I can't resist....

Socialism did not cause the collapse of the Soviet Union. The development of a totalitarian plutocracy who didn't understand economics or, more specifically, economic sustainability very well, caused the collapse of the Soviet Union.

I can't resist either...

I thought that's what socialism was? :cool:

Oh snap!

If you take the power away from the people (Socialism) - where do you suppose it goes?

Apparently, you have a lot more confidence in our Congresspeople.

Where did this come from? I've been against this bailout bill.

As I said ....... ideologues are the last to recognise the failure of the ideology ;)

Europeans scramble to save failing banks - Yahoo! News

Uh, let's be honest here. No liberals were excited about adding the AMT changes but the GOP needed that pork so they would vote for it.

SI

Did I read this right? A judge has blocked the Wells Fargo/Wachovia deal? WF would buy all of Wachovia without FDIC assistance, while Citi would require FDIC (and hence, using up to $42b of the bailout) just to buy part of Wachovia. Wouldn't the former be much better than the latter, since WF is on much firmer ground than Citi?

Its only a matter of contracts, so either they'll have to pay some sort of seperation fee or after looking at the contracts they'll be allowed to move with WF.

It will be a long, long time before the antagonisms of the past are forgotten in Europe and they can act in concert.

There's an interesting article here - a potted history of capitalism, it's booms and busts and the oscillation between free market and Keynesian economics. It's very readable:

http://www.guardian.co.uk/business/2...marketturmoil1

To me this whole Wachovia/Wells deal has shown just how undervalued the forced sales by the FDIC have been (ie. the break up of WaMu, Bears etc.).

Especially with the case of WaMu imho in which alledgedly the executives of the bank in question weren't even aware that their company was being broken up and were busy negotiating their own deals when suddenly informed it'd all been done without them ...

FDIC should back off since Wells Fargo is presenting a free market/private solution that doesn't dip into taxpayer/government funds at all. Hank Paulsen should then inform Citi that they won't get a penny of the 'bailout fund' if they pursue this matter for one more second. If those two things do not happen, they've blown their first post-bailout approval opportunity to show they have a clue.

Federal government solutions have to go looking for answers to questions, else how are they going to claim the justifications for doing things?

And despite screwing this up, the government will surely handle this $700 billion bailout/buy-in much better and save us all...

To be quite honest I don't think anyone knows accurately how this will pan out with the bail out - however most people agree things without it are going to get very hairy.

As such I see the bailout as a definite 'history in the making' moment - for good or bad I don't think we'll know until we've lived through it.

read the history of the great depression today and the similarities are striking and scary.

And yet, Republicans voting against still outnumbered those voting "for".

I think it was "intended" to coax some GOP members into voting for it...but since we have no transparency into who adds what to a bill...we can only speculate.

The reverse argument might be that pro-bill Democrats & Republicans realized more House Repubs would need to be catered to in order to vote for this turkey. It certainly doesnt make anybody feel any better to argue that point...but it is a bi-partisan BS tactic that has, and will continue to, go on until these same corrupt people vote themselves into transparency. Utterly sickening how the whole process continues to move on while we (i.e. the genral public) continue to be brought into partisan food fights to distract from the real problem...corruption.

I'm with you. What worries me is the idea that we sign a check and the problem disappears, which seems very unlikely. Action was clearly necessary, but it remains to be seen how much of an effect that action will have.

I don't think anyone is under the impression that the problem was going to disappear by signing a check. The problems do not just exist here - they're worldwide and its going to take time to work out of them. The 700b check just needs to free up the credit market so that things don't have to grind to a halt in order to work on fixing the problems.

Dow is below 10k.

I think you and I agree on the main point, but I'd disagree about the 'problem-solving check' -- I'm certain that plenty of Americans believe that now they've heard the bailout is going to happen that they can go back to watching TV and the crisis won't be a concern any longer. Long attention spans haven't been a hallmark of our national character lately.

