

Grand Theft America.
Financial Crime of the Century
http://www.globalresearch.ca/index.php? ... &aid=10364

NorthernMonkey wrote:deva, you've just perfectly demonstrated my points above.

Here's some real facts for you: http://news.bbc.co.uk/1/hi/business/7641173.stm

this bullshit bill would not stop the market from falling, it would only allow some very wealthy people to dump their own shares before it comes down

the bill is a fraud and a scam and the people of the country know it, that is why congressional phones are ringing off the hook. As one person put it, 50% of calls are saying no, and 50% of calls are saying hell no!

another article

No Bailout for Wall Street Billionaires
Ten Reasons to Oppose the Wall Street Bailout
http://www.globalresearch.ca/index.php? ... &aid=10362

NorthernMonkey wrote:@ethios4: this hasn't just happened overnight, this has been building for a few years. Many people could see this coming but as with everything else it only becomes newsworthy when it can be called a 'crisis'. But where there's money involved, you're right to be suspicious

Good point...Sept 11 was (supposedly) unexpected, whereas this crisis has been coming for awhile.