Jul
30
How is the bailout different from trickle down economics?
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austin_dev asked:
The US tax system takes money from income, not wealth. That means workers pay the taxes while the wealthy have stock. The bailout adds a trillion dollars to the debt, to be repaid by workers, and uses that money to buy worthless securities/mortgages from companies owned by investors. This boosts the value of the companies and makes the investors richer. The companies can then stay afloat and keep paying workers.
The US tax system takes money from income, not wealth. That means workers pay the taxes while the wealthy have stock. The bailout adds a trillion dollars to the debt, to be repaid by workers, and uses that money to buy worthless securities/mortgages from companies owned by investors. This boosts the value of the companies and makes the investors richer. The companies can then stay afloat and keep paying workers.
What is the difference between this and trickle-down economics?
Why are the Democrats suddenly supporting trickle-down economics after years of bashing it?
Why are conservative Republicans bashing trickle-down economics after years of promoting it?
Chad
Jul
29
The Government Bailout Plan Rejected
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Elaine asked:
The Government bailout plan referred to as Emergency Economic Stabilization Act of 2008 that allocated up to $700 billion to recover troubled mortgage backed assets and to stabilize the economy in the US was rejected by the majority of voters of the House on Monday. It appears that while majority of the voters wanted the bailout plan to pass, no one wanted to risk their own job. And now who is to blame? It seems that now that it’s all said and done a lot of finger pointing is going around. I won’t name anybody in particular, but we all know who is it whom everyone is associating with the failure.
Now that the bailout plan has been rejected, is there is plan B that the Government will implement in this very urgent economic situation? What steps will the Government take now to avoid the major economic recession that the country is facing now? And how will that affect us, the taxpayers?
At this time, there is no answer to this question, but citizens understand that an emergency measures need to be taken immediately to bring the economy in the country back to normal and to allow for the financial institutions to resume lending. At this hard market period, with the major financial fiascos of lending giants such as Washington Mutual and Wachovia, and the biggest Dow drop in the history, the lawmakers need to step up to the plate and take charge of the situation on the Wall Street. Check out Where Will Our Economy Go?
Stacey
The Government bailout plan referred to as Emergency Economic Stabilization Act of 2008 that allocated up to $700 billion to recover troubled mortgage backed assets and to stabilize the economy in the US was rejected by the majority of voters of the House on Monday. It appears that while majority of the voters wanted the bailout plan to pass, no one wanted to risk their own job. And now who is to blame? It seems that now that it’s all said and done a lot of finger pointing is going around. I won’t name anybody in particular, but we all know who is it whom everyone is associating with the failure.
Now that the bailout plan has been rejected, is there is plan B that the Government will implement in this very urgent economic situation? What steps will the Government take now to avoid the major economic recession that the country is facing now? And how will that affect us, the taxpayers?
At this time, there is no answer to this question, but citizens understand that an emergency measures need to be taken immediately to bring the economy in the country back to normal and to allow for the financial institutions to resume lending. At this hard market period, with the major financial fiascos of lending giants such as Washington Mutual and Wachovia, and the biggest Dow drop in the history, the lawmakers need to step up to the plate and take charge of the situation on the Wall Street. Check out Where Will Our Economy Go?
Stacey
Jul
19
Gold and the Big Bailout!
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Carl Lucci asked:
09/28/08 - Wondering how the bailout (or it’s failure) will affect gold? I don’t portend or pretend to know what is going on behind the doors as Congress negotiates this “bad” bill, but from all my indicators are that wall street will initially get caught up in the hype, and then the plan will “fall” out of favor…
My work is indicating just that, that the gold market is setting up for a massive, yes I said a massive comeback. First stop is to attack, very aggressively, I might add, the old highs at 1000/oz.
So, how can you take advantage of the next move? Especially, if you were the few that listened as the gold market yelled for us to get out of the way of the oncoming avalanche. Well, as traders know, take your profits when the indications are that the markets will turn and “re-position” yourself when the market likewise “calls” out to us to come back to the party - as I believe it is doing as I write this article.
GOING FOR THE GOLD - HOW?
I’m no longer a big believer in “hard assets”, to difficult (for me anyway) to sell tangibles, the execution is too slow, the price haggling is too much BS. In short it’s not as efficient, or anywhere as convenient as the trading pits on the futures and commodity exchanges, this is especially true when it comes to the options pits (which is where I trade). So, this is where I have chosen to play the stock market, the futures and all the commodities (yes, you can play all of these markets in via stocks). For those who are interested in playing the gold markets you can do so via the following stocks and or indices; abx, nem, gld, or the xau.
