Is the government going to step in and bail out every company that takes financial hit in an overinflated market?

Bernanke defended the Fed's decision to provide about $29 billion in loan assistance in JPMorgan Chase & Co.'s takeover of Bear Stearns earlier this year, but said it "is not something I want to do again."

Guess what Ben...get your pen ready.

This is to dumb to even address seriously.

I was sorta hoping to see freddy's fanny.


































DOH!

Hmm..do me a favor then and educate a fellow FCP'er.

Dude, no. You didn't make a serious post, therefore you don't want to be taken seriously. Be happy I even took 18 seconds to tell you how retarded you are.

Edit: That was mean. I was half way kidding if it helps. Look, the fed has to date performed a series of moves to improve liquidity, and the Bear Sterns bailout was part of that, sort of. Did they bail out CFC? No. BAC bought them out. You will probably see a fair amount of that type of thing over the next year, 2 years. It is possible that government could help in some cases, that remains to be seen. But, so far, it has happened once, and when that leads you to ask the question,"Is the government going to bail out every company" I have to conclude that you are not thinking the question all the way through.

Edit/Edit: I apologize for my overall assholery earlier. I answer these types of questions all weekend long in my job, people with millions talking about how we are all going to be eating gruel in the streets by tomorrow. The US as a whole has completely lost perspective and this is just a smidgen of the results of this lack of perspective. It drives me nuts.

Hey, look, no saving this one either:

http://money.cnn.com/2008/07/11/news/compa...sion=2008071120

Do people still take Loismustdie seriously? This is him near the end of February when oil was just reaching $100 a barrel and the housing market was just starting to take a dive. He obviously is not looking at things unbiased. He was wrong then and is wrong now.

He will come in here and tell everyone that I'm just an idiot and the economy is fine and everything is just great. You guys need to start following things yourself, be cautious and prepare for times ahead.

I wish you were right LMD...

There are a lot of issues that need to be dealt with for sure. When will we deal with this one.

http://usatoday.printthis.clickability.com...;partnerID=1660

And the beat goes on!!

http://www.nytimes.com/2008/07/11/nyregion...amp;oref=slogin

That is sick. $59 trillion in debt.

Can that ever even be paid back? Compounding interest is a mother on that sum!

EDIT: Oh sorry it can be paid back. Only $31,000 for every US man, women in child every year for 75 years...start saving...

Actually, everything I said there was pretty accurate. Issues, yes, but far from failed. Perspective, my friend.


Oil isn't that big of a deal if you have some of your portfolio in oil, now, is it? You lose one way, win another. That's called being diversified. The housing market being down isn't so bad either, if you are in the market to buy, one, or even two homes. It's good times if you are that guy. The overall market isn't so bad either if you know when to go long and short. Volatility is a traders friend. And, if you're long term, pick strong stocks or strong value plays and sit back.

Consider this- one, technically, we have not had a month of zero growth. Unemployment is still at manageable levels. Now, let's talk markets. On an average, a bear market, which we are currently in and have been for 4 to 6 months, well, they last 14 moths and the Dow, on average, sheds about 30% off of the high. A couple of things- 1, we still have, on average, about 8 to 10% to go. Incidentally, the next visible support range for the Dow that last any length of time is right around the 10,500 to 10,800 or so range. Interesting- that would be just a little bit over 30% off of the highs.

You are not an idiot, you just don't know much about this stuff. In short, when CNN cries "The sky is falling!!" you scream and tremble and run spreading the message and I say,"Really? Are you sure? Why? Can I take advantage of it in some way?"

Okay, all that may be true, but my friend who cares. So what if you can make a few grand on the stock market. You're going to be alright, and hopefully I believe I will be okay. But there are millions who do not have the knowledge you do. We are taking about gross hyper inflation, the destruction of purchasing power. The US has trillions in debt and just printed up $300 billion yesterday to stop the forecloser crisis, which won't do anything but make the situation worse. You may be okay but what happens when thousands of people don't have food, are you going to feel safe?

Oil is a major problem considering war with Iran will most likely happen causing oil prices to sky rocket. And unemployment will be at 6% in 2009 with shitter and shitter jobs employing people.

