The ongoing financial turmoil and financial discussion thread

[Phanuthier]

Azure... use some common sense here. Look at the lengthy process it took to get $700B and $800B bailout money out there. Look at how much was spent on Iraq in the past 8 years. Look at how much money there is in currency in the USA. Look at the total US debt 2 years ago and 4 months ago. Look at the total value of the USA.

Then tell me again how Obama has spent $2T a month or how he's spent $12T in the past 4 months. (I dunno how you got to your math, but either way, you're wrong.)

You're intepretting the article incorrectly

[Azure]

Originally Posted by Phanuthier

Azure... use some common sense here. Look at the lengthy process it took to get $700B and $800B bailout money out there. Look at how much was spent on Iraq in the past 8 years. Look at how much money there is in currency in the USA. Look at the total US debt 2 years ago and 4 months ago. Look at the total value of the USA.

Then tell me again how Obama has spent $2T a month or how he's spent $12T in the past 4 months. (I dunno how you got to your math, but either way, you're wrong.)

You're intepretting the article incorrectly

I am using common sense. Read the stupid articles.

Many details of Obama's rescue plan remain uncertain. But it's likely to cost at least $700 billion - and that would push Uncle Sam's bailouts near $8 trillion.

There was $29 billion for Bear Stearns, $345 billion for Citigroup. The Federal Reserve put up $600 billion to guarantee money market deposits and has aggressively driven down interest rates to essentially zero.


The list goes on and on. All told, Congress, the Treasury Department, the Federal Reserve and other agencies have taken dozens of steps to prop up the economy.



Total price tag so far: $7.2 trillion in investment and loans. That puts a lot of taxpayer money at risk. Now comes President-elect Barack Obama's economic stimulus plan, some details of which were made public on Monday. The tally is getting awfully close to $8 trillion.

http://money.cnn.com/2009/01/06/news...s_in/index.htm

http://www.nydailynews.com/money/200..._trillion.html

Put another way, our total GDP is around $14 trillion, so we're nearing on 60% (and of course, this is excluding the trillions the government spends in the normal course of business). In the last year, we've pretty much spent our entire economy on rescuing our economy. The good news: spending two thirds of the GDP is what some economists have said is really required to do a bailout right. So... maybe we're there? We can always hope.

http://www.businessinsider.com/2009/...ill-8-trillion

Cash commitments made by the US government to its main bailout efforts – the Treasury’s Troubled Asset Relief Program (TARP), various Federal Reserve Board programs, and some others – have now reached at least $2.98 trillion, Neil Barofsky, Special Inspector General for TARP, told the Senate Finance Committee at a hearing Tuesday.

The $2.98 trillion figure represents tax dollars that are committed to bailout operations, not money that has been appropriated and spent.

http://features.csmonitor.com/politi...illion-so-far/

These articles aren't talking about the Federal debt....which is at $11 trillion anyways, not $12.8 like you say the Bloomberg article is saying.

[Phanuthier]

Its funny... you sure throw out a lot of numbers.

Whats your total verdict? $12T? $8T? $6T?

I think you are confused, but you don't realize it yet Azure.

Also - difference between loans and buying. Figure that out too.

If you still can't, maybe someone else can explain it to you.

Get me the total US debt in 2006. Now look at what it is now. Tell me how Obama's spent $2T a month again?

[macker]

Want to see bleeding in many colors.....http://seekingalpha.com/article/1287...price-declines


The January report(.pdf) for the S&P Case-Shiller Home Price Indices shows both the 10-city and 20-city index once again making new record annual declines of 19.4 percent and 19.0 percent, respectively.

Phoenix maintained its leadership role in year-over-year price declines with an astonishing 35 percent plunge. Las Vegas and San Francisco are not far behind with declines of more than 30 percent as indicated in red and Miami may be ready to join that select group.

So with the housing price declines of about 20% and our currency decline of about 20% in the last year it is about the same value for a Canadian to pick up some US real estate today vs a year ago....

[Daradon]

Originally Posted by Phanuthier

^ Very well said RP... but, I'm not sure about "always having loaners" as I thought I read an article about how the USA would be running low on loaners soon (or something of that effect.)