PLAYING THE BANKS…
Banking and the financial crisis or the presumed exuberance of it’s passage can be played and or invested in through the utilization of options on; xlf, wfc, wb, etc. So, while the shorts have been stopped, on certain stocks, the “put” option protection (investing) remains in effect.
While I sit and analyze the above, I find even the stronger survivors of the recent debacle, are looking a bit top heavy, with little to go to the topside (or in an upside rally), in fact I am getting ready to short the next rally in any of the banking stocks I’m watching (which I can’t divulge here), and searching for a place to take a position in the gold arena. In other words gold (investors) are not buying into the going’s on in Washington (and around the world.
Presently it is going to be a bit frustrating to “gold” traders up at these present levels (10/10/08), but the indications look like for the next few weeks, the traders (institutions) are squaring off their positions, covering shorts and repositioning in longs (call options or hard assets), for the next rally. This would play out, given the recent “stock market” debacle as it settles back and forth, in it’s attempt to test the most recent “panic” bottom in the 8800 range, though I don’t believe it will remain tough at that level, as I see a horde of buyers (vulture investors) sitting in wait at the 7700 (on the Dow) price level.
WHY TALK ABOUT THE STOCK MARKET?
Whether you believe it or not, or want to believe it or not ALL MARKETS are indicators of their fellow markets. One tells what another is going to do, when it is likely to do it and at what levels it will probably occur. That being said, you MUST KNOW HOW TO READ THE MARKETS, understand their language and how to interpret what they are saying to you! This comes with time and training - Back testing, CNN, CNBC or FBN won’t tell you or teach it to you. Hell, half of the commentator’s on these stations don’t know what the heck the news is dictating to take place anyway - so why listen to them? It’s fun to watch these puppets fundamentally analyze the markets based on what is in the news they are broadcasting.
I once told my fellow investor’s: “If you want to be a good trader, make money consistently in the stock and commodity markets, then TURN OFF THE NEWS!” It is often “inaccurate” and or “late to the party”, i.e., used as an excuse for what the market “HAS ALREADY COMPLETED DOING… NEVER WHAT IS ABOUT TO DO!”
Keep your powder dry, be patient and get ready - IN MY OPINION, the next move is going to be a very worthwhile position to take in the gold and stock markets.
~ Good Trading
Oh, the bailout, in my opinion was nothing more then a “power grabbing” excuse used to rape the tax-payers coffers of what our “government” has stored up. My question is this; if we have all this wealth to toss at wall street, why hasn’t our government readjusted the tax code, lowered our tax rates and thus allow Americans to really enjoy the fruitage of their labor(s)?”
Carla
09/28/08 - Wondering how the bailout (or it’s failure) will affect gold? I don’t portend or pretend to know what is going on behind the doors as Congress negotiates this “bad” bill, but from all my indicators are that wall street will initially get caught up in the hype, and then the plan will “fall” out of favor…
My work is indicating just that, that the gold market is setting up for a massive, yes I said a massive comeback. First stop is to attack, very aggressively, I might add, the old highs at 1000/oz.
So, how can you take advantage of the next move? Especially, if you were the few that listened as the gold market yelled for us to get out of the way of the oncoming avalanche. Well, as traders know, take your profits when the indications are that the markets will turn and “re-position” yourself when the market likewise “calls” out to us to come back to the party - as I believe it is doing as I write this article.
GOING FOR THE GOLD - HOW?
I’m no longer a big believer in “hard assets”, to difficult (for me anyway) to sell tangibles, the execution is too slow, the price haggling is too much BS. In short it’s not as efficient, or anywhere as convenient as the trading pits on the futures and commodity exchanges, this is especially true when it comes to the options pits (which is where I trade). So, this is where I have chosen to play the stock market, the futures and all the commodities (yes, you can play all of these markets in via stocks). For those who are interested in playing the gold markets you can do so via the following stocks and or indices; abx, nem, gld, or the xau.
PLAYING THE BANKS…
Banking and the financial crisis or the presumed exuberance of it’s passage can be played and or invested in through the utilization of options on; xlf, wfc, wb, etc. So, while the shorts have been stopped, on certain stocks, the “put” option protection (investing) remains in effect.
While I sit and analyze the above, I find even the stronger survivors of the recent debacle, are looking a bit top heavy, with little to go to the topside (or in an upside rally), in fact I am getting ready to short the next rally in any of the banking stocks I’m watching (which I can’t divulge here), and searching for a place to take a position in the gold arena. In other words gold (investors) are not buying into the going’s on in Washington (and around the world.
