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Location: Oshawa
Location: Oshawa
January 14th, 2008, 08:48 AM
The rescue brigade has finally arrived, but does it know what to do? And isn't it already too late?
January 14, 2008
David Olive
Business Columnist
The economic rescue brigade finally arrived in something like full force last week, about a year after experts dismissed warnings of a U.S. economic downturn with global consequences, and five months after world credit markets were thrown into turmoil by the collapse of the U.S. housing boom.
It has not been an edifying sight.
Stephen Harper, the Canadian prime minister, announced a $1 billion assistance fund for one-industry towns hard hit by forestry mill closings – a trend, and a hardship, that's been evident for more than two years now. The premiers promptly responded that the sum wasn't sufficient. Ontario's all-important auto sector alone could swallow up that bailout sum. With its output largely exported to the U.S., it will be in grim shape by year's end if, as expected, tapped-out American consumers cut back sharply on vehicle purchases.
U.S. president George W. Bush was said last week to be contemplating a grandly titled economic stimulus package, probably to be unveiled at the time of his Jan. 28 state of the union address. Like most non-military challenges faced by Bush, the tonic will likely be more tax cuts, further eroding America's alarmingly weak fiscal status, and putting still more downward pressure on the greenback, already worth a humble $1.49 to the euro.
Nancy Pelosi, speaker of the U.S. House of Representatives, declared last week that the U.S. Congress has a stimulus package of its own in the works. It will, with luck, see the light of day in March or so, emerge from conference committee with the U.S. Senate filled with pork projects that will justify Bush's decision to veto it in June.
Hillary Clinton, more attentive to grassroots economic anxiety than most of her presidential rivals, in a year when 1.8 million U.S. "subprime" mortgages will "reset" at much higher monthly payments than the teaser rates that inflated the housing bubble starting in 2003, last week presented her own rescue package. It's skewed to low-income and middle-class Americans, and provides more genuine assistance to hundreds of thousands of people faced with foreclosure on their homes, in contrast with the minimalist distressed-homeowner bailout proposed by Bush late last year. But Clinton's initiative won't become reality until some months after she takes the presidential oath of office, should it come to that, which takes us into the spring of 2009.
Not to be outdone, Ben Bernanke, chairman of the U.S. Federal Reserve Board, made one of his periodic appearances last week to allow, once again, that all does not appear quite right with the economy but that he and his fellow Fed governors are loath to over-react. Although, yes, they are monitoring the same danger signals that have unsettled the rest of us. Or maybe not, since the ever cautious Gentle Ben, while strongly hinting at another half-point cut to the federal funds rate at the Fed's next meeting Jan. 29-30, couldn't say that the further rate cuts Wall Street pines for are on the way, given that with soaring fuel and food prices, inflation is still a worry.
Resolute for drift, Bernanke was at his most declarative, in a speech last Thursday, when he asserted that the economic climate is "uncertain." He gets top marks for consistency, this being his helpful prognosis for the past year, with points off, admittedly, for being in denial until last week that the housing-market collapse would infect the broader economy with malaise.
You were wondering about those danger signals?
Last week alone, major U.S. retailers disclosed that they had a lousy holiday season, the worst in five years, excepting Wal-Mart Stores Inc., which wisely held a fire sale of inventory to prop up volume. The U.S. Labor Department reported a spike in the jobless rate, to 5 per cent, accompanied by the bleak prediction of some economists that a rate of more than 6 per cent is in store by year-end.
Goldman Sachs Group Inc. became the latest Wall Street investment house to forecast a recession for the world's largest economy – a cheerier outlook, to be sure, than Merrill Lynch & Co.'s insistence that "recession is no longer a forecast but a present-day reality."
And in the piling-on department, economists at the United Nations last week reported on the "clear and present danger" to a global economy from the U.S. slowdown, a sentiment echoed last week by David Dodge, outgoing Bank of Canada governor, who warned of collateral damage for Canada from the U.S. slump. And many bankers worldwide still aren't lending, Bernanke noted, because the financial system remains "fragile," along with the prospects of continued employment for those bank and brokerage CEOs yet to report their multibillion-dollar writeoffs on soured subprimes.
Oh, and Moody's Investor Service, the credit agency, said Thursday that the Triple A rating on U.S. government debt in place since 1917 is in jeopardy because of out-of-control government spending on health care and social security.
And then everyone went out for a nice lunch.
