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  1. #31
    mountain surfing nomadic's Avatar
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    Quote Originally Posted by ygolo View Post
    I think there is more to this story than meets the eye.

    Notice that the Dow lost a lot of it's value before the vote.

    But also notice the zero volume from 1:41PM to 1:58 PM.

    House Bailout Vote Fails!-dow-bail-news-jpg

    Does anyone know exactly when the House deliberated and voted on this?
    all day. the entire market was watching the house vote and deliberate the entire time.

    when votes were being casted, the market would react to the talley at the time.

  2. #32
    Senior Member Eileen's Avatar
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    Quote Originally Posted by Lateralus View Post
    The root of the problem is the Federal Reserve. We're not going to do anything about that. Obama talks about giving the Fed MORE power...

    I understand that this may be a legitimate point of view, but I'd like to hear an argument for it, because it also seems legitimate to me to view deregulation (essentially allowing for irresponsible and predatory loaning) as the root of the problem.
    INFJ

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  3. #33
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    Quote Originally Posted by ptgatsby View Post
    It'll hit big first.

    First, you might hit a liquidity trap. The small business there might get squeezed, but it'll be the public companies that get hit first (they tend to have debt convents they have to meet). See: AIG.

    Second, there will be less money being transferred, which means that the use of money will decrease. This will cause a few major problems, namely like the liquidity trap, money will be harder to re-raise to cover existing debt, and with that comes an end of existing businesses

    Third, it will be harder to raise money for capital projects, meaning projects that would of been financed are not (and they almost all are!). This means less business across the board (this hits small businesses too, either directly or in terms of trickle-down).


    Great time to be a long term investor though. Just wish I had income to divert for buying. Ah well.
    yeah those are public companies. but i imagine most americans work for small businesses which is why i mentioned that part.

    its not over though. they HAVE to work something out. i can't imagine them not doing something. i mean, thats their damm job! fkkin congress.

  4. #34
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    Quote Originally Posted by Eileen View Post
    I understand that this may be a legitimate point of view, but I'd like to hear an argument for it, because it also seems legitimate to me to view deregulation (essentially allowing for irresponsible and predatory loaning) as the root of the problem.
    deregulation is huge. it could have prevented all the exotic securities that packaged bad loans, and took it off from the hands of lenders who would not get punished for making bad loans. Lenders could get it off their books by selling the bad loans to people who want to package it into complex securities most people could not understand. So they would sell as many loans as possible, and people who should not be getting homes, would find the allure too great.

    these "exotic securities" called collateralized debt obligations, MBS, etc... were supposed to "spread risk" so banks could unload risk from their balance sheets. problem is, they spread it so much, everyone got affected. lawyers were able to make the structures of these instruments so complicated, no one would understand it. and yeah, it could have been prevented with better regulation of the loan/credit markets.

  5. #35
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    Quote Originally Posted by Eileen View Post
    I understand that this may be a legitimate point of view, but I'd like to hear an argument for it, because it also seems legitimate to me to view deregulation (essentially allowing for irresponsible and predatory loaning) as the root of the problem.
    Yes and no.

    There would have been no predatory lending if lenders had had to tote their own notes, because predatory lending is ultimately self-defeating. If you're in the lending business, you do not lend your own money to people who can't pay it back... but you might very well lend someone else's money to those who can't pay it back.

    Enter Fannie Mae and Freddie Mac, two quasi-federal corporations who played the part of enabler to this national-scale loan-sharking debacle. Without them, this whole deal would never have happened.

  6. #36
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    remember.

    the dow drop would have been even worse than this. but there is a freeze on short selling on financial stocks.

    that 700 dow point drop is mostly from non financial companies.

  7. #37
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    people are not sure if the average everyday citizen will be able to use their ATM's in the future, if nothing happens.

  8. #38
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Eileen View Post
    I understand that this may be a legitimate point of view, but I'd like to hear an argument for it, because it also seems legitimate to me to view deregulation (essentially allowing for irresponsible and predatory loaning) as the root of the problem.
    The Fed doesn't really have anything to do with regulation. The part the Fed played was by making credit so cheap that banks found it profitable to make all these ridiculous loans at the time. You see, there's a natural interest rate that the market determines. When the Federal Reserve sets interest rates below the market rate, this causes people to borrow more because the credit is artificially cheap. We can talk about deregulation all day, and it did play a part, but the Fed created the environment for all of this to happen. Banks did what banks do. They were predictable. The Fed knows this and chose that course of action anyway. It makes me wonder whether they're corrupt or just incompetent.

    And some politicians want to give the Fed MORE power.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  9. #39
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    Quote Originally Posted by Lateralus View Post
    The Fed doesn't really have anything to do with regulation. The part the Fed played was by making credit so cheap that banks found it profitable to make all these ridiculous loans at the time. You see, there's a natural interest rate that the market determines. When the Federal Reserve sets interest rates below the market rate, this causes people to borrow more because the credit is artificially cheap. We can talk about deregulation all day, and it did play a part, but the Fed created the environment for all of this to happen. Banks did what banks do. They were predictable. The Fed knows this and chose that course of action anyway. It makes me wonder whether they're corrupt or just incompetent.

    And some politicians want to give the Fed MORE power.

    mortgage rates are tied to treasuries. i don't think treasuries were aritificially cheap because of the fed.

    if you have low mortgage rates, and good credit screening policies in place, then you wouldn't make bad loans to people who shouldn't get them.

    market incentives to NOT screen out those with bad credit is key here...

  10. #40
    Seriously Delirious Udog's Avatar
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    Quote Originally Posted by Lateralus View Post
    The root of the problem is the Federal Reserve. We're not going to do anything about that. Obama talks about giving the Fed MORE power...
    I don't hear McCain talking about doing anything different, though.

    Quote Originally Posted by Modern Nomad View Post
    people are not sure if the average everyday citizen will be able to use their ATM's in the future, if nothing happens.
    People are not sure of alot of things. I'm not clear what your point is here...

    Quote Originally Posted by Lateralus View Post
    You see, there's a natural interest rate that the market determines. When the Federal Reserve sets interest rates below the market rate, this causes people to borrow more because the credit is artificially cheap. We can talk about deregulation all day, and it did play a part, but the Fed created the environment for all of this to happen. Banks did what banks do. They were predictable. The Fed knows this and chose that course of action anyway. It makes me wonder whether they're corrupt or just incompetent.
    The average joe has been struggling for awhile now, and keeping the rate low was the way the Fed decided to delay the collapse for as long as they could. Increasing the rate would have cause this to happen much earlier (not necessarily a bad thing).

    I'm not a Ron Paul fanatic, but I couldn't agree with him more here:

    [YOUTUBE="http://www.youtube.com/watch?v=ticytEUvVhQ"]Ron Paul: Corporatism - not free markets[/YOUTUBE]

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