Has Congress started fixing everything yet :)

What do you think they should do? I mean, if the problem is that the housing/credit market can't sustain itself without federal intervention, how exactly to you tear the whole thing down to sustainable levels WHILE you're propping it up? Or is it possible to just indefinitely keep it propped up?

I don't remember if I've heard you say if you think that a housing/credit collapse is inevitable.

There is a question as to whether the bailout/rescue package is too late with banks already crashing and the unemployment figures indicating an increase in the speed at which the economy is tanking. I don't think it's ever been believed that the package will avoid a recession but that it will hopefully restrict it to a level that can be tolerated.

It's no longer just the toxic packages - banks crashing is a problem in itself and reinforcing the downturn.

Wait, so we passed the $700 Blank Check Bill and now its supporters are telling us they aren't sure if it's going to work or not?

Awesome.

If you hadn't buried your head in the sand you would have heard all along that the bailout would not prevent a recession but hopefully prevent the situation becoming far worse that that - a much deeper, longer recession or even a depression. For all intents and purposes you've been in a recession for some time now.

Congress isn't exactly known for their foresight and recognition of a problem.

And yet now we have a "solution" that requires them (apparently) to "fix" the problem as this bides them time. That will NEVER happen. Why would anyone think it would?

This is more of a question for Gary, but I wonder if he would still be in favor of this temporary fix if he believed that Congress would do nothing to address the problems in the meantime (or conduct actions which are actually further destructive to the economy).

It is neither a fix nor a temporary fix. It's an attempt to prevent the situation getting completely out of control. You will have noticed that it was considered essential to act as quickly as possible even to the extent that the rescue package would not be the prefect one. That was because the economy is at a tipping point and we needed to act before the point was passed. Have we caught it in time? We can't know for some time.

But at least this will remove the initial cause of this - the toxic packages on the balance sheets of banks - but it's moving beyond that. Banks collapsing is a problem in itself - there can be a domino or snowball effect with one bank collapse triggering another. Hopefully we haven't reached that point and the removal of the toxic packages will mean that we get a manageable recession.

Well, if it was too late anyway, then wouldn't it have made more sense to take this opportunity to do a root-and-branch overhaul of the financial system so as to avoid this in the future instead of just throwing money at the problem in the hopes that it'll make the next couple of years a little more bearable?

I never said that the bailout would fix anything - I only felt it would keep the credit market flowing and prevent our economy from dropping to depression type levels. I've always felt a recession is inevitable - the question to me was could we keep things away from a depression. Without the bill I still think we would be headed to a depression - with the bill we could too but I think there's at least the possibility that this bailout stops the bleeding before it gets to that point. I was very clear in saying the bailout would fix nothing - there's far more problems to be fixed than throwing $700B at it.

I think the housing/credit market can be fixed without a total collapse as long as 1) the credit stays available and 2) credit is not being loaned out to businesses/people that can and will pay it back. You can not forever prop up giving people loans for houses they will never be able to afford or loans to businesses that have no assets of value nor am I suggesting you should.

There has to be failure here to make things better. Some businesses have to go under and some people sadly will have to lose their homes. What I want avoided is for the rest of the economy to come tumbling down with it. Should we head to "depression" levels alot of profitable, well run businesses will be jeopardized and their employees put at risk. People who have done nothing to contribute to this problem will end up having their lives turned upside down by it. That's why I'm in favor of getting this stuff out from the banks. The banks failing helps nobody. Let the government take it on and free the banks to continue lending to the people who can afford to purchase the house they want or to the business that will be able to pay back its loan. Now if the banks take the bailout money and do the same stupid things again then we're all hopelessly screwed.

Before the bailout there was alot of talks about banks trying to be able to set up a "good bank/bank bad" situation. A bank can still be a very profitable business - IF they're loaning money and IF they're getting paid back. There's no business like compounding interest. But if they're essentially getting rid of all their crap they need to take that relief and make good decisions now. They must loan money to keep our economy moving but they've got to tighten the standards so they will not take on poor risks.