If there appears to be a marked lack of urgency on the part of the rescue brigade, we have to be a bit forgiving since none of the rescuers appears overly consumed with confidence about exactly what needs to be done. What might seem obvious to you, chatting up pub patrons about the local shuttered pulp mill, or watching them tow away a friend's trailer home, is not so obvious to the trained economist. What's generally known among that group is that nothing much they might try would work, and that we're in for a certain amount of unavoidable pain.
"However much the Fed cuts rates between now and the spring," economist Brian Bethune of Global Insights told the New York Times last week, "the die is cast for a pretty rough six months and a very high risk of recession."
We should think of the coming economic misery as restorative, counsels Hank Paulson, the U.S. treasury secretary, who said last week of the housing crisis that a correction is "inevitable and necessary" and that "there is no single or simple solution that will undo the excesses of the last few years."
Mistakes were made. Some people will lose their jobs and their homes – a class of people that does not include the lax regulators, including Bernanke and especially his predecessor, Alan Greenspan, whose easy money policies and non-supervision of predatory lenders enabled the forces of an unfettered market to turn the housing industry into a global economic powder keg.
It wouldn't be fair either to identify culprits or experiment with drastic forms of assistance for people let down by the system since, after all this time, the folks in charge still aren't quite sure what they're dealing with.
Or so conceded Bernanke colleague Donald Kohn, the Fed's vice-chairman, in a speech. "We cannot say more than we know," Kohn said last week, "and we should strive to avoid giving people the impression that we know more than we do."
Oh, no need for striving on that score. Your cluelessness towers over you.
http://www.thestar.com/Business/article/293660
The rescue brigade has finally arrived, but does it know what to do? And isn't it already too late?
January 14, 2008
David Olive
Business Columnist
The economic rescue brigade finally arrived in something like full force last week, about a year after experts dismissed warnings of a U.S. economic downturn with global consequences, and five months after world credit markets were thrown into turmoil by the collapse of the U.S. housing boom.
It has not been an edifying sight.
Stephen Harper, the Canadian prime minister, announced a $1 billion assistance fund for one-industry towns hard hit by forestry mill closings – a trend, and a hardship, that's been evident for more than two years now. The premiers promptly responded that the sum wasn't sufficient. Ontario's all-important auto sector alone could swallow up that bailout sum. With its output largely exported to the U.S., it will be in grim shape by year's end if, as expected, tapped-out American consumers cut back sharply on vehicle purchases.
U.S. president George W. Bush was said last week to be contemplating a grandly titled economic stimulus package, probably to be unveiled at the time of his Jan. 28 state of the union address. Like most non-military challenges faced by Bush, the tonic will likely be more tax cuts, further eroding America's alarmingly weak fiscal status, and putting still more downward pressure on the greenback, already worth a humble $1.49 to the euro.
Nancy Pelosi, speaker of the U.S. House of Representatives, declared last week that the U.S. Congress has a stimulus package of its own in the works. It will, with luck, see the light of day in March or so, emerge from conference committee with the U.S. Senate filled with pork projects that will justify Bush's decision to veto it in June.
Hillary Clinton, more attentive to grassroots economic anxiety than most of her presidential rivals, in a year when 1.8 million U.S. "subprime" mortgages will "reset" at much higher monthly payments than the teaser rates that inflated the housing bubble starting in 2003, last week presented her own rescue package. It's skewed to low-income and middle-class Americans, and provides more genuine assistance to hundreds of thousands of people faced with foreclosure on their homes, in contrast with the minimalist distressed-homeowner bailout proposed by Bush late last year. But Clinton's initiative won't become reality until some months after she takes the presidential oath of office, should it come to that, which takes us into the spring of 2009.
Not to be outdone, Ben Bernanke, chairman of the U.S. Federal Reserve Board, made one of his periodic appearances last week to allow, once again, that all does not appear quite right with the economy but that he and his fellow Fed governors are loath to over-react. Although, yes, they are monitoring the same danger signals that have unsettled the rest of us. Or maybe not, since the ever cautious Gentle Ben, while strongly hinting at another half-point cut to the federal funds rate at the Fed's next meeting Jan. 29-30, couldn't say that the further rate cuts Wall Street pines for are on the way, given that with soaring fuel and food prices, inflation is still a worry.
Resolute for drift, Bernanke was at his most declarative, in a speech last Thursday, when he asserted that the economic climate is "uncertain." He gets top marks for consistency, this being his helpful prognosis for the past year, with points off, admittedly, for being in denial until last week that the housing-market collapse would infect the broader economy with malaise.
You were wondering about those danger signals?
