What do you think about the current financial situation?

F

Flo_Rida_2016

Active member
Fanny mae freddie mac in the past

Lehman bros the other day

AIG?

Merrill Lynch?

700 billion dollars of unreviewable federal dollars?
 
well mike, i currently have $2800 in my bank account, im and i owe mom and dad $700 for the tv i got. thats my current financial situation
 
haha Im jkin the real problem is americans love buying shit and borrowing and using their credit cards even though they cant afford it. Companies in america love trading debt so they let them borrow shit. Then the Clinton administration allowed debt trading companies to merge so they became giant companies that hold the economies in their hands. It was good for a while during the boom period. Every economy goes through regular boom and bust periods. People forgot about the bust period. And during the bust period people realized they shouldntve taken out adjustable rate mortgages that were so huge. And the big companies lost tons of money. so now they need the government to help.
 
i know but memebr that video of perpetual debt? well a lot of what they said is coming true. too bad the market already recovered pretty much.
 
o i was talking to my dad about if his money is safe....

he said he has lost 30grand in one day before... its crazy how much you can loose in the blink of an eye... (he said it was 30 grand in mutual funds)

but yeah "jumister" i agree, americans just cant stop spending, spend, spend, spend.

 
This is a much bigger issue though because 700 billion dollars is by far the most the federal government has ever spent on market regulation. More over htere will be significant reform in the SEC and financial regulation all together. Theres gotta be new antitrust regulation but more importantly securities exchange has to be better regulated.

Also the fed has asked that once it has the 700 billion dollars that it cannot go under judicial or congressional review as it has to act fast. This would be critical in defining future executive powers. (for those of you who dont know the treasury and fed are extensions of the president).

PS i love how many people respond to this thread and yet they all go to the sarah palin thread. I knew the liberals of NS wouldnt be able to grasp such a real, tangible, yet complex issue.

 
^^that and the fact that the carter administration said that in order for banks to be open they have to give out loans to people that prolly won't be able to pay them back. but yeah right now its pretty fucked up but it could be alot worse.
 
haha my Econ professor went off on what Carter did for atleast 1o mins....

haha i would LOVE to see him post in here...

government GTFO.. haha

yeah, lets go back to the age of gas shortages, interest rates through the roof, but hey, he was nice guy wasnt he?
 
I havent read what the fox article says but heres the simple version:

-Democrats love giving poor people breaks

-Bill Clinton is a Democrat

-Jimmy Carter is a Democrat

-Jimmy Carter was President from 1976-1980

-In 1977 Jimmy Carter proposed and passed the Community Reinvestment Act

-The CRA was an act that said banks have to loan credit to poor people no mattah what

-The CRA is regulated in part by the FDIC

-Bill Clinton was president from 1992-2000

-In 1995 Bill Clinton proposed changes to the CRA so that low to moderate income people could borrow a lot more money to buy bigger homes. (poor people should be entitled to subprime mortgages they cannot afford)

-The 1995 Clinton reform of CRA is what is credited with the vast number of subprime mortgages out there today

-Everyone was crediting Clinton for a good job because the housing economy was in a Boom period and AIG and the such were doing well

-In 2003 Bush wanted to repeal the fact that the government will bail out financial companies Freddie Mac and Fannie Mae but was declined

-As a result companies were like oh shit lets keep loaning mortgages and selling the debt.

-The housing market declined the tiniest smidge in 06-07

-Poor people couldnt afford their mortgages

-speculators owning their debt werent getting paid

-new speculators didnt want poor ppls mortgages no mo

-AIG and other mortgage hedgers couldnt sell

-Their balance sheets looked bad

-Their stock dropped

-The economy sucked.
 
haha that was a joke your name was the first i could think of. i just wanted to see how educated NS really is and whether or not they know the real issues. Apparently not...
 
The FUNDAMENTAL problem comes down to SIMPLE BASIC FACTS.

People on average live to probably around 85 years of age in the western world.

