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

[Dion]

Senate approves the bailout.

Vote count is 74 in favour and 25 against

[Table 5]

Originally Posted by Displaced Flames fan

Wonderful.

It is for those of us who believe it's a good thing....

[V]

And the American Dollar gets hammered immediately. A lot of people waiting for this, I think.

[Displaced Flames fan]

Originally Posted by Table 5

It is for those of us who believe it's a good thing....

Yep.

I guess on the positive side it ensures we won't be spending ridiculous amounts of money funding a war in Iran or something. Of course, that won't be happening with Obama in office anyway.

I just think it's another thing that does nothing for middle class Americans...just like 95% of policy that institution pumps out.

[Table 5]

Honestly DIS, while i dont think it will give much to us middle-class folks, i really do think it will help from things being taken away. We are not gaining much with this bill, we are just ensuring we don't lose everything.

And that doesnt mean that all is a lost cause. Warren Buffet said he would TAKE ON 1% of the gov't buyout if allowed. This, the smartest investor in history, is willing to take this on to MAKE money. That has to count for something no?

[Displaced Flames fan]

Originally Posted by Table 5

Honestly DIS, while i dont think it will give much to us middle-class folks, i really do think it will help from things being taken away. We are not gaining much with this bill, we are just ensuring we don't lose everything.

And that doesnt mean that all is a lost cause. Warren Buffet said he would TAKE ON 1% of the gov't buyout if allowed. This, the smartest investor in history, is willing to take this on to MAKE money. That has to count for something no?

Warren Buffet hasn't been in the game to make money for a couple of years now. All of his endeavors have been philanthropic in nature, in fact I believe he had a press conference to announce that when he gave the Gates Foundation a bazillion. I think his motives are to stimulate the economy and help drive up confidence. Very admirable.

I see huge tax hikes in my near future to pay for this....and social security solvency...and entitlements for the poor. My hope is that they will actually try to fix the problem after they put this band aid on it.

Usually, though, the band aid stops the bleeding and they go on like nothing was ever broken in the first place.

10 years from now we'll see someone championing the cause of creative lending to help the poor achieve home ownership. It will be deja vu all over again.

[Phanuthier]

Dis, who's pockets do you think this bailout $ will go to, and how?

[Displaced Flames fan]

Originally Posted by Phanuthier

Dis, who's pockets do you think this bailout $ will go to, and how?

$250B instantly into the financial system (banks, mortgage banks etc.) Another $100B upon the Treasury's request. Then $350B more upon approval from Congress.

That's the logistics of it.

Where will the wealth actually end up? Well, the US gov't will acquire up to $700B in bad debts essentially freeing the banks to get back to the business of giving bad loans.

I guess one major thing that is baffling to me is how creating more consumer debt helps the economy.

[Table 5]

Originally Posted by Displaced Flames fan

My hope is that they will actually try to fix the problem after they put this band aid on it.
Usually, though, the band aid stops the bleeding and they go on like nothing was ever broken in the first place.

Well i agree here, this is a stop-gap, not a long term solution. If the problem isn't addressed properly afterwards, it was all for naught.

As for Buffett, he personally might be in it for charity at this stage, but remember that Berkshire Hathaway still has stock holders who expect him to make money. I don't think he would be putting in 8 billion dollars of investments this week if he didnt think he would make money.

[Phanuthier]

Originally Posted by Displaced Flames fan

$250B instantly into the financial system (banks, mortgage banks etc.) Another $100B upon the Treasury's request. Then $350B more upon approval from Congress.

That's the logistics of it.

Where will the wealth actually end up? Well, the US gov't will acquire up to $700B in bad debts essentially freeing the banks to get back to the business of giving bad loans.

I have heard alot of concerns about this going into "golden parachutes" and so on, but I don't understand how it goes into the fat cats pockets. (though it probably will anyways, but it would even without the bailout, somehow they manage to get their cut either way anyways)

Is this money even a bailout or a leveraged debt? Or is the US gov't just saying "don't worry about it" about this bad debt?

And I know that the point of this bailout is to free up credit, and the intention isn't for it to get banks back into gambling. I'm just curious how and what restrictions there are in place here to ensure that this $$ goes into the nations credit and not some CEO's pockets and was wondering if you had any idea.

Saying all of that, I have to say I am not on board with is a capitalist market for profits, but then turning to socialism for losses. (sorry for the bad wording)

I get the feeling that some Americans - not you in particular, but more the politicians - are so scared of socialism that they are shooting down the bill to preserve the only market they understand, capitalism.

(To your edit, I agree, I don't understand how creating more consumer debt is going to help the eocnomy. But on the flip side, not allowing credit to flow freely could sink the US and world economy.)

[Table 5]

Originally Posted by Displaced Flames fan

I guess one major thing that is baffling to me is how creating more consumer debt helps the economy.

Our whole economy/lifestyle is built on money flowing from one hand to the other. People spending, people lending, people buying....all these things need to happen for this economy to thrive. Whether you agree if that is good or bad is one thing, but the reality is that this current crisis has stopped this movement of money flowing, atleast at the top. Pretty soon this will flow down to the general population...where peole won't take vacations, small companies won't make payroll, people won't buy goods etc.