What you said is a little detailed here in a old article, some comments from Hilary Clinton:
http://www.washingtonpost.com/wp-dyn...022200468.html

I think the problem/perception of debt is why people think its such a bad thing. To the average schmuck like you and me, debt is bad, bailouts is us paying for the rich and stuff like that. The reality is that every schmuck has their investment in all of this (and alot of it was caused by house-trader schmucks) so its in our best interests to keep on borrowing to get ourselves out of this mess. We just don't know it, so thats why we hire better people then us to make those decisions.

As for "paying off debt" ... I don't think there was ever the intention of paying it off.

Good point except for one little thing.

'We just don't know it, so thats why we hire better people then us to make those decisions.'

That.

I think it's become painfully obvious that from traders to investment managers to government policy makers... on average... these people DON'T know better than us. Or if they do, they don't act on it. They're just using it to their advantage and are prone (perhaps even more prone because of their positions) to the same greed and idiocy that can undo us. Only on a much larger, much more important scale.

Not saying they don't understand how things work better than us, that there is no reason to go to business school or get an MBA, or that some aren't doing it for the right reasons. Just saying, we all better remember they are human, and we better put our faith in them and the 'system' only when it shows us it's deserved. We better educate ourselves better. We better ask more questions and DEMAND more answers. We can't afford to take things like that for granted.

[Azure]

Originally Posted by Phanuthier

Its funny... you sure throw out a lot of numbers.

Whats your total verdict? $12T? $8T? $6T?

I think you are confused, but you don't realize it yet Azure.

Also - difference between loans and buying. Figure that out too.

If you still can't, maybe someone else can explain it to you.

Get me the total US debt in 2006. Now look at what it is now. Tell me how Obama's spent $2T a month again?

Huh?

I said that if the Feds had spent $12trillion since September on the bailout, thats an average of $2 trillion per month. Equal to $24 trillion per year.

Where is my math wrong?

Don't demonize me. You were the one who misinterpreted what the articles ALL said.

Fact: The US Federal Reserve has committed to $12.8 trillion dollars to get the country out of the economic crisis.

[Phanuthier]

Originally Posted by Daradon

Good point except for one little thing.

'We just don't know it, so thats why we hire better people then us to make those decisions.'

That.

I think it's become painfully obvious that from traders to investment managers to government policy makers... on average... these people DON'T know better than us. Or if they do, they don't act on it. They're just using it to their advantage and are prone (perhaps even more prone because of their positions) to the same greed and idiocy that can undo us. Only on a much larger, much more important scale.

Not saying they don't understand how things work better than us, that there is no reason to go to business school or get an MBA, or that some aren't doing it for the right reasons. Just saying, we all better remember they are human, and we better put our faith in them and the 'system' only when it shows us it's deserved. We better educate ourselves better. We better ask more questions and DEMAND more answers. We can't afford to take things like that for granted.

Economics is a funny thing that it isn't like most other science. You can't go "doing thing will get you that" but you can go "this is what happened, and here is why."

To many, it apperently was obvious (Claeren for one had been saying this would happen for since 2006 or 2007) but I think the problem is, they don't act on it. People look at the present and want results now-now-now. Then, everything looked great cause the bubble kept getting bigger and everyone was saying "see! see! see! i am right" and putting short term gains in front of the future.

The same is happening here, IMO. We are seeing too many people go "see see see, look at the stock market and so on, Obama has failed" when he's been in office for less then 100 days. Really, we have no idea if what Obama/Geitner is doing is going to work. But waaaaaaaaaaay too many people here (for instance, Azure in this thread) are ready what he's done has failed.

To say one action will lead to a definate result, or there is only one way... well that is wrong in economics. Economics just isn't that definate of a science. Governments have 2 things they can control to move the economy, and thats what they are doing - otherwise, they don't have any control. If they do nothing, it would be short term pain and probably no recovery and long term pain. If they do something, it will be short term pain, possible recovery and long term pain. They picked option B, say, about $2.4T worth.

[Phanuthier]

Originally Posted by Azure

Huh?

I said that if the Feds had spent $12trillion since September on the bailout, thats an average of $2 trillion per month. Equal to $24 trillion per year.

Where is my math wrong?

Don't demonize me. You were the one who misinterpreted what the articles ALL said.

Fact: The US Federal Reserve has committed to $12.8 trillion dollars to get the country out of the economic crisis.