Last week alone, major U.S. retailers disclosed that they had a lousy holiday season, the worst in five years, excepting Wal-Mart Stores Inc., which wisely held a fire sale of inventory to prop up volume. The U.S. Labor Department reported a spike in the jobless rate, to 5 per cent, accompanied by the bleak prediction of some economists that a rate of more than 6 per cent is in store by year-end.
Goldman Sachs Group Inc. became the latest Wall Street investment house to forecast a recession for the world's largest economy – a cheerier outlook, to be sure, than Merrill Lynch & Co.'s insistence that "recession is no longer a forecast but a present-day reality."
And in the piling-on department, economists at the United Nations last week reported on the "clear and present danger" to a global economy from the U.S. slowdown, a sentiment echoed last week by David Dodge, outgoing Bank of Canada governor, who warned of collateral damage for Canada from the U.S. slump. And many bankers worldwide still aren't lending, Bernanke noted, because the financial system remains "fragile," along with the prospects of continued employment for those bank and brokerage CEOs yet to report their multibillion-dollar writeoffs on soured subprimes.
Oh, and Moody's Investor Service, the credit agency, said Thursday that the Triple A rating on U.S. government debt in place since 1917 is in jeopardy because of out-of-control government spending on health care and social security.
And then everyone went out for a nice lunch.
If there appears to be a marked lack of urgency on the part of the rescue brigade, we have to be a bit forgiving since none of the rescuers appears overly consumed with confidence about exactly what needs to be done. What might seem obvious to you, chatting up pub patrons about the local shuttered pulp mill, or watching them tow away a friend's trailer home, is not so obvious to the trained economist. What's generally known among that group is that nothing much they might try would work, and that we're in for a certain amount of unavoidable pain.
"However much the Fed cuts rates between now and the spring," economist Brian Bethune of Global Insights told the New York Times last week, "the die is cast for a pretty rough six months and a very high risk of recession."
We should think of the coming economic misery as restorative, counsels Hank Paulson, the U.S. treasury secretary, who said last week of the housing crisis that a correction is "inevitable and necessary" and that "there is no single or simple solution that will undo the excesses of the last few years."
Mistakes were made. Some people will lose their jobs and their homes – a class of people that does not include the lax regulators, including Bernanke and especially his predecessor, Alan Greenspan, whose easy money policies and non-supervision of predatory lenders enabled the forces of an unfettered market to turn the housing industry into a global economic powder keg.
It wouldn't be fair either to identify culprits or experiment with drastic forms of assistance for people let down by the system since, after all this time, the folks in charge still aren't quite sure what they're dealing with.
Or so conceded Bernanke colleague Donald Kohn, the Fed's vice-chairman, in a speech. "We cannot say more than we know," Kohn said last week, "and we should strive to avoid giving people the impression that we know more than we do."
Oh, no need for striving on that score. Your cluelessness towers over you.
http://www.thestar.com/Business/article/293660
Hawkings former plumber
Posts: 10,260
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
January 14th, 2008, 09:07 AM
What I'v been reading says the feds bailout fund will enable the banks to suck up the last of the real assets left lying arround out there.The bailouts are designed to save the banks first and foremost protecting the assets of the rich, they're bad investments will be covered by more public money, but there is a limit to what the US government can get it hands on from forigne sources like China and Japan, in short they'll have to steal it from somebody, enter John Q Public and anything he's got left. Nobody I'v read (except the raving lunatics who caused the problem in the first place) have any idea how to stop the slide into deep long recession that's close to but not quite the same as depression which is a word we will hear sooner than later. With war going on now for seventeen years in a row it's hard to see how industrial stimulation can be spurred by starting a war, excepting of course gross expansion of that same war. Trouble with that is the war is being conducted in the vital border regions of one of the primary lenders to the American Empire who are competitors and partners at the same time, and members of the newly emerging SCO tradeing block, which right now constitutes a clearly defined roadblock to western and American hegemonic expansion and survival.
Whatever, it looks like John Q Public is going to get stripped right down to the skin. See ya in the soup kitchens.
The American consumer is maxed out credit wise, retail returns have slumped, wages are in decline due to inflation, unemployment continues to rise, further jobs will be offshored (millions), if the consumer does not have the cash or the credit to get back in the consumption game (and that's what it is) and there is little loose equity in houseing, how will they be able to buy the Chinese produced American goods when thier will be no wage increases that could keep up with inflation, even if we all work for Walmart we still wouldn't be able to shop there.
