On the Economy and Bear Stearns

Discussion in 'Politics, Religion, Social Issues' started by solvs, Mar 18, 2008.

  1. solvs macrumors 603

    solvs

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    #1
    http://online.wsj.com/article/SB120569598608739825.html?mod=special_coverage
    http://bonddad.blogspot.com/2008/03/on-bear-stearns-situation.html

    Surprised we've only mentioned this in the Libertarian thread. Kinda thought there'd be more economy based threads. Anyway, wondering what y'all think of this. Or the fed bailout mention. Or where we're headed. And what you think of this:

    Through Bush-Colored Glasses

    Please don't accuse me of bashing, I know it's an opinion piece, but everything I've been watching and reading about this from reliable sources says almost the same types of things.
     
  2. Queso macrumors G4

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    #2
    At least over here in the UK the politicians in the Treasury act on advice from the economists at the Bank of England. Bush burying his head in the sand is simply pathetic. I still have the feeling this downturn's going to be far worse in the USA than elsewhere.
     
  3. Eraserhead macrumors G4

    Eraserhead

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    #3
    17.5% long term unemployed, ow, that seems high.

    Bush really is burying his head in the sand. I suspect the winning democrat can use Bush's support of McCain against him in this election.
     
  4. Full of Win macrumors 68030

    Full of Win

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    #4
    Meh... turn the page and the "economy" will be booming in a few years, and turn it again, and it will be flat.

    Oh, and we in the US don't ever consult economists :rolleyes:
    Please, the Fed is run by them.
     
  5. Queso macrumors G4

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    #5
    Who's talking about the US in general? :rolleyes:

    My point was that the Bush Administration, as ever, is stuck believing it knows best and that what they decided two years ago still applies. The Fed may be stuffed full of experts but if the White House isn't listening what good can they do?
     
  6. pilotError macrumors 68020

    pilotError

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    #6
    Bear Stearns was a total implosion, but you haven't seen the last of it.

    In the coming months, you'll probably start to see pretty large layoffs as the big financial institutions start to come to terms with this.

    Things have the potential here to get real ugly real fast. Think the Japanese market implosion in 1990???

    This situation could potentially overwhelm the Federal reserve and force the Treasury to step in. The 400B they've already put forth represents about half of their war chest. Another big collapse and it could easily overwhelm them.

    In the late 70's and early 80's the S&L crisis put a serious dent in the economy. You would have thought they would have kept those checks and balances in place. I'm not sure how much more the markets can Bear... OK Pun intended!
     
  7. obeygiant macrumors 68040

    obeygiant

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    We're not exactly in the same position he Japanese were back then. Plus didn't they implode because the government didn't step in?
     
  8. mactastic macrumors 68040

    mactastic

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    #8
    It's supremely ironic to see the rush to a taxpayer-backed bailout of a private company by the very people who espouse personal responsibility for your decisions.

    Sure, make it harder for an average American to declare bankruptcy, but come to the rescue when it's a big Wall Street firm on the line. I guess there really are welfare queens in society, and we've found 'em...

    Are any of these corporate honchos going to feel the sting of these losses? Will there be a personal price to pay for any of them beyond having to switch from 600-count sheets to 200-count? How do we bail out the economy without rewarding the people who helped cause this problem in the first place?

    And why do I have a feeling that someone from the Bush administration is going to trot out the old "no one could have expected this" line in the near future?
     
  9. Desertrat macrumors newbie

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    #9
    obeygiant, best to think of Japan as "Japan, Inc." The entire governmental structure of trade policy and taxation is very, very strongly pro-industry. We're somewhat following in their footsteps with the deflationary policy of ever-lower interest rates, although they were in fair shape with savings at the time it all began. We're broke and/or in debt.

    Many things have contributed to this present crisis. Among them are the 1977 law calling for less restrictive credit ratings for homebuyers, and the 1987 changes in banking law as to what banks could do in the way of investments. (That was at the time that Greenspan took over at the Fed.)

    The elephantiasis of what are now referred to as "the financials", those giant corporations such as Bear Stearns, allowed the accumulation of piles of money that were moved around in interest-rate games in international actions--including derivatives. (Do your own homework about derivatives; they're in the hundreds of trillions of dollars of exposure.)

