Deal reached in US financial crisis [Update- NOT Passed]

[Wookie]

Does it affect Canada?

I just refinanced about $2.3 million of some guys debt Friday/today, and about $4.9 million Thursday, both expiring October 1st.

We just got an email from our head office saying we're not looking at any new deals for a minimum of a few days. If these guys had been slow, they could have been SOL!!

Now we're not in the business of f'ing people. So I'm sure it wouldn't have been that bad. But. . . It could have been. We could pull out of the market all together. I'm not sure yet...

Lack of credit is a serious, serious problem, it's pretty much the oil that runs the economy.

[Bertuzzied]

Originally Posted by fotze

The only ones who never suffer are those in the medical profession, plus all the rest of the time they make us feel guilty about how downtrodden they are all the time. Doctors are smart for a reason.

Athletes are pretty protected too. Unless you are Al Macinnis.

[Table 5]

Originally Posted by Top Shelf

Yes, people will lose money. It happens, I know a lot of people who have lost a lot of money in the last year. Investing is not a "guarantee", there is always some sort of risk involved.

Do you really think that this is only an investor problem? Our entire lifestyle is built on money flowing freely from one business to another, and you don't think this will affect everyone?

[Phanuthier]

Originally Posted by Wookie

Does it affect Canada?

I just refinanced about $2.3 million of some guys debt Friday/today, and about $4.9 million Thursday, both expiring October 1st.

We just got an email from our head office saying we're not looking at any new deals for a minimum of a few days. If these guys had been slow, they could have been SOL!!

Now we're not in the business of f'ing people. So I'm sure it wouldn't have been that bad. But. . . It could have been. We could pull out of the market all together. I'm not sure yet...

Lack of credit is a serious, serious problem, it's pretty much the oil that runs the economy.

I think Wookie illistruated this point pretty well, which would be my reply to peter12 but I was too lazy to repeat what CNN has been saying.

If credit is frozen, companies start dying, people stop buying things, jobs will be lost, rinse and repeat.

Its not about saving the stock market or getting stocks to rebound, its about having cash flow through credit.

[Wookie]

Originally Posted by fotze

Hopefully thats true since I'm pretty much 100% into oil and all in one company.

It was an analogy dufus! I knew that was coming though.

Although you could say credit is the oil to most economies, and oil is the credit to Alberta's economy, and oil/credit is fotze's economy, which just makes him a greasy guy!

[peter12]

Originally Posted by Top Shelf

That's Democracy. It and the free market won today. I was shocked to see the bill not get passed, but government intervention is not the solution here.

Wall Street wants to privatize the profits and socialze the losses. How convenient is that? The natural course of the market will eventually get rid of this rotten section. Yes, people will lose money. It happens, I know a lot of people who have lost a lot of money in the last year. Investing is not a "guarantee", there is always some sort of risk involved.

That's a great post. Exactly what my thoughts are.

[FurnaceFace]

Originally Posted by Slava

Good post. Fundamentally this is absolutely right. You should also invest in a shredder so that when your quarterly or monthly statements arrive you can get rid of them before you even bother to open them.

Funny thing is I don't open mine. They pile up and then a couple of times a year I have a moment of cleanliness and open them all up and toss the paper in the fireplace. Whoosh, no more reports and nothing for the identity thieves.

[flamesfever]

Originally Posted by fotze

The only ones who never suffer are those in the medical profession, plus all the rest of the time they make us feel guilty about how downtrodden they are all the time. Doctors are smart for a reason.

I've always heard that doctors are the one of the worst investors - probably because their work load prevents them from learning how to invest properly.

I've read that many doctors on the prairies, during the depression years, used to take food in exchange for their service, and probably financially weren't any better off than anyone else.

[Wookie]

Originally Posted by flamesfever

I've always heard that doctors are the one of the worst investors - probably because their work load prevents them from learning how to invest properly.

I've read that many doctors on the prairies, during the depression years, used to take food in exchange for their service, and probably financially weren't any better off than anyone else.

