LEARN from EXAMPLE?

Discussion in 'Politics' started by Phil Ayesho, Sep 24, 2008.

  1. Phil Ayesho

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    Article at NY times outlining a similar disaster in the Swedish economy and the key differences in how the Swedish handled it.

    Number one difference- holding the firms and executives responsible.


    Please- everyone- contact your representatives and demand they DENY the no review and extraordinary powers clauses of the currently proposed deal.

    Demand that the firms take partial financial responsibility and that Executives responsible pay penalties.


    We HAVE to have a bail out--- but we CAN NOT give THIS president unreviewable powers.
    Not with his record of abuse.


    And we can not allow the perpetrators of this disaster to walk away untapped.
     
  2. lucky8

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    In cases you missed it, the FBI is currently investigating many of these firms (somewhere aound 25 in total i think) for fraud
     
  3. B_starinvestor

    B_starinvestor New Member

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    Here is the silver lining in the bailout: taxpayers may wind up with a profit on these dollars. The government isn't just handing over a check to Wall Street. Instead, the government is going in and buying distressed financial securities. You can look at the $700 billion as an investment more so than a bailout.

    As Chairman Bernacke quoted today, the prices that these securities will be picked up are "fire-sale prices."

    Moreover, Warren Buffett indicated this morning that if he had the funds available, he would finance the bail out himself as he thinks its a great investment opportunity.

    In my professional opinion, I believe there is a more than fair chance that additional dollars will come back to the government - well above the initial 'bailout' figure; or initial investment. Really, we may be picking up $2 trillion in securities for $700 billion.

    I've observed over the years that if Warren Buffett is sniffing around somewhere, there's usually exceptional value close by.
     
  4. Phil Ayesho

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    You are somewhat correct...
    The S&L crisis of 89 ended up not being nearly as bad as folks feared thru the rapid turnover of acquired assets.

    If this bailout was not predicated upon the Government getting the properties, I would not be willing to entertain it.

    However.

    Every year we hold these assets without selling them effectively reduces the cash we get from the sale.
    The Interest we will pay on this bailout erodes the capital we yield from the assets.


    In 89... the US was on the cusp of both the internet, and the electronics booms.
    By 93, housing prices and income had bounced back to the point where the government could sell the properties with enough gain to more than cover the interest.


    However
    today we have two major differences...

    First, we have NO new industry and no emerging technology that will revitalize the American economy on the horizon.

    Because of republican failure to invest in new technologies- particularly biotechnology- research in which has been brought to near standstill by Bush era religiously motivated obstruction...
    ...we have NO area in which the US has the lead... NO emerging market of new products..
    so- recovery is going to be far slower than it was from the S&L crisis.


    Secondly- we have a party that is STILL planning to FURTHER cut taxes to the predominantly wealthy while CONTINUING to borrow vast sums to prosecute a war.

    If you combine the slow recovery with the unwillingess to slash Unneccesary expenditure... and the continued borrowing to fund tax xcuts we can not afford...

    That creates an entirely different outcome than we had in the early 90s.

    It is highly likely, if we get another republican Borrow and Spend administration, that the interest we are paying on the bailout will outstrip any economic gains...
    Forcing government to hold off on reselling the assets because they can not get the prices they need... which will cause interest to erode the value of any sale they do get later...

    OR- forcing government to simply sell the assets off at drastically reduced prices, which will have the same effect.
    Essentially a massive loss...

    What Sweden did was have the companies they were rescuing DISCOUNT the properties PRIOR to bailout.
    Basically making the failed lenders TAKE a large portion of the loss.

    This gave the government properties it could AFFORD to sell at reduced prices... which spurred the private sector to buy them up quickly.


    This is what we need to do with this bailout. Save Wall Street... but they will have to take as large a loss as they can possibly survive.


    Any other course is simply too fraught with the potential for further disaster.
     
    #4 Phil Ayesho, Sep 24, 2008
    Last edited: Sep 24, 2008
  5. Phil Ayesho

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    I didn't miss it...
    I just wish it weren't Bush's FBI doing the investigating.

    How many fourth tier bible school graduates did he salt the FBI with?
     
  6. faceking

    faceking Well-Known Member

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    The GDP of the state of California is 6x times larger than Sweden's. A near completely different scenario. The Bank of Sweden could collapse and noone would hear the "perverbial tree falling".

    Bush tried to clean things up in 2001, but the Barney Franks (D - Mass) and Chris Dodds (D - Conn) in the House kibash'd it for their own interests. Please be educated and stop the Bush is responsible for all evils. What the fuck are you going to do next year, especially when Obama wins? Keep blaming Bush... yawn.
     
  7. B_ScaredLittleBoy

    B_ScaredLittleBoy New Member

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    Is the boss not responsible for his staff? Do Franks and Dodds have authority over the President?
     
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