Monday, September 29, 2008

Reckless and Uninformed

The WORLD, not just the U.S. markets, will be voting over the next couple of days... on just how badly our Congress has served us.

I am AMAZED at how passionate that people who do not know what a TED spread, CDO, CMO, CDS, etc... and wouldn't know the Fed Funds rate from the Discount Rate, and wouldn't know the Prime Rate from a Prime Rib, etc... were about rejecting this liquidity measure.  SOMEBODY billed it as a BAILOUT, and the public went for it hook, line, and sinker!

Other financial bloggers (who shall remain nameless) have gone on to tell their readers how terrible this bill is, blah, blah, etc...  Well, I have a question for them:

If the U.S. market loses 50% of its value, and several more banks close with company's payrolls, and NO ONE can get a mortgage or a car loan...

Will you be satisfied?  No?  Let me throw in no ability to pay for heating oil this winter...

Are you satisfied now?   

Does New York HAVE to lose its banking dominance to the Middle Ease Sovereign Wealth Funds?  Would that leave you satisfied?

Or perhaps unemployment hitting 25%?

So.  I am curious.

At what point would you admit that maybe, just maybe, you f$#cked up?

Mentatt (at) yahoo (dot) com


gregoryw said...

Uh, maybe, just maybe, people could get a mortgage loan from one of the other 8400 banks in this country. You know, the kind of loan where you walk in, talk to the branch manager, he evaluates your credit and character, you show him an earnest money deposit of 20%, and he loans you the rest at 8% interest. Sorry for bringing it up. That is truly unthinkable.

Bureaucrat said...

My friend, you started this whole blog to deal with the "American Energy Crisis," the title of your blog. Did you ever think that there was going to be no pain from such a massive turnaround in the way humans live via energy depletion? If so, it is hard for me to believe that you would think this financial crisis, the biggest since the great depression, couldn't possibly turn out the same way. I saw a trader from the CBOT on Chicago TV saying if the "treasury doesn't fix things soon, we've all had it." Give me a break! Your brothers and sisters, who you apparently left behind, put us in this God-forsaken position (with a LOT of help). And now, I'm sorry. The big screen TVs and the vacations every summer to Cancun and the too-big houses and the granite countertops all bought on credit will have to get shelved. The old people (who vote) run this country now, and they want to stick it to the baby boomers by denying you any more credit. You've had enough. More debt is unsustainable, just like you've been saying. It is unfair to your children. It's bad enough we bought the globalization bullshit hook, line and sinker, and now it is our turn to eat a little less. You knew exactly what you were doing starting this blog (I'm glad you did it), and what you predicted would happen. Now, it has started, just from another angle. An old man once said, when he was a boy, he got a bag of oranges for Christmas, and he was happy. To everyone I say: start thinking differently.

Anonymous said...

I'm going to bet the money lost on the markets today cost us much more than the 700 billion liquidity infusion would have cost.
And that's out of our pockets, SS, pensions soon to be expanded to lost jobs. etc etc

Matt said...

I'm shocked to hear this post come from here. I thought we could expect better analysis than that. This $700B wasn't going to do any good so why waste it? It's the ultimate example of dumping more money after already spent bad money.

Personally in a situation like this I'm not opposed to spending $700B on something, although the wealth destruction would come anyway, but I want to see something for my money instead of hearing a giant sucking sound as these banks suck up all this cash, dump shitty securities on Uncle Sam and then park the cash on their BS and do nothing.

I agree with GregoryW, the only lenders I've heard of having trouble are the ones who made stupid loans. I don't know many good credit risks that are being turned down here in Iowa.

Greg T. Jeffers said...

Never popular, but I stand by my post. There IS no $700 Billion Bailout! It is a liquidity injection! The U.S. has a fractional reserve banking system! No liquidity, no lending, not enough liquidity = not enough lending.

The cure for the energy crisis CAN'T be the destruction of the economy via the collapse of the banking system - that would make less sense than shooting yourself to cure cancer.

Folks, destroying the American economy will only direct the oil elsewhere. If you are in a hurry for the Amish lifestyle, this is a good way to get there.

But be careful what you ask for.

Many want to punish the execs at the banks... GO AHEAD!!! Hang them high! WHat does that have to do with priming the pump in a fractional reserve system of banking?

The market cap losses around the world likely cleared $1.5 TRILLION today alone. This will only lead to a negative feedback loop of further declining home prices, and at the end of the day it is ALL about home prices.

Greg T. Jeffers said...

Read my "Deal Done" post from a couple days ago.

The injection would have altered the rate of the decline, not the outcome.

If you are ROOTING for a collapse, they you might be pleased with today's vote.

Bureaucrat said...

(The loss of wealth that was never really there in the first place isn't a loss. It's a favor.)

gregoryw said...

Maybe Jim Rogers is right, that western civilization (debtors) is going to take a back door to eastern (creditors). He moved to Singapore and taught his kids Mandarin. It is possible that our prosperity (or lack thereof) will be overshadowed by Asian nations that derive their wealth from production rather than financial trading.

Greg T. Jeffers said...

Read my "Deal Done" post from a couple days ago.

The injection would have altered the rate of the decline, not the outcome.

If you are ROOTING for a collapse, then you might be pleased with today's vote.