Are we in the middle of a financial meltdown?

Kinda interesting that we don't actually have a thread on this subject. We have the Lehman brothers thread that ticks slowly along.

But last night congress failed to come to an agreement on the $700 Billion bailout. Even WITH the bailout it looks a bit possibly messy for the future. Without the bailout it looks...errrr...very messy.

I guess I am a little surprised that other TTers are not glued to the TV and newspapers like I am? I am not being Mr. Doom & Gloom as it really might not be that bad in the end, but right
now, we are in the middle of "interesting" financial times, and it looks like it could all go one way or the other.

Are we in the eye of the storm, has the storm already passed, or is it just gonna be a bit wet and rainy for a few weeks?

(or is the sun coming out for the super optimists out there!!!)

support the economy and buy stocks! It's a good time to do it.

Why the French (and similarly the Germans) are not as badly effected by the present events in the financial world as Britain and the US

I am trying not to think about it too much, even though it is directly impacting my life... I am definitely cutting down on discretionary expenditure. I worry for my own family situation, but also my brothers and sisters.

I think the "bail out" money should be spent on major infrastructure programs (job creation) however, not propping up the banks. Do the banks have to pay this money back- is it a loan, or a gift? I object on the basis if the banks receive the money for free so to say (to bail out their bad decisions), however all the debtors of the bank still have to pay their money back (ie the ordinary people who are losing their homes). It seems a win-win situation for financial institutions as usual.

Yeah, watching the News I saw a reporter in Paris saying the French banks had only lost about $20 Billion so far which is buttons of course. 75% of their banking is retail and hardly any of this other silliness. Personal debt is also much much lower than the UK.

I assume same pretty much applies here in Germany. I haven't seen any obvious signs of stress, and I suspect bums will be on seats at the Oktoberfest today.

Just I saw a UK reporter in New York last night, and he said you have to be there to believe it. He said it's like 100 times worse in the atmosphere over there, than when Northern Rock went bust in the UK.

Renia: Yeah, I think I am also "feeling" it because it is directly impacting my brother back in the UK, so kinda on my mind more. On a microeconomic scale I also watch my own sales on the internet for end-users in the UK, Germany and France and at this stage they appear largely unchanged.

I have been watching the Tele and admit I am nervous. I plied JJ with questions the other night during the Bears game (sorry dude) about this. A friend of mine works as a receptionist at an insurance company while she works on her masters and she says it is deadly quiet everyday with a sense of doom on peeps faces.

Sadly she is working on becoming a social worker and it looks llike she might be in greater need closer to home sooner than she thinks (her words).

Edit: In the US

People in Britain get loans to buy furniture and holidays. In Britain institutions lend money to people to buy furniture and holidays.

Mortgage rates in the UK went up again overnight - expect more to come. With credit tightening more and more, I expect it is not a good time to invest in property or firms, especially in the US and UK. Pumping billions of taxpayers' money into the market will lead to even huger government debt medium-term which cannot be good for the economies especially of US and UK (who, let's admit it, have been living beyond their means for some time now).
Does anyone know if there are bank asset/risk ratios online?

I saw this on a comments section linked to a news article:

The public will not pay more tax (at least not in the short term).
[tin-hat-mode]
Instead, government debt will explode, and this debt will be serviced by those who have cash (resp. Chinese, Arabs). The danger is that the Chinese/Arabs will get bored of buying dollars - then it's game-over for the greenback.
[/tin-hat-mode]

I've always felt that there is a lot of truth to the movie Understanding Money as Debt but I still wish it doesn't turn out that way...

The (cautious) Japanese banks are doing quite well out of this too....they have the cash ready to buy.

For sure the game is to convert a potentially very large terminal punch to the head, into lots of nasty slow jabs to the ribs for the public. Spread the pain over time.

It's not helping me find a job that's for sure.

I think theres truth to the title of this thread - and there is f'ck all we can do to stop it. Buckle down and enjoy the ride, cuz it ain't gonna be pretty.

Maybe I did find the right time to move back to germany.

I am very skeptic about the 700bn bailout
Investing in a turbulent market can be very risky.

I'm kinda happy I have no assets in the UK. With average household debt in the UK at ca. £50K (incl. mortgage), and credit getting more expensive/hard to obtain = falling house prices / lower investment / higher unemployment / more government debt / higher taxes ... .

Britain: The Economic Fallout

Not really. At least I didn't notice any gloom and doom at Allianz. Or are you refering to an insurance company in the US?