We don't know that it's too late. We hope not. We hope we caught it in time (the delay in congress passing the bill didn't help). We can't know for some time. The unemployment figures only came out on Friday, the day the bill passed so that information about an accelerating downturn is new.

But even if it is too late the removal of these toxic packages will still help reduce the depth of the recession.

The American economy is already in a recession. The question now is will it be like the dotcom crash with recovery a year or two away or will it be much deeper than that and take several, even many, years to recover.

So basically the argument is that we throw money into the system as fast as possible to avoid the credit market failing altogether, and then solve the root problems later when we have time.

I'm sure that'll work out great.

I don't have a problem with pushing money into the markets to free up the credit market. The credit market is tight, the economy runs on credit ("operating credit" is not a bad thing like "overextended credit" is), can't have that fail, fine.

I don't have a problem with clearing the books of all the banks who have toxic assets on them. We've done that before, we'll do it again, and it's clearly the only way we'll get to a point where banks feel comfortable loaning to each other again.

But to do it without enforcing more transparency in the way banks report their financials (a key problem that got us into this mess in the first place)? To do this without getting any return on our investment of $700 billion (such as equity in the institutions we're saving)? To do it without requiring that the banks being saved act as good citizens once they're saved (the bill just assumes they'll do this)?

Give me a break.


The freezing of the credit markets is a direct result of the financial institutions being greedy idiots. If you're going to rescue them, and everyone they affected, from the result of their greedy idiocy, it seems like an ideal time to ensure they aren't such idiots in the future.

I have heard that a lot of institutions may balk at some of the requirements attached to the $700B bailout and refuse the offer and just try to ride it out.

The US markets are falling because of fears about the situtation in Europe, it appears.

Not a chance - if nothing is done to actually fix the problems then it is a complete waste of money. The bailout money is needed, IMO, to let the banks continue to operate and continue to lend and to keep the credit available to those businesses and people who should get it. As it was stated before, the patient needed to be kept alive so that surgery could be performed and that's what I believe the bailout to be.

I can't believe we're already back headed towards (or in) another recession. We really never really had a good recovery period from the last one.

SI

I'm now $10,000 below book value. This is scary/ridiculous. If I was 55 right now, I'd be pooping my pants.

Well, you not only give yourself breathing space but you remove much of the problem.


World banks have been pushing money into the credit market for months now - well over $200 billion - but it hasn't worked because it doesn't remove the cause of the problem - these toxic packages poisoning the banks' balance sheets and threatening their survival.


And that is what the bailout package is doing. But instead of a loan you're buying them and will sell them back into the market when their value has recovered.

The loans haven't worked because the poison remains. The government is absorbing the poison (only government can handle this size of debt) unitil it is no longer a problem.



The bailout package isn't the end - there is a great deal of regulation and oversight to be added to it to avoid it happening again. Both Obama and McCain have made it plain that will come.



Absolutely. Apart from a few free market ideologues that is what all believe must happen. These regulations etc have existed before but were progressively dismantled since 1980.

I'll give you a week to write up legislation that will not only fix the transparency issues, make sure you get the ROI you want and come up with new guidelines for the operating procedures of the bank...and to get enough votes in the House and Senate to guarantee it passes....and we're in election season.

Impossible.

This kind of stuff SHOULD HAVE been done LONG, LONG ago but it wasn't. Congress was not willing to act until the economy had flatlined - then they decided it might be worth looking into. They barely were able to pass a bill to simply get the toxic debt out of the banks - a free pass/redo for the banks for now - let alone try to do anything of substance. By their own fault they had no time to do anything here and they had to do something to buy themselves some time to fix the problem. Who knows if it will work but at least there's a chance it does as opposed to being on the bullet train to a deep recession/depression with no stops along the way.

I've haven't heard about the requirements. What exactly are they?