Well if they were eating, they were probably better off than a lot of other people.

[Top Shelf]

Taken from http://www.moneyandmarkets.com

How Free Markets Are SUPPOSED to Work ...

Availability of credit allows money to flow between savers and borrowers.

Resources and funds are allocated to various projects or investments during a boom phase.

Eventually borrowing becomes excessive and leads to malinvestment, thanks to the suppression of the real rate of interest by our illustrious Federal Reserve Banking system.

At this stage, adherence to free market theory would allow for an efficient cleansing period and a healthy recovery period. How? Irresponsible and unprofitable businesses fail. Bad debts get liquidated. Excess resources go on sale, flow into more stable ventures and pool together with more profitable resources controlled by healthy corporations or entities.

Sure, pain is felt by certain parties who can't keep things going. But the moving parts become more efficient and stronger. Healthier, more efficient businesses emerge.
As the Austrian School of economists says, the bigger the boom generated by manipulation of money and credit, the bigger the ultimate bust.

That's important, because thanks to the massive manufacturing and sale of derivatives, there has never been a boom supported to such a large degree by thin air. And since the laws of gravity haven't been outlawed yet, what goes up must come down.

How Our "Free" Markets Are Being Handled Right Now ...

Unfortunately, self-proclaimed free enterprisers — President George W. Bush is one among many — are either ignoring or are unable to accept the fact that some people must suffer as the purging process runs its course.

Often their vision is blurred by their quest for a tighter grip on the private sector. They call it "compassion" ... but I call it "zeal for power." Worse yet, they use other people's money — namely, ours!

In its infinite wisdom and undying compassion for the public, our government does all it can to hamper the market's cleansing tools — recessions and deflation.
Instead of one swift painful smack in the head by the invisible hand, their very visible hand "helps" ensure that economy will grow much less efficiently AND remain much more vulnerable to future shocks to the system.
That's not compassion ... it's nonsense!

In fact, on a historical basis, many parts of the U.S. economy are in awfully good shape. We're told to believe otherwise since doom and gloom dominates what the mainstream media consistently reports.

One of the biggest fear indicators they use: Employment numbers. After all, Americans don't want to lose their jobs.
But look at the current employment situation on a historical basis: While U.S. job losses are on the upswing, they are fairly modest ... and should be expected in a self-cleansing market.

[the_only_turek_fan]

The people I really feel bad for are the older people that are on the cusp or retirement who had 401K's tied into this....brutal. Here is your reward for working hard your whole career.

[Top Shelf]

Originally Posted by the_only_turek_fan

The people I really feel bad for are the older people that are on the cusp or retirement who had 401K's tied into this....brutal. Here is your reward for working hard your whole career.

I know, that is the worst thing about all this. I spoke to my grandpa about 6 months ago, shortly after the BS collapse and told him to get out of anything in the financial sector. I've been meaning to call him the last few weeks and ask him how things have turned out, but i've been putting it off dreading what the answer might be.

I believe in the free market and true capitalism, but that doesn't make it any easier to see loved ones suffer from it.

[Bertuzzied]

Originally Posted by the_only_turek_fan

The people I really feel bad for are the older people that are on the cusp or retirement who had 401K's tied into this....brutal. Here is your reward for working hard your whole career.

No kidding at least most of us on this board can wade it out. That is just scary for some folks in the states.

I was looking at some houses this morning on the Vegas mls. Just off the strip, you can find 1500 square foot houses for $60k.

[Phanuthier]

Originally Posted by Bertuzzied

No kidding at least most of us on this board can wade it out. That is just scary for some folks in the states.

I was looking at some houses this morning on the Vegas mls. Just off the strip, you can find 1500 square foot houses for $60k.

Thats cause its off the strip, and its Vegas. Those houses probably were $80k 2 years ago anyways.

[FurnaceFace]

Originally Posted by the_only_turek_fan

The people I really feel bad for are the older people that are on the cusp or retirement who had 401K's tied into this....brutal. Here is your reward for working hard your whole career.