Noone can tell whether this bailout will work or not, but I'm sure it will happen, if only because of the upcoming US election, where both parties want to be seen as doing something.

Here's a a couple of views from the Motley Fool, one for, and one against the bailout:

Can We Afford All of These Bailouts?

Bailout: The Sucker Punch

tis time to buy gold (actually too late) and guns!

I just hope that people predicting a situation worse than the 30's are wrong. It is indeed a very unsettling situation

My husband told me this morning that he read an article about masses of people in Hong Kong queueing up at banks to withdraw their savings. I wonder if that will happen in Europe too if the news gets worse?

The bank run was the Bank of East Asia. Seems to have recovered but it's not a good sign.

In the light of impending financial meltdown, I wonder if prostitutes will also lower their rates?

Why, do you think there will be more competition?

The NYT reported a few days ago that business at NY massage parlors is up, because stressed bankers need to distract themselves.

*wonders if you can buy stocks in ho's*

worm: Marry one.

Why buy a cow when you only want a cup of milk?

http://www.moneymorning.com/2008/09/26/cre...sis-compromise/

The longer Congress diddles around without doing anything, the more it looks like we probably don't need a bailout of the size the Administration is asking for. I read an opinion piece yesterday arguing that the banks were all taking care of the matter themselves with mergers and that though the market might be down for awhile with no bailout at all, $700 billion would be far overshooting the need. (Unfortunately, like JE, I have been reading so much in the past week, from so many sources, that now I can't find where I read that.)

Keep diddling around, Congress!

The Birk Economic Recovery Plan
Hi Pals,
I’m against the $85,000,000,000.00 bailout of AIG.Instead, I’m in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.
To make the math simple, let’s assume there are 200,000,000 bona fide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman and child.
So 200,000,000 might be a fair stab at adults 18 and up.
So… divide 200 million adults 18+ into $85 billon. That equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.
Of course, it would NOT be tax free.
So let’s assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes.
That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Ø Pay off your mortgage – housing crisis solved.
Ø Repay college loans – what a great boost to new grads.
Ø Put away money for college – it’ll be there.
Ø Save in a bank – create money to loan to entrepreneurs.
Ø Buy a new car – create jobs.
Ø Invest in the market – capital drives growth.
Ø Pay for your parent’s medical insurance – health care improves.
Ø Enable Deadbeat Dads to come clean – or else.
Remember this is for EVERY adult U S Citizen 18+ –
including the folks who lost their jobs at Lehman Brothers, and every other company that is cutting back.
And of course, for those serving in our Armed Forces.
If we’re going to re-distribute wealth let’s really do it…
instead of trickling out a puny $1000.00 (“vote buy”) economic incentive that is being proposed by one of our candidates for President.
If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!
As for AIG – liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.
Here’s my rationale. We deserve it and AIG doesn’t.
Sure it’s a crazy idea that can “never work.”
But can you imagine the Coast-To-Coast Block Party
How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC.

And remember…
The Birk Plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ah-h-h… I feel so much better getting that off my chest.
Kindest personal regards,
Birk
T. J. Birkenmeier,
A Creative Guy & Citizen of the Republic

P.S. Feel free to pass this along to your pals as it’s either good for a laugh or a tear or a very sobering thought on how best to use $85 BILLION!

Actually, it's 425 $ per person, not 425,000 $. Makes a difference, no?

And btw, the 85 b $ is not money down the drain. It is a loan to AIG at >10 % interest. And they will anyway carve up AIG as much as needed to be able to repay the loan.

Oh dear, not a math expert, are we? That sounded like the coolest plan ever until I thought about it for about 20 seconds. So actually, the candidate's plan to return $1000 to each taxpayer is twice as generous as your plan. Hmmm...

It is instructive, in light of the economic developments of the past weeks, to go back and read some of Toytown's right-wingers' comments in a thread I started about a year ago.

The alarming parallels between 1929 and 2007

I notice that they haven't been weighing in on this thread. I would very much like to see whether their opinions have undergone any changes or if they continue to believe what they espoused last year.

Oh, my, but that does make for interesting reading, bookman!

Yoooo hoooooo, Dan Hessen! Conquistador! Lifeisabuffet!

Extra credit to Ulysses:

I think that the UK is in big trouble. For years Gordon told us we had a strong economy, bollocks. The GB economy, unlike the French or German is built on sand (credit debt and the housing market and not much else). Money has been too easy (unlike France and Germany), 120% mortgages given to young people who can obviously never pay it back. People borrowing £1000s just to go on holiday, buy Plasma TVs or new furniture, a big crash just had to come. A crash in the long term is the best thing that can happen to the UK (ok perhaps not quite), the situation as it was, was not sustainable. People have to start being sensible now (at last). The UK has been living in cloud cuckoo land for too long.