Gary -

I regret not having read the rest of this thread since my last post. Having my debit card stolen and my accounts cleaned out does work into this thread pretty well, though. :mad: Don't worry about me, though, the bank is going to give me a bailout equal to what was in the accounts to begin with. ;)

The problem with your above post and basically anyone that supported the bailout is that you don't see that it almost certainly will not work.

Just because you give banks free fake money does not mean they will lend it out. And if you only give them the money with strings attached that they have to lend it out to people that they wouldn't otherwise feel comfortable lending to, guess what you've now done? The exact same freaking thing that got us into this mess.

That's the whole problem. They are trying to fix a problem by doing the same thing that caused it.

I guess I picked a good time to sell what I had, since I knew I needed to sell and needed the liquidity. I sold all my holdings on the Friday before the first (and failed) vote on the bailout plan. I checked out with a decent gain, but not too much (important for my tax situation). I am going to start buying back in about 75 days or so, probably. I don't believe in timing the market, that's just when my new 401(k) picks up.

Congress? Bush and McCain (and their cronies) were, even a few weeks back, saying everything was fine. Doesn't make it alright, but it shows that many in government believed everything was just fine when they thought it was only affecting 'deadbeats who couldn't afford their mortgages.'

Totally disagree with this. They were hoping everything was fine and wanting to increase confidence in the economy. Behind the scenes, the banks were telling everyone on both sides of the aisle in Congress that there could be a problem coming that could have been addressed over 6 years ago when the first warning signs showed up.

Why would the banks not lend it out (assuming the other party is a worthwhile candidate to lend to)? How else does a bank make money? They're just going to sit there and hoard the money?

And I don't know what you mean about lending to people they wouldn't normally lend to. I said they should be lending to people and businesses that are not risky and that will pay the interest and loans back. It would be complete stupidity to get your books cleared and then go do exactly the same thing that clogged them up in the first place.

And they failed...by not sounding the alarm soon enough. Hard for me to blame just Congress for it. Sounds like it is easy for you, so good for you, but there is plenty of blame to go around on this one.

Let's be fair here - Obama and his cronies have their hands in this whole mess as well. Seems there's been a mention or two of him and Freddie/Fannie in the same sentence not to mention that he's a Senator - why wasn't he storming through Congress a year ago to get them to do something. Democrat, Republican...Bush, the House, Senate, Treasury...this is on all of them.

Seriously? Banks can't even trust other banks right now. There is less credit being handed out and fewer loans being given out (basically zero interbank loans) because nobody trusts anybody else.

So that's why. Kind of the reason the economy has hit the fan.

Yes, I'm quite aware of that - I've been one of the people mentioning that in this very thread. That's the purpose of the bailout - you take this stuff off the books and then the banks will lend.

they have always said that it was an attempt but that it was a best guess of the options available at the speed needed.

Don't assume I am all about Obama being great either...

By the way, from what I am reading, it seems there is a fear that many CEOs will refuse to participate because they don't like the restrictions on golden parachutes and such. Rather amazing...they are trying to play chicken with the government in order to still get their big pay day. Take that money and split it amongst the other employees that will lose their jobs when these greedy SOBs blow up Wall Street.

”I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the Government at defiance. The issuing power should be taken from the banks and restored to the people to whom it properly belongs.” Thomas Jefferson President of the United States


"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson, President of the United States


"It is well the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford


"All the perplexities, confusion and distress in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation." This is because nearly every part of our lives revolves around money in some way. If we clear up the money problem, all sorts of seemingly unrelated problems will simply vanish!” John Adams President of the United States


"The youth who can solve the money question will do more for the world than all the professional soldiers of history.” Henry Ford


"Whoever controls the volume of money in any country is absolute master of all industry and commerce.” James A. Garfield President of the United States


