The Global Economy

[killbot1000]

I have a hunch that this "global financial crisis" is just another "panic" to me. There's some real {censored} going on of course, but it looks like it is only an excuse to hand over financial institutions and mortgages to the federal reserve and the government (at least thats how it looks in the US). Just because a few banks cant hold onto their cash doesn't mean the economy is going to come crashing down, but in the media, everyday life, its suddenly a crisis now, when it wasn't last week. To be honest it's kind of weirding me out. All of the documentaries I have watched, and the research I have done about the federal reserve, banks, etc. all said it would go down like this, and its happening really quickly...maybe I'm paranoid.

 

Share your thoughts.

[Paranoid Marvin]

...maybe I'm paranoid.

 

Stand back!

I'll handle this!

[m16]

Actually what is happening is the KGB is slowing infiltrating the US goverment. John McCain has been with the KGB since vietnam... Russia started a war in georgia as a distraction to make mccain look tough. Soon the United States and the Russian Federation will merge to become one great soviet power.

[Paranoid Marvin]

Actually what is happening is the KGB is slowing infiltrating the US goverment. John McCain has been with the KGB since vietnam... Russia started a war in georgia as a distraction to make mccain look tough. Soon the United States and the Russian Federation will merge to become one great soviet power.

 

Haha, great!

But seriously?

[Descalzo]

I have a hunch that this "global financial crisis" is just another "panic" to me. There's some real {censored} going on of course, but it looks like it is only an excuse to hand over financial institutions and mortgages to the federal reserve and the government (at least thats how it looks in the US). Just because a few banks cant hold onto their cash doesn't mean the economy is going to come crashing down, but in the media, everyday life, its suddenly a crisis now, when it wasn't last week. To be honest it's kind of weirding me out. All of the documentaries I have watched, and the research I have done about the federal reserve, banks, etc. all said it would go down like this, and its happening really quickly...maybe I'm paranoid.

 

Share your thoughts.

I love it when I agree with killbot! At least I think I do.

[Paranoid Marvin]

It's scary what is happening, I think. I mean, this {censored} is serious.

 

However, I do have faith in the businesses and governments of our countries to get this mess sorted.

 

We've had it coming for a while though

[brainbone]

However, I do have faith in the businesses and governments of our countries to get this mess sorted.

 

About the only thing that will sort this mess out is the US pulling back from global trade, potentially putting enough strain on the Chinese economy, allowing us to buy back our debt for pennies on the dollar.

[killbot1000]

I guess my hunch was correct:

Link

 

This is the part you want to pay attention to:

 

 

"Paulson yesterday asked Congress for unfettered authority to buy devalued mortgage-related securities from investment firms in an effort to keep the financial system from coming to a standstill. The proposal would prevent courts from reviewing the Treasury's actions while raising the nation's debt ceiling."

 

I love it when I agree with killbot! At least I think I do.

 

On this issue you do! People with millions of different backgrounds and beliefs can still find common ground on a lot of issues. The media, the government, religion, etc have moslty focused on tearing us down (or dividing us) rather than building us up. While I may not agree with a lot of people on this board, I respect them and I enjoy the dialectic. Everybody needs to keep talking

[aduffbrew]

The proposal would prevent courts from reviewing the Treasury's actions while raising the nation's debt ceiling.

Too bad that ceiling wasn't fixed. We're well on our way to doubling it since 2000! Nice. Soon the only affordable retirement plan will be euthanasia.

 

Just because a few banks cant hold onto their cash doesn't mean the economy is going to come crashing down.

Um, that is exactly what it means.

 

To date, this is the worst financial catastrophe since the Great Depression. Economists and financial analysts have been watching the "bad" go to "worse" and then move on to "much worse" for months. It became painfully clear the economy wasn't in the condition to right itself. If nothing was done, it became a certainty our credit driven economy would eventually collapsed. And no, I am not being some emotional doomsayer. Our financial system is too interdependent. Banks borrow money to lend money. With so many heavy hitters on the brink of collapse, the pool of "lendable" capital dries up. That means less and less money to lend and fewer and fewer able to borrow. Eventually, after no one can borrow, the economy goes "poof"... literally. Collectively, central banks around the world have poured trillions of dollars into the system hoping it would jump start the process again only to see it get progressively worse and worse. It was either sit by and watch the whole thing implode or step in and do something... ANYTHING... to restore investor confidence.

