Liquidity is not the problem.

Central banks and governments cannot transform unprofitable investments into profitable ones. They cannot force institutions to increase lending when they are so exposed. This is why calls for throwing more money at the problem are so totally misguided. Injections of liquidities started more than a year ago and have had no effect in preventing the situation from getting worse. Such measures can only delay the market correction and turn what should be a quick recession into a prolonged one.

Thanks. That solved the issue. I wonder why my posts were flagged as spam?

It wasn’t meant to REPAIR anything, but rather to simply PUT OUT A RAGING FIRE that threatened to go completely out of control. Now that the fire is out, we can take a breath and start to discuss rational ways to fix the system, and hopefully, hold those responsible, ( the de-regulators, IMO ) for putting the country in this position in the first place.

IMO, Congressman Inslee voted “no” to appease his constituency and preserve his job, rather than look a the big picture and vote “yes” to save the people’s jobs, as well as this country’s economy. I emailed him my intention to vote against him unless he changed his no vote from the first try. He did not, and I will not give him my vote as I believe he put his own interests first rather than the country’s.

Ask yourselves how much cash and equivalents do MSFT, etc. have sitting around? How much do wealthy individuals and small companies have sitting, pulled from the markets over the last year as it became clear change was in the air? I personally know several folks who have tens of thousands of cash sitting in safes at home, not to mention hundreds of thousands that have been moved to treasuries and spread through FDIC accounts.. There is a lot of money sitting on the sidelines, many times over what the bailout has to spend. If it seemed at all obvious this was a good time to pick up some deals, more of that money would be moving into equities. It’s not. Because most with money realize the main event has not happened yet, and the market fundamentals haven’t even begun to really correct. That’s the only point I intended to make. Cheers.

This is not a Democratic or a Republican issue. All the politicians as well as their constituients are resposible. Everybody wants to make quick bucks. Poltiticians would dare to say the opposite. The apathetic attitudes contribute the downfall.

Let’s take the Tim and his $10s, a click away in the upper right hand corner of this web site. If a thousand people click that button today and give the Tim $10s he makes money. If ten thousand, or one hundred thousand people click that button he makes more money.

The possibilities are endless in today’s world.

By some estimates there’s over $5 trillion in cash sitting in hedge funds and PE funds. If there were any equities worth buying out there you’d think they’ would be making a move.

Sorry, that statement isn’t going to fly. I’d love to hear who “some” people are who are making these estimates because there aren’t even $5 trillion in ASSETS in hedge funds – Much less cash. Plus this it ignores the fact that most of these funds are leveraged insanely – they can’t afford to sit on cash. If they are sitting on any cash at all it is because they are quaking in their boots anticipating withdrawals

Total Hedge Fund Assets Approach $3 Trillion

I’m not here to defend Bill Clinton or the Democrats. I am saying the Republican Party sunk this ship and now they’re abandoning it too.

The Republican Party exists to dynamate sane government regulations. They don’t deny it. They crow about it. That’s why John McCain picked a nut like Phil Gramm as his chief economic advisor and the party faithful cheered.

Your Clinton quote just confirms it. Bill Clinton rolled over and let the GIngrich congress screw the country, more than once.

No cudos for the Republicans on the list. They are biggest cause of the mess we’re in, and they’re doing nothing to fix it.

I’m not a Jim McDermott fan, but it was not a “stay elected ” vote. McDermott could convert to Islam and call for assassinations and he’d still get re-elected. He’s safe in his seat for as long as he wants it, Congressman For Life.

The bailout will prove to possibly delay the real pain that is gonna get worse. And then there will be “son of bailout” and then “grandson of bailout”.

There is no escape from this financial black hole.

At some point in the future all the government intervention in the supposedly “free market” will have proven to be precisely the wrong to do. But I digress…..

So we have a bunch of economists for the a bail out:
http://blogs.wsj.com/economics/2008/10/01/dueling-economists-experts-voice-support-for-bailout-bill/

And a bunch of economist against the bail out:
http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

Figured I’d attempt to formulate my own opinion, so read about markets and alternative plans etc, but quite honestly, trying to read thru all this financial “chocolate” just makes my head hurt.

If the experts whom I’m assume actually enjoy this stuff and understand it are divided on this, then aren’t all of our arguments for or against the plan here philosophically/financially/emotionally biased, and not even actually based on the actual solution or lack of solution to this problem.

As long as the common shares are worth anything at all, Buffett gets his return.

