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 Post subject: Doomed? / Breaking news
PostPosted: Mon Sep 29, 2008 8:02 pm 
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US lawmakers have "taken leave of their senses" says EU trade commissioner Peter Mandelson. He adds, "I hope that in Europe we will not see politicians and parliamentarians replicating the sort of irresponsibility and political partisanship that we have seen in Washington."

View full article here

The House rejects the bank bailout plan.

View full article here

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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 9:33 pm 
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I fear the USS Mac&Mae are lost with all hands.

It is around this time that all those old women with their money stuffed in the mattress start to look very wise indeed.


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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 10:29 pm 

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I can't honestly say whether this was a good thing or not. On the one hand, a critical reevaluation of the history of the Great Depression (not the worst in US history) has shown that FDR's intervention in the economy worsened and lengthened its effects, but there appears to be a fairly widespread opinion that something needs to be done.

The problem of trying to gauge the course of events is that the drop in the Dow doesn't yet reflect real effects of the credit crisis, but rather the opinion of stock traders who learned that the Bailout failed. It could that it will recover most or all of its value, either in a short of long period of time, depending on how things develop. Everyone is waiting for something to happen, talking about the potential for something to happen, but most of what seems to be happening centers around the Bailout, not the actual problem.

If anything is to be done, I thought a seizure, breakup, and sell-off of failed banks would be the best way to spread out the debt. The proceeds could then be used to pay down part of it and loans could be given to make up the difference. On top of that, the suggestion of slashing taxes and raising banking insurance would help on the consumer end.

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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 10:35 pm 

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This crisis is not going to stay on the other side of the Atlantic. Note the three bank bailouts in Europe (not the EU) today, and the 10 year government bond yield spreads say something about the strains in the eurozone:

29/9/08
Belgium vs Germany: 55 bp
Spain vs Germany: 54 bp
Portugal vs Germany: 66 bp
Italy vs Germany: 89 bp (!!!)
Greece vs Germany - I don't have the figures but given the Italian spread it ought to be well above 90 bp.

It is going to be expensive for Italy and Greece to service their extensive national debts. Remember once you give up your currency you no longer can devalue the country out of a debt crisis.


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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 10:46 pm 

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This does not effect the nationalisation of fannie mae and freddie mac, this is the $700 billion plan to buy up the toxic debt of the US banking system, which is supposed to stop case by case bailouts like Mae, Mac and AIG.

Frankly I'm of the opinion that this kind of intervention would would very well in the UK, with the government buying up a portion of the toxic debt from banks in return for a stake in each bank, it certainly makes more sense than nationalising Northern rock and effectively liquidating Bradford and Bingley (though some say the name may be sold as an asset), it certainly makes a hell of a lot more sense and would do rather more good than these short term loans by the bank of england.


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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 10:48 pm 
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Quote:
Belgium vs Germany: 55 bp
Spain vs Germany: 54 bp
Portugal vs Germany: 66 bp
Italy vs Germany: 89 bp (!!!)
Greece vs Germany - I don't have the figures but given the Italian spread it ought to be well above 90 bp.


Thanks Mikgen. If the Euro breaks up that would be a big hit for financial confidence and an even bigger hit for the EU, should we hope for this at this moment?

What is "bp".

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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 11:02 pm 
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http://www.telegraph.co.uk/finance/fina ... ction.html

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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 11:11 pm 
Julian Williams wrote:
Quote:
What is "bp".


"bp" = basis point = 1% of 1% = 0.0001


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 Post subject: Re: Breaking news
PostPosted: Mon Sep 29, 2008 11:19 pm 
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I just heard a commentator say that the rejected 700 billion dollar bail out did not include stopping the practice of making sub-prime loans. In other words, the thing that got us into this predicament– making loans to people who are not credit-worthy and who have little or no prospect of being able to pay them back- would be allowed to continue.

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 Post subject: Re: Breaking news
PostPosted: Tue Sep 30, 2008 12:12 am 
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Well, not quite the worst Wall Street nosedive, despite what the journalists may tell us:

http://michellemalkin.com/2008/09/29/so ... n-littles/


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 Post subject: Re: Breaking news
PostPosted: Tue Sep 30, 2008 1:38 am 
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As can be expected, there's some finger pointing going on in the MSM.

I thought I'd shed some light on the matter:

http://www.youtube.com/watch?v=y56lGWvVsrc

Good ole Barney "rent boy(s)" Frank, Chair of the House Financial Services Committee, is a frigging disgrace...

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 Post subject: Re: Doomed? / Breaking news
PostPosted: Tue Sep 30, 2008 4:23 am 
Those irresponsible Representatives, how dare they listen to their constituents.


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 Post subject: Re: Breaking news
PostPosted: Tue Sep 30, 2008 4:31 am 

Joined: Thu Jul 10, 2008 3:45 am
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Mystery Meat wrote:
I just heard a commentator say that the rejected 700 billion dollar bail out did not include stopping the practice of making sub-prime loans. In other words, the thing that got us into this predicament– making loans to people who are not credit-worthy and who have little or no prospect of being able to pay them back- would be allowed to continue.


It is worse than that. The banks are not only allowed to still make sub-prime loans... they are still required to make them! The congress didn't remove the offending regulations from the Community Reinvestment Act, so the problem would have to begin again by law!


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 Post subject: Re: Doomed? / Breaking news
PostPosted: Tue Sep 30, 2008 5:09 am 
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It is worse than that. The banks are not only allowed to still make sub-prime loans... they are still required to make them!


Yep...a point made neither often nor strongly enough. Banks have certainly acted with astonishing stupidity but they had the arm put on them by government to extend mortgages to those with little or no ability to make the repayments.

All in the name of social/political expediency. We are still paying for Kohl & Pöhl...different circumstances...same horrendous costs which will be paid by those who have worked & saved all their lives for the privilege of seeing their nest-eggs decimated.

Those who are crying for the government to intervene should be reminded that it was exactly such intervention that created the problem in the first place. Unbelievable, I do wish I could say.

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 Post subject: Re: Doomed? / Breaking news
PostPosted: Tue Sep 30, 2008 7:06 am 
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permanentexpat wrote:
[...]


Seconded... and amidst all the hysteria we must also suffer the repairs being done by the culpable scoundrels themselves as they deflect blame, pontificate, scheme to extend their control and influence, all the while claiming to represent the common good and warning that all is sunk if we don't act in hast and desperation. The swine may even be right under the circumstances they have nurtured.

Approval of the bailout should be contingent on an earmark specifically mandating Barney Frank be burnt at the stake along with Pelosi, Reid and Dodd. Though a public stoning would work as a compromise.

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