BAILOUT [strike]STRUCK DOWN[/strike] PASSED DOW PLUMMETING!

My understanding is they were going to fund the Paulsen plan by issuing some bonds (which is all moot anyway till Congress passes something else). At this point, people are fleeing stocks, and may very well snap up any new federal treasuries.

Do this enough, however, and the value of the country's debt becomes less guaranteed. Once that happens, you're going to have to offer a higher interest to compensate for the risk. If your credit rating goes down sufficiently, no one wants to hold dollars, and we're all screwed. I can't imagine what capital flight out of the United States and any dollar-denominated assets would do to the world economy.

One thing I can't understand is, why do so many people look at the $700 billion and immediately say it's an expense item? It's not - it's an asset, albeit a highly speculative one. Something that could conceivably appreciate in value once the mess is over. There's a chance of it going all the way to zero, losing taxpayers more than just the $700 billion, but what's the chance that the underlying asset of those securities - which are mortgaged houses - would actually go down to zero?

I am a dolphin, do you want me on your body?

Oh yeah, issuing bonds, I always forget about that.

Still, like you say, someone has to buy them and that's as likely to be foreign investors as domestic ones, leading to a reduced balance of payments in the future. Eventually that will swing round to be a benefit as a cheaper dollar means more exports but in the short term, imports will cost a load more, including, crucially, oil.

I was speaking idiomatically.

True, balance of payment issues may crop up in the future. Though, that's one of the things America ought to address - its twin deficits (trade/current account deficit and fiscal deficit). Problem is, habits are hard to change. Try telling the people who elected you that you want them to lower their standard of living to levels they can afford

The beauty of the dollar's value being floated is that this will ultimately counterbalance in the medium-term. As oil prices become intolerably high, Americans would start using less oil. Thus, reducing the import bill, and ultimately the price of oil.

Regardless, I agree the short term effect would inevitably be a weak dollar coupled with higher inflation.

What kind of toxic man-thing is happening now?

I guess now is a good time for me to be starting a 401(k) plan. Either the market goes back up and I make money, or it drops further and everyone's fucked.

FELIPE NO

Quote:

Yes, the banks are at fault here (although not completely, but that's a different discussion), but just saying that they got in to this mess on their own means that they have to get out of it on their own is just stupid, because it should be clear to everyone who has watched the crisis over the past year or so that they CAN'T get out on their own.

I've always wondered if the banks engaged in a bit more risk than they should have since they were aware that there would always be the government to bail them out in the event of financial disaster.

Also.

BUY WAR BONDS

What, you don't want my bikini-clad body?

Well RR it's like leaving your home unlocked. Sure, the police will probably bail you out by catching the guys who did it, but it doesn't mean you get back all your stolen shit.

Jam it back in, in the dark.

Isn't that what homeowner's insurance is for?

Most amazing jew boots

That's where the comparison breaks down yes

This thing is sticky, and I don't like it. I don't appreciate it.

The implicit "too big to fail" policy was a part of it, but it's mostly the 1% interest set by the Fed. With money that cheap, lenders figured they could afford to issue sub prime mortgages to as many people as they could, and even with the few who would default they'd make so many profits that they could still pay off the interest on the money.

Didn't turn out that way.

I am a dolphin, do you want me on your body?

I just wanted to leave a link for anyone who wants a detailed explanation on what actually happened with the lead up to the situation. There's a great This American Life radio show episode which really puts it all in laymen terms. It's worth a listen - it's free, and in streaming.

I was speaking idiomatically.

I didn't see a response to this in the Bill failing thread, so here goes -

Senate to vote on financial rescue plan on Wed. - Yahoo! News

Here's an interesting trick - revive a plan in the other house, tack on something to make fearful investors and a jittery, tired public less likely to oppose it (upping FDIC limits to $250,000 from $100,000) and see if the trick holds. P.S. as I write this, the story was posted less than 20 minutes ago.

How ya doing, buddy?

Just because nobody mentioned this yet, hardly qualifies it for a new thread. Let's try to keep discussion on one topic in one thread yeah?

Additional Spam:

Originally Posted by Zergrinch

Americans would start using less oil.

Hahahahahaha, yeah right. America fucking loves oil, more than anything else. The main reason for not signing up to Kyoto and paying scientists to say that global warming is a myth is so they can keep burning the stuff and bollocks to the eastern seaboard in hurricane season. Petrol prices rise in America and everyone here starts complaining about how it now costs almost a fiver to fill up their eight litre SUV. The concept of not using oil is an entirely alien one to the US. They're spending billions of dollars a week keeping their army in Iraq just to secure oil reserves. Shit, they could have saved most of the money they need for the bailout by not even flying the troops over, let alone the cost of keeping them there for the best part of a decade. The ludicrous amount of money the US government has spent in maintaining their access to Iraqi and Kuwait oil is a big part of the reason why the US government is almost bankrupt in the first place.