 

So do I think we're doing the right thing? No, not exactly.... but at this late stage, it's better than doing nothing at all. For over a decade and a half, we've been warned. This isn't something new... it has happened before but never on such a scale! Widely available credit and ridiculously low interest rates even for those with subpar credit ratings coupled with lax regulatory oversight and near non-existent fiscal scrutiny was our perfect storm.

 

None of this should have happened. The unmitigated gall of these heartless greedy s is only superseded by the incompetence of those whose task it was to oversee and safeguard the integrity of our financial system! Today the bailout is priced at $700 billion but is likely to balloon well in excess of $1 trillion. And already, Congress is throwing a wrench in the works by trying, for some unfathomable reason, to protect the outrageous severance packages and bonuses of the leaders of many of these companies in such desperate need of our hard earned tax dollars. Write your representatives in Washington and tell them to get real!

 

"Instead of millions, your bonus this year might be to have a job... unlike many of those paying for your incompetence!" Sheesh!

[Descalzo]

None of this should have happened. The unmitigated gall of these heartless greedy :censored2: s is only superseded by the incompetence of those whose task it was to oversee and safeguard the integrity of our financial system! Today the bailout is priced at $700 billion but is likely to balloon well in excess of $1 trillion. And already, Congress is throwing a wrench in the works by trying, for some unfathomable reason, to protect the outrageous severance packages and bonuses of the leaders of many of these companies in such desperate need of our hard earned tax dollars. Write your representatives in Washington and tell them to get real!

I've been thinking.....

 

These people gambled and lost. Why don't I go to Vegas? (I live pretty close) If I blow it, the government will come and bail me out, right?

[brainbone]

I've been thinking.....

 

These people gambled and lost. Why don't I go to Vegas? (I live pretty close) If I blow it, the government will come and bail me out, right?

 

Well, if done correctly, we taxpayers could actually come out ahead on this. We're effectively purchasing 700b of mostly undervalued debt. When/if the market recovers, much of it should be able to be sold off at a profit.

 

The problem is, how much control and transparency there will be in what is actually being purchased, how it is managed, and to whom and when it is later sold. Also, the price paid, if too low, could further push our fragile economy over the edge. If too high, well, we as tax payers will be less likely to recover our "investment".

 

As it stands now, we are basically handing at least 700b over, with no expectation of recovery, not to mention how to best manage it. Fits your analogy pretty well.

[apowerr]

Actually what is happening is the KGB is slowing infiltrating the US goverment. John McCain has been with the KGB since vietnam... Russia started a war in georgia as a distraction to make mccain look tough. Soon the United States and the Russian Federation will merge to become one great soviet power.

Cannot wait! Red Day 2008 =DDD

[killbot1000]

Too bad that ceiling wasn't fixed. We're well on our way to doubling it since 2000! Nice. Soon the only affordable retirement plan will be euthanasia.

Um, that is exactly what it means.

 

To date, this is the worst financial catastrophe since the Great Depression. Economists and financial analysts have been watching the "bad" go to "worse" and then move on to "much worse" for months. It became painfully clear the economy wasn't in the condition to right itself. If nothing was done, it became a certainty our credit driven economy would eventually collapsed. And no, I am not being some emotional doomsayer. Our financial system is too interdependent. Banks borrow money to lend money. With so many heavy hitters on the brink of collapse, the pool of "lendable" capital dries up. That means less and less money to lend and fewer and fewer able to borrow. Eventually, after no one can borrow, the economy goes "poof"... literally. Collectively, central banks around the world have poured trillions of dollars into the system hoping it would jump start the process again only to see it get progressively worse and worse. It was either sit by and watch the whole thing implode or step in and do something... ANYTHING... to restore investor confidence.