"Banking was conceived in iniquity and born in sin.....Bankers own the Earth. Take it away from them but leave them the power to create money, and, with the flick of a pen, they will create enough money to buy it back again.....Take this great power away from them and all great fortunes like mine will disappear (he was said to be the second richest man in Britain) and they ought to disappear, for then this would be a better and happier world to live in.....But, if you want to continue to be the slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit. - Sir Josiah Stamp, President of the Bank of England


"I had never thought the Federal Reserve Bank System would prove such a failure. The country is in a state of irretrievable bankruptcy.” Senator Carter Glass


"The Federal Reserve are one of the most corrupt institutions the world has ever seen. - Senator Louis T. McFadden (for 22 years Chairman of the U.S. Banking and currency Commission)

Well it seems the Dow always has a reason to fall, gotta love short term speculation. Cleaning up my puts since I never believed a rally would occur on my targets and I'll soon own more of certain favorite companies than I deserve to, yay me, boo world!

I'm disappointed that already we are playing the shifting blame game in regards to Congress/president/etc... and how we already are making excuses for the bailout. Lets be honest here, the actors here are Big Finance, they have various parts of our government by the balls and are soaking us dry while continuing the old games.

Quit listening to the latest hype on CNBC and use common sense for a bit. It is going to get rockier! :mad:

And does it really surprise that CEOs are saying no to bailouts because it affects their golden parachutes? These are spoiled trust fund babies who have been given everything they want from the government in corporate welfare and bailouts, and what not... why would they suddenly expect they would have to give up ground.

The whole banking industry needs to be put in its place.

Agreed. It would appear that those of us who emphasized that a lot of money would be wasted on this bill may end up getting the result they wanted. The big players are balking at the stipulations, so the money will likely stay in government accounts, though we gave away billions of dollars in earmarks in the process of not doing much of anything.

Oil now dropping below the $90 threshold. Down to just below $89 at this point, down over $5 on the day.

We may be too late to stop this thing and I fear for the next 6 months - 1 year.

If we go into a deflationary spiral and then a depression the pain will be widespread and bloody. In the short term people will love deflation but as the companies margins get squeezed they'll lay off people left and right and cut corners on quality and safety. R&D becomes nonexistent and people will begin to hold off on spending in the hopes that the price of item X will get cheaper in a few months thus leading to more of the problem.

This really sucks.

How come the teaman hasn't got the Chicken Little title yet?

That's another indication that the global economy, not just the US', is slowing down. Oil use, and thus oil price, is a direct measure of commercial activity.

Or that perhaps rampant speculation has ceased? Oil analysts have been saying $80-90 should have been the normalized price all along.

cuz far be it from you to admit it Ive actually been right a bunch. Which sucks cuz I'd rather have been wrong this year up until now on some of the things I ended up being right on and wouldve rather have been right on some of the things I was wrong on. I'll take any title you want as long as you get the crotchety old man title

As for your post above about oil, one exacerbates the other (amongst many other things) which causes massive problems including the deflation ive mentioned that you seem so willing to have added to the pressure the entire country is under.

And I presume you were saying the corollary back when oil prices were exploding several months ago? That oil skyrocketing from 80 to 100 to 120 to 140 must have meant that the world economy was going gangbusters, and that this was really a good sign?

(Just kidding, I happen to agree with you in general, it just seems like a strange time to try to make much sense of oil prices)

nope, I said it was a bubble....along with the commodities trade.

I was right about the dollar strengthening however it wasnt for the reason(s) I anticipated so...

and I continue to Bucc's chagrin to hope and pray that I am chicken little and everything will be fine.

I was almost convinced that every cloud really did have a silver lining but the gas is now cheaper but we had to sell the car to pay the mortgage :banghead:

Sorry for piling on two pages late, but no, the New Deal did the opposite. FDR's Policies Prolonged Depression by 7 Years, UCLA Economists Calculate / UCLA Newsroom The unemployment rates were still 19%/17%/15% in 1938-1940. And if the NRA had been allowed to stand, I shudder to think of the effects. (Hint: why did the Soviet economic system collapse - because one person can't price 200+ commodities.)