Job losses in the service sector will be huge.There won't be anything to service. My financial tip for today==buy the book Back to Basics you will need it.
What I'v been reading says the feds bailout fund will enable the banks to suck up the last of the real assets left lying arround out there.The bailouts are designed to save the banks first and foremost protecting the assets of the rich, they're bad investments will be covered by more public money, but there is a limit to what the US government can get it hands on from forigne sources like China and Japan, in short they'll have to steal it from somebody, enter John Q Public and anything he's got left. Nobody I'v read (except the raving lunatics who caused the problem in the first place) have any idea how to stop the slide into deep long recession that's close to but not quite the same as depression which is a word we will hear sooner than later. With war going on now for seventeen years in a row it's hard to see how industrial stimulation can be spurred by starting a war, excepting of course gross expansion of that same war. Trouble with that is the war is being conducted in the vital border regions of one of the primary lenders to the American Empire who are competitors and partners at the same time, and members of the newly emerging SCO tradeing block, which right now constitutes a clearly defined roadblock to western and American hegemonic expansion and survival.
Whatever, it looks like John Q Public is going to get stripped right down to the skin. See ya in the soup kitchens.
The American consumer is maxed out credit wise, retail returns have slumped, wages are in decline due to inflation, unemployment continues to rise, further jobs will be offshored (millions), if the consumer does not have the cash or the credit to get back in the consumption game (and that's what it is) and there is little loose equity in houseing, how will they be able to buy the Chinese produced American goods when thier will be no wage increases that could keep up with inflation, even if we all work for Walmart we still wouldn't be able to shop there.
Job losses in the service sector will be huge.There won't be anything to service. My financial tip for today==buy the book Back to Basics you will need it.
Steven Hawking's Tutor
Posts: 4,995
Location: Florida, Hurricane Central
Location: Florida, Hurricane Central
January 14th, 2008, 06:38 PM
On the Toro Rating Scale of Economic Accuracy and Sanity, or TRS-ASS, I rate this article a 7 out of 10.
It is a synopsis of the problems in the US economy, but has a condescending tone, as if all we had to do was ask David Olive what to do.
However, we are going into a recession and the article explains why.
On the Toro Rating Scale of Economic Accuracy and Sanity, or TRS-ASS, I rate this article a 7 out of 10.
It is a synopsis of the problems in the US economy, but has a condescending tone, as if all we had to do was ask David Olive what to do.
However, we are going into a recession and the article explains why.
House Member
Posts: 4,558
Location: Minnesota: Gopher State
Location: Minnesota: Gopher State
January 18th, 2008, 11:16 PM
Bush's new stimulus package is nothing more than further tax cuts for the wealthy. As you may recall, his previous program did nothing to benefit the economy but made billions in welfare for the wealthy. And that is all that is going to happen again.
At no point did we have these problems under Clinton.
Bush's new stimulus package is nothing more than further tax cuts for the wealthy. As you may recall, his previous program did nothing to benefit the economy but made billions in welfare for the wealthy. And that is all that is going to happen again.
At no point did we have these problems under Clinton.
Electoral Member
Posts: 909
Location: Ardrossan, Alberta
Location: Ardrossan, Alberta
January 19th, 2008, 12:53 AM
It's unfortunate that the middle class of America are going to have to eat it again - If they keep doing this too much longer- there won't be a middle class. You give them corporate welfare and they turn around and outsource your jobs to India or China anyway, they win both ways.
It's unfortunate that the middle class of America are going to have to eat it again - If they keep doing this too much longer- there won't be a middle class. You give them corporate welfare and they turn around and outsource your jobs to India or China anyway, they win both ways.
Not so newbie now
Posts: 183
Location: 950 Snowupthearse Rd. Canadian Shield Ontario
Location: 950 Snowupthearse Rd. Canadian Shield Ontario
January 19th, 2008, 06:13 AM
By MADLEN READ, AP Business Writer 1
NEW YORK - Wall Street resumed its downward trek Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's stimulus plan.
Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.
http://news.yahoo.com/s/ap/20080118/...re/wall_street
////////////////////////////////////////////////////////////////////////////
"Beyond that with most consumers already deeply in debt, a one time or short term tax break may well go toward paying down debt instead of a spending spree at the mall. Secondly with the majority of the merchandise at the mall manufactured in China or Mexico most of the new jobs created by an increase in spending will go to somebody fluent in Mandarin or Spanish instead of Joe Six Pack.