 

So do I think we're doing the right thing? No, not exactly.... but at this late stage, it's better than doing nothing at all. For over a decade and a half, we've been warned. This isn't something new... it has happened before but never on such a scale! Widely available credit and ridiculously low interest rates even for those with subpar credit ratings coupled with lax regulatory oversight and near non-existent fiscal scrutiny was our perfect storm.

 

None of this should have happened. The unmitigated gall of these heartless greedy s is only superseded by the incompetence of those whose task it was to oversee and safeguard the integrity of our financial system! Today the bailout is priced at $700 billion but is likely to balloon well in excess of $1 trillion. And already, Congress is throwing a wrench in the works by trying, for some unfathomable reason, to protect the outrageous severance packages and bonuses of the leaders of many of these companies in such desperate need of our hard earned tax dollars. Write your representatives in Washington and tell them to get real!

 

"Instead of millions, your bonus this year might be to have a job... unlike many of those paying for your incompetence!" Sheesh!

 

You're right. I did more research, my mistake .

[Maxintosh]

These people gambled and lost. Why don't I go to Vegas? (I live pretty close) If I blow it, the government will come and bail me out, right?

You're not trying to destroy the country, so no.

[solaar]

There is (was) way too much money in the hands of way too few. Some of those few turned out to be blatantly incompetent, irresponsible, short sighted and plain greedy. In a situation like that it only takes very few to screw everything up.

 

Money needs to be better distributed in order to maintain a healthy economy. When will people ever learn from history??

[mp3228]

Actually what is happening is the KGB is slowing infiltrating the US goverment. John McCain has been with the KGB since vietnam... Russia started a war in georgia as a distraction to make mccain look tough. Soon the United States and the Russian Federation will merge to become one great soviet power.

 

Georgia attacked S. Ossetia, that has been admitted by mainstream press, the wallstreet journal, and the NY Times. Russia retaliated. I don't know where you get your facts from but they are backwards. I have no doubts that McCain has ties to foreign terrorist organizations, but the KGB was abolished, and renamed after the collapse of the SU. Former head of the KGB, now prime minister, Vladamir Putin has lead the retaliation against Georgia. Georgia, which is part of NATO, got what was coming to them. They committed genocide in S. Ossetia, and killed hundreds of innocent civilians, so they reap what they soe. The US won't touch Russia with a 10,000 mile pole unless they want REAL problems.

 

Both of the presidential candidates, Sen. Barak Obama, and Sen. John McCain are supporting this WallStreet bailout, socialism for the rich scheme. Both of them voted for it on the Senate floor today, even though it has been proven that more than %90 of Americans are against the bailout. They don't care, they will do it anyway. Anything they can do to screw the American people, they will do it.

 

This election is the largest joke I have ever seen. It is nothing more than a dog and pony show for the ponzies that believe they actually run something. The Bankers run this country. America is gone folks.

 

Prescott Bush Banker connection

http://www.youtube.com/watch?v=1D6fxyOtVeI

 

Obama's Youth

http://www.youtube.com/watch?v=ssC7aSZnAX8

[aduffbrew]

Former head of the KGB, now prime minister, Vladamir Putin

No, he wasn't.

Georgia, which is part of NATO,

No, they aren't.

 

First off, m16 was injecting some much needed humor. For clarification of their viewpoint, you may visit the South Ossetia thread.

 

While I don't necessarily disagree with your conclusions regarding our relationship with Russia, I can't help but feel your perspective on the US "Bailout" is similarly short on fact and based nearly exclusively on the tantalizing bits and pieces given you by the unscrupulous wanting to sway your opinion their direction.

 

Like cancer treatment, it might be difficult to ascertain which is deadlier, the disease or its cure. To complicate matters further, those deciding on our course of action are more concerned with maintaining their factional power than doing what is best for the nation. And I think we can all agree, some have a level of incompetence that it quite literally unspeakable. That said, it is painfully clear to economists and financial analysts, those with the expertise and experience that have been largely ignored throughout this crisis, that the global credit crisis had crossed the tipping point where the more laissez-faire Anglo-Saxon model would no longer be able to right itself. Action, any action, was needed to prevent a domino effect that would collapse world markets and plunge the global economy into a depression like none ever seen before. I know, I know. I'm sounding like some 1970's disaster flick. Unfortunately, the facts really do fit the doom and gloom and must be addressed frankly.