    The crookedness in the subprime melt down, as near as I can tell, came in two forms. First was the packaging of high-risk paper (ARMs and I-O loans) for resale in bundles as AAA-rated bonds. Second was the actions of rating firms to call this trash AAA. These packages were resold to retirement funds and mutual funds. They were acquired by such as Bear Stearns and used in leveraging for derivatives. When defaults and foreclosures began, the inflow of money slowed down and The Biggies ran into trouble meeting their debt-service demands of their own pyramids--and either wrote down billions of dollars in bad paper or couldn't meet the calls and went broke.

    Yes, this is way over-simplified; I've barely scratched the surface.

    Bush, Paulson and Bernanke don't seem to have a clue. Everything they've done has pretty much been an effort to save the financials' liquidity at the expense of the public (inflation). However, many in Europe and Asia are no brighter; they're having similar problems and having their own financials going broke,as well. "Northern Rock" in England, e.g.; and a major German bank whose name esapes me,for another. Deutschewelle?

    I dunno. I don't see how this can all be resolved in less than two or three more years. The stagflation we're into is just gonna get worse, in the interim.

    'Rat
     
  10. Iscariot macrumors 68030

    Iscariot

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    #10
    JP Morgan is one of our clients.

    It's going to be a long week for me.
     
  11. Desertrat macrumors newbie

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    #11
    JPM has the most exposure to derivatives of any entity. Some 94 trillion bucks' worth. Their total assets are about 1.2 trillion. Roughly. Anyhow, a 71:1 risk exposure. Next on the list is BofA, "down" around 50:1 IIRC.
     
  12. Iscariot macrumors 68030

    Iscariot

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    The U.S. economy is in a trough on almost every economic cycle you can name, even the ~50 year Kondratieff wave. If there was any point where the economy needed solid stewardship, it's now. Do any of the 2008 candidates have a solid economic platform?
     
  13. solvs thread starter macrumors 603

    solvs

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    #14
    Not really, but some are better than others. I posted something in the Obama thread about him disagreeing with McCain's new statements on the economy, saying he actually wished McCain would have kept his old views. I actually agree, used to be fairly decent, but more and more now it just looks like more of the same Bush policies that aren't and haven't been working, no matter how many times he keeps saying they are. I'm sorry, I know it's cyclical, but I don't buy the "it's not our fault" argument they're currently trying to make. Better leadership may have at least made things not quite as bad, if not better. I've posted links showing how they've actually made things worse, and can again if needed. For example, how the NY Gov (before the prostitution scandal) wrote about how he and other governors were trying to use previous guidelines to alleviate the situation, and the feds actually stopped them, threatening to take away federal funding and over rule them. We also keep hearing how no one saw this coming, but the numerous articles read and posted the last few years disproves that as well. I've been hearing the housing bubble is coming for months now. We've been hearing about rising costs and stagnant wages for even longer.

    To answer your question though (sorry, long tangent) Hillary has a good looking program on paper. I haven't slogged through all of it, but what I've seen is actually somewhat responsible, similar to her husbands. I've also read though that some of it is very pie in the sky, and not likely to happen. Don't know, lot of cross talk, hard to know who to believe. Not like the MSM talks much about it. Obama has been touting his, but not much on the details. Edwards' was ok, but the right was going to hit him with the "raising taxes" thing. Dodd's was supposedly really good, couldn't tell you any details though. Of the GOP candidates though, McCain's did seem the lesser evil. As I said though, apparently it's changed for the worst now (more tax cuts for one) so I couldn't tell you if it's still acceptable. Maybe someone who knows more about the details (and understands them) could post more info. I'm sure I wouldn't be the only one who would appreciate it.
     
  14. Iscariot macrumors 68030

    Iscariot

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    Hmmm. I don't really follow US economic policy too closely, since most of what I deal with is the end result, and I don't do any kind of interpretation or analysis beyond what I choose to do on my own time. We're not a consulting company, so I just get sort of a birds eye view of the facts and am forced to make of it what I will.

    I agree. There's a reason there's no single unified economic cycle, and that's because outside factors absolutely have an impact. I think good leadership is capable of making changes, but are limited in many capacities, while poor leadership can cause almost limitless damage.
     
