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NotABigDeal
1000+ Penny Miser Member
USA
3890 Posts |
 Posted - 09/17/2008 : 06:12:54
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So the government is going to bailout AIG. The government is taking something like an 80% stock in the company. I wonder what, if anything, will happen to their rates. Naturally, since I belong to AIG, the rate will probably go up. What do you guys think?
Deal
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Live free or die.
Plain and simple.
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams |
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kieblera5
Penny Hoarding Member
USA
859 Posts |
Posted - 09/17/2008 : 09:49:06
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You must be logged in to see this link.
I was reading something online today. It was a conversation between two people...
P1: Did you hear that the Fed is bailing out AIG?
P2: Yeah.
P1: So if the time comes, who is going to bail out the Fed?
P2: China...
Made me laugh
On a brighter note, silver shot up around 10:40 this morning! |
Democracy is being allowed to vote for the candidate you dislike least.
Never argue with an idiot. They will drag you down to their level and then beat you mercilessly with experience.
Caller number seven gets the Peace Prize!
Get coding tips, tricks, and more at: http://codingmonday.blogspot.com |
Edited by - kieblera5 on 09/17/2008 09:51:32 |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/17/2008 : 10:43:15
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No need to bail out the FED. They can just print the money. They are solvent forever. They can spend $100 Trillion tomorrow and the check clear.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 09/17/2008 : 11:19:40
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quote:
Originally posted by swusc
No need to bail out the FED. They can just print the money. They are solvent forever. They can spend $100 Trillion tomorrow and the check clear.
-SWUSC
they'll be putting Mugabe's picture on our money soon. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 09/17/2008 : 11:38:44
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| I wonder how long AIG is going to stay on the Dow Jones Industrial Average now. One of the few stocks I had not bought on the Dow (I collect stock certificates of 1 share each too). |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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penny4mythoughts
Penny Sorter Member
USA
82 Posts |
Posted - 09/17/2008 : 12:57:22
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My concern is the precedent being set. If we bail out/finance Sterns, and now AIG, and any company that it's collapse "could cause a crisis"...where does that stop? Do we just nationalize everything? It is a really strange back-door socialism brought to ou by all of the people that say they despise socialism.
I find it absolutely insane that we don't offer socialized medicine because the government should "stay out" of private enterprrise, but the government will buy any insolvent mega-bank and act like it is the only option available.
Grr. |
Los Angeles is the place I call home... |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 09/17/2008 : 17:50:46
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"No need to bail out the FED. They can just print the money. They are solvent forever. They can spend $100 Trillion tomorrow and the check (will) clear."
100% True = coming hyperinflation
If they'd just let everything weak fall, as should be allowed in a true capitalist society, we'd have been forced into a new age of fiscal responsibility. Now the game just continues, and the seemingly inevitable is just delayed.
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Copper Catcher
Administrator
USA
2092 Posts |
Posted - 09/17/2008 : 20:37:38
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| GM wants 50 billion to help develop a cars with alternative fuel! What about the airlines...they want some too...etc. When will the madness stop? |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/17/2008 : 21:28:07
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quote:
Originally posted by starwarsgeek171
"No need to bail out the FED. They can just print the money. They are solvent forever. They can spend $100 Trillion tomorrow and the check (will) clear."
100% True = coming hyperinflation
If they'd just let everything weak fall, as should be allowed in a true capitalist society, we'd have been forced into a new age of fiscal responsibility. Now the game just continues, and the seemingly inevitable is just delayed.
I agree with that, but it would have some very bad effects on everyone. If Bear Stearns had gone, then JPM and a few other big banks could have gone with it. LEH fails, then AIG goes almost under due to Credit default swaps. It comes down to the fact that all the large financial companies are tied at the hip. If one goes, then it is going to pull down on the others. If a big one goes, then someone else is going too. It is a huge problem. How do you tell who to save and who to let fail. LEH was total crap (I wish I had stayed short on it). AIG might be solvent, but just have cash flow problems. If AIG is solvent, then the US government isn't going to lose any money. FRE and FMN bail out might not cost the taxpayers much if everything works out. Again it is a question of liquidity vs solvency.
You could look at it as a government investment. If we let ABC fail, then what will that do to tax receipts. If we save ABC then is the loss less than the loss tax receipts.
The problem comes back to debt. The country has way to much debt. Way to much of the assets are tied to real estate. I saw a commercial that said 60% of people's net worth was in their home. That isn't good, even though they tried to spin it that way. That is awful and show major problems for the country. Your home doesn't produce any income. We as a country have pushed home ownership on people even though that might not be a good thing for the country. It is that American dream sales pitch, but everyone doesn't need to own their home. Some do, but some don't.