They start work on average probably around 20 and finish around 60.

That gives 40 years to work.

Therefore, realistically speaking you can't hold a debt (mortgage) greater than 4x your income or it will never get paid off.

Lenders were lending 10x peoples income.

Bob earns 10K a year before taxes.

Bob gets a mortgage for 100,000

If everything was free for bob, he could pay off his mortgage in 10 years (without interest). But sadly that isn't the case. Bob has to provide for his wife and 2 children (on average), pay bills, save for a pension, pay taxes.

He probably ends up with 2K left over (being optimistic)

That means he has 50 years to pay off his debt (without interest). But what's that, he is only working for 40 years? How is he going to pay it? He can't

Slap interest on all of that and he definitely can't

It really is that simple.
 
I'm sorry, but with your incredibly one sided political bias and assumption of blame on a single party, I find your real issues. Divided as our country is, the state of the nation can not be the fault of just one side.
 
all of this being true, and i see what your saying, but the economy was thriving under clinton, along with the school systems. its pretty sad to say that clinton is the best president of my lifetime, even though he was impeached
 
no... cuz thats not what happened. It was growing but because of rising housing markets too. I mean its really undoubtable that there wouldnt be giants like AIG giving out ARMs to poor people left and right if it werent for Clinton. Lenders wouldnt be loaning so much for mortgages poor people couldnt pay off if it werent for Clinton. Thats a fact because previous legislation prevented them from doing so.
 
Oh absolutely, I agree completely but what I am saying is that the main problem is so simple in reality, but because people are greedy they get carried away.

The trouble is people live for the moment far too much. When money is coming in it all seems great and attractive. Bonuses get paid, people do more and more and sell sell sell until boom, the first generation of borrowers stop earning (enough) money. eventually it will settle again, and no one will learn. It happens time and time again and has been proven in history so many times. But people just don't get it.

Government regulation could help this but it can seem like a cap on earnings. Consistency is the key but it's a tough message to put across to money grabbing banks!
 
im not getting involved in this because we all know how ju feels. all i know is its depressing watching my ira shrink instead of grow...
 
i dont really think we have much choice but to bail them out... or risk more failures and sinking into a depression
 
Let the government buy all the mortgages and fix the rates to the consumer then resell them when somebody wants to pay a price for them.

 
well yeah no shit. But do we let the Fed spend 700 million without judicial or congressional review? Doing it with oversight will lead to lenghty processes which we dont have time for. Doing it without oversight will invariably lead to future precedent where the executive branch extends further power into the congress. Moreover whos to say that the Fed will buy the right mortgages? Also if these companies are receiving federal dollars, should the CEOs keep their salaries? Where will these $700 billion come from? What type of SEC/ financial reform should be in place?

This is the single greatest issue in politics right now. Greater than the war. Greater than everything else combined. At least it was last week...
 
See i don't think it is the greed of banks that is the issue. It is the blind sympathy democrat policy has for poor people. In 1977 when the CRA was first introduced every single major firm advocated against it. In 1995 all major banking and lender firms opposed Clintons add on about ARM's and subprimes except for one banker. None of this would happen in the first place if the FDIC didnt enforce the CRA or if the CRA never passed.

Pre 70's banks were very skeptical about loaning money to people with high risk. But after the waves of democratic legislation, companies were forced to loan with an inadequate assessment of risk. Coupled with the guarantee that the government would bail them out and that there were speculators who traded these securities due to the rising cost of homes* the economy boomed for a while. But when the value of the homes decreased jus thte tiniest bit, all hell broke loose.

*If the value of your house increases ytou will be able to pay off your debt.
 
I don't really care. Let the financial institutions package what they got and then sell it to the Fed. The Fed can decide what to do with it later. Ideally they will sell the assets back to the public market at a profit or break even.