[Phanuthier]

Originally Posted by Table 5

Well i agree here, this is a stop-gap, not a long term solution. If the problem isn't addressed properly afterwards, it was all for naught.

As for Buffett, he personally might be in it for charity at this stage, but remember that Berkshire Hathaway still has stock holders who expect him to make money. I don't think he would be putting in 8 billion dollars of investments this week if he didnt think he would make money.

I agree with both of you (T5, Dis) ... Buffett has an obligation to his shareholders to maximize profits for his company.

But ... I do think Buffett is playing a bit of a marytr here. I think Buffett is playing both worlds, we need credit to flow for the USA / world to avoid a depression; but, I do think there is a huge influence for him to do the "noble" thing.

I do find this recent investment into GE fascinating. I would love to here his thesis behind thing. GE has good dividend yeild, it is below value but there are so many other good options out there IMO. Is there any specific industry that Buffet has his eye on? Time to google.

[Displaced Flames fan]

Originally Posted by Table 5

Our whole economy/lifestyle is built on money flowing from one hand to the other. People spending, people lending, people buying....all these things need to happen for this economy to thrive. Whether you agree if that is good or bad is one thing, but the reality is that this current crisis has stopped this movement of money flowing, atleast at the top. Pretty soon this will flow down to the general population...where peole won't take vacations, small companies won't make payroll, people won't buy goods etc.

Yeah, I get that. Corporations don't borrow money because they can't wait to buy something until they have saved up enough. Cash flow means everything at that end of the economy. However, I have heard a lot of talk from politicians this week gasping at how difficult it is to get a loan right now for the average Joe. IMO, the average Joe who is trying to borrow money right now is an idiot. Why on earth would you put yourself in more debt right now?

Maybe what they should do is pay down some of the consumer debt, ie bad ARMs, avoid foreclosures for Joe and get the mortgage banks some cash flow.

[Displaced Flames fan]

Originally Posted by Phanuthier

I have heard alot of concerns about this going into "golden parachutes" and so on, but I don't understand how it goes into the fat cats pockets. (though it probably will anyways, but it would even without the bailout, somehow they manage to get their cut either way anyways)

Is this money even a bailout or a leveraged debt? Or is the US gov't just saying "don't worry about it" about this bad debt?

And I know that the point of this bailout is to free up credit, and the intention isn't for it to get banks back into gambling. I'm just curious how and what restrictions there are in place here to ensure that this $$ goes into the nations credit and not some CEO's pockets and was wondering if you had any idea.

Saying all of that, I have to say I am not on board with is a capitalist market for profits, but then turning to socialism for losses. (sorry for the bad wording)

I get the feeling that some Americans - not you in particular, but more the politicians - are so scared of socialism that they are shooting down the bill to preserve the only market they understand, capitalism.

(To your edit, I agree, I don't understand how creating more consumer debt is going to help the eocnomy. But on the flip side, not allowing credit to flow freely could sink the US and world economy.)

The golden parachute thing is a huge concern and I don't know what provisions, if any, are included in this bill to avoid that. I do know this: The CEO of Washington Mutual was personally soliciting investment in his 'healthy and growing' company a very, very short time ago. There are some investors who bit and lost everything all in a matter of weeks. Unfortunately for this clown, they have proof that he fraudulently obtained their investment by lying about the health of WaMu. He's going down. It's hilarious that it's not a huge story yet actually.

Free markets are great, but if this (and Enron, WorldCom etc) aren't proof that there needs to be more oversight at the top of the economy then I don't know what it would take.

[Table 5]

Originally Posted by Phanuthier

I do find this recent investment into GE fascinating. I would love to here his thesis behind thing. GE has good dividend yeild, it is below value but there are so many other good options out there IMO. Is there any specific industry that Buffet has his eye on? Time to google.

Funnily enough I bought some GE stock today (before the Buffet announcement, but believe me, im no Oracle!) because i think its a fantastic long-term buy....collapse or not. Throughout this whole crisis, its retained its AAA rating, has made money, has a fantastic divident, and a stock price that is currently as low as it has been in years. Plus it puts out 30 Rock, ha.

[Table 5]

Originally Posted by Displaced Flames fan

. IMO, the average Joe who is trying to borrow money right now is an idiot.

Well i guess a lot of people want to follow their dream...start a small business, buy a house (might have enough for a downpayment, and the real estate market is a great Buy in certain part of the country). Obviously people who are in debt already should minimize that, but there are lots of people in good solid financial situations out there who could be blocked from trying to better their life, or help grow the economy in their own way. And as we all know, this country really is founded on little guys going out and making hay.

[Bobblehead]

My latest copy of "The Economist" arrived today, and they were in favour of the bail-out. It pretty much comes down to the lesser of two evils.

[the_only_turek_fan]

Senate approves the bill..................doesn't a bill go through the house before the Senate?

[nickerjones]

yeah it gets voted on by both ...

[Displaced Flames fan]

Originally Posted by the_only_turek_fan

Senate approves the bill..................doesn't a bill go through the house before the Senate?

Usually, but it's not a formal procedure.