Presently it is going to be a bit frustrating to “gold” traders up at these present levels (10/10/08), but the indications look like for the next few weeks, the traders (institutions) are squaring off their positions, covering shorts and repositioning in longs (call options or hard assets), for the next rally. This would play out, given the recent “stock market” debacle as it settles back and forth, in it’s attempt to test the most recent “panic” bottom in the 8800 range, though I don’t believe it will remain tough at that level, as I see a horde of buyers (vulture investors) sitting in wait at the 7700 (on the Dow) price level.
WHY TALK ABOUT THE STOCK MARKET?
Whether you believe it or not, or want to believe it or not ALL MARKETS are indicators of their fellow markets. One tells what another is going to do, when it is likely to do it and at what levels it will probably occur. That being said, you MUST KNOW HOW TO READ THE MARKETS, understand their language and how to interpret what they are saying to you! This comes with time and training - Back testing, CNN, CNBC or FBN won’t tell you or teach it to you. Hell, half of the commentator’s on these stations don’t know what the heck the news is dictating to take place anyway - so why listen to them? It’s fun to watch these puppets fundamentally analyze the markets based on what is in the news they are broadcasting.
I once told my fellow investor’s: “If you want to be a good trader, make money consistently in the stock and commodity markets, then TURN OFF THE NEWS!” It is often “inaccurate” and or “late to the party”, i.e., used as an excuse for what the market “HAS ALREADY COMPLETED DOING… NEVER WHAT IS ABOUT TO DO!”
Keep your powder dry, be patient and get ready - IN MY OPINION, the next move is going to be a very worthwhile position to take in the gold and stock markets.
~ Good Trading
Oh, the bailout, in my opinion was nothing more then a “power grabbing” excuse used to rape the tax-payers coffers of what our “government” has stored up. My question is this; if we have all this wealth to toss at wall street, why hasn’t our government readjusted the tax code, lowered our tax rates and thus allow Americans to really enjoy the fruitage of their labor(s)?”
Carla
Jul
16
What exactly is the reason for the bailout of the auto the companies?
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☮♫♪♥christen☮♫♪♥ asked:
What exactly is the reason for the bailout of the auto the companies? You know you’ve heard it on the news (because they never stop talking about it) should we bail Ford out, Chrysler or GM. But what does it all mean for the average American?
I want to be able understand what’s going on.
What exactly is the reason for the bailout of the auto the companies? You know you’ve heard it on the news (because they never stop talking about it) should we bail Ford out, Chrysler or GM. But what does it all mean for the average American?
I want to be able understand what’s going on.
Thanks.
Brent
Jul
12
How were republicans responsible in democratic controlled senate in defeating the auto bailout bill?
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wondering asked:
Since the legislator seems to be forcing an executive decision, is the plan to blame Bush for bailout?
Jamie
Since the legislator seems to be forcing an executive decision, is the plan to blame Bush for bailout?
Jamie
Jul
11
Wall Street Bailout, Congressional Cover-up, or Sarbanes-Oxley?
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Steve Selengut asked:
Every new controversy demands a look at similar situations of the past. Just what is a bailout anyway? In the early 80’s, Lee Iacocca arranged a government loan and tax concessions to bring Chrysler Corporation back from the brink of bankruptcy— during the Carter Administration, to save you a Google.
The economic domino effect of a major corporate death was clear, and Congress acted wisely when it saved this American icon from extinction— the loans were repaid. But was it poor management or shortsighted government that caused the problem. Politicians massaged and empowered the labor unions, implemented minimum wage legislation, and protected the steel industry from foreign competition.
Similar financial problems existed throughout the automotive industry and lower cost, better product was just starting to come ashore. Bailout or fix-up? Voteless corporations were perfect patsies then, and remain so today. But the average Joe’s investment in the success of these perennial scapegoats for bad government has risen from zero dollars to all of our dollars. Every failure takes a piece of your retirement program with it.
All employed John Q’s are investors; all taxpayers are investors; all Americans have a vested equity interest in the success of all publicly traded corporations in our “regulated capitalism” economy. Most politicians still can’t connect the dots, and seem to be formulating policy based on the latest consensus of public blogs.
It wasn’t the financial institutions that decided to make mortgage money available to practically anyone who wanted to own a home— regulators permitted (encouraged) a relaxation of the qualification requirements. In effect, they enabled the predatory lending practices that misguided many first time homebuyers.
The easy-money lending practices, and sky rocketing housing prices, brought speculators into the mix and home flipping became as popular as Monday Night Football. Speculators accept the risks of loss; it’s what they do. But allowing the creation of high risk where none is expected is unacceptable. The creative products developed by the financial institutions must be examined more closely and labeled more effectively.