And while I don't have anything in front of me, a huge factor, if not the largest, in the global depression was excessive government regulation in the form of tariffs and barriers to trade that shut down the global market - later Bretton Woods was passed to hopefully eliminate this in the future.

There are issues with the New Deal, but to say without it there would have been a great recovery... well that is just using stat-magic with a narrow focus. It was a worldwide depression, and in the absence of government controls we might have seen widespread damage to the real economy. To use steel as an example, if the steel industry was crushed by foreign steel dumping we would not have had the same industry to profit off the war industry in world war II.

Oil speculation has been big, although I agree that 80-90 is its probable range. I've made money in both directions on the oil speculation, again, another reason to make your own estimation of an asset's worth and separate hype from news. Oil/gold is part of my inflation hedge... and I know deflation is spiking in references in the news, but again it seems like the latest play on the public's panic.

There was 15-25% unemployment for 10 years. That qualifies as widespread damage to the real economy to me. (There was also a famine - exacerbated by the New Deal/Agricultural Adjustment Act destroying massive amounts of food and farm products to, um, help end a famine?) The combination of high minimum wages and increased threat of strikes from unions kept the unemployment rate high until WWII rolled around, where suddenly unions couldn't threaten to strike without being thrown in jail, and strict wage controls were implemented (of course, that ended up screwing us long-term because businesses started offering benefits like health-care to compete against other businesses, but that's a different example of government intervention having disastrous unforeseen consequences).The steel industry that Roosevelt accused of a criminal conspiracy to cause economic ruin and ordered the FBI to look into, then had the Justice Department go after for antitrust reasons? No, our steel industry would have quickly recovered even if it suffered a temporary downturn as long as FDR didn't succeed in completely packing the Supreme Court. After all, its huge competitive advantage over European competitors was that it wasn't in the middle of a war zone, and that wasn't going to be any different. At the same time, a "dumping" of cheap steel onto the US market would have resulted in cheaper building materials, a construction boom, and a corresponding increase in jobs.

Guys, the Great Depression truly didn't end until WWII. The probable solution was obscene amounts of government deficit spending that makes today's budget squabbles look silly.

http://www.marktaw.com/culture_and_m...ionalDebt.html

Yeah, look at the left of the graph, our deficit for one year alone, exceeded all government receipts.

What are you talking about? That deficit WAS WWII because there was no one to buy anything. Also it clearly shows that years 2004-today are projected. It's highly probable the numbers are worse than the projections given what we know from this thread alone.

Our current "squabble" has us under an enormous amount of debt that we're just now feeling the effects of, and to make things worse we're heading INTO an economic retraction not coming OUT of one, making this situation even worse.

What's sad/depressing is that had we not set $3 trillion+ on fire in Iraq and the rest of the world (the right of the graph) we'd be in a much better position to deal with all of this.

Well, if you're going to talk about the problems caused by being under huge amounts of debt, deficit spending and current account deficits, it is worth pointing out where, historically, these all began - the New Deal, with WWII and the rebuilding of Europe accelerating the debt supercycle.

Or we could try to spend $1 trillion, increase government regulation and control of the economy and assume it will fix the problems created by exactly those kinds of solutions. Spurred on by a belief amongst a number of people that the New Deal was responsible for the recovery.

Unadulterated Keynesian economics are a joke that leave countries worse-off long-term.

Warhammer's link above doesn't really support this. Yes, debt was added by the New Deal programs and war reconstruction, but it was quickly under control and remained so for over 30 years. Debt didn't really start accumulating again until 1976, but was then back on a downward trend by 1980. That's when debt seemed to really get out of control as it exploded in the years between 1980 and 1992 and then again, even moreso, after 2000.





Warhammer's link where these images, along with some commentary, can be found: http://www.marktaw.com/culture_and_m...ionalDebt.html

Kinda funny how you always hear how terrible Democrats are with money, but the Clinton years were the only ones where the graph goes down. Obviously, lots of other stuff affects what happens with the deficit, but we always hear about those darned BIG GOVERNMENT TAX AND SPEND LIBERALS.