OK, I don't know the ins and outs of a 401k (Slava maybe you can shed light on this) but is it more akin to apension on an RSP? If it's a pension my belief is a pension is essentially a lower risk mutual fund - or more like a diversified fund which helps it avoid wild swings like this. Also can someone not just use part of their 401k or defer it as long as possible by perhaps borrowing against it? There should be other avenues available than converting it all at the worst possible time.

I only really understand the Canadian system the best and in our case we say we have "an RSP" as a blanket term however we typically have a few avenues of registered funds. Also as someone reaches near retirement age they should have converted some of their portfolio to low risk or even guaranteed investments so this sort of volatility doesn't affect them.

I had learned the rule of thumb that whatever your age was, that's the amount of your investments you should have in guaranteed investments. Hence a 25 year old has 25% in certificates or bonds whereas a 60 year old has a lot more locked in.

[Bertuzzied]

Originally Posted by Phanuthier

Thats cause its off the strip, and its Vegas. Those houses probably were $80k 2 years ago anyways.

Well they are the closest houses to the strip. Like 2-3 blocks off. Umm are there even any houses on the strip?

[Phanuthier]

Originally Posted by Bertuzzied

Well they are the closest houses to the strip. Like 2-3 blocks off. Umm are there even any houses on the strip?

Well you can own real estate on the stripe, not nessasarly houses though. My family owns some property on LV Blvd actually.

(damn I wish google chrome had spell check)

[habernac]

Originally Posted by Bertuzzied

Well they are the closest houses to the strip. Like 2-3 blocks off. Umm are there even any houses on the strip?

they're dumps. My parents live in Vegas, you don't want to live anywhere near the strip.



I'm torn on the bailout thing, I really am. I hate to see the taxpayers foot the bill for the financial sector's greed, but you also hate to see the 70 year old guy get buried by crap like this.

[Slava]

Originally Posted by FurnaceFace

OK, I don't know the ins and outs of a 401k (Slava maybe you can shed light on this) but is it more akin to apension on an RSP? If it's a pension my belief is a pension is essentially a lower risk mutual fund - or more like a diversified fund which helps it avoid wild swings like this. Also can someone not just use part of their 401k or defer it as long as possible by perhaps borrowing against it? There should be other avenues available than converting it all at the worst possible time.

I only really understand the Canadian system the best and in our case we say we have "an RSP" as a blanket term however we typically have a few avenues of registered funds. Also as someone reaches near retirement age they should have converted some of their portfolio to low risk or even guaranteed investments so this sort of volatility doesn't affect them.

I had learned the rule of thumb that whatever your age was, that's the amount of your investments you should have in guaranteed investments. Hence a 25 year old has 25% in certificates or bonds whereas a 60 year old has a lot more locked in.

There are a few avenues of guaranteed income that people near retirement might want to consider. During times like this people learn the hard lesson that sequence of returns makes an enormous difference when you are withdrawing money.

When you are accumulating the average rate of return is what matters...and truthfully as a long-term buyer you want the prices to drop. (I know that is going to need some further explanation, but I'll move along for now). When you go to withdraw though the average return is only somewhat useful. You need returns to be steady, so that the corresponding income is also steady. There are certain folks in our industry though who fail to apply this truth; they are selling people on the average rates of return even when the client is near retirement. Days like today (and really the last few months) leave those clients making a tough decision: retire later (continue working), take less income from your portfolio, or go back to work.

As far as my comment about the shredder, I was serious. I have been extremely close to buying a bunch of these to give to clients with that advice...but I've never taken the final plunge on that.

[mykalberta]

IMO the only money they should inject is to help healthier US financial companies pick the carcasses of those going belly up.

Like loans to Citi or Credit Suisse to buy up these companies to create ultra powerful US Banks. Bailouts IMO is not the answer. As usual its a classic goverment bandaid fix.

Its too bad I am associated with a generation who has no concept on how to honor a simple contract like a mortgage contract.