Anybody Home US?

[bigmack]

You mean to tell me there ain't nobody that can put together a concise presentation for simple folk to understand about what "Main Street" (tired phrase) is paying for? Sounds like a big deal there and we be pickin' up the tab - Could you itemize the bill?

The Feds can't figure out PowerPoint and let "Main Street" know what this is all about?

WHY DIDN'T THEY PASS IT? Long Story - You don't wanna know
HOW WILL IT AFFECT ME? Stores can't get dough. McDonald's can't open another store. PASS THE VOTE!!!

You see these folk on the financials - DON'T THEY REALIZE, IT'S NOT A BAILOUT!!

NOTE TO FEDS: Clue the regular folk in.
NOTE TO REGULAR FOLK: WAKE UP!!!!!

[Tom]

Bring back Ross Perot.

[ddog]

am part of a new bank starting in a couple of months.
no problem raising capital.

false alarms, things that are bloated and over leveraged need to die or shrink, that's life.

Main street has this one correct.

no bill, no bill, no bill.

it won't help anyway.

we have already injected several TRILLION dollars over the past year into various bails, that's plenty and still here we are with another bucket of money to throw at the "problem".

People need to realize the problem is bigger then the gvt can solve.

Come down out of the clouds and realize where we have placed ourselves.

This is a couple of decades of foolish policies and over leveraged speculation and that will not be solved in a couple of months.

O, i forgot, we won't be paying that, our kids or their kids or their kids will.

PLS UNcle Bushy and Aunty Pelosi ANYTHING , don't take the pipe away!!!!

:(

[ddog]

You Can't Rescue the Financial System If You Can't Read a Balance Sheet

John P. Hussman, Ph.D.
All rights reserved and actively enforced.
Reprint Policy

This is a bad idea.

However the final legislation is written, the Troubled Assets Relief Program (TARP) being rushed through Congress will evidently be built around its single worst provision, which is that the Treasury will have authority to purchase distressed mortgage securities from U.S. financials.

As I noted last week in An Open Letter To Congress Regarding the Current Financial Crisis, the sequence of bankruptcies that we've observed among U.S. financials has been almost exactly in order of their gross leverage (the ratio of total assets to shareholder equity). The reason for that is:

1) as the assets of a financial company lose value, the losses reduce the asset side of the balance sheet, but also reduce shareholder equity on the liability side;

2) as the cushion of shareholder equity becomes thinner, customers begin to make withdrawals;

3) in order to satisfy customer withdrawals, the financial company is forced to liquidate assets at distressed prices, prompting a further reduction in shareholder equity;

4) go back to 1) and continue the vicious cycle until shareholder equity goes negative and the company becomes insolvent.

Let's return to the basic balance sheet of a typical financial company before the writedowns:

http://www.hussman.net/wmc/wmc080929.htm


If this doesn't seal it for you , well you need new o-rings.

:bang:

[ddog]

a little bit from Buffett in the past on their "experience" in those derivitive markets............