The current recession is fundamentally different that traditional business cycle recessions of the post World War II era, the current recession is a structural recession resulting from the destruction of the wealth of America’s Middle Class and working poor, the concentration of wealth into fewer and fewer hands of the elite, outsourcing of America’s manufacturing industries, absurd mortgage lending policies, a grossly over expanded supply of money, massive Federal deficits and the Iraq War."
http://www.commondreams.org/archive/2008/01/18/6449/
Yep, nice try GeeDub. Ya blew it again.
By MADLEN READ, AP Business Writer 1
NEW YORK - Wall Street resumed its downward trek Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's stimulus plan.
Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.
http://news.yahoo.com/s/ap/20080118/...re/wall_street
////////////////////////////////////////////////////////////////////////////
"Beyond that with most consumers already deeply in debt, a one time or short term tax break may well go toward paying down debt instead of a spending spree at the mall. Secondly with the majority of the merchandise at the mall manufactured in China or Mexico most of the new jobs created by an increase in spending will go to somebody fluent in Mandarin or Spanish instead of Joe Six Pack.
The current recession is fundamentally different that traditional business cycle recessions of the post World War II era, the current recession is a structural recession resulting from the destruction of the wealth of America’s Middle Class and working poor, the concentration of wealth into fewer and fewer hands of the elite, outsourcing of America’s manufacturing industries, absurd mortgage lending policies, a grossly over expanded supply of money, massive Federal deficits and the Iraq War."
http://www.commondreams.org/archive/2008/01/18/6449/
Yep, nice try GeeDub. Ya blew it again.
Steven Hawking's Tutor
Posts: 4,995
Location: Florida, Hurricane Central
Location: Florida, Hurricane Central
January 19th, 2008, 07:56 AM
Its been a great couple of weeks for traders who have been betting the stock market would fall.
The TRS-ASS rating on this article is 8 out of 10. The author was doing fine until he broke out the moldy, 1960s angry left-guy rhetoric.
Its been a great couple of weeks for traders who have been betting the stock market would fall.
Quoting hermite
On the Toro Rating Scale of Economic Accuracy and Saneness (TRS-ASS), I rate this article 10 out of 10 for its descriptive content.
By MADLEN READ, AP Business Writer 1
NEW YORK - Wall Street resumed its downward trek Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's stimulus plan.
Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.
http://news.yahoo.com/s/ap/20080118/...re/wall_street
NEW YORK - Wall Street resumed its downward trek Friday as skittish investors, unable to hold on to much optimism about the economy, drew little comfort from President Bush's stimulus plan.
Investors had already pulled back from a big early gain, with the major indexes trading mixed as Bush began to speak. By the time the president finished announcing a plan for about $145 billion worth of tax relief, the indexes were well into negative territory.
http://news.yahoo.com/s/ap/20080118/...re/wall_street
Quote:
////////////////////////////////////////////////////////////////////////////
"Beyond that with most consumers already deeply in debt, a one time or short term tax break may well go toward paying down debt instead of a spending spree at the mall. Secondly with the majority of the merchandise at the mall manufactured in China or Mexico most of the new jobs created by an increase in spending will go to somebody fluent in Mandarin or Spanish instead of Joe Six Pack.
The current recession is fundamentally different that traditional business cycle recessions of the post World War II era, the current recession is a structural recession resulting from the destruction of the wealth of America’s Middle Class and working poor, the concentration of wealth into fewer and fewer hands of the elite, outsourcing of America’s manufacturing industries, absurd mortgage lending policies, a grossly over expanded supply of money, massive Federal deficits and the Iraq War."
http://www.commondreams.org/archive/2008/01/18/6449/
Yep, nice try GeeDub. Ya blew it again.
"Beyond that with most consumers already deeply in debt, a one time or short term tax break may well go toward paying down debt instead of a spending spree at the mall. Secondly with the majority of the merchandise at the mall manufactured in China or Mexico most of the new jobs created by an increase in spending will go to somebody fluent in Mandarin or Spanish instead of Joe Six Pack.
The current recession is fundamentally different that traditional business cycle recessions of the post World War II era, the current recession is a structural recession resulting from the destruction of the wealth of America’s Middle Class and working poor, the concentration of wealth into fewer and fewer hands of the elite, outsourcing of America’s manufacturing industries, absurd mortgage lending policies, a grossly over expanded supply of money, massive Federal deficits and the Iraq War."
http://www.commondreams.org/archive/2008/01/18/6449/
Yep, nice try GeeDub. Ya blew it again.
The TRS-ASS rating on this article is 8 out of 10. The author was doing fine until he broke out the moldy, 1960s angry left-guy rhetoric.