If it isn't enough to keep those in trouble solvent, so be it! Those fat cats need to be put on a diet anyway. The whole market could use a correction. IMO of course!
 
still if you put the .Com explosion under any presidency it will boost the economy and make them look good. not saying that thats the only reason, but thats deff. a big part of it.
 
i agree with you sell them to the fed. we need some stability in our financial markets soon.

its a crap shoot either way. IMO its either we "pay" for buying them or we "pay" for not buying them.

The only thing i dont like is this would be the biggest buout in the countries history and the document is something like 3 pages long? seems pretty sneaky if you ask me. also, i heard there are some companies on that list that dont even deal with financial markets. weird, but i am for the buyout mind you
 
to be honest i dont know shit about the cra. but from what your saying shouldn't banks still have had to realize that the poor could only afford a house up to a certain price and so they should have made sure to keep below this. where as from what i've read the banks made loans that were very risky to people who should have never been approved for them. so then arent the banks also to blame for approving loans that should not have been not just democrats?

 
to be completly honest with you kid it is a combination of everybodies fault that we got to this position. clintons programs, bushes spending, banks loaning too much credit, people not being able to afford their mortgages...

the banks did not care who bought the loans because the banks just sold off the paper to AIG, Lehman Brothers, Fannie and Freddie. people cant afford their loans, the people holding the paper are the ones going under. this is why you dont see your local bank going under.

thats the easiest way i can put it
 
I forgot to add a huge part that is contingent to the whole ordeal. Most of the time when they loaned out money, they assumed the value of the house would raise enough over a long period of time so that equity could be acheived. But the minute housing markets slow down just the slightest bit, speculators no longer buy mutual funds and hedge funds from firms like AIG and their stocks drop. Remember these firms are rated quarterly, sometimes daily so they do not always have the luxury of waiting 100 years for the value of a house to rise significantly.
 
no because the CRA FORCED banks to target low income citizens and provide credit at more lenient risk analysis. The 1995 revision by Clinton worsened the problem exponentially. He FORCED creditors in essence to offer subprime and adjustable rate mortgages to poor people who had no chance of repaying. The thought being that after a while, the houses would increase in value enough to cover the original cost of it and that if there had to be a seizure, the house's new value would be profitable. Unfortunately that isnt the case in real life. And for a long time people questioned the economic viability of these plans and in 2002 congress wanted to repeal the 95 revision but the process is still ongoing. In 2003 Bush wanted to repeal the entire act but failed.
 
you also forgot that Americans (mainly our generation and a few others) have a "I want now, i will get it now" mentality. there is no saving just spending. in fact we spent, as a nation, 3 trillion dollars more than we could afford from early 2000 untill now.

so what happened? we added in cheap credit at a rate nobody thought through. you could be 20 years old with half way good credit getting pre-approved cards for 10 to 20 thousand dollars, what the hell did we expect to happen to our country?

Credit bought this nation and credit will take it down.
 
So tell me who's fault it is in 2003 that Bush couldn't 'fix' the problem? The Republican Senate, or the Republican House?
 
well i believe the US has a problem saving...(we all do) and that this is a problem, but the current financial situation is a bit different. Yes the housing market is at the root of it, but that is not because of saving, that is because unqualified people took out sub prime loans based on the idea that their house would increase in value, as they historically have. When a few default it is not a big deal because they are all packaged up and securitized, but since there was a big housing bust (mainly in nevada, cali, phoenix, florida) these companies suffer. Thus the problems with mac and mae (but they have been government sponsored so they deserve a bit more attention) AIG is in trouble, but its not a insolvency issue, but a liquidity one. THey simply dont have enough cash on hand and cannot sell their assets fast enough to come up with it. The plan the government has in place for them, they could actually make money off of. As far as the 700B, we dont know what will happen if they do it, but it should do some good, maybe a bit bad as well. But if we dont do it, we know what will happen, more shit. so it is a good idea
 
EXACTLY haha thanks for summing upthe whole thread into cliff notes. Dunno if youre average Rowen or Drew. or Mucho Mango is going to know what default, sub prime loans, liquidity, or securities are.
 