Long ago, Mark Twain said: “A man who tries to carry a cat home by its tail will learn a lesson
that can be learned in no other way.” If Twain were around now, he might try winding up a derivatives
business. After a few days, he would opt for cats.
We lost $104 million pre-tax last year in our continuing attempt to exit Gen Re’s derivative
operation. Our aggregate losses since we began this endeavor total $404 million.
Originally we had 23,218 contracts outstanding. By the start of 2005 we were down to 2,890.
You might expect that our losses would have been stemmed by this point, but the blood has kept flowing.
Reducing our inventory to 741 contracts last year cost us the $104 million mentioned above.
Remember that the rationale for establishing this unit in 1990 was Gen Re’s wish to meet the
needs of insurance clients. Yet one of the contracts we liquidated in 2005 had a term of 100 years! It’s
difficult to imagine what “need” such a contract could fulfill except, perhaps, the need of a compensationconscious
trader to have a long-dated contract on his books. Long contracts, or alternatively those with
multiple variables, are the most difficult to mark to market (the standard procedure used in accounting for
derivatives) and provide the most opportunity for “imagination” when traders are estimating their value.
Small wonder that traders promote them.
A business in which huge amounts of compensation flow from assumed numbers is obviously
fraught with danger. When two traders execute a transaction that has several, sometimes esoteric, variables
and a far-off settlement date, their respective firms must subsequently value these contracts whenever they
calculate their earnings. A given contract may be valued at one price by Firm A and at another by Firm B.
You can bet that the valuation differences – and I’m personally familiar with several that were huge – tend
to be tilted in a direction favoring higher earnings at each firm. It’s a strange world in which two parties
can carry out a paper transaction that each can promptly report as profitable.
I dwell on our experience in derivatives each year for two reasons. One is personal and
unpleasant. The hard fact is that I have cost you a lot of money by not moving immediately to close down
10
Gen Re’s trading operation. Both Charlie and I knew at the time of the Gen Re purchase that it was a
problem and told its management that we wanted to exit the business. It was my responsibility to make
sure that happened. Rather than address the situation head on, however, I wasted several years while we
attempted to sell the operation. That was a doomed endeavor because no realistic solution could have
extricated us from the maze of liabilities that was going to exist for decades. Our obligations were
particularly worrisome because their potential to explode could not be measured. Moreover, if severe
trouble occurred, we knew it was likely to correlate with problems elsewhere in financial markets.
So I failed in my attempt to exit painlessly, and in the meantime more trades were put on the
books. Fault me for dithering. (Charlie calls it thumb-sucking.) When a problem exists, whether in
personnel or in business operations, the time to act is now.
The second reason I regularly describe our problems in this area lies in the hope that our
experiences may prove instructive for managers, auditors and regulators. In a sense, we are a canary in this
business coal mine and should sing a song of warning as we expire. The number and value of derivative
contracts outstanding in the world continues to mushroom and is now a multiple of what existed in 1998,
the last time that financial chaos erupted.
Our experience should be particularly sobering because we were a better-than-average candidate
to exit gracefully. Gen Re was a relatively minor operator in the derivatives field. It has had the good
fortune to unwind its supposedly liquid positions in a benign market, all the while free of financial or other
pressures that might have forced it to conduct the liquidation in a less-than-efficient manner. Our
accounting in the past was conventional and actually thought to be conservative. Additionally, we know of
no bad behavior by anyone involved.
It could be a different story for others in the future. Imagine, if you will, one or more firms
(troubles often spread) with positions that are many multiples of ours attempting to liquidate in chaotic
markets and under extreme, and well-publicized, pressures. This is a scenario to which much attention
should be given now rather than after the fact. The time to have considered – and improved – the reliability
of New Orleans’ levees was before Katrina.
When we finally wind up Gen Re Securities, my feelings about its departure will be akin to those
expressed in a country song, “My wife ran away with my best friend, and I sure miss him a lot.”
* * * * * * * * * * * *



http://www.berkshirehathaway.com/letters/2005ltr.pdf

[ArlJim78]

this is nothing but Goldman Sachs making a run on the US treasury by exploiting a weakminded lame duck president, a democratic congress that's all for it as long as they can blame it on Republicans, and weak Republicans (for the most part) that are being brought in line by the pres and the party leaders so as to be part of the "solution".

[Tom]

That's not a president, it's a used car car salesman.
"What will it take to put you this car TODAY?

Sorry Bush, not buying your lies anymore. Crooked or stupid, not sure, probably both.

[bigmack]

We were/are supposedly on the precipice of financial ruin and the initial bill had Dem's sliding in a 20% kickback to some outfit named ACORN? That's beyond pathetic.

As I said, you want $700B - ITEMIZE THE BILL.

If we as tax payers are the investors in this mess would we agree to loan some dead beat this amount of loot without clear specifics? What % of people have a handle on where it's all going? My guess: .0025%

[Tom]

Go to rushlimbaugh.com - he has a link to the Senate Sell Out Bill, all 450+ pages of it. Some interesting earmarks in that sucker.

[ArlJim78]

the scary part is you've got McCain on board as well doing his part to be a good cheerleader.:bang:

[bigmack]

Go to rushlimbaugh.com - he has a link to the Senate Sell Out Bill, all 450+ pages of it. Some interesting earmarks in that sucker.
Mumbo jumbo. Not a speck of itemization. So, $700B is a nebulous "sounds about right, let's see if they'll go for it" number?

Nice they required a report after each $50B

TIMING.—The report required by this subsection shall be submitted not later than 7 days after the date on which commitments to purchase troubled assets under the authorities provided in this Act first reach an aggregate of $50,000,000,000 and not later than 7 days after each $50,000,000,000 interval of such commitments is reached thereafter.

"Wooden arrows designed for use by children"???

SEC. 316. RAILROAD TRACK MAINTENANCE
SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN RESERVATIONS.
SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK FACILITY.
SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEES.
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.

[chickenhead]

I'm not terribly certain this bill is going to make much of a difference anyway.

This is an solvency issue, not a liquidity issue. One is a side effect of the other. This auction dealio will change the solvency only to the extent they overpay for what they're buying, which, as it's hard to figure out what these things are worth, is not going to be apparent in any regard, but we can assume it's some fraction of the total.

The losses are going to be taken somewhere, by someone. That's about all we know. The excesses are going to get paid for by equity and bond holders, or through higher interest rates and declining dollars. Or a combo of both.

Even though the eye-popping size of this might freak people out, the losses are still gonna be out in the system primarily, and still looking for a home. In short, this doesn't look like a game changer to me, it's like a bullshit half-step. It won't do much, conversely I really don't think it will ultimately cost much.

I predict we'll be all seized up again in no time at all.