Speculative bubbles always implode— this time taking down speculators and marginally qualified homebuyers alike. It’s ever so easy to blame the corporations, but who called off the regulators? Brokerage Firms have entire divisions whose only job is to make sure that nobody looks cross-eyed at any SEC regulation (real, contemplated, or anticipated).
The SEC itself requires full disclosure from all registrants. The interests of the customer are always placed first— except of course, as was the case with Collateralized Debt Obligations (CDOs), when an act of Congress prohibits the SEC from having a look. Could they have stemmed the tide? It doesn’t matter. What matters is that complicated products are reviewed more carefully in the future.
Fannie Mae and Freddie Mac have a similar tale not to tell. Congress was closely involved in their charade as well, with conflicts of interest that are certainly worthy of extensive investigations, but, again, not now. Now we need to get this credit driven economy out of the emergency room and back out there where it belongs, greasing the wheels of all industries, growing jobs, and reaffirming the strengths of our system.
This is not a situation where an innocent government is bailing out an evil industry that has lost its credibility (the financial sector deserves little credibility). This is an opportunity for Congress to save and strengthen an economy that has suffered from a government-initiated relaxation of lending rules, a government-mandated ban on regulation of derivative products, and accounting rules that just don’t make sense for mortgage backed (or any fixed income) securities.
Politically, using the financial institutions as a scapegoat is easy and, judging from Internet polls, effective. John Q is furious, but at only half of the problem causers, and for the wrong reasons. How many of you have stopped making your mortgage payments just because the market value of your home has fallen?
Less than 5% would be a fair estimate. Yet a much more significant amount of the collective mortgage debt in the USA (not in any stage of default) has been arbitrarily erased from institutional balance sheets. Even within the “toxic” products the government would purchase, 80% of the loans are solid and meeting their monthly commitments. The cash flow from these products is more than adequate to keep things moving, were it not for Sarbanes-Oxley.
Congress passed the Sarbanes-Oxley Act in 2002, placing some very stringent, inappropriate, and inflexible reporting rules on financial institutions. Under this law, financial assets must be valued at fair market value— even if they are not for sale! The Working Capital Model eliminates this problem entirely, but it is difficult to apply when the individual securities are not identifiable.
More than 95% of Americans are making their mortgage payments right on schedule, yet there is no market for the financial products that contain these mortgages. Consequently, balance sheets reflect trillions of dollars less than the maturity value of the securities held by the financial institutions.
Eureka! Regulate the product creating mechanism better, so that the productive value of the underlying assets is measurable. But, in the meantime, suspend the Sarbanes-Oxley restrictions and re-evaluate their applicability to packaged mortgage products in existence now.
Bonds, mortgages, preferred stocks, etc. are contracts that are honored 99% of the time. They are held for the income they promise. These promises are being met while the government tells holders that they can’t be booked at full value. Have they all gone mad?
This is no bailout of an industry, it’s a transfusion of capital needed to allow an industry to comply with legislation that just doesn’t make sense. And while the politicians posture and pontificate, bluster and blame, banks are failing and irreparable harm is being done to John Q’s nest egg. Yours and mine!
Telling me that my house has dropped in market value does me no harm, and I continue to make my monthly payments— the lower (more realistic) market value may reduce my carrying costs. Telling banks that the mortgages they are collecting on need to be written down because they can’t be sold is lunacy.
Tell John Q more about the source of the problem, and different heads will roll.
Georgia
Every new controversy demands a look at similar situations of the past. Just what is a bailout anyway? In the early 80’s, Lee Iacocca arranged a government loan and tax concessions to bring Chrysler Corporation back from the brink of bankruptcy— during the Carter Administration, to save you a Google.
The economic domino effect of a major corporate death was clear, and Congress acted wisely when it saved this American icon from extinction— the loans were repaid. But was it poor management or shortsighted government that caused the problem. Politicians massaged and empowered the labor unions, implemented minimum wage legislation, and protected the steel industry from foreign competition.
Similar financial problems existed throughout the automotive industry and lower cost, better product was just starting to come ashore. Bailout or fix-up? Voteless corporations were perfect patsies then, and remain so today. But the average Joe’s investment in the success of these perennial scapegoats for bad government has risen from zero dollars to all of our dollars. Every failure takes a piece of your retirement program with it.
All employed John Q’s are investors; all taxpayers are investors; all Americans have a vested equity interest in the success of all publicly traded corporations in our “regulated capitalism” economy. Most politicians still can’t connect the dots, and seem to be formulating policy based on the latest consensus of public blogs.
It wasn’t the financial institutions that decided to make mortgage money available to practically anyone who wanted to own a home— regulators permitted (encouraged) a relaxation of the qualification requirements. In effect, they enabled the predatory lending practices that misguided many first time homebuyers.
