Market crash: are we there yet ?

[Rickm505]

Paulson and Bernanke begin an intensive two-day round of congressional hearings on Tuesday to hasten approval of the bailout legislation.

CNBC.com will provide live streaming of the hearings beginning at 9:30 am ET.

[KeelHaulin]

I think the bailout is a complete fleecing of honest hardworking American taxpayers; but in order for the honest hardworking American taxpayer to keep his job and keep his 401K from being worth toilet paper, the fed must agree to the bailout. The prediction if accurate is a comparison to the Great Depression; where everything tanked and people were standing in soup lines by the thousands. I really don't think we want that to be re-lived in this day and age. It might humble us and in the long run make us stronger, or it might be something that the USA would never recover from. Countries like China and the middle east are on the rise in power and wealth; we need to keep our economy strong to stay on top. Fundamentally the US economy is strong; but this mortgage/bank/liquidity problem is a cancer that needs to be cut out before it kills the rest of the market.

I also think the market(s) should form a fund to pay back the government; as the gov is acting as an insurance agent for the entire US economy. A short term raise in the capital gains tax could help cover the payback; with large contributions (with interest) to companies who took relief from the Fed. I know; Gingrich says drop the Cap Gains tax to zero. But if we let everything go down the tubes first; what will be left to rebuild?

Everyone who has a substantial amount in their 401K or IRA should review their insurance coverages in the event their financial institution fails. The insurance that is provided -may- not cover you for your cash holdings; if there is mass failure be aware that the SIPC is only a non-profit corporation not like the FDIC (federally backed).

The Fed needs to close the loophole on the lending practices and it needs to stop the short term investors in the Real Estate market (penalize short-term capital gains on real estate to the effect of 90% penalty on a short term gain). The home flippers put the RE market into a feeding frenzy and that is the source of all of this crazy inflation of value and short term low-interest (teaser) loans. It only works when the price of homes are increasing; at some point the non-flippers stop buying because they are priced out and everything corrects. This time the flippers decided to walk away with huge profits and leave the banks holding the bag.


We're There Gang!!! The US market WILL have some form of crash if the bank industry fails!!

[chucklesR]

Anyone care to refute this:

Obama may break bent economy - BostonHerald.com



Whatever is left of the economy after the current round of crisis interventions by the Fed could go down the drain if Barack Obama is elected and carries out his plans for sharp increases in taxation. Even if Obama does not understand the linkage, most Americans do and will turn sharply against Obama’s tax plans if John McCain hammers away at the risk they pose for us all.

During the Great Depression, Congress raised taxes sharply in the Revenue Act of 1932. The top rate went from 25 percent to 63 percent. As a result, the real Gross Domestic Product dropped by 13.3 percent and unemployment rose from 15.9 percent to 23.6 percent.

In 1990, the first President Bush famously broke his “read my lips, no new taxes” pledge of 1988 and raised the federal gasoline tax and federal excise taxes, and imposed a 10-percent surtax on the top income bracket, raising its taxes to 31 percent. The recession that followed in 1991-1992 cost him re-election.

It is obvious that increasing capital gains taxes by a minimum of one-third and possibly doubling them, both of which Obama has proposed, would send a signal to investors to keep their money under the mattress. Who would buy stock knowing that the tax on any profits he or she will make is going to go up sharply if Obama becomes president?

Look at what happened just last year in Michigan. Democratic Gov. Jennifer Granholm raised taxes on almost everything. Income taxes shot up 11.5 percent, and the state’s 6 percent sales tax was expanded to dozens of new services, like investment advice, janitorial services, landscaping, ski lifts and carpet cleaning.

The $1.75 billion tax package shook the economy to its foundations. Michigan became the only one of the 50 states with a shrinking gross domestic product. The value of all goods and services produced in the state fell by 0.5 percent, while the national GDP rose by 3.4 percent. The state fell from 23rd in GDP to 35th. Taxes caused a disaster.

In a strong economy, Obama’s proposed tax increases would raise questions. In a weak economy, they portend a catastrophe. It would be like bleeding a sick patient, the medicine of 200 years ago, depriving him of blood even as he needs more, not less, circulating through his arteries.

McCain’s populist rhetoric, including his pledge to fire Securities and Exchange Commission Chairman Christopher Cox is important for a Republican candidate. But his focus should shift to the tax issue. With firms suffering, withering and dying for a lack of capital, tax increases on those who invest would be a horrible mistake.

Americans will realize this obvious fact, and McCain should use it to gain the advantage in discussing the economy.

