Worst Crisis Since '30s, With No End Yet in Sight Pt. 1

timshatz · 09-22-2008, 09:22 AM

Quote:

Originally Posted by Soundbreaker Welch?

interesting idea. How much does cost per pound to buy?

Too much to bother with. Go ahead and buy ETF for gold or silver. They are GLD and SLV. Of the two, silver is better. It has useages out in the real world whereas gold is just a hedge and next to useless as anything other than jewlery.

If you actually buy either metal, in the real ownership, then you have to take delivery and they are fairly illiquid (means you can't get rid of them fast). Better to own the ETF. Trades like a stock.

renrich · 09-22-2008, 09:26 AM

Not even close to the 30s. Somewhat similar to the late 1980s when banks and S&Ls all over the country but especially those in California and Texas went under. Too bad that a lot of congressmen thought that a lot of people in this country should be able to buy homes they could not afford. When the lending standards were relaxed, a lot of investors got into the act also, buying homes that they thought would appreciate in value with LLCs and Sub S Corps. Those chickens have come home to roost.

Old Wizard · 09-22-2008, 03:13 PM

Along with the bail-outs, how are the big shots going to be punished for their greed and total lack of foresight? Fired without compensation? [Failure should not be rewarded. Boiled in oil would be nice.] Banned for life from any association with financial institutions of any kind?
Will they get off with minimal damage?

timshatz · 09-22-2008, 05:16 PM

Quote:

Originally Posted by Old Wizard

Along with the bail-outs, how are the big shots going to be punished for their greed and total lack of foresight? Fired without compensation? [Failure should not be rewarded. Boiled in oil would be nice.] Banned for life from any association with financial institutions of any kind?
Will they get off with minimal damage?

To some extent, yes. But these guys typically had a lot of money tied up in their company's stock. Take a look at Dick Fuld. He was the guy running Lehman. In a week, he went from being worth 700+ million dollars to something like 7 million. 7 Million is a lot of money to you and me, but to somebody who just lost 99% of his wealth?

Another example is the guy who owned AIG's stock (name excapes me). Estimates are he lost something like 6 BILLION dollars.

But that's not enough. Lehman approved bonuses to upper management as it was going down the tubes. That sort of crap is not going to fly. Bankruptcy court will take it back.

The problem with the Government setting executive compensation is the talent pool is not really that big for the top performers. While a viable question would be "Why pay someone 100 million dollars to run a company in to the ground?", a lot of these guys made billions of dollars for the company and investors.

I agree with the overcompensation perspective. They probably make more than they should. But what sets the standard? And if somebody is willing to pay it, shouldn't they take it?

It's a tough question and one of the basic ideas of free market capitalism.

renrich · 09-22-2008, 05:18 PM

Which big shots are you talking about. If you mean the politicians that wanted more home ownership at the expense of underwriting standards then they will get off scot free.

Amsel · 09-22-2008, 11:07 PM

It is nationalizing things that should be in the private sector. The socialists have made a huge power grab.

Old Wizard · 09-23-2008, 12:54 AM

Quote:

Originally Posted by timshatz

To some extent, yes. But these guys typically had a lot of money tied up in their company's stock. Take a look at Dick Fuld. He was the guy running Lehman. In a week, he went from being worth 700+ million dollars to something like 7 million. 7 Million is a lot of money to you and me, but to somebody who just lost 99% of his wealth?

Another example is the guy who owned AIG's stock (name excapes me). Estimates are he lost something like 6 BILLION dollars.

But that's not enough. Lehman approved bonuses to upper management as it was going down the tubes. That sort of crap is not going to fly. Bankruptcy court will take it back.

The problem with the Government setting executive compensation is the talent pool is not really that big for the top performers. While a viable question would be "Why pay someone 100 million dollars to run a company in to the ground?", a lot of these guys made billions of dollars for the company and investors.

I agree with the overcompensation perspective. They probably make more than they should. But what sets the standard? And if somebody is willing to pay it, shouldn't they take it?

It's a tough question and one of the basic ideas of free market capitalism.

I'd be interested to know who's who on the Boards of Directors of these companies. I've heard that some of those clowns are Obama advisers.

Bluehawk · 09-23-2008, 07:41 AM

Quote:

Originally Posted by Old Wizard

Along with the bail-outs, how are the big shots going to be punished for their greed and total lack of foresight? Fired without compensation? [Failure should not be rewarded. Boiled in oil would be nice.] Banned for life from any association with financial institutions of any kind?
Will they get off with minimal damage?