 

The cost of inaction will be far greater than the several trillions probably needed to carry out this bailout... the $700 billion is just the down payment folks. If it succeeds, the federally managed assets will be sold as the economy recovers to help offset the direct costs. If the economy doesn't recover, any accrued debt will be meaningless anyway. Like the Great Depression of the 1930's, this will be a defining moment. We will learn from the mistakes and better protect our economies from those guided by unchecked greed and shortsighted self-interest. We are still in a steep learning curve. We never quite perfected capitalism and now we are merging our economies on an unprecedented scale. There is no putting the genie back in the bottle. Our future prosperity lies in successful globalization.

[mp3228]

Success is overthrowing the monsters of greed that caused this mess, and abolishing the federal reserve. Bush, Paulson, Bernake, and Greenspan. Criminals that belong behind bars. Any scumbag that commits bank robberty in a suit should be put in jail the same as one that does it with a mask. I don't see why you support that? You aren't a banker, and you aren't getting paid by them. You think they are going to bail you out when you are on the street? You are a very small minority, because nobody supports this bailout but crooked senators, the very rich, and the very stupid.

 

http://video.google.com/videoplay?docid=44...out+martial+law

 

Globalization is the cause of this mess, and it will fall as long as the people have a say. Let the market crash. Let the trash be flushed out with it. I am not dependant on it, becuase I am not stupid enough to rely on some bank for my wealth.

 

Sorry, FSB, not KGB. Same difference, another secret terrorist group. None the less, he was in the KGB.

 

http://en.wikipedia.org/wiki/Vladimir_Putin

[tattoo8118]

The cost of inaction will be far greater than the several trillions probably needed to carry out this bailout... the $700 billion is just the down payment folks. If it succeeds, the federally managed assets will be sold as the economy recovers to help offset the direct costs. If the economy doesn't recover, any accrued debt will be meaningless anyway. Like the Great Depression of the 1930's, this will be a defining moment. We will learn from the mistakes and better protect our economies from those guided by unchecked greed and shortsighted self-interest. We are still in a steep learning curve. We never quite perfected capitalism and now we are merging our economies on an unprecedented scale. There is no putting the genie back in the bottle. Our future prosperity lies in successful globalization.

 

 

Did you copy this from what the media is reporting? You really need to put down the kool-aid there. This bail-out is not good! This bail-out is a joke! The Fedral Reserve can print money anytime it wants, in fact the day that the bill failed in the house of representatives they pumped in 630 billion dollars of credit into the markets. Yet the market still dropped. So tell me what 700 billion is going to do for it?? The only thing this will do is further inflate the dollar, adding fuel to the fire. We need to hold the lenders accountable, but what are we doing, we are letting them try to cure this thing.

[tattoo8118]

Here is some more intresting information about this bill. Great thing they are trying to pull off isn't it. Check this out.

 

The bailout bill means total financial dictatorship. This bill gives the death penalty to capital markets. The execution will, if this passes, begin immediately and be stretched out over succeeding years.

 

It includes such nooses as:

 

1. The Secretary of the Treasury gets complete power to buy up any mortgage-related assets he decides on. No questions asked.

 

2. The Secretary and the Fed Chairman get power to buy ANY FINANCIAL ASSET (wow!). They need only inform Congress in writing what they are up to.

 

3. The Secretary can buy troubled assets of ANY financial institution he decides on.

 

The power grab here is not one but several quantum leaps beyond even the New Deal. It is at a minimum in that Big League.

 

The discrimination inherent in this bill is totally inconsistent with any kind of even-handed rule of law.

 

The precedent set here, if this bill passes, is extremely damaging. In the future, Congress will be far more likely to grant such powers to financial czars who will then have direct control over all the capital markets, money markets, and loan markets, and over all financial intermediaries.

