Market crash: are we there yet ?

[craigtoo]

Originally Posted by sailhog

Craig,
The only people who seem to be having a difficult time getting credit are the state of California and GE. Who would've thunk it? My wife and I have substantial lines of credit available to us, and we've been waiting for the bank to tell us that they've been cut in half. It hasn't happened yet. Makes you wonder.

I've been very lucky (is that the right word) with getting credit.
I'm careful with it. But I carry a balance sometimes too. Especially since my clients have this wonderful idea that going to 60 days net will somehow fix their problems....

BoA even told me that I could get a 2nd mortgage (on my current house) to pay part of my downpayment on the 1st mortgage at the new house.... I didn't need it... but it was good to know that BoA was willing to work with me.

[sailaway21]

Originally Posted by SailorMitch

Sway--almost as good as the horse's ass who posted in podt #12 in this thread "why I am neither worried nor concerned." Talk about spot on analysis and predictions....NOT! Oh, pardon me, that was YOU who said that. as you are want to say--some cognitive dissonance there perhaps?

Mitch,
You'll no doubt be surprised that I am still neither worried nor concerned. I am perplexed admittedly and would like to see matters resolved so that the market stabilizes. But I would ask the question once again regarding the real economy. While it certainly appears to now be slowing, so what? The business cycle is just that, cyclical. To date most of the economy continues apace. Unemployment is creeping up but most people, like most mortgage holders, have their jobs and are paying their note.

I'm in one of the worst states, with arguable the worst governance, and a seemingly permanent 7% unemployment rate-yet we're surviving and even fixing our roads. I see no crisis although I uncharacteristically agree with Rick in the capability of the government to create one with all their "help".

Where I disagreed previously was in the significance of the housing market compared to other factors in the economy. Those other factors have carried the economy along nicely while Rick was advocating the lemming approach. and the reason that I found Rick's post so despicable is that it is irresponsible to create irrational fear in others. Encouraging people to run down to their banks, potentially creating a run, to withdraw federally insured deposits is the height of irresponsibility. You risk creating a large scale panic the results of which could be quite harmless in ways not foreseen. Sort of like posting on-line that Steve Jobs has had a heart attack.

And, as you no doubt remember, I assured you that we could talk ourselves into a recession just on the talk. I have little doubt that that is now occurring.

As to the lending of money between banks and to individuals and others I remain unconvinced by the arguments that this must naturally produce a crisis. If they refuse to lend, other sources will step up to meet the need. The nature of capitalism dictates it. If Bank of America doesn't lend to you someone else, someone interested in making a return on their money, will do so. Let's not forget that these banks have a vested interest in fear, especially if they can profit by keeping their money close to their vests while government provides more to them courtesy of the tax payer.

I continue to fear inflation, perhaps irrationally, but I'm also old enough to know that's the only way all these new debts are going to get paid off.

[Valiente]

I can hear the printing presses in Canada...Our bank just printed about $20 billion of "liquidity" (aka inflation), which is about $300 billion proportional to the U.S. economy. Our leaders are saying our banks are "sound", yet I know my bank has a lot of these ABCP crap on its books.

[sailaway21]

Originally Posted by Valiente

I can hear the printing presses in Canada...Our bank just printed about $20 billion of "liquidity" (aka inflation), which is about $300 billion proportional to the U.S. economy. Our leaders are saying our banks are "sound", yet I know my bank has a lot of these ABCP crap on its books.

Quite so, Val. Europe as well. Very low interest rates world-wide, for perhaps too long, have contributed to a great deal of speculative borrowing and money lent to those incapable of repaying it at any rate.

[sailingdog]

Don't feel bad, ours is about to print $800,000,000,000 new bills to pay for this stupid bailout—which may or may not work, may or may not shorten the current problems in the banking sector, and may or may not get paid back.

Originally Posted by Valiente

I can hear the printing presses in Canada...Our bank just printed about $20 billion of "liquidity" (aka inflation), which is about $300 billion proportional to the U.S. economy. Our leaders are saying our banks are "sound", yet I know my bank has a lot of these ABCP crap on its books.

[Valiente]

It can't, it won't and forget it. My investment plans rest on this tripod of obviousness.

[wind_magic]

Originally Posted by Rickm505

Wow, talk about gambling...

Trading and gambling are very different. 90% of traders lose money. Gamblers have to be active losers, and in chance games their results are not tied to their emotions, so their odds of success are significantly better than your average trader's.

I wrote more about this in an earlier post on this thread ... CLICK

[Valiente]

Let's examine what has actually occurred here, shall we? Just for fun.

The U.S. government has printed jeebus knows how many billions to "inject liquidity" (i.e. dilute the currency). The U.S. government has also loaned a load of semi-insolvent banks (due to their own greed, short-sightedness and frankly, malfeasance) enough money to "ease the credit crunch".

What does this mean?

This means the same xxxx who loaned money at insufficiently low rates of interest to insufficiently collateralized "clients" are now free to do so again. This isn't a bailout, it's a firebreak, an attempt to burn down enough trees in a controlled manner so that the huge fire you want to stop eventually runs out of fuel as it turns back on itself.

The problem is that unless extremely carefully managed, firebreaks can either get out of control themselves, setting on fire previously unburnt forest, or they can be too small to stop the main conflagration from "jumping" the break, and making an even greater number of critters crispy.

Who here has the confidence that the same government that relaxed the regulations, printed the money and had to have its collective thumb pulled out of its ass over this has the management skills to stop this fire?

I haven't even touched upon the havoc this is playing in other countries far removed from the root causes, yet deeply involved in the far-reaching effects of these "adventures in finance".

[sailaway21]

I cannot argue with Val's evaluation of the bailout. Neither would this scholar from the Cato Institute who says that "the bailout isn't as bad as Main street thinks. It's worse."

Main Street vs. Wall Street — The American, A Magazine of Ideas

[Valiente]

Sway, when we agree in Off-Topic, things have really gone to hell! I'm buying a shotgun and some freeze-dried food. My buddy's got a place up in the hills...