There is no reason for the economy to work to Obama’s advantage when he is committed to a doctrinaire program of tax increases and spending hikes. McCain can use the issue to run rings around him.

[Rickm505]

After time shifting my morning, I've watched and listened for the last 3 hours as I think this is too important to not pay attention.

I hate what I'm hearing. this plan stinks.


The decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Isn't that a dictator?

This from another concerned citizen:

_________________________________________________

"This puts the Treasury's actions beyond the rule of law. This is a financial coup d'etat, with the only limitation the $700 billion balance sheet figure. The measure already gives the Treasury the authority not simply to buy dud mortgage paper but other assets as it deems fit. There is no accountability beyond a report (contents undefined) to Congress three months into the program and semiannually thereafter. The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest, and there would be no recourse. Given the truly appalling track record of this Administration in its outsourcing, this is not an idle worry.

But far worse is the precedent it sets. This Administration has worked hard to escape any constraints on its actions, not to pursue noble causes, but to curtail civil liberties: Guantanamo, rendition, torture, warrantless wiretaps. It has used the threat of unseen terrorists and a seemingly perpetual war on radical Muslim to justify gutting the Constitution. The Supreme Court, which has been supine on many fronts, has finally started to push back, but would it challenge a bill that sweeps aside judicial review? "

___________________________

Lastly, Nouriel Roubini does not think it passes the smell test:

"He's asking for a huge amount of power,'' said Nouriel Roubini, an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.''

Dodd and Shelby don't like it either and I'm sure are rewriting the proposal right now.

[lynn1120]

Inhale and hold it, hold it, hold, now slowly...... exhale--



We're There Gang!!! The US market WILL have some form of crash if the bank industry fails!!
[/QUOTE]


Keep those shoulders below your ears! NOW! If you have to; bend over and place your head between your knees and inhale, exhale; inhale, exhale



If you are over the age of forty, and perhaps you are not, fair enough, we have been here before. You know, where the whole financial system is creaking and wavering, just like your boat does when you have most definitely left up waay too much sail..

These are the white cold terror moments, fight or flight baby, getting closer to the big guy than is comfortable....a lot of unlikely promises get made with those prayers...


and there is a lot of fighting going here. Again, good enough, but for those who intelectually realize that they are allowing themselves to be manipulated by fear and hysteria and just want a break you might find a moments solace in the following analogy from a friend of mine:


Of Fires That Burn Out

"On October 17 2008, those who can even remember it will mark the twentieth anniversary of the day the great Yellowstone fire was contained.

The summer of 1988 would turn out to be Yellowstone National Park's driest in recorded history. But there was no way of knowing that in advance, as seasonal, lightning-sparked fires broke out in May, and burned into June. More storms in July brought more lightning; the fires spread and intensified.

Still, it wasn't until late July - when some four thousand people had to be evacuated from Grant Village, a collection of lodges, restaurants and a visitor center - that the nation's attention became riveted on Yellowstone. Hundreds of reporters descended on the park, as more than 25,000 firefighters fought the spreading blazes.

On August 20, which came to be known as Black Saturday, winds of up to eighty miles per hour doubled the size of the fire to 750 square miles, and on September 7 the historic Old Faithful Inn had to be evacuated. (It was saved essentially by a sprinkler system installed just the prior year.) Four days later the rains came, and by October 17, the fires were under control. In all, 1,875 square miles burned out - something like a third of the park -- in what was universally regarded as an ecological disaster of epic proportions, perhaps the greatest in American history.

No fewer than three separate Congressional hearings were held to review fire management policies at Yellowstone and on other public lands, and the National Park Service was pilloried for an alleged "let it burn" strategy - a policy it had in fact never maintained.

Today, as the leaves begin to turn again in Yellowstone, you will find it a renewed paradise. Trees have taken root everywhere among the burnt logs that litter the forest floor. The fires, it seems, cleared out the overgrown forest canopies, allowing new plants to bloom. Bird and animal life flourishes. And people who know and love the park say that it's greener than they've ever seen it. The fires weren't an ecological disaster at all; they were nature's way of cleaning out and renewing one of the most beautiful places in America.

This autumn, we find ourselves in the later stages of a great credit conflagration. Hordes of catastrophists on cable and the Internet decry an unprecedented disaster burning out of control and engulfing one great financial institution after another. In their view, the fire is beyond the capacity of nature and man, is constantly getting worse, and will surely end in the long-term destruction of the financial system.