[aduffbrew]

Did you copy this from what the media is reporting? You really need to put down the kool-aid there. This bail-out is not good! This bail-out is a joke! The Fedral Reserve can print money anytime it wants, in fact the day that the bill failed in the house of representatives they pumped in 630 billion dollars of credit into the markets. Yet the market still dropped. So tell me what 700 billion is going to do for it?? The only thing this will do is further inflate the dollar, adding fuel to the fire. We need to hold the lenders accountable, but what are we doing, we are letting them try to cure this thing.

No, the bailout isn't "good." It's going to cost us a boat load of money we don't have but doing nothing will cost a whole lot more. Also, I find your muddling of concepts and terminology difficult to follow. Are you saying you think the $700 billion bailout is just another infusion of capital into the credit markets? What do you mean by "inflate?" Are you implying the dollar is over valued? And what is this about the Federal Reserve being able to print money at will? You do realize our national debt is financed, right?

 

Here is my Reader's Digest take on all this.

 

Cheap, easily acquired credit started this cycle. The US housing bubble was funded by a nearly unregulated sub-prime market. Too few were concerned with actual borrower qualifications because some genius thought up the brilliantly shortsighted strategy of securitizing prime and sub-prime loans together, selling them off and letting investors take the risk. Lenders would process loans, take their cut, and then get them off their books through securitization so quickly, some didn't even care if the borrower could make their first mortgage payment. This quickly became the new gold rush. A whole industry evolved around this niche. Optimism ran high. Banks everywhere snapped these puppies up quickly, repackaged them, and sold them over and over. As time went on, more and more became even more daring and emboldened. Regulations were changes to allow higher and higher investment percentages. On the surface, it seemed like it couldn't fail. As oversight decreased, chance taking increased. Because of a housing bubble fueled by wild speculation, these securities were backed by properties whose value continued to outgrow the loans themselves... but it popped, like all bubbles do. Now, the same people stepping forward with solutions are those who turned a blind eye to this train wreck waiting to happen for years.

 

I don't blame your skepticism. However, like it or not, our local, state, federal, and global economies are powered by credit. Too many banks are now sitting on a stock pile of loans of dubious worth. Borrowers owe more than the property is worth... sometimes MUCH more. Some, no longer able to continually refinance, can't afford the payments after their introductory period others have seen their property value plummet so drastically and with no hope in recouping their investment in the shorter term, they decide just to walk away. How much of this debt will ever be repaid? The banks aren't sure. Banks borrow money to lend money. Bank A has become so concerned with Bank B's stockpile of garbage loans, they worry Bank B won't be able to pay back a loan to Bank A so Bank A doesn't make the loan... like dominos, inter-bank lending has almost stopped. If nothing is done to bolster confidence, it will eventually stop all together and then our economy will collapse. And unless you live on a self-sustaining farm or something, your livelihood will go along with it.

 

Central banks thought if they just freed up more capital and made it available to this inter-bank network, it would kick start the whole process again. It didn't. The underlying cause, those stock-piles of bad debt, is still there. Instead of just throwing out more available credit, the bailout is intended to "buy back" the bad debt. In theory, this should make it easier for Bank A to assess Bank B's ability to repay loans. The credit cycle would start flowing again. This should jump start the economy while regulators review the exact causes to the crisis and tailor a regulatory solution to minimize the risk of this ever happening again. The federally managed assets will then be sold when the markets are more favorable in the hope of recouping some of the taxpayer's investment.

 

Now, I still share many of your same concerns but it's not like we have an endless list of alternatives here. We must work within the confines of a complex interconnected financial system which we can all agree is in dire need of an overhaul. We can either let the whole thing crash and crumble and attempt reform during the chaos and anarchy that will follow or we can zero in on the principle catalyst to this disaster, get the dutch boy to stick his finger in that particular leak while the entire network is evaluated and a series of reforms are prepared and rolled out. The choice is ours. Personally, I don't find social chaos followed by extreme poverty an appealing choice.

[aduffbrew]

Success is overthrowing the monsters of greed that caused this mess, and abolishing the federal reserve. Bush, Paulson, Bernake, and Greenspan. Criminals that belong behind bars.