  15. solvs thread starter macrumors 603

    solvs

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    #16
    Bingo.
     
  16. Iscariot macrumors 68030

    Iscariot

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    I spend all day changing language, lowering numbers, and making sad little graphs. You're not going to hear any argument from me.
     
  17. shu82 macrumors 6502a

    shu82

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    #18
    I am about to go do that right now, in a box, for 8 straight hours:(.

    I know that a few of you here would think hell had frozen over for me saying this, but as for Economic policy, Hillary is ahead on this for me (shudders).
     
  18. Desertrat macrumors newbie

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    #19
    Back to Bear Stearns for a moment: You could have bought it for #2/share on Monday afternoon. By Noon on Tuesday, it was up to $8, before closing at around $4. Somebody made a bunch of money.

    I'm agin Hillary's notions on the economy: IMO, she's wanting to spend money we don't have and won't have. Next, her taxation ideas will be rather stifling insofar as dealing with gas pump and petrochemical-products prices these next several years.

    42% of the 2002 budget expenditures were for SS, Medicare and Medicaid. Here we have the Boomers coming onstream for SS and Medicaid, and in three more years for Medicare. How ya gonna pay for her medical program? "Tax the rich" sounds good, but "the rich"--five percent of us--are already paying half the income tax load. A lot of "the rich" are already moving out of the U.S., just as they have already started moving out of California. Geese and golden eggs, as in the fable...

    And if she's one of those who voted for the energy bill, with that ethanolitis garbage in it, she's part of the cause of your food prices going up.

    Which of ALL of those who jumped into the presidential race ever "worked for a living" in the classic sense? Ran a business, owned some small company, came from any sort of hands-on trade background? Did their own dealing with regulatory bodies, or the myriad inspectors thrust upon us by cities? Did their own paperwork at tax time as part of doing business?

    Overall, I've seen few politicians who really knew, firsthand, what life itsownself was all about, beyond college, office work as a hired hand, and in politics. For them, all money is virtual. Well, except some sort of bribery...'scuse me, campaign contributions.

    'Rat
     
  19. mactastic macrumors 68040

    mactastic

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    #20
    How is McCain planning on paying for the next 100 years of the Iraq war, do you suppose?
     
  20. GoCubsGo macrumors Nehalem

    GoCubsGo

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    #21
    Ummm "start to see pretty large layoffs..." really? Because I'd venture to guess the majority of the layoffs have already happened in the sub-prime world.
     
  21. solvs thread starter macrumors 603

    solvs

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    #22
    She is, but it still isn't great.

    Uh, actually if you knew anything about her plans, one of her top priorities is balancing the budget. It's right there on her website. McCain is reversing a lot of his former views, unfortunately making them more like Bush's for some reason. And we all know how well his plans have been.
     
  22. Desertrat macrumors newbie

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    #23
    "...one of her top priorities is balancing the budget."

    I don't doubt that for a minute. But given what she's said about what she wants to do in the way of taxation and new programs, it can't happen. It won't happen.

    There are fixed obligations such as SS, Medicare and Medicaid which are growing at an increasing rate. There are incredible demands for infrastructure improvements--highways, water supplies and the like. There are the demands in the "human resources" budgets, and in education. There can thus be no significant reduction in the federal budget.

    People talk about the cost of Iraq, but they seem to think the entire military budget is allocated to that. The reality is that the incremental annual cost is some $100 to $150 billion per year, which if not spent in Iraq would do little toward reducing the deficit. How many "stimulus packages" will we see in the future?

    If you look at the charts which show who pays how much of the present income tax, it doesn't look like that cow can be milked much more. Inheritance taxes never have raised much money. A higher capital gains tax would reduce investment activity and thus reduce the federal income from that source--a reversal of what happened when the capital gains tax was lowered.

    Music for the campaign trail, tra la, tra la...

    'Rat
     
  23. mactastic macrumors 68040

    mactastic

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    #24
    Republicans said Bill Clinton wouldn't / couldn't balance the budget either. I don't put much stock in their predictions of what a Democratic POTUS will and won't be able to do.

    Just because conservatives suck at running a government they detest doesn't mean everyone else does too.
     
  24. MacNut macrumors Core

    MacNut

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    #25

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