Now don't get me wrong. People get the system they deserved. But can we at least call a spade a spade. Let us see what is on the horizon. And trust me, it ain't going to be pretty!

First let me say that link you sent doesn't mean shit to me. Yes, bank fails. Big bank? Somewhat, but no where close to the size of the companies I am talking about. I like that quote from the FDIC employee.

"There will be increased failures, but it will be within range of what we can handle," Bair said. "People should not worry."

O'rly? How can you say that? I bet you would have said no way in hell if someone asked you this time last year whether IndyMac had a chance of going under.

Do you really believe the feds would not step in to bail out Fanny and Freddie? They are already considering changing regulations to help them. That my friend, is a bailout. The NY Times reported yesterday that the government was going to take control of them. Paulson had said there are no plans to do that, but if they did what does it do? Well, first it doubles our national debt. That's no big deal though. Right?




For some reason I have an ethical dilemma when considering investing in oil right now. It's also amazing what people will do to companies when you can actually bet their stock will go down! Novel concept. Obviously some people like to take advantage of other people's misery. I prefer to use other methods of investment.

Sure people that have millions are pretty silly to think they will have any trouble paying the bills if the shit hits the fan. That's over 99% of the population though. Oh wait...I think I have that backwards.

You're ethical dilemnas are just silly. Shorting is a valid way to make money in the stock market. It's also a good way to lose money- the thing is, I can be short, but I can also be wrong. Google "shorting" and click o the Investopedia link to get a feel for how it works. As far as not investing in oil, I have no idea what that's about, that's just ignorant as well. I hand you valid tools and means, you say,"Oh, I can't do that, that's unethical." That's ridiculous. An Iphone is ****ing expensive, one way you can offset that is by owning Apple stock, maybe getting in back when it's started it's last run around 120 or so. Is that unethical? No.

You don't have to be a millionaire, you just have to be smart enough to take advantage of what's available to you at whatever level your game is at. I am not saying we are not in for some hard times, I am not saying more banks wont go under (on average 6 to 7 fail per year) I am not saying the fed will not step in at any point for someone else, they might. I didn't say the feds wouldn't bail out Fannie and Freddie. I said from all available information right now it's not even neccesary. Try venturing outside of the times, that would help you. Here is a link for you, that explains a bit of what happened yesterday http://www.forbes.com/reuters/feeds/reuter...C-WRAPUP-7.html

I used to stand in a line for free cheese back in the 80's, I come from broke as ****. It wasn't all that bad. I never felt unsafe. I certainly don't now. I honestly don't know how to help people such as yourself, usually when I was dating and I dealt with a paranoid woman- they are everywhere- I would usually just tell them to slow down and shut up, but it never really worked. Do you have a job? Do others around you have jobs? When you drive, are the streets empty? Are stores empty? Etc., etc., etc., and the answers are for the most part no. Parts of the country suck, most of it does not. Now, I realize saying that is pointless because you think that poor people are soon going to try and either kill you or eat you, so what can I really say to that?

Believe it or not I haven't read a NY Times article in a very long time. That statement was from a WSJ article.

That's another great link. Reminds me of the time when the CEO of a large investment bank came out on a Thursday and said things were peachy. Something magically happened overnight and on Friday they were out of business. Forgive me if I don't take some people's word as gold.

As for the investment advice, I appreciate it. My dad is also a day trader and was able to retire quite young. He has a few contacts here and there and helps me out from time to time.

And you're right. Some might consider my ethical thoughts silly, but it still doesn't change how I feel.

You are right again that shorting is another way to make money in the market, but the ethics in the market aren't quite top notch and people have abused shorting quite possibly more than any other market tool. I'm sure you are familiar with naked shorting, but that's explicitly illegal right? Someone should probably tell Lehman Brothers about that. GOOOOOOOO uptick rule FTL!

AFAIK naked shorting is not illegal unless its intended to drive down the shares of a stock.

Fannie and Freddie play a massive role in the nations housing economy. Like, way, way critical. There's a reason they're on the governments "unofficial" teat should anything ever go wrong. If they went down, it would be absolutely catastrophic and could potentially create some huge 'government agency' sort of thing that would be an intercessor in most mid income domestic home lending from here to eternity.