No, oil prices will rise and America will keep using the same amount of oil. Rather than occasionally turning things off when they aren't using them and walking places once in a while, they'll be faced with a higher and higher proportion of their income going on oil based products, fuel, power, anything made outside the US. They won't be able to get loans because their banks aren't offering, pay rates will fall behind inflation making it even harder to maintain the standards of living most of them seem to believe is a right rather than a priviledge. People will start eating cheaper food to save money which is generally worse for you meaning the obesity epidemic will get even worse putting greater strain on hospitals. More people will turn to drink and drugs to combat the depression of having no money and theft and burglary will increase as consumer good s become harder to come by. People will give less to charity and the fear of crime will make the already overly-paranoid American people even more fearful of their neighbours. Gun crime will increase, as will the number of accidental shootings as everyone tools up to defend their remaining material possesions.

I don't think a lot of people in America realise just how important the strength of the dollar is to their standard of living. Between that and having a government with no money, America is unlikely to be a very nice place to live for the next few years and personally I don't see a quick-fix solution, I think you'll just have to ride it out and wait for international markets to do their thing. In the mean time, the best the US government can manage is to try to reduce the dependance on imports, make the country more self-sufficient but not just by imposing trade tarrifs as that keeps prices of domestic goods artificially high, making life even harder for the population. Instead they need to focus on developing alternative energy sources, improving efficiency in food production and reducing food miles and supporting those industries where America is a world leader, not that I can particularly think of any off the top of my head. The financial markets will eventually settle down, albeit much quicker if they get given the money they need to start functioning again.

FELIPE NO

Just read an article that interesting, detailing the selling of American corporations and assets to foreign investors.

The Great American Yard Sale - TIME

A month old, but I found it informing.

What, you don't want my bikini-clad body?

So, how about that bill actually passing? You know, like it did.

I don't know much about this bill other than that it gives tax breaks to companies and raises the FDIC insurance rate. I was under the impression that in a "free market" economy that good old invisible hand is supposed to in and fix everything not the government. I guess that's why a bunch of people are calling it a socialist bill? But that doesn't make sense if it LOWERS taxes for companies. (I'm probably not making any sense, probably because from what I know of this bill, it doesn't seem to make any sense.)

Wouldn't it make more sense, instead of reducing taxes on the companies, to invest in America's crumbling infrastructure?

Jam it back in, in the dark.

Originally Posted by The_Melomane

So, how about that bill actually passing? You know, like it did.

I don't know much about this bill other than that it gives tax breaks to companies and raises the FDIC insurance rate. I was under the impression that in a "free market" economy that good old invisible hand is supposed to in and fix everything not the government. I guess that's why a bunch of people are calling it a socialist bill? But that doesn't make sense if it LOWERS taxes for companies. (I'm probably not making any sense, probably because from what I know of this bill, it doesn't seem to make any sense.)

Wouldn't it make more sense, instead of reducing taxes on the companies, to invest in America's crumbling infrastructure?

Reducing taxes is a very free-market thing to do. Essentially by doing that the government are handing the power to kick start the market back to the corporations.

By reducing taxes, the companies have more ready cash available. The idea is they can use this cash to invest in new projects whereas before they'd have to borrow money from the banks to fund that kind of thing, something they can't do so easily now.

Increasing the insurance cover means confidence is increased that people's life savings won't be wiped out by a bank going under which stops people wanting to withdraw all their money and hold it in cash, which is what fucks banks over as they often struggle to scrape together the ready cash to service everyone's withdrawl needs.

If the government started investing in infrastructure, that would be a very socialist, even communist thing to do. This stance assumes that the government know how to fix the economy better than businessmen do, which may or may not be true but in a country built on a mantra of free trade (Except with foreign countries of course), that kind of interventionist policy is never going to be taken on board.

Tax reductions are a slow way to recover an economy and can backfire if all the companies do is use the tax breaks to pay higher dividends, which I would suggest is a distinct possiblity as the boards are going to want to keep the investors sweet to stop them selling their stock and devaluing the company.

There's nowhere I can't reach.

Originally Posted by Shin

If the government started investing in infrastructure, that would be a very socialist, even communist thing to do.

No it isn't.

Melomane is referring to things like roads, highways, bridges, rail lines, etc., which has been a popular practice since the Romans. Not that public works would help the economy in the short term anyways.

This thing is sticky, and I don't like it. I don't appreciate it.

Originally Posted by The_Melomane

So, how about that bill actually passing? You know, like it did.