If this had happened in China, they'd get a one each bullet in the back of the head.

timshatz · 09-23-2008, 08:59 AM

Paulson is headed up to the hill to defend the bailout. Happens today. Trying to find another word for the...bailout. Either way, this thing is a loser. The way he's doing it, the Govt will make money on it. As it is, if the Govt buys this debt (of which over 97% is now paying), it will buy it for pennies on the dollar. Like 10 cents on the buck. Then, they have the spread of .10 to .97 where they make money as they hold the debt. A couple of years from now, they can sell it back to the markets. Further, they can always get Congress to approve a bailout of subprime loans, ensuring they make money. Downside is if the Feds buy this debt at that level, they'll be putting a monetary value on all the debt out there. That will value a bunch of banks balance sheets a lot lower than they are now and a bunch of them will go out of business.

But if Congress turns the feds down, then MS and GS go under and the new investment banks that move in (a couple of months to years from now) will be foriegn owned. What happened to the car companies will happen to the finance companies. Further, a rout will continue and a bunch of banks will tank as well (going back to the valuation of the loans on the books as MS (Morgan Stanley) and GS (Goldman Sachs) assets are valued at 10-20% of their value).

This is a damned if you do and damned if you don't situation.

Amsel · 09-25-2008, 11:45 PM

It looks like the bailout deal may not go through. Friday will be an interesting day on Wall street to say the least.

Quote:

Inflating the currency, printing more money, and increasing the deficits won't help. The bad debts have to be accounted for and liquidated. The Paulson strategy is to create another ocean of red ink while refusing to face the underlying problem head-on. This just further exacerbates the consumer-led recession which economists know is already setting in everywhere across the country. Demand is down and consumer spending is off due to falling home equity, job losses, and tighter lending standards at the banks. The broader economy does not need the added downward pressure from higher taxes, bigger deficits, or inflation. Paulson's plan is a band-aid approach to a sucking chest wound. The debts are enormous and the pain will be substantial, but the problem cannot be resolved by crushing the middle class or destroying the currency.

Wall Streets Trillion Dollar Swindle :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Bluehawk · 09-26-2008, 08:40 AM

I'm not opposed to LETTING them fail.

If I make mistakes in my handling of my finances, I pay a price for the rest of my life, by means of bad credit and even worse sometimes.

Let them pay the same price that they are eager to make everyone else pay for making a negligent or intentional error.

javlin · 09-26-2008, 04:32 PM

So the doom that Paulson,President and the Dems have suggested would happen to the NYSE did not happen today.The NYSE finished up 1.2% today no biggee but not a collapse as forwarned.This only leads me to ask 1)just how right are these guys? 2)why ask the fox to watch the hen house?(already screwed pooch once) 3)as has been mention by the media,Dems do not need the Pubs for this vote so why all the blather?The more I see and here we in the US may give up some Liberities if it goes through in it's present form.I do not know the answer but trying to rush it now seems not the right track atm.

Bluehawk · 09-26-2008, 08:36 PM

In present form as submitted in draft (see Sections 2(b) and 8 ), the Secretary of the Treasury would have:
- authority without limitation
- decisions would not be subject to review by any court nor any other administrative agency

So, definitely we'd all be in deep doo doo.

Since Tuesday, angry mail and phone calls in to members of Congress have been running 50 to 1 against the proposal - so, I think it is safe to say that it won't go through as proposed.

What will end up being proposed could be worse, or better.

Who knows...

Bluehawk · 09-26-2008, 08:39 PM

BTW, javlin - thank you for your signature.
Sir Blue
---------------------------------------------------------

Secretary of State Colin Powell was asked by an anti-Iraq war official from Europe why American armies so often descend on foreign lands. "Sir," replied Secretary Powell, "our armies (if you recall) have twice been to the European continent this century, and the only thing we have asked for are small plots of earth to bury the dead we leave behind."

pbfoot · 09-26-2008, 09:11 PM

Quote:

Originally Posted by Bluehawk

I'm not opposed to LETTING them fail.

If I make mistakes in my handling of my finances, I pay a price for the rest of my life, by means of bad credit and even worse sometimes.

Let them pay the same price that they are eager to make everyone else pay for making a negligent or intentional error.

Amen to that having just finished 7 years in financial purgatory