We've learned some lessons about home lending ("lessons" that a lot of people screamed would inevitably happen when they watched their $9 hourly neighbor buying a $250,000 house) and the Macs really should've known better, but we can't let them fail. The downward implications would be massive.

I hate saying this because I'm a libertarian to my bones, but there's a difference between experiencing "free market modifier" growing pains and just outright taking bullet to the head on principle alone.

Really, Scram? I'm disappointed. What next, Free Tibet, save the Red Panda, and gun control? Government bail out? You pinko commie.

Not that anyone cares, but this thread has almost entirely changed my opinion of LMD. Seriously, good relevant and well-stated stuff.

I for one am getting a little tired of hearing people talk of the "recession" and offering anecdotal "evidence" of why the economy is so bad. McCain himself is running ads proclaiming the economy to be in "tatters".

For the uneducated "Recession" = 2 or more consecutive quarters of negative growth

The OP is a perfect example of why Phil Gramm was right about the "Nation of Whiners".

Yeah, Lois isn't all that bad when he's not lecturing on science.



Yes, this is the technical definition of a recession and no, I guess we haven't had that yet. I'm probably the very last person who should be talking about the economy, and I'm certainly not in the chicken little camp that some seem to be in, but even you must admit that our economy is at a pivotal point right now. The fallout of the whole housing/credit situation is rippling through our country and we must be very wise and cautious if we hope to avoid major issues and what could eventually lead to a technical recession. Certainly your view of the state of the economy is more sophisticated than some arbitrary definition, and I assume that you appreciate the importance of settling our economy and getting things back on track. No, the world isn't going to end and we're not going to enter a new great depression, but intelligent steps need to be made to get things back on track. I have no clue what those steps actually are, and that should be left to the more economically inclined.

That made me laugh.

I have been pretty much avoiding the religion/science threads of late, I think it's redundant about now. I was getting a tad tired of myself, you know? What a pontificating prick I can be.

Scrams points earlier are quite valid, and like I said I wouldn't rule out a bailout if it's neccessary. Notice, when that rumor was out on friday FNM and FRE debt was going at a premium, because if such a bailout/takeover/buyout were to take place there fixed income securities would be viewed as backed by the government, with yields much better than treasuries right now. Yin, yang.

You're not looking at the future. A good economist looks into the future. You obviously don't know anything about the economy. You look at stores having goods, streets having cars on them and think everything is fine.

Why don't you answer this and only this. When and how does the $59 trillion debt get paid off?

EDIT: And I'm not worried about people eating me. Why don't you ask the Germans what you get in times of economic crisis...

3rd grade, there was this kid named Aaron who had some sort of skeletal deformity. Don't know precisely what it was, but he had to wear these weird "braces" on his legs, kinda like Forrest Gump, only they went higher up onto his body. By 5th grade, he didn't have to wear them anymore, but he still had to wear special shoes that were different from normal shoes and would have to do so for the rest of his life.

That's kinda like where we're at.
The economic 'skeleton' of this country can be corrected to a freer market model over time, but given how long we've been walking with a philosophically deformed backbone, we'll probably always need 'special shoes' in certain economic arenas no matter what; trying to 'walk' without them would cause us to fall on our faces, NOT because the shoes are "better" but because the shoes address a permanent circumstance that was created by a flaw in our past that cannot be undone.

The government guaranteeing FMC and FRE is an example of 'special economic shoes'.
The problem with leftists is that they see Aaron walking with these special shoes and think "Hey! Look! He used to be crippled and now he's walking with those special shoes! Obviously, those shoes must have special properties that can make cripples walk again, so if we just give them to anyone who can't walk, they'll be able to walk again!" so they try to put them on a paraplegic with a spinal injury and scratch their heads and blame "society" when they fail to make him walk again, then reference you to "Guns, Germs and Steel" to explain why they aren't working. .

Do you believe there is no naked shorting for this reason taking place?

LMD and others..what are your thoughts on counterfeited longs? From what I have heard about them they kind of worry me.