Accelerating was the wrong word, but using annual change in debt is just as misleading. National debt never fell below ~2 trillion or 35% of GDP after WWII. http://upload.wikimedia.org/wikipedi.../3b/USDebt.png (I don't know how to resize that to make it fit better.)

And, yes, Kodos, Reagan and the Bush's haven't exactly been fiscal conservatives. But fwiw, the deficit didn't go down, merely the rate of increase was slowed, which sadly does count as a victory.

As I said - ideologues are always the last to recognise the flaws in their ideology. The self-deluding rationalisations never cease to be astonishing :banghead:

Keynesian economics stopped with Reagan and the current crisis is a direct result of the dismantling of the regulatory systems that has occurred since.

The problem is always excess. By the 1970s excessive Keynesian economics had certainly brought the world economy to a condition where it was unable to handle economic impacts such as the oil shock in 1973/4. The response was to veer massively to the right - to return to the free market economics of the pre-1933 world. But, again, excess took over and has brought about the present situation.

What is needed now is a balanced response once the economic situation is recovered - free markets but with restrictions on those who would abuse the markets and oversight with the power to punish that abuse. The oscillation from one extreme to the other, driven mainly by ideologues and self-interest, has to come to and end if we're to avoid seeing another century like the last.

Whether our political systems have the ability to carry this through remains to be seen. Economic philosophies have tended to converge recently - socialism has been put aside for the present and this crisis is about to do the same for unfettered markets - and there is hope that the adversarial approach of the past may be at an end. There is little to choose between Obama and McCain in their response to this crisis and we can only hope that their shared solution is the right one.

I say "hope" because we still exaggerate enormously our real understanding of economic systems and a little more humility is needed.

Japan just pumped 1.5 trillion Yen (~15 billion $) into short term money market funds and watching what was going on in the Eurozone today was scary. The euro is at a fork in the road now.

If you think we've actually been running an ideological free-market system recently I'm not sure what to say.

Bush is certainly not the "dryest" President you've ever had but the present financial crisis has come about because the financial community has behaved in a thoroughly irresponsible manner that the dismantling of the regulatory system has allowed. It is that "freedom" to act, free of regulation and oversight, that has created this crisis. If you don't see the present system as "free market" then I suspect I'd be horrified by one you do.

UPDATE

'Global' rate cut of a 1/2 a point. Doesnt seem like Im the only chicken little, eh Bucc? Perhaps youre wrong on this one....but I promise, I pray youre right.

Why would you (not YOU, but this guy) make the scale of this graph in thousands of millions of dollars? Lop some of those zeroes off there and just make the scale billions.

British bailout:

Britain Announces Huge Bank Bailout - NYTimes.com

About $350B and $85B is to bailout 6 specific banks, which the government will own shares in now (of course that wasn't good for the stocks of those banks, but whatev).

According to The Guardian (British left-wing newspaper) that's now risen to 500 billion POUNDS - ie nearly a trillion dollars. And that for a country with a population less than a quarter of the US.

Youse guys are wingin' over nuttin' ;)

http://www.guardian.co.uk/business/2....creditcrunch1

Chicken little.

http://biz.yahoo.com/ap/081008/eu_iceland_meltdown.html

I keep waiting for the shoe to drop on Canada. So far our banks seem to be ok, but of course they will keep telling us they are fine until the day they go under. I know we have more regulations than the US, but this thing is seemingly bringing down banks in every country in the western hemisphere, and I don't see how we can be that immune.

Do you believe there's a point where it's too much and the money just becomes fake and worthless?

What if in six months we need 5 trillion to keep things running smoothly? What if in a year it's 100 trillion?