I think it comes back to this... the masses are basically stupid on complex issues. Studies show they are great on general knowledge stuff like being a life line on Who wants to be a millionaire. Then you have a government system that give equal control to everyone and unequal distribution of the gains and cost. The poor, middle, and rich have equal say per person, but the rich pay most of the cost.
I don't think we will have hyperinflation anytime soon. I actually think you will have some deflation in prices going forward in the short term. I think the private sector is deleveraging quicker than the public/government is adding leverage. That is a net deleveraging event, which should be deflationary.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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NotABigDeal
1000+ Penny Miser Member
USA
3890 Posts |
Posted - 09/18/2008 : 06:31:20
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swusc, as usual another brilliant post. Hope you have returned from your little hiatus as your posts were missed.
Deal |
Live free or die.
Plain and simple.
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your council or your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."
- Samuel Adams |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 09/18/2008 : 09:40:56
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| Excellent post, SMUSC. I hope you're right about the hyperinflation! |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/18/2008 : 10:39:00
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The opposite could be just as bad or worse.
You must be logged in to see this link.
That is Paul take on AIG and the bail outs. I agree with him, but as of last monday... his plan was to late. People didn't listen soon enough. It is like telling kids not to play in the street. After the car as hit them, screaming at them for playing in the street is pointless. You have to just do what you can to fix the problem.
We have a massive problem now. I think it could be worse than hyperinflation. Everything is built on debt, which is totally fine. It is totally fine as long as everyone makes good on the debt. If I give you $100 worth of labor for $100 bill, then go to Walmart and get $100 worth of food for that $100 bill===everyone is happy as Walmart will continue the cycle. The problem is debt isn't being honored. Lehman Brothers will not pay back all their debt. Home Mortgage borrowers are not going to make good on theirs. The defaults are basically destroying money. Someone's debt is someone else money.
You have household wealth going up in smoke. Look at Real estate and the stock market... paper wealth is just gone. The stock market is down 8% this week which is like $800 billion gone. That is going to cause people to spend less as they feel poorer. The bond market isn't doing much better so more wealth gone.
If you have people stop spending money, then production is going to drop. Yes, other countries are going to get it, but we still produce a lot of stuff here. If business aren't selling, then they don't need workers. It creates a huge cycle.
Look at the 1930s. It just keep getting worse because there was no consumer demand. No one had money to buy extras. It took war world two to pull the country/world out of it. Just look at all the production needed for the war and the clean up after wards. It created jobs and allowed people to start spending. They did this through borrowing money(government printing). Yet, everyone was so unleveraged at that point it was ok.
So lets say for a second that we have to totally deleverage for the bottom. What does that look like? The average home is $150K and average credit card debt is like $16K per family. That would destroy the whole banking system. It will be totally owned by the government through bailouts and fdic take overs. The net effect will still be deflationary because everyone isn't going to be made whole. There is a ton of corporate debt and some of those companies would go under. They are trying to stop the massive problems of the 1930s.
Long term, inflation is still a problem. It will always be a problem with the current system. Yet in the short term...I am more worried about a huge bust than double digit inflation.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 09/18/2008 : 11:24:33
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| My wife and I have extremely secure/high paying jobs; we have low debt, and a fairly large home (we've lost about 100k so far, but still have a great deal of equity). Wouldn't deflation actually be a good thing for those who are financially secure? |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 09/18/2008 : 12:13:32
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quote:
Originally posted by legacypac
I wonder how long AIG is going to stay on the Dow Jones Industrial Average now. One of the few stocks I had not bought on the Dow (I collect stock certificates of 1 share each too).
Apearantly 1 day after I asked the question. Saw on CNN this AM AIG is being dropped from the DOW. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/18/2008 : 12:15:35
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I guess it depends on what you consider extremely secure. I can't think of many extremely secure jobs. Even jobs that are seen as needed teachers and police could go with government cuts. Anything with a company could go bye bye with that company going under? A big insurance collapse could make hospitals have a hard time making payroll. If your job is a must have with an entity that is super sound, then maybe it is extremely secure.
If you keep your job and salary along with having a lot of cash, then you could come out very well. Assuming you invest the cash at the bottom of asset prices. That is the problem though when is the bottom? What if I am wrong and inflation wins out...then cash could be very bad.