I don't know much about this bill other than that it gives tax breaks to companies and raises the FDIC insurance rate. I was under the impression that in a "free market" economy that good old invisible hand is supposed to in and fix everything not the government. I guess that's why a bunch of people are calling it a socialist bill? But that doesn't make sense if it LOWERS taxes for companies. (I'm probably not making any sense, probably because from what I know of this bill, it doesn't seem to make any sense.)

Wouldn't it make more sense, instead of reducing taxes on the companies, to invest in America's crumbling infrastructure?

They also put in tax breaks for companies investing in renewable energy and a provision to ensure mental health coverage in all health care plans so I mean it's not like only the Republicans were pandered to.

I am a dolphin, do you want me on your body?

I guess, since I'm not feeling the effects of what's going on in the stock-market and the housing crash, I can't/won't understand why we need this. I'm not seeing an real consequences of the ups and downs of the it lately, so I have no idea what they are. (Actually, I caught a snippet of NPR a little while ago and they mentioned something about pension plans and 401Ks, but I'm not sure in what context or how they're being affected.)

People say it'll create a great depression if we don't do anything, people say it'll sort itself out if we don't do anything. I get that the bill is supposed to increase spending, it's a pretty typical expansionary fiscal policy, but weren't the checks people got in June/July also a pretty big expansionary fiscal policy? If that only worked in the extreme short-term, and obviously not so well, if spending is down again, what makes this bill any more likely to "fix" the problem?

How ya doing, buddy?

Originally Posted by Bradylama

Fuck you Aardark you were so fucking wrong.

HAHAHAHAHAHAHAAHAHAHAHAHAHAHAHAHAHHAA

Heh. Fuck you, who was wrong now?

What kind of toxic man-thing is happening now?

The bill that passed in the Senate is a completely different draft than the one that failed in the house.

Lurks, the energy tax breaks weren't added to the bill, apparently any tax bills must originate in the house, so they stapled all this shit underneath the energy bill to sidestep their own rules.

Melomane, you won't feel the ripple effects for a few months, when business will start slowing down a whole lot more than it already has.

I've already seen the automotive business go flat, so I got out of that. Since then, hunting jobs is hard as fuck, especially when you don't have any other specific skillsets.
I'm not sure if you're still working as a waitress, but if you are, you'll probably see the effects in the amount of tips you start getting (should nothing happen with this bill).

You could also read Shin's posts (which you should've already done, but doubt you actually bothered to read the entire thread).
http://www.gamingforce.org/forums/po...tml#post648617
http://www.gamingforce.org/forums/po...tml#post649014

Also:


FELIPE NO

Originally Posted by Aardark

Heh. Fuck you, who was wrong now?

It's you.

What, you don't want my bikini-clad body?

Originally Posted by The_Melomane

So, how about that bill actually passing? You know, like it did.

I don't know much about this bill other than that it gives tax breaks to companies and raises the FDIC insurance rate. I was under the impression that in a "free market" economy that good old invisible hand is supposed to in and fix everything not the government. I guess that's why a bunch of people are calling it a socialist bill? But that doesn't make sense if it LOWERS taxes for companies. (I'm probably not making any sense, probably because from what I know of this bill, it doesn't seem to make any sense.)

Wouldn't it make more sense, instead of reducing taxes on the companies, to invest in America's crumbling infrastructure?

From what I heard (in addition to all of Shin's stuff), interbank trading* has basically froze. The banks don't want to loan any other banks money for 3 months if they don't know if the bank will still be there in 3 months. If it keeps on for too long like this, then anything that requires loaning from a bank (mortgages, loans, credit cards) will stop. That would be the first pinch.

You should read Shin's posts, and if you're still interested after you should google up some blogs about it. I don't know of any good financial blogs though, so if someone else does, plug it now.

* the financial markets of the world depends on interbank trading.

Jam it back in, in the dark.

Originally Posted by Bradylama

No it isn't.

Melomane is referring to things like roads, highways, bridges, rail lines, etc., which has been a popular practice since the Romans. Not that public works would help the economy in the short term anyways.

A properly capitalist government wouldn't build any roads. They'd sit back and wait until the demand for a new road was such that people were willing to pay someone to build one (And then put up a toll booth on it). Public works building is strictly for reds.

There's nowhere I can't reach.

A properly capitalist government would be determined by market forces, but no government to date has ever behaved that way.

Framing individual policies in absolutist terms of capitalist - Marxist or capitalist - socialist is for the birds.

This thing is sticky, and I don't like it. I don't appreciate it.

Originally Posted by Bradylama

A properly capitalist government would be determined by market forces, but no government to date has ever behaved that way.

Framing individual policies in absolutist terms of capitalist - Marxist or capitalist - socialist is for the birds.

I know this, I was just saying how I wasn't technically wrong before...

I am a dolphin, do you want me on your body?