War Minister
Posts: 3,061
Videos: 4
Location: The Moonsine Cafe
Videos: 4
Location: The Moonsine Cafe
January 19th, 2008, 08:04 AM
Though no one here knows, when Bush was elected I mentioned that this would end with the country in a recession and at war. Now look at Harper doing his damnedest to follow along and blame it on the American economy.
Elect a democrat and let the war come to an end, and get the economy strong again. Remember when Clinton had everyone working, and surplus from tax revenues, cheap gas and no one was fighting for the freedom of a country full of people that hate Americans?
Whew those were sure messed up days eh?
Though no one here knows, when Bush was elected I mentioned that this would end with the country in a recession and at war. Now look at Harper doing his damnedest to follow along and blame it on the American economy.
Elect a democrat and let the war come to an end, and get the economy strong again. Remember when Clinton had everyone working, and surplus from tax revenues, cheap gas and no one was fighting for the freedom of a country full of people that hate Americans?
Whew those were sure messed up days eh?
January 19th, 2008, 08:32 AM
The housing market in Canada will come back to roost someday as well. It wouldn't surprise if in 10 years the average house price is 25% less than it is today. In most every community the economic rent of real estate is well under the present price structure. Either rents must go way up or prices come way down, or a bit of both, to make real estate a viable investment. Speculators buy anything but those who invest in real estate based on disciplined valuation methods won't find much of anything in today's marketplace, short of getting lucky in a rural outpost.
As for Bush what's left to say about the guy? The blackhole in the ME could come in handy right about now. It's as if he fell into every trap set by the terrorists.
The housing market in Canada will come back to roost someday as well. It wouldn't surprise if in 10 years the average house price is 25% less than it is today. In most every community the economic rent of real estate is well under the present price structure. Either rents must go way up or prices come way down, or a bit of both, to make real estate a viable investment. Speculators buy anything but those who invest in real estate based on disciplined valuation methods won't find much of anything in today's marketplace, short of getting lucky in a rural outpost.
As for Bush what's left to say about the guy? The blackhole in the ME could come in handy right about now. It's as if he fell into every trap set by the terrorists.
Electoral Member
Posts: 299
Location: Boonies
Location: Boonies
January 19th, 2008, 11:01 AM
Darkbeaver, this political and economic stuff is way over my head, you seem to know what you are talking about ( or at least you sound like you do!
) Is there a way that you can explain what is going on in US is a simplier way or have any suggestions on something to read about it that is dumbed down a bit for me??
Also, is whats going on in the states going to happen here in Canada?
Thanx in advance
Haz
Quoting darkbeaver
What I'v been reading says the feds bailout fund will enable the banks to suck up the last of the real assets left lying arround out there.The bailouts are designed to save the banks first and foremost protecting the assets of the rich, they're bad investments will be covered by more public money, but there is a limit to what the US government can get it hands on from forigne sources like China and Japan, in short they'll have to steal it from somebody, enter John Q Public and anything he's got left. Nobody I'v read (except the raving lunatics who caused the problem in the first place) have any idea how to stop the slide into deep long recession that's close to but not quite the same as depression which is a word we will hear sooner than later. With war going on now for seventeen years in a row it's hard to see how industrial stimulation can be spurred by starting a war, excepting of course gross expansion of that same war. Trouble with that is the war is being conducted in the vital border regions of one of the primary lenders to the American Empire who are competitors and partners at the same time, and members of the newly emerging SCO tradeing block, which right now constitutes a clearly defined roadblock to western and American hegemonic expansion and survival.
Whatever, it looks like John Q Public is going to get stripped right down to the skin. See ya in the soup kitchens.
The American consumer is maxed out credit wise, retail returns have slumped, wages are in decline due to inflation, unemployment continues to rise, further jobs will be offshored (millions), if the consumer does not have the cash or the credit to get back in the consumption game (and that's what it is) and there is little loose equity in houseing, how will they be able to buy the Chinese produced American goods when thier will be no wage increases that could keep up with inflation, even if we all work for Walmart we still wouldn't be able to shop there.
Job losses in the service sector will be huge.There won't be anything to service. My financial tip for today==buy the book Back to Basics you will need it.
Whatever, it looks like John Q Public is going to get stripped right down to the skin. See ya in the soup kitchens.