Not a surprise to anyone but the completely retarded, Fed announces that the Fannie and Freddy will not be allowed to fail.

http://www.msnbc.msn.com/id/25665507/

The article references that they hold or underwrite about 1/2 the outstanding mortgages in the US.

The Enron and UBS Phil Gramm? The same one who said it will be no big deal when people get laid off?

yeah, shocker. I am just wondering at what point does it stop? Every time the government does this they get "bigger". I don't like the direction big government is heading. I would like see what small government would be like during my lifetime.

Fannie and Freddie definitely wouldn't be a good 'jumping off point' at this point in time, as far as letting them fry.
I couldn't care less about Bear, but definitely not FMC/FRE.

But you do realize that this makes things much worse don't you?

Please explain why, in a way that won't make me immediately think someone at the retard home must've left the door to the internet lab open after the most recent "life skills" class and you just happened to shake your supervision and wander back in.

You really think government is competent enough to save this company? You see no problem in a government that comes running to help every problem that comes along? Just getting past the fact that government is using tax payer funds to start saving companies non-stop and seeing how government is the least efficient distributor of goods and services, just take a look at the bail out repercussions. What tools do the Treasury Department have that they can use? I mean what do you think M3 is at right now? M3 has to have increased 15%-20% in the last year. The Federal Reserve is going to just print up more money to save this section of the economy. Inflation is becoming a gross monster. If this was such a blessing, why not save every industry that employs people?

Everything has an equal and opposite reaction. These companies LOST money...and you don't see the risk of giving them a free $15 billion to keep them a float? Where did they get the money from? There is a $9.5 trillion debt. Printing money to give to companies is not a way to a healthy economy.

I see your point of view. I just think it's shortsighted. When even Scram says,"Yeah, they probably shouldn't let them fail" you should look up and listen. Now, out of curiosity, explain to me exactly what the fed is proposing. I would be interested to hear what you think has happened so far, and if action has been taken.

You still haven't answered how the $59 trillion debt is going to be paid off...

My view is not short sighted. It is exactly the opposite of short sighted. My concerns about future inflation and future dollar deflation and a crunch on earnings/savings is a long term issue. You and Scram are the ones who are short sighted in thinking it was a great idea to save these companies so that the market runs good today. Sure it will send confidence into the market today, but there will be future unintended consequences.

It is nice you think of me as an expert now in the Fed's actions. You could easily do something crazy, like read the news, to find out what the Fed is doing. But I will do your homework and say what course action have been taken!

- the Federal Reserve has been given a greater role in supervising the finances of Fannie and Freddie
- the Federal Reserve announced Sunday that the mortgage finance companies can turn to the Federal Reserve Bank of New York for funds

You will have to find out what this means on your own...

Laugh away.

"The SEC states that "Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules," and clarifies that in some circumstances, it can contribute to market liquidity.[4] However, naked shorting to drive down share prices violates US law."

This thread reminds me why I dont bother reading poly/economics on FCP. Spend some time on 4, fellas, at least you'll get a sorely needed education.

Of course, since DN is so clueless it just reflects his level of thinking.

Barrons had an article on Freddie/Fannie over the weekend.

Their prediction: common and preferred holders get nada. Some smart folks are buying the bonds at a discount and will make coin. Taxpayers will end up paying a bill of about $100 billion.

Link?

My guess is that this was not put forth as a "prediction".

Not sure if the link will work as it may not be on the free side.

Barrons Article

thanks for trying, only for subscribers

BITE YOUR TONGUE!!

I already know. The question is, currently, what ACTION has actually taken place? The answer is, nothing. It's there if they need it, so far, they haven't. Question- do you buy an insurance policy and then sit in a corner and cry because one day you may need it? I read some stuff about "if the treasury buys stocks in the company that will dilute the share value." Sure- IF. That's step 3 in the plan, and step one hasn't even been used yet. There are a number of ways this could go, it's tough to gauge exactly where, especially when(especially FNM) basically says they have more capital to work with than they ever have.