I totally agree... I just don't feel it is necessary that we kamikaze the mess. I'd like to be alive and well to enjoy the fruit of our reformist labors.

Globalization is the cause of this mess, and it will fall as long as the people have a say. Let the market crash. Let the trash be flushed out with it. I am not dependant on it, becuase I am not stupid enough to rely on some bank for my wealth.

I can't disagree more with you here. The "pyramid scheme" that caused this mess was hatched here. Yet much of the brunt of all this mess was actually absorbed by foreign banks. Without a globalized economy, this crisis would have been much MUCH worse because the fallout would have been concentrated here. I know of no credible economist that advocates a return to a closed protectionist economy. I know many people do share the near religious conviction that globalization is somehow the source of all evil. Luckily, they are the laypeople. Sure, politicians and talk radio often pander to their sensibilities and they have succeeded in slowing down trade liberalization but they are powerless to actually stop it. The United States has benefited immensely from it. No doubt the nay-sayers can rattle off a long list of those displaced by the transition... but there is an equally impressive list of those who have benefited. There are many resources available online outlining the net loses and net gains of globalization. I find the Cato Institute to be invaluable. Instead of just spewing free-trade rhetoric, they walk you through the mathematics of it all and provide compelling real world examples and comparisons in language most of us can understand.

 

As far as not relying on some bank for your wealth, I do hope you have no need for money what-so-ever and live on some sustainable farm or something. All commodities and even precious metals have relative value. If the economy tanks, only the ability to provide for all of ones needs will remain unscathed. For us city dwellers dependent on commerce to feed, house, and clothe ourselves, we have a big stake in making sure the markets don't "crash."

[Descalzo]

If the economy tanks, only the ability to provide for all of ones needs will remain unscathed. For us city dwellers dependent on commerce to feed, house, and clothe ourselves, we have a big stake in making sure the markets don't "crash."

Here's what you do:

Get out of debt and stay out of debt. Avoid excessive debt. If you have to get a student loan, get as little as possible. Go without.

 

Get a 72-hour kit that has everything you need to survive for 3 days: food, water, an emergency blanket, a first-aid kit, flashlights, and a radio (don't forget the extra batteries).

 

Start accumulating a year supply of food. It's not as hard nor as expensive as you might think. For some people this one is not possible, but it would be wise to have something, even if you're just a poor college kid.

 

Once you get married and have a house, those 3 things are all very wise things. Imagine the stability you'd bring to your life if you followed just the first one!

 

 

Anyway, IMHO, this problem is not the fault of anybody but the imprudent people who bought that which they could not afford.

[aduffbrew]

Here's what you do:

Get out of debt and stay out of debt. Avoid excessive debt. If you have to get a student loan, get as little as possible. Go without.

 

Get a 72-hour kit that has everything you need to survive for 3 days: food, water, an emergency blanket, a first-aid kit, flashlights, and a radio (don't forget the extra batteries).

 

Start accumulating a year supply of food. It's not as hard nor as expensive as you might think. For some people this one is not possible, but it would be wise to have something, even if you're just a poor college kid.

 

Once you get married and have a house, those 3 things are all very wise things. Imagine the stability you'd bring to your life if you followed just the first one!

Anyway, IMHO, this problem is not the fault of anybody but the imprudent people who bought that which they could not afford.

That has always been very sound advise... I just noticed where you're from. No wonder that all sounded so familiar! No doubt, they will bring this up in your General Conference today.

 

I do wish there was a way to isolate those responsible and only have them pay for their shortsightedness. Unfortunately, there isn't a way to do that at this late stage. We'll all pay for this, one way or another. While the landing gear might not be fully extended nor the flight controls fully operational, I say we still TRY to land this bird in a controlled manner.... to sit idly by with our seat-belts fastened, our tray tables locked in their upright position, and our carry-ons safely stored in the overhead bins as our financial system nosedives into the tarmac for no other reason than "it's not our fault" is equally shortsighted.

 

And besides, Beehive brand dehydrated watermelon rinds only last so long.

[Maxintosh]

I do wish there was a way to isolate those responsible and only have them pay for their shortsightedness.

AMEN to that