[ArlJim78]

meanwhile we're half-way through the second week of what was supposed to be certain financial armageddon.:rolleyes:

[ArlJim78]

Mumbo jumbo. Not a speck of itemization. So, $700B is a nebulous "sounds about right, let's see if they'll go for it" number?

Nice they required a report after each $50B

TIMING.—The report required by this subsection shall be submitted not later than 7 days after the date on which commitments to purchase troubled assets under the authorities provided in this Act first reach an aggregate of $50,000,000,000 and not later than 7 days after each $50,000,000,000 interval of such commitments is reached thereafter.

"Wooden arrows designed for use by children"???

SEC. 316. RAILROAD TRACK MAINTENANCE
SEC. 315. ACCELERATED DEPRECIATION FOR BUSINESS PROPERTY ON INDIAN RESERVATIONS.
SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK FACILITY.
SEC. 319. EXTENSION OF WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEES.
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.

a few more goodies tucked away in the new bill.
Rum and wool research? the heart of any good recovery plan I assume.

Tax earmark “extenders” in the bailout bill.
- Virgin Island and Puerto Rican Rum (Section 308)
- American Samoa (Sec. 309)
- Mine Rescue Teams (Sec. 310)
- Mine Safety Equipment (Sec. 311)
- Domestic Production Activities in Puerto Rico (Sec. 312)
- Indian Tribes (Sec. 314, 315)
- District of Columbia (Sec. 322)
- Wool Research (Sec. 325)

[chickenhead]

meanwhile we're half-way through the second week of what was supposed to be certain financial armageddon.:rolleyes:

do you think someone is going to come around and mark your door jam with lambs blood when the crisis really hits?

whether there is a cure, much less whether this is it, is quite apart from the fact that a ton of damage is being done. Everyone is paying more for money, that's kind of like taking a baseball bat to the knees of the economy.

[skate]

Gees!


It..................is..................all....... ..........about.............money




Flow.:eek:

simple, once again, thank you.

Now, go to bed.

[ArlJim78]

do you think someone is going to come around and mark your door jam with lambs blood when the crisis really hits?

whether there is a cure, much less whether this is it, is quite apart from the fact that a ton of damage is being done. Everyone is paying more for money, that's kind of like taking a baseball bat to the knees of the economy.
no, taking a baseball bat to the economy is when the secretary says a total collapse is imminent, here pass this gigantic spending authorization within a matter of days and this will do the trick. if you don't its armageddon.

acting stupidly has brought us to this point. Paulson coming on the scene 2 weeks ago scaring the hell out of everyone and demanding immediate action on a ridiculous plan in order to avoid a collapse was stupid and a self-fulfilling prophecy. everyone is waiting for the deal now, to know how to go forward, everything is frozen. it didn't have to be like that. he has essentially frozen a lot of economic activity in its tracks. to me he and the administration have acted horrendously. they have basically shut down a slowing economy so they can fix it.

there were more rational ways to go about this thing. now its possible that the economy is stopped, this crappy deal will get done, and it won't solve many of the problems and we'll end up with slower growth and now much more debt.

[JustRalph]

meanwhile we're half-way through the second week of what was supposed to be certain financial armageddon.:rolleyes:

http://www.reuters.com/article/businessNews/idUSTRE49092V20081001?feedType=RSS&feedName=businessNews&rpc=23&sp=true

It's starting to catch up. Read the above. Take car sales straight out of the economy and you see some problems starting already. This is one business that would change completely. That may not be all bad though.

[LottaKash]

Figuratively speaking, we are one day away from "National Bankruptcy", and all that this crap is, is a way for the Fat Cats to find a legal way to raid the National Treasury before the end comes.......I don't see it any other way.....

We have staved off this inevitability for far too long.....Broke is Broke.....This was predicted, by some extremely smart people way before any of this current baloney "just" happened......

I say NO to the bailout, period, as what will happen next is going to happen anyway.....Let's not leave them laughing at us when the time comes to face up to our fate...

I believe if we were propelled into the future some 20 yrs, and looked retrospectively at this nations history, one could readily see what had taken place in our nation in these times, and I believe it is an out and out conspiracy against the trusting American people....

Godless Greed.........

best,

[chickenhead]

Auto sales down 30% across the board last month...Paulson and Bernanke are reacting to what they're seeing in the numbers and credit market, not the other way around. And what they're seeing is ever-lovin' pain coming down the pike.

Remember the scene in Jaws where Schieder turns to Shaw and says, "You're gonna need a bigger boat"?

[Tom]

Mumbo jumbo. Not a speck of itemization. So, $700B is a nebulous "sounds about right, let's see if they'll go for it" number?

Nice they required a report after each $50B




Boils down to "Pork-fest '08" brought to you by the United States Senaturds.
Time to take to the streets. The world's greatest "cluster-fudge" ever.