Are we in the middle of a financial meltdown?

[Batson Creek 20]

 

Who gives a fuck who caused it , shit needs to get sorted out before it's curtains.

Top marks parnell. Here we are on the brink of financial oblivion, and the politicos on TT think its business as usual. Its not. Its potentially 5 years of unmitigated misery unless the next few days are finessed perfectly without blame being cast or politics being involved. Too much to ask for, me thinks.

[Batson Creek 20]

 

There's a very, very small upside here. Amidst the carnage, I think the Fed will probably lower interest rates, dramatically. This is going to send US homeowners with good credit straight to the bank (the three remaining) to refinance. Someone posted earlier that real estate values will probably rise steadily from the lows here in the next few months.

 

With money so cheap (like Greenspan cheap at 1-2%) the credit market between institutions will have to loosen up. But still, lots of shit to get through before this happens.

While I'd like to agree with you, I actually think that, unfortunately, inflation is the only way out of this. Those of us whose memories go back to the 70's know how tough an unpalatable that was, but the situation has massive similarities to '74 where stagnation was cured, eventually, with inflation. No aspect of the next few years is going to be pretty.

 

Look.

 

Over there.

 

Chickens coming home to roost.

[cinzia 2,643]

Too much to ask for in an election year, yes, Batson Creek.

 

We could leave politcs out of it if McCain had done what he agreed last week with Obama, and just issued a joint statement from the campaign trail, urging passage of a bailout bill. He chose to grandstand it, and now he looks an ass.

[Batson Creek 20]

I'd love to respond, but that might smack of politics!

[bookmanjb 138]

Another way to see it is that this is the culmination of a 75 year crusade to undo the economic safeguards put in place after the spiritual ancestors of today's Wall streeters also combined greed, stupidity, and deception to smash the economy. It progressed very slowly until Reagan and then picked up speed. The S & L Robbery was a kind of practice run; they raised the federally insured deposit limit to from 10k to 40k and shortly thereafter to 100k. (McCain got all dirty over that one, but that's another thread.) Then the banks simply went to the real estate casino and played roulette way past their bedtime because the risk had all been shifted onto the taxpayer and naturally we ended up paying 500 billion for that one. But now we see that was just small potatoes. By 1999, after Phil Gramm put the finishing touches on gutting Glass-Steagal (Gramm-Leach-Bliley Financial Services Modernization Act), the stage was set. It took only a few years to run up the bar tab far beyond what the cookie jar could cover. Now, all those geniuses who worked so hard for so long to rationalize a phony economic philosophy are desperately trying to avoid saying: "I guess I was wrong." You can even read their hilarious, appalling posts on this very thread...

[MonksTown 104]

It was politics that got us into this though.

 

A desire to increase home ownership for political goals.

A desire for "free" markets with less and less regulation.

A belief in virtual rather than real goods or services.

 

Now we are supposed to be all "un-political" and bail out these blood suckers?

[Bell the cat 429]

 

So the Democrats just wanted to let things run their course? Of course not- the Democrats were involved in the negotiations. There had to agreement on the part of the Democratic leadership before this bill could go to a vote.

yes, likewise for the republican leadership. And both candidates staked their candidacy on this deal. But while a majority of the Democrats trooped out and supported the deal; the republicans by contrast defied their own president, their own leadership and their own candidate bJohn McCain to say fuck you to the whole deal and fuck you to the people of america.

[RS500Guy 54]

 

While I'd like to agree with you, I actually think that, unfortunately, inflation is the only way out of this.

Yeah, it's certainly possible. The oddity of inflation with decreased demand is a real tough nut to crack. Lower rates to drive demand? Raise rates to curb inflating prices?

 

But to hone in on it now, the biggest issue is to get the bank trusting each other again. Do that, then drive the upswing to the the broader market. Most of the losses today are people selling into strength, which is easily reversible if trends are believed to be moving to positive.

 

If I had the answer Warren and I would be lunching later to discuss it. :)

[cinzia 2,643]

BTC, I think Obama mostly stayed out of the fray. He was summoned, along with McCain, by President Bush, to Washington for that photo op/meeting last week. Otherwise, there is no indication he intended to go to Washington until (unless!) the Senate voted. Certainly, I wouldn't say Obama "staked his candidacy" on this deal.

 

You could even say that the Republicans "defied the president, their own leadership, and John McCain" to back Newt Gingrich.

 

Hubby says this, via IM: "what do you want to bet that there are many legislators buying up stock right now, knowing that they'll pass the next damn version of the bill?"

[Bell the cat 429]

granted Obama was kind of forrced into this position but he was nevertheless backed by his own party which cannot be said for McCain.

[Batson Creek 20]

 

If I had the answer Warren and I would be lunching later to discuss it.

I'll tell Warren you'll join us for pudding if you find the answer ;)

[MonksTown 104]

What are the chances of a massive program of public investment in the US a la TVA in the 1930s?

 

Railways, flood defences and home insulation spring to mind.

[cinzia 2,643]

Boy, if we could channel it into clean energy initiatives, that would ROCK.

[MonksTown 104]

America's energy consumption (and Europe's too) lie at the heart of the complex set of issues.

 

At the risk of a cliché, the "freedom" to drive an SUV from your newly bought house to the mall means nothing if the house is being foreclosed,

you can't get gasoline to run the vehicle and you've no money to spend at the mall.

[RS500Guy 54]

 

What are the chances of a massive program of public investment in the US a la TVA in the 1930s?

 

Railways, flood defences and home insulation spring to mind.

The TVA was a smaller, local component of the WPA, which employed millions nationwide. But what of the chances today? I'd think we need to be rationing food and have double digit unemployment for multiple quarters to get there again. Remember, lots of the WPA projects then (dams, roads, national parks) are covered by multi-national firms today. And don't forget the unions. The labor market is totally different today.

[cinzia 2,643]

Buy gold. I'm taking my harp to the bank to get it a vault.

 

Oh, wait ...

[RS500Guy 54]

Dow finished down 748.21

 

Largest ever.

 

Sucks.

[bookmanjb 138]

But that's not even close to the largest drop in percentage terms.

[worm 72]

well if the world is about to end, may I be the first to selflessly offer my body to the ladies of TT. Do what you will

[bohemka 4,338]

Dow down 778 and dropping.