A ton of unknowns. Plus a tank could cause crime to go up big time.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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n/a
deleted
139 Posts |
Posted - 09/18/2008 : 13:06:02
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funny how there are kids going to bed hungry, schools falling apart, people without coverage to see a competant doctor, dentist, roads and bridges falling apart, how (in rhode island) you need to make 89k to afford the median house while the median income is 40k, GM layoffs and plant closings, gas coming back to 4 bucks probably 5, and the government can come up with 100 or so BILLION to help out a company? think how much could get fixed with 1 billion? never mind 100.
there always seems to be money when anyone but the common people need it.
ive got a great job but can be gone tomorrow. my learned trades are what make my job secure whether it be where i work now or somewhere else. |
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2cents
Penny Sorter Member
USA
44 Posts |
Posted - 09/18/2008 : 15:01:27
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Man,
The way y'all talkin, if it gets much worse, I might have to get my 12 gauge out and cook me up some of them plump "grain-fed" river rats !
"Whatever gets you through the night".
Hopefully things will calm down soon and we will all look back at this as just a little economic hiccup. |
2cents |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 09/18/2008 : 16:45:41
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"A ton of unknowns. Plus a tank could cause crime to go up big time."
Agreed, and people are tense, I can feel it. It's like the calm before a great storm.
"I might have to get my 12 gauge out..."
Let's hope it stays locked up! |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 09/18/2008 : 17:30:40
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quote:
Originally posted by swusc
I think it comes back to this... the masses are basically stupid on complex issues. Studies show they are great on general knowledge stuff like being a life line on Who wants to be a millionaire. Then you have a government system that give equal control to everyone and unequal distribution of the gains and cost. The poor, middle, and rich have equal say per person, but the rich pay most of the cost.
-SWUSC
How about if we apply the bicameral principle to voting. Every citizen gets one vote each, but their vote is mutiplied by the amount of taxes they pay... If you're in the negative in your contribution to the treasury, whether due to bad luck or laziness, you don't get a vote. 
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/18/2008 : 19:10:46
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quote:
Originally posted by Delawhere Jack
quote:
Originally posted by swusc
I think it comes back to this... the masses are basically stupid on complex issues. Studies show they are great on general knowledge stuff like being a life line on Who wants to be a millionaire. Then you have a government system that give equal control to everyone and unequal distribution of the gains and cost. The poor, middle, and rich have equal say per person, but the rich pay most of the cost.
-SWUSC
How about if we apply the bicameral principle to voting. Every citizen gets one vote each, but their vote is mutiplied by the amount of taxes they pay... If you're in the negative in your contribution to the treasury, whether due to bad luck or laziness, you don't get a vote.
I think it has a lot of merit. It will never happen though. |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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eharrison
Penny Pincher Member
USA
234 Posts |
Posted - 09/20/2008 : 02:51:55
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The american free market system is gone. This is evident in many things, one of which is AIG being replaced by KRAFT. Yes, "everything is ok ladies and gents, the market is going to hell so invest in mac 'n' cheese!"
As for a deflationary trend????
I hope your guys are right, but my gut tells me that is not the case.
When one starts to hope, I think we all better tighten the seat belts and hold on. |
Freedom is popular
That's why I voted
Ron Paul! |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/20/2008 : 07:56:09
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Well, I haven't look at the CPI stuff lately, but...
Since June 2008
Metals are going down. Energy is down. Consumer demand is down. Labor supply is up(though the skills of this supply are questionable)
You can't raise prices with inputs and demand going down. Things are costing less and that should roll into retail prices.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 09/23/2008 : 21:05:19
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Saw this cross the Canadian newswire - what the heck is he thinking? Only the Bernanke could think this plan up. Must be really nice to be able to just print as much money are you want eh?
"WASHINGTON - U.S. Federal Reserve chairman Ben Bernanke told Congress Tuesday the government should pay more than "fire-sale" prices for the toxic assets it would acquire under a proposed US$700-billion bailout plan. That could mean both higher initial costs for taxpayers and reduced returns when the assets are later resold." |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 09/24/2008 : 21:27:48
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Everyone keeps calling this a bailout of Wall street. It isn't. The country is on fire, and we need to put the fire out. The person that started the fire isn't important right now. We can put the fire out, then worry about stop the next one. If you just give market prices for the assets, then that doesn't help the banks. They can get market prices without the government's help. Like it or not, you can't let the banks fail. Well, I guess you can let them fail, if you are ok with a good long depression. This is a plan to save the country from the stupid action of a few. You don't have to like it, but you don't have much choice.
I don't think the plan that will pass is going to work. It will be rewritten enough to make it not work.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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AIG bailout
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