The American consumer is maxed out credit wise, retail returns have slumped, wages are in decline due to inflation, unemployment continues to rise, further jobs will be offshored (millions), if the consumer does not have the cash or the credit to get back in the consumption game (and that's what it is) and there is little loose equity in houseing, how will they be able to buy the Chinese produced American goods when thier will be no wage increases that could keep up with inflation, even if we all work for Walmart we still wouldn't be able to shop there.
Job losses in the service sector will be huge.There won't be anything to service. My financial tip for today==buy the book Back to Basics you will need it.
Darkbeaver, this political and economic stuff is way over my head, you seem to know what you are talking about ( or at least you sound like you do!
) Is there a way that you can explain what is going on in US is a simplier way or have any suggestions on something to read about it that is dumbed down a bit for me?? Also, is whats going on in the states going to happen here in Canada?
Thanx in advance
Haz
Hawkings former plumber
Posts: 10,260
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
January 19th, 2008, 11:30 AM
Global bankers seek to raid taxpayers over subprime fiasco 
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Banking used to be simple. When you borrowed money from a bank, the bank owned your mortgage and you paid the interest and principal directly. This is easily understood by this graphic representation:
Things got complicated when bankers got greedy, figuring the could make a whole lot more than just simple interest. The scheme is called securitization, as depicted by the following flow-chart.
If the banking crowd succeeds in taking another full drink from the public treasury, it will cost the American taxpayers billions in the end.
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By Patrick Wood Banking used to be simple. When you borrowed money from a bank, the bank owned your mortgage and you paid the interest and principal directly. This is easily understood by this graphic representation:
In its simplest terms, securitization is a process whereby illiquid financial instruments (e.g., mortgages) are purchased and combined into pools. The pool is then structured where shares can be sold to 3rd party investors like banks, pension funds and even governments. Any type of asset can be securitized as long as it has a steady flow of cash associated with it. The cash flow is the incentive for purchasers to make their investment.
There are many fees that are paid along the road to successful securitization. The original borrower pays "points" to the initial broker and/or banker. The pool operator receives the rights to income at a discounted price. The investment banker who syndicates the sale charges hefty fees plus commissions paid to the selling broker/dealer or investment representative.
The investment bankers are the primary enablers and drivers of the securitization process. Right behind them is the Federal Reserve, who is supposed to be a watchdog on shaky banking practices.
Investment bankers have many tricks that help to make securitized investments more attractive. Appraisers are employed to give favorable valuations (and often greatly inflated) to the underlying properties. Credit agencies are employed to give favorable ratings (again, often greatly over-rated) to the investments, thus promoting confidence. The credit risk is often mitigated by adding insurance policies, different classes of investors, hedging against failure by purchasing or selling derivatives. It gets more complicated than we want to discuss here.
Currently, Attorneys General in New York, Ohio, and Colorado are investigating illegal appraiser activity with respect to banks and other lenders pressuring appraisers to fudge their appraisals. The Securities and Exchange Commission is currently investigating illegal activity at credit rating companies who might have been pressured into issuing artificially high credit ratings.
For the investment bankers, most of their profit is taken out of the "enhancement" value at the expense of the underlying investment that is being purchased by unsuspecting investors. In other words, the ultimate investor is getting hosed from the start but the house of cards doesn't fall until the cash flow starts to dry up -- as in, John Doe can't make his house payment and goes into default on his mortgage.
Securitizations made against the subprime lending markets were simply the weakest links in the financial chain.
This is exactly where greed starts to really show up: when bankers decided to relax borrowing standards, they began to allow loans that never, ever should have been made. In other words, borrowers had deficient or delinquent credit histories, little documentation on income and over-appraised properties. Adjustable rate mortgages (ARM's) were tailored to fit the income of the borrower, which was already too small for a normal loan. Thus, when the ARM adjusted upward, up went the payment amount and the borrower finds himself delinquent and facing bankruptcy.
Those holding the securitized investments all of a sudden receive less income and are forced to "revalue" their investment down to the reality of income actually received plus the prospect of additional declines in income in the future. Remember that these assets were over-inflated in the first place, so investors are forced into taking huge hits on their balance sheets.
Since securitized assets are quite illiquid, it is very hard to find another buyer. If you are lucky enough to find one, the buyer will be interested in offering you a "pennies-on-the-dollar" type of price.
It is insufficient to blame the credit collapse on the subprime market. Because it was the weakest element of an overall flawed investment market, It was simply the first segment to blow up. The rest the market (non-subprime) is following right behind it.
Now that people are looking for someone to blame for this debacle, the banking community, including even the Federal Reserve, is shifting the blame to the consumer for having made poor borrowing decisions in the first place. After all, nobody forced them to submit an application for a loan that they couldn't afford. They should have known better.