Buffett’s GE investment is no ordinary stock tip

I am shifting between bearish and hopeful. If Warren Buffett is wiling to buy some Goldman Sachs and GE, it may not be a bad time to hunt for your own bargains. I know he is getting a good deal but it won’t look good if Goldman goes bankrupt next year or GE goes to $10. John Paulson, the guy who made $3 billion shorting subprime, is raising funds to provide capital to distressed companies. Jim Chanos, who was first to call Enron’s demise, said financials are nearing a bottom. A few big bank stocks have already doubled off their July lows so the situation is not as dire as the politicians make it out to be. Many banks will fail but enough will survive.

The article you refer to states this: ” But history has proven time and time again, and is once again proving as we speak, that markets get it wrong all the time.”

That’s very funny, as the alternative to letting the markets work things out is of course government intervention. :-)

FWIW, I agree with most of that article, but the article doesn’t provide a solution other than the implicit ‘let things collapse and we have the natural balance after that’. Imho, it is naive to think it is desirable to roll back housing prices to what they were in say 2000.

You seem a bit consused. Do you think market forces should be allowed to return house prices to traditional price/rent and price/income multiples or don’t you? If you don’t, just how that is going to be prevented?

There used to be a major power that was founded on the ideology that asset prices should not be based on fundamentals. Remember what it was called?

I heard U.S. Bank advertising home equity loans on the radio this morning. With that being true, how bad can the “crisis” be? I’m beginning to think some aspects of the situation are completely manufactured, or, at a minimum, not exactly what they appear. There’s something else going on here.

I’m glad we can count on Obama/Biden to clean this all up once they’re elected. With their more than 30 years combined senate experience, coupled with the expertise of Barney Frank, Nancey Pelosi, and all we’ll be in good hands.

“It is now clear that the US financial system – and now even the system of financing of the corporate sector – is now in cardiac arrest and at a risk of a systemic financial meltdown. I don’t use these words lightly but at this point we have reached the final 12th step of my February paper..”

http://www.rgemonitor.com/roubini-monitor/253853/financial_and_corporate_system_is_in_cardiac_arrest_the_risk_of_the_mother_of_all_bank_runs

Anyone else finding it amazing that the market was up almost 300 points in anticipation of this thing passing, and promptly dropped to negative 150 when it passed – a 450 point swing?
.
I asked an Edward Jones broker about this very thing today. He said the drop was due to day-traders taking profit from the previous uptick.
.

http://www.npr.org/blogs/money/

Maybe?

“Republican’s failed policies got us here in the first place.”

Former President Bill Clinton: “I think the responsibility that the Democrats have may rest more in resisting any efforts by Republicans in the Congress, or by me when I was President, to put some standards and tighten up a little on Fannie Mae and Freddie Mac.” (ABC’s “Good Morning America,” 9/25/08)
http://thepage.time.com/mccain-camp-veep-debate-release-obama-silent-on-fannie-freddie/

Republican’s failed policies got us here in the first place. They sunk this ship, and now they’re abandoning it too. They failed to take responsibility for their mistakes by coming up with serious alternatives to the original bailout plan.

That would be the least of our worries the Dow at 8000 and lower really isnt that terrible compared to the 29 crash when the market went from 370 to 40 thats a huge change compared to a 14000 point Dow going down to the 8000 range where we were just 6 years ago.

As long as housing prices continue to fall, more and more mortgages will be driven into default. There are about $12.5 trillion in outstanding mortgages at this time. The multiplying effects of derivatives increase current exposure into the hundreds of trillions.

The only thing that will stop the bleeding is to increase home prices back to levels where people will fight to hold onto real equity, and make their payments. The only permanent way to make that possible is to increase real wages at a rapid rate. But instead of increasing wages, the additional national debt represented by the bailout, along with the increased taxes needed to carry the debt, will suppress increases in spendable income. This $7.0 trillion “investment” doesn’t create one new job, one new company, one new tech breakthrough, one increase in productivity. Wages are currently growing at a rate 2% BELOW inflation, leading to negative net gains in consumer income, and the falling asset prices that forces on the economy. All this money does is provide temporary solvency to firms that are likely headed down in the long run anyway.

All we’ve done is dig ourselves in deeper for the long haul, while bailing out the Chinese, etc. The market has figured this out, despite the claims of the politicians. I predict the market will tank hard in the next week or two once the reality of where the money is going, and what little effect it will have, sinks in more fully. Hang on!

thanks.

http://www.neworleanscitybusiness.com/uptotheminute.cfm?recid=20613&userID=0&referer=dailyUpdate

My solution to the credit crisis: Don’t buy crap I don’t need on credit.

So really I want to hear opposing geniuses ideas to heal the credit crunch in a shorter term. I think US regained a big reputation again showing the greens in global exchanges…

Remember, the bailout began with the republicans who didn’t even want any oversight to the whole thing.

There are no buyers in the market right now. Anyone that wasn’t out of the market sold the brief rally today. We are headed straight down. Cash out now.