A small (tatty) 2 up 2 down victorian terrace in my home town used to cost £60,000 in 1999, this summer it would have cost £170,000. That is just crazy, no way is that worth it at all, how can normal working class people ever afford that. Just making the social devide even bigger (as if it wasn't big enough here).

The £ might fall a lot more as well, we might even go for the Euro soon, you never know.

Personally... I am scared. I was worried that this financial situation was coming due to our budget, months ago I googled this but the reponses I read were mostly positive. I don't have a say or a place in any of that but I'm not surprised at all that this happened. I was very very upset when I sw HIM running for president. I saw his face before he ran and I knew... he was nothing...The day he won, I cried and I said he is going to start a war. 9/11 I said he did it. I'm not sure about that yet. I can't even hear his voice to this day. He and Cheney are the leaders of corruption. I worked at the US Embassy in Seoul and they had a pic of Cheney and he wasn't smiling, he wasn't trying to look like a nice guy at all, it was mocking, he just had this smirk on his face, like he knew everyone was stupid and he was going to take them for all they had. All this shit makes me sick. I want my country back!!!

It just depends what billion you take. For Europeans a billion is different than for an American. Never had to deal with that many zeros and when I was a kid and played with German money they had the billions printed on it in one word as the zeros just swam away.

Maybe you all should read Bill Bonner. He has been warning about this for years.

http://www.dailyreckoning.com/

I got all excited that Bonner quoted Garrison Keillor, who, though no longer particularly popular here in his native Minnesota, is a raging lib and can write a damn good column when he gets wound up about politics. But alas, Bonner took Keillor out of context. While Bonner seems to think Keillor is in favor of government regulators stepping in and doing their jobs now, GK was really writing in favor of the regulators doing a decent job of regulating all along to prevent the mess.

Anyway, let's quote some more of that Keillor column (not linked in the Daily Reckoning):

Middle America has something to say about this too:

http://uk.youtube.com/watch?v=XalFQT2edto#

No bail out ...

Was listening to the radio this morning on the way home.It said on the German News ( Bayern 3) that the Stadt Münich had 4 million in the Lehmann bank but Frankfurt had 90 million.All euros but looks like the haad of financial destruction is reaching out far

I know this qoute is long but it was one of the easiest to understand explanations of the financial/housing crisis in the US.

Investors.com: How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable


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I think the USA is already in depression, sorry if I sound pessimistic but, I think it’s going to take allot more than $700 billion rescue bill, to return all of that investor confidence back into check.
Also US financial regulation, defiantly needs serious adjustments and reforms.

Well, I read the article and I'm relieved now to know upon whom to place blame for the Wall Street Meltdown: POOR PEOPLE! Now why didn't I think of that before? Here I was thinking that the combination of arrogance, ignorance, deception, fraud, and greed that has characterized the Wall St./K Street complex for the last 30 years or so was the problem. What a relief to know it was all those ethnics who had the nerve to want to own a house!!!

Great to see that you actually didn't UNDERSTAND the article then...It was about Someone intending to do good without common sense and then all the rest you wrote (greed etc...)

The article was about how the CRA and its 1995 revision were responsible for Fannie Mae & Freddie Mac being sucked under. The speculation about Clinton's "good" intentions is absurd and pointless. Variations on the thrust of this article--that the CRA is the cause of the meltdown--have been making the rounds of RightWingWorld for the past week or so, most notably on the Limbaugh show. Unsaid is that the CRA was toothless until 1995 and after that only semi-toothless. It applied only to banks and thrifts; it did not apply to mortgage companies and only applied to affiliates of banks and thrifts IF the bank or thrift decided to count the loan as CRA-applicable. Less than 1 in 4 of the toxic waste loans were CRA-applicable. The agenda of the article was to give the impression that the arrogance, ignorance, deception, fraud and greed at the two Freddies were a function of Democratic Party shenanigans. Compared to the responsibility being currently avoided by the "Personal Responsibility" set, this is very small potatoes indeed.

Looks like seth17 is trying out some of McCain's tactics from last night's debate (and I do mean tactics and not strategy): bookman, you just don't UNDERSTAND.

If you don't agree, in other words, bookman, it's because of your own weak intellect.