It will do nothing of the kind, any more than the Yellowstone fire of 1988 did. Nothing that is occurring today is unprecedented - though it may be happening on a larger scale - and nothing is unnatural. This is nature's way of cleaning out the rot. And it will lead to a healthy renewal of the global financial system in ways that today's doomsayers cannot even imagine.

Between 2000 and 2002, the world unwound the greatest equity market bubble of all time. Last year and this, we have been unwinding the greatest credit bubble of all time. These are horrific processes as one goes through them, but it is useful to remember that they burn out - that the rains do come again, even after the driest summer, and that, as John Kennedy said, no human problem is beyond the capacity of human beings.

While waiting for the rains, it will be useful to ask oneself: if this is an unprecedented long-term destruction of the financial system, why does the equity market refuse to burn down?

From its false dawn last October, the broad equity market declined about 24% peak-to-trough through the close on September 15, 2008. A 24% decline over nearly a year is hardly a walk in the (national) park, but neither is it an indicator of Armageddon. Indeed, the October before the great Yellowstone conflagration, the equity market went down nearly that much between a sunup and a sunset. (This event, too, sparked any number of equally spurious Congressional investigations, to equally negligible effect.) But as the leaves turn yet again - even in this season of despair - the equity market stands nearly five times higher than it did that evening.

Perhaps it's time to turn the television off, and to make a weekend of it in Yellowstone. At the very least, this exercise might restore some very important long-term perspective.

But be sure to pack your slicker and boots. The rains are coming. "


So inhale , exhale and keep those shoulders down!

enuff said-- back to the finger pointing and shouting....

[Rickm505]

Originally Posted by chucklesR

Anyone care to refute this:

Obama may break bent economy - BostonHerald.com

Whatever is left of the economy after the current round of crisis interventions by the Fed could go down the drain if Barack Obama is elected and carries out his plans for sharp increases in taxation. .

Just how do you propose to balance the budget and repay the National debt? By implementing tax cuts? We just went through that. It was a dismal failure. We are deeper in debt as a result and it still killed the economy.

The World has changed in the last 2 weeks. All those grandoise plans by both McCain and Obama are now in the trash heap. There will be no money to do any of them, and neither candidate will bring them up again.

Both of them better start focusing on how they will bring about an administration tasked with fiscal responsibility.

[chucklesR]

Rick,
We agree.
It stinks, it's too much power not enough oversight.
Where we don't agree is that Dodd should have any part of putting that oversight in place. He's too much in the pocket of the people he's supposed to be writing oversight rules for, and IMHO as much to blame as anyone for the crisis nature of this crisis if you get what I mean. As Chair of the committee he should not have been taken by surprise on this - even I saw it coming ( you and I only actually disagree on extent, not what, how, or why) how could he not have seen it, and been more prepared?

Why are they running around saying they only have two days to write this when we've been talking it for two years? The two years HE has been in charge?
on CNN Dodd referenced a 2005 bill from Sarbanes, Frank and Oxely shot down by the Republicans, I know of the 03 and 05 McCain bill's shot down by Dems, but not a Dem plan - I could find no reference to it on the gov sites, anyone?

[chucklesR]

Originally Posted by Rickm505

Just how do you propose to balance the budget and repay the National debt? By implementing tax cuts? We just went through that. It was a dismal failure. We are deeper in debt as a result and it still killed the economy.

The World has changed in the last 2 weeks. All those grandoise plans by both McCain and Obama are now in the trash heap. There will be no money to do any of them, and neither candidate will bring them up again.

Both of them better start focusing on how they will bring about an administration tasked with fiscal responsibility.

Okay, we don't agree -
YES because tax cuts increase revenue - look it up, it works - read the dang link and see the numbers, do a little research.

We are in debt because of over spending, not under - collecting. Again - look it UP.

There has been enough proof of both of those statements I really don't believe that YOU don't get it.

[PBzeer]

Okay, I'm weak, but some things can't be left unchallenged.

I have no idea what your economic training is Rick, but when you have a 20% growth in income, yet a growing deficit, it is due to SPENDING.

Tax cuts did not increase the deficit, spending did. Tax revenue, let me repeat it, grew 20% under the Bush tax cuts. How you can come up with an increase in revenue causing deficits is beyond absurd.

[PBzeer]

Chuck - this is the only Sarbanes-Oxley that I'm aware of, and that was in 2002, with a GOP Congress.
Sarbanes-Oxley Act - Wikipedia, the free encyclopedia

Also, as an aside, as recently as July of this year, Dodd said there is no cause for concern for Fanny and Freddie.