The easy-money lending practices, and sky rocketing housing prices, brought speculators into the mix and home flipping became as popular as Monday Night Football. Speculators accept the risks of loss; it’s what they do. But allowing the creation of high risk where none is expected is unacceptable. The creative products developed by the financial institutions must be examined more closely and labeled more effectively.
Speculative bubbles always implode— this time taking down speculators and marginally qualified homebuyers alike. It’s ever so easy to blame the corporations, but who called off the regulators? Brokerage Firms have entire divisions whose only job is to make sure that nobody looks cross-eyed at any SEC regulation (real, contemplated, or anticipated).
The SEC itself requires full disclosure from all registrants. The interests of the customer are always placed first— except of course, as was the case with Collateralized Debt Obligations (CDOs), when an act of Congress prohibits the SEC from having a look. Could they have stemmed the tide? It doesn’t matter. What matters is that complicated products are reviewed more carefully in the future.
Fannie Mae and Freddie Mac have a similar tale not to tell. Congress was closely involved in their charade as well, with conflicts of interest that are certainly worthy of extensive investigations, but, again, not now. Now we need to get this credit driven economy out of the emergency room and back out there where it belongs, greasing the wheels of all industries, growing jobs, and reaffirming the strengths of our system.
This is not a situation where an innocent government is bailing out an evil industry that has lost its credibility (the financial sector deserves little credibility). This is an opportunity for Congress to save and strengthen an economy that has suffered from a government-initiated relaxation of lending rules, a government-mandated ban on regulation of derivative products, and accounting rules that just don’t make sense for mortgage backed (or any fixed income) securities.
Politically, using the financial institutions as a scapegoat is easy and, judging from Internet polls, effective. John Q is furious, but at only half of the problem causers, and for the wrong reasons. How many of you have stopped making your mortgage payments just because the market value of your home has fallen?
Less than 5% would be a fair estimate. Yet a much more significant amount of the collective mortgage debt in the USA (not in any stage of default) has been arbitrarily erased from institutional balance sheets. Even within the “toxic” products the government would purchase, 80% of the loans are solid and meeting their monthly commitments. The cash flow from these products is more than adequate to keep things moving, were it not for Sarbanes-Oxley.
Congress passed the Sarbanes-Oxley Act in 2002, placing some very stringent, inappropriate, and inflexible reporting rules on financial institutions. Under this law, financial assets must be valued at fair market value— even if they are not for sale! The Working Capital Model eliminates this problem entirely, but it is difficult to apply when the individual securities are not identifiable.
More than 95% of Americans are making their mortgage payments right on schedule, yet there is no market for the financial products that contain these mortgages. Consequently, balance sheets reflect trillions of dollars less than the maturity value of the securities held by the financial institutions.
Eureka! Regulate the product creating mechanism better, so that the productive value of the underlying assets is measurable. But, in the meantime, suspend the Sarbanes-Oxley restrictions and re-evaluate their applicability to packaged mortgage products in existence now.
Bonds, mortgages, preferred stocks, etc. are contracts that are honored 99% of the time. They are held for the income they promise. These promises are being met while the government tells holders that they can’t be booked at full value. Have they all gone mad?
This is no bailout of an industry, it’s a transfusion of capital needed to allow an industry to comply with legislation that just doesn’t make sense. And while the politicians posture and pontificate, bluster and blame, banks are failing and irreparable harm is being done to John Q’s nest egg. Yours and mine!
Telling me that my house has dropped in market value does me no harm, and I continue to make my monthly payments— the lower (more realistic) market value may reduce my carrying costs. Telling banks that the mortgages they are collecting on need to be written down because they can’t be sold is lunacy.
Tell John Q more about the source of the problem, and different heads will roll.
Georgia
Jul
7
How does citibank bailout help pay bills or make it easier to find jobs for ordinary citizen?
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abc asked:
dow jones went up 400 only because of citibank bailout news. However what is being done to create more jobs? Unemployment and massive job losses (240,000 jobs lost last month and over million jobs lost this year, along with big hiring freezes by way too many copmpanies) continue to be a problem, and bailout does not address that?
why should taxpayer care about citibank problems when it doesn’t provide him/her any relief whatsoever?
Roland
dow jones went up 400 only because of citibank bailout news. However what is being done to create more jobs? Unemployment and massive job losses (240,000 jobs lost last month and over million jobs lost this year, along with big hiring freezes by way too many copmpanies) continue to be a problem, and bailout does not address that?
why should taxpayer care about citibank problems when it doesn’t provide him/her any relief whatsoever?
Roland