U.S. buying stakes in banks may actually work

Discussion in 'Politics' started by B_starinvestor, Oct 14, 2008.

  1. B_starinvestor

    B_starinvestor New Member

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    $250 billion of the $750 billion bailout package is earmarked for the government to buy shares of preferred stock in U.S. banks. As much as I'm against gov't intervention -- this move really may be effective.

    Since the gov't is buying preferred stocks, the common stock will not be diluted. This will provide the capital needed for banks to extend credit and [unfreeze] the lending and credit markets; without harming common stockholders.

    When banks become healthy again, these shares can be sold on the open market for [potentially] profits to be returned to the taxpayers. Obviously, the market likes the initiative as it gained 11% yesterday. This move should attract private capital/investors back to the banking segment, which, has scared investors away for the last year.

    I hope this isn't a typical gov't fuck-up. But the fundamentals of this piece of the bailout seem prudent.
     
  2. B_Nick4444

    B_Nick4444 New Member

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    investors seem to think so

    check out the indices yesterday and today

    where are all the Obamites and LPSG Chicken Littles that were so furiously posting recently?

     
    #2 B_Nick4444, Oct 14, 2008
    Last edited: Oct 14, 2008
  3. CALAMBO

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    the sky was not falling as some suggested...hold on for a better ride...history shows that market corrections are needed, presenting bargains for those smart investors..longterm is smart investing
     
  4. lucky8

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    I coulda sworn Bush wants to ADD $250 billion to the $750 billion...come on guys, you know the stock market isn't everything, it's only going to fix a small part of our problem, and ultimately, it won't help those struggling pay their bills. As soon as businesses start raising wages, or prices go back to where they were 3 years ago, THEN things will start improving. Investors aren't the ones suffering, and the poor aren't really affected by the market, there are other, more important factors involved than just stocks. Just because you're doing well and have money invested doesn't mean everyone is fine...put yourselves in other people's shoes once in awhile
     
  5. curious n str8

    curious n str8 New Member

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    What I don't understand though is where is this bailout money really coming from? If were truly 55 Trillion in debt even the 14 Trillion the government claims, I haven't heard of any foreign countries loaning us any money. I hope I'm not one of the chicken little's your talking about. Some one enlighten me please.:dunno:
     
  6. lucky8

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    The printing presses are working overtime my man, say goodbye to the dollar
     
  7. tripod

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    That is what I have been fearing... we don't actually have any of this $700 billion, so we are just GODDAMN PRINTING MONEY!!!!

    You can't just fucking print money without some form of economic blowback against the dollar.... Lucky8 is sooooo right.

    It also sounds like they are propping up the most questionable banks against the ones that are still going strong. Isn't this gonna cause the now stable banks to become more unstable over time as the banks that were bailed out get an artificial leg up over their more honest competition?

    So now the banks will be stronger with a totally weak dollar... I wonder how long it will take for that $700 billion money printing fiesta to drive the dollar down to new lows...

    Printing money to save the banks only to have the dollars that these banks hold in assets become devalued seems like complete and utter nonsense.
     
  8. 1BiGG1

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    One first needs to stop with the rich vs. poor BS and take a look at reality. The current market situation affects everybody!

    Every leader in the free world and a spattering of leaders in the not so free world is onboard with this plan. You think there will be problems for the rich & poor alike by the governments around the world taking on additional debt to fix this? Sure there will but nothing like the problems we will all have if they don’t!
     
  9. tripod

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    There have been no talks of rich vs. poor... are you hallucinating?
     
  10. 1BiGG1

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    Apparently you started throwing lavish praise on lucky8 instead of finishing reading his post.
     
  11. tripod

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    I read his post and he didn't mention poor vs. rich, my praise wasn't all that lavish either... he just said what I was thinking and I gave him a shout out for it. Whatev...
     
  12. sixlittleboi

    sixlittleboi Member

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    The market and the U.S. will recover. It has in the past and it will again. As far as the debt is concerned everything in the world is based on credit. There are countries that owe money to the U.S. Do we really think that one of the wealthiest most powerful nations on earth is in debt so much that we need to borrow money from someone? While we may not agree with what the federal government is doing to bail out major banks they have suffered themselves. Wachovia, WaMu, Lehman Bros just to name a few are not in the position they would have liked to be in right now. Those names will disappear from the financial world except from the "Don't let this happen to you" column. At this point it's all a waiting game. But I think we should do something about the CEO's and other major decision makers at the helm of the collapse of the housing market. Federal charges and fines should be brought.
     
  13. B_starinvestor

    B_starinvestor New Member

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    The $250 bil is part of the $750 billion.

    The stock market isn't everything - you are correct. But in an individual sense, if your house, car, and savings account became worthless, you would have difficulty with several items in your life. With businesses, if the stock price sucks, they are handcuffed.

    I appreciate the poor and working (don't care for those that don't work and look for handouts) but a shitty stock market will hurt the working folk too.
     
  14. durks

    durks Member

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    Agreed star investor.
    While stockmkt isn't everything, business confidence is, and with credit lines frozen and businesses unwilling and unable to take any risk for fear of raising capital or uncertain demand, you're not going to see any positive movement in employment. And that is important.

    Sixlittleboi...ummm
    'Do we really think that one of the wealthiest most powerful nations on earth is in debt so much that we need to borrow money from someone? '
    Yup!!! It's the biggest debtor nation on earth, by a long shot and then some. Despite your gigantic wealth the US still has one of the highest debt/GDP ratios of all developed nations. A lot of which is held externally - China, Japan, Saudi you name it, you owned boi.

    Were u being sarcastic?
     
  15. faceking

    faceking Active Member

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    While the big "engine room" of the banking system are being bailed out....


    Take this one to the track and lay some odds down:

    20+ regional banks will go out of business and just fold.
     
  16. faceking

    faceking Active Member

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    While the big "engine room" of the banking system are being bailed out....


    Take this one to the track and lay some odds down:

    20+ regional banks will go out of business and just fold.

    [edit: Oh wait.. did I say 20, I meant 200.]
     
  17. lucky8

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    Wow I'm suprised there aren't any repubs in this thread screaming socialism...irony
     
  18. 1BiGG1

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    Is it socialism if permanent intent is void? A bailout was needed because there were no buyers, when the buyers return the government is on record as getting out.
     
  19. lucky8

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    And is it socialism if Obama's policies are changed back by a future admin after only 4 years of implementation? Again...irony
     
  20. dreamer20

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    Yes. Medicare and social security are socialist measures too, which fortunately were not privatized as John McCain suggested they should be.
     
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