Or is just "hey, it's the government, they can take on debt"?

http://biz.yahoo.com/ap/081008/eu_russia_markets.html

Honestly, Russia's economy is far less able to handle these problems than the U.S. or Europe. It's very fragile. Toss in the oil price drop, and they've lost their only lifeline to sanity.

we're very interconnected in the world so these ripples elsewhere are significant of what is happening elsewhere....to say 'chicken little' is just ridiculous IMO.

You're right. If you believe that the relative stability of a Russian economy and the U.S. economy are even close to comparable, we have little to discuss.

are you kidding? Are you taking me literally pointing out one economy vs. ours when I point out interconnectedness as being 'it'? FWIW if you havnt seen the reciprocated effects of what were doing throughout the world than your head is buried so deep you may never admit to it.

I posted an article about Iceland just a little before!! Stop with the nonsense MBBF and start debating positions that have actually been said. You always do this and sometimes I wonder if you deny reading things or ignore posts so you can just keep standing in your corner which is done in many of the threads your the main antagonist in.

Ive simmered down....please tell me the tipping point of how many things need to come from how many countries to prove youre wrong in the above debate and Ill be sure to aim for that threshold otherwise it is pointless and you'll never, everrrrrrrrrrrrrrrr, come around to the stances that those on my side are espousing.

At some point, do we just decide on ditching stocks altogether? I don't mean tomorrow, but in 100 or 500 years, is it going to be one of those things people look back at and laugh or at least view as quaint like people using leeches and earth-centric solar system models.

Basically, financial people have suckered regular people into playing this baseball card trading game with paper that has no value. I guess, in a strange sense, money is paper that has no value but it is given intrinsic value by an entire country. However, basically, you have a bunch of people who have no idea (401K investors) being directed by novice traders (large firm people in charge of 401Ks) who just get suckered in by advanced traders.

In the end, isn't your return on investment in a stock basically StockPriceSell - StockPriceBuy + DividendOverEntirePeriod?

SI

the stock market is just a small window into what is going on.

Once again, you totally miss the point.

1. The Russian economy is fragile and has far more volitility than U.S. or European markets. They are a disaster in the making. Sure, there's a global economy, but the Russian economy could easily collapse without similar effects being seen in other countries.

2. The Iceland situation is much more relevant to the U.S. than Russia.

3. "those on my side". There's no sides here. Relax. I'm not sure where you got the idea that I don't think there's a problem here, but feel free to continue on if it makes you feel better.

i miss the point LOL

could very well be true that im more worked up than you or others as it is my nature.

This is my fear. Investment 'professionals' will always try to push charts and historical data on you as reasons why you should invest in the market, but more and more it's feeling like a ponzi scheme. Sure all those baby boomers made crap loads of money over the last 100 years, but in any pyramid scheme everyone makes money except for the guys on the bottom rung when the thing collapses. I honestly am beginning to worry that the entire financial model of our society may collapse during our lifetime, and that myself or my children will be the ones left holding the worthless bags of play money that kept our parents living in McMansions and driving Hummers to work.

If you were an writer for a newspaper editorial, I would read your weekly column religiously simply because of how I enjoyed reading this. Sure it sounds depressing as hell and an opinion, but it's good, entertaining writing.

It makes me want to just go and put all of my money in safe, but non-growing bonds, in that you get back slightly more than inflation and that's it. Then again, those are still only backed by the government.

That said, going back to before. One can draw a parallel between stocks and money saying "they're just worthless pieces of paper representing a commodity". However, there was a need for money when it came about- you needed something, anything to be a standard for currency so you didn't have people trading 3 goats for 2 sheep and then turning around and trading 2 sheep for a mule and then the mule for 5 sets of clothes. Instead, you could just trade in your 3 goats for cash and then for clothes.

This, on the other hand, is starting to feel like social security, only it's run by crooked money grubbers

SI

IMF predicting US deep recession next year.

Forecasters see U.S. leading global downturn - World business - MSNBC.com


Here's to China and India (especially China) to keep going. If China goes downhill severely, it may be a double US-China blow.