Yet, it was the banking community that structured the loan offers that lured unsuspecting borrowers into their lair. For years, TV ads for mortgages and credit cards dominated the airwaves. Many consumers received dozens of credit card offers by mail each week. Is it right for the bankers to say that they were merely responding to market conditions, to give the foolish consumers what they demanded? In fact, the average person looks to his banker as an "expert adviser", expecting knowledgeable answers that will be in the borrowers best interest.
I think not. Their markets were artificially created by the very advertising they flooded us with. Advertising creates expectations that can only be filled by purchasing the advertiser's products.
According to a recent statement by Treasury Secretary Henry Paulson, former chairman and CEO of Goldman, Sachs, the Treasury will now step in with a plan that "helps investors and lenders avoid unnecessary and costly foreclosures that are not in their interest." He has also talked of a rate freeze on Adjustable Rate Mortgages that are soon to reset to a higher interest rate.
You can imagine how the owners of securitized investments feel about that. Having been guaranteed a certain rate of interest, they will meet any government intervention or price-fixing with a flood of lawsuits.
Of course, a tsunami of lawsuits, mortgage foreclosures and bankruptcies would be fatal to at least a few U.S. banks. Yet apparently, to assume responsibility for their own mistakes (or even criminal actions) is too much to ask of them.If the banking crowd succeeds in taking another full drink from the public treasury, it will cost the American taxpayers billions in the end.
Meanwhile, don't expect that the banking crisis is limited to just the subprime lending market: It's merely the tip of the iceberg!
Electoral Member
Posts: 299
Location: Boonies
Location: Boonies
January 19th, 2008, 11:49 AM
Wow, I really had no idea that it was that complicated. I will have to do more reading in this subject area! I am going to have to read that through a couple of times to make sure that I really get it. Thanx DB I appreciate that!
Wow, I really had no idea that it was that complicated. I will have to do more reading in this subject area! I am going to have to read that through a couple of times to make sure that I really get it. Thanx DB I appreciate that!
Hawkings former plumber
Posts: 10,260
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
Videos: 3
Location: RR1 Distopia 666 Discordia Drive Apt 911
January 19th, 2008, 11:49 AM
Quoting Hazmart
I am not an expert in economics by any stretch of the imagination. Simply put you cannot spend your way out of an economic problem that is the result of spending your way into that same problem in the first place. Credit misuse is part of the problem, negative savings is another part, unemploymeant is another, unjust profit is important, poor distribution distribution of profit is very important, but by far the largest part is war and the offshoreing of industrial capacity. If an economy does not have domestic industry it cannot use that industry for recovery, if the wages are not earned they cannot be spent, and therefore cannot reinvigorate an economy. There is no move to address any of these problems, there is only a move to consolodate wealth and power with the ultimate goal of world domination. That is the declared direction and the verifiable course of a twenty year old military plan now in place. The economic crisis has been manufactured as has the terrorist enemy both are intimately tied to western imperialism and open warfare on the rest of the world not identified as western. It's as simple as that. IMO
Darkbeaver, this political and economic stuff is way over my head, you seem to know what you are talking about ( or at least you sound like you do! ) Is there a way that you can explain what is going on in US is a simplier way or have any suggestions on something to read about it that is dumbed down a bit for me??
Also, is whats going on in the states going to happen here in Canada?
Thanx in advance
Haz
) Is there a way that you can explain what is going on in US is a simplier way or have any suggestions on something to read about it that is dumbed down a bit for me?? Also, is whats going on in the states going to happen here in Canada?
Thanx in advance
Haz
No party affiliation
Posts: 2,003
Location: Oshawa
Location: Oshawa
January 19th, 2008, 11:58 AM
Quoting gopher
The only thing republicans seem to be able to do is cut taxes and increase debt.
Bush's new stimulus package is nothing more than further tax cuts for the wealthy. As you may recall, his previous program did nothing to benefit the economy but made billions in welfare for the wealthy. And that is all that is going to happen again.
At no point did we have these problems under Clinton.
At no point did we have these problems under Clinton.
January 19th, 2008, 12:03 PM
Quoting Hazmart
As a suggestion, look at researching the issues with balance. Some people search the internet to look for any opinion that supports their own hypothesis, foregoing the opinions they don't share.
Wow, I really had no idea that it was that complicated. I will have to do more reading in this subject area! I am going to have to read that through a couple of times to make sure that I really get it. Thanx DB I appreciate that!