Interesting tidbit on Indymac- FDIC froze all current foreclosures in there bank owned properties, so they can work with the homeowners, investors, etc. I like that move-it's possible that they can end up repackaging this company and making it a viable option for another bank to buy. We will just have to wait and see.

All I know is we don't allow it,and as far as I know it's because it's illegal. If we don't have shares to lend you, we don't have shares to lend, end of story. We can always go to another firm and borrow from them but it will cost you to do it. In some cases that might make sense to pay the monthly fee to do so, but for the most part people don't go that route.

Your firm may be taking a conservative position but it is NOT illegal. A number of hedge fund managers use a portable alpha strategy of going long on one stock in a sector and shorting a different one in the same sector.

That's not being naked. Naked implies that the broker/dealer allows the client to take a short position without having the ability to borrow it. Here is aquick synopsis of how it's supposed to work:

o profit from the stock price going down, short sellers can borrow a security and sell it, expecting that it will decrease in value so that they can buy it back at a lower price and keep the difference. The short seller owes their broker, who usually in turn has borrowed the shares from some other investor who is holding his shares long; the broker itself seldom actually purchases the shares to lend to the short seller.[1] The lender of the shares does not lose the right to sell the shares.

Short selling is the opposite of "going long." The short seller takes a fundamentally negative, or "bearish" stance, anticipating that the price of the shorted stock will fall (not rise as in long buying), and it will be possible to buy at a lower price whatever was sold, thereby making a profit ("selling high and buying low," to reverse the adage). The act of buying back the shares which were sold short is called 'covering the short'. Day traders and hedge funds often use short selling to allow them to profit on trading in stocks which they believe are overvalued, just as traditional long investors attempt to profit on stocks which are undervalued by buying those stocks.

In the U.S., in order to sell stocks short, the seller must arrange for a broker-dealer to confirm that it is able to make delivery of the shorted securities. This is referred to as a "locate," and it is a legal requirement that U.S. regulated broker-dealers not permit their customers to short securities without first obtaining a locate. Brokers have a variety of means to borrow stocks in order to facilitate locates and make good delivery of the shorted security.

The vast majority of stock borrowed by U.S. brokers comes from loans made by the leading custody banks and fund management companies (see list below). Sometimes brokers are able to borrow stocks from their customers who own "long" positions. In these cases, if the customer has fully paid for the long position, the broker cannot borrow the security without the express permission of the customer, and the broker must provide the customer with collateral and pay a fee to the customer. In cases where the customer has not fully paid for the long position (meaning the customer borrowed money from the broker in order to finance the purchase of the security), the broker will not need to inform the customer that the long position is being used to effect delivery of another client's short sale.

Most brokers will allow retail customers to borrow shares to short a stock only if one of their own customers has purchased the stock on margin. Brokers will go through the "locate" process outside their own firm to obtain borrowed shares from other brokers only for their large institutional customers.

Stock exchanges such as the NYSE or the NASDAQ typically report the "short interest" of a stock, which gives the number of shares that have been sold short as a percent of the total float. Alternatively, these can also be expressed as the short interest ratio, which is the number of shares sold short as a multiple of the average daily volume. These can be useful tools to spot trends in stock price movements.

I think it's worth pointing out that most of the $59 trillion is money expected to be paid out to Medicare/Medicaid as well as Social Security. This is why if you read your annual Social Security statement, it points out that starting around the year 2040, Social Security will have more money going out than coming in, and the system will be in trouble. I don't think calling this a $59 trillion dollar debt is accurate, because these programs will simply be unable to be funded without drastic change.

I'm not saying this is not an important issue. I feel quite the opposite actually. This is a huge problem that seems to get swept under the rug by politicians, and is very rarely covered by mainstream media. Guess thats the way it goes when the problem won't involve any issues in the upcoming election.....

Worse than being swept under the rug, the problem is hyped beyond the reality as a political football. Even the conservative talk show hosts rail on about both Bush and Clinton "bankrupting Social Security".

My bad, I was using the common defintion, not the legal one.

Everyone knows SS is bankrupt...don't you lol

Strange because I'm not a subscriber but I was able to read it. Took quite a while to load for what was there but then I have a dinosaur computer.