Yeah...you don't really fully grasp this issue.

First of all, we are asking the Treasury Secretary to buy up the illiquid assets currently harming the balance sheets (and liability statements), of our Investment Banking, and Commercial Banking sectors.

The Federal Reserve is the 'fund raiser' they will sell 700 Bil. in treasury bonds/ T-bills. This is effectively Debt. It will be purchased by foreign Central Banks because they don't have any other real option. The US produces the Debt which backs the fixed annuities used by Banks and Insurance Companies to generate 'guaranteed' returns.

Executive Power is almost a non-issue here (except wild assertions of FDR), the president already has the power to regulate (or not regulate) the Financial Markets.

The Causes:

MBS - Mortgage Backed Securities, groupings of +1000 mortgages, with their cash-flows artificially spread throughout a spread of Mortgage Security products produced by mortgage brokers.

(this created the illusion of secure investment, as very poor loans could be packaged with better loans to create a homogeneous cash-flow, that was the basis of the asset's valuation (didn't work so well). There are TRILLIONS in MBS floating; their value is not clear.

CDS - Credit Default Swap, These are essentially insurance on a loan (credit). Should a debtor not pay the loan back (default) then the Bank is out the amount of the loan. To hedge against that risk, banks bought Credit Default Swaps to "swap" the liability of default to the insurer(mostly AIG).

(I loan Bob $20 @ 25% interest, i will earn $5. Then i give Joe $2, in exchange, Joe has to cover the $20 if bob doesn't pay me back) [CDS is a more than 60 Trillion Dollar Market]

Leverage / Excess Liquidity - Alan Greenspan (NOT CLINTON), made money almost free (1% interest rates) for a long time. This made it easy for people Buy Cars, Houses, Boats. It also allowed them to lever Trades at 100:1. 200:1, even 400:1 in Forex.

This cheap money created a housing boom, which in turn made lending more attractive. Banks lowered their standards until everyone who could afford a mortgage had one. Then Came the Trouble. Unscrupulous brokers didn't care about the quality of the loans, they just wanted more Debt to package and sell as MBS. To meet the demand for fresh debt, some horrid Loans were born:

The NINA - No Income No Assets (no problem)

The NINJA - No Income No Job No Assets (no problem)

This Debt is TOXIC, and there is TRILLIONS of dollars of it. We don't know where it is (in what package of mortgages), or even exactly how much it will cost to undo.

Worse still, the Banks that purchased these questionable loan packages hedged their exposure to default by buying Credit Default Swaps, TRILLIONS of dollars worth. Again, we don't know which Swaps are worthless paper or how much of there is.

The ultimate concern is the total loss of demand of US Dollars, and US Debt.

Even this is a simplification. This crisis runs to the core of the post-Bretton Woods Monetary System.

Regulation etc is really not the issue for the near term, if we fail to act quickly enough to stem the loss of credit, WE ARE FUCKED!

Partisanship is also TOTALLY irrelevant.
 
get rid of everyone over 75 and evenly redistribute their wealth. ends over means?

are the current and former heads of fannie mae, freddy mac, AIG, etc getting buttraped in San Quentin tonight? no? a $700 billion debt did not happen overnight. people knew about it, failed to act on it, and said people probably had salaries six digits or more. fuckers.

a small example of this is mr. kerry killinger (former CEO of washington mutual). highest paid CEO in the state of washington in 2007 (over familiar companies such as microsoft, starbucks, amazon.com). and that same year they closed how many "lending branches"? because they outsourced their home loans.

 
good points.

it will be interesting to see what history will make out of this current crisis.

i believe in a free market society (whats left of it) and companies should be allowed to fail if so be it. however, on the other side these companies are so huge and so powerful that they hold the economy in their hands. if they fail things will get really bad so i believe we should bail them out but its still at our expense so.....fuck
 
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