Ok Azure. If you really want to believe the USA government has spent $2 trillion a month, or $12 trillion the past 6 months or $24 trillion in a year, you go riiiiiiiiight ahead.

I give up, I have nothing to gain and you seem too confused to be worth the time.

[Azure]

Originally Posted by Phanuthier

Really, we have no idea if what Obama/Geitner is doing is going to work.

After spending a record amount of money, it sure as hell better work.

Then again, they're just hoping it will work too.

I have my doubts.

But waaaaaaaaaaay too many people here (for instance, Azure in this thread) are ready what he's done has failed.

No, I'm criticizing what he has done. I have never outright said he will fail.

Is it a problem if I question what the government does? Or should I just applaud and cheer as a trillion more is added to the bailout bill every month?

[Azure]

Originally Posted by Phanuthier

Ok Azure. If you really want to believe the USA government has spent $2 trillion a month, or $12 trillion the past 6 months or $24 trillion in a year, you go riiiiiiiiight ahead.

I give up, I have nothing to gain and you seem too confused to be worth the time.

The US government has committed to $2 trillion per month since September to deal with the bailout.

I have already provided my proof for that, which you ignored.

I have also never said that Obama has spent the $12.8 trillion. I was referring to the Federal Reserve when I said 'Feds.'

So...your statement here....

Then tell me again how Obama has spent $2T a month or how he's spent $12T in the past 4 months. (I dunno how you got to your math, but either way, you're wrong.)

Is completely off-base....and has nothing to do with what the articles mentioned, or what I was talking about. Which is probably why you're just ignoring everything I posted, and going with the 'you are confused' shtick.

Obama doesn't spend the money anyways. He only asks for it. Congress signs the checks.

[Phanuthier]

Ok lets try not to turn this into a 2-person discussion here. You are confused. Proof?

Originally Posted by Azure

I'm not talking about the overall debt right now. I'm talking about how much money the Feds are spending to fix this 'crisis.'

$12.8trillion and counting.

From the article....

Originally Posted by Azure

Huh?

I said that if the Feds had spent $12trillion since September on the bailout, thats an average of $2 trillion per month. Equal to $24 trillion per year.

Where is my math wrong?

Don't demonize me. You were the one who misinterpreted what the articles ALL said.

Fact: The US Federal Reserve has committed to $12.8 trillion dollars to get the country out of the economic crisis.

Originally Posted by Azure

The US government has committed to $2 trillion per month since September to deal with the bailout.

I have already provided my proof for that, which you ignored.

I have also never said that Obama has spent the $12.8 trillion. I was referring to the Federal Reserve when I said 'Feds.'

Committed? Sure, $12.8T or whatever. Spent?

$2T-3T

[Ronald Pagan]

The suggestion that for some reason China is going to stop lending to the U.S. is completely ludicrous.

It's a mutually dependent arrangement. Neither side has anything to gain from walking away from it.

China will keep lending no question about it. The only issue is to kickstart growth again.

[Daradon]

Originally Posted by Phanuthier

Economics is a funny thing that it isn't like most other science. You can't go "doing thing will get you that" but you can go "this is what happened, and here is why."

To many, it apperently was obvious (Claeren for one had been saying this would happen for since 2006 or 2007) but I think the problem is, they don't act on it. People look at the present and want results now-now-now. Then, everything looked great cause the bubble kept getting bigger and everyone was saying "see! see! see! i am right" and putting short term gains in front of the future.

The same is happening here, IMO. We are seeing too many people go "see see see, look at the stock market and so on, Obama has failed" when he's been in office for less then 100 days. Really, we have no idea if what Obama/Geitner is doing is going to work. But waaaaaaaaaaay too many people here (for instance, Azure in this thread) are ready what he's done has failed.

To say one action will lead to a definate result, or there is only one way... well that is wrong in economics. Economics just isn't that definate of a science. Governments have 2 things they can control to move the economy, and thats what they are doing - otherwise, they don't have any control. If they do nothing, it would be short term pain and probably no recovery and long term pain. If they do something, it will be short term pain, possible recovery and long term pain. They picked option B, say, about $2.4T worth.

Well I think that proves it ISN'T a science. I mean, I know the term, and I know the similarities, but there are still a lot of people, scientists mostly, who get really uppity when they hear the term 'economic science'. And I don't blame them really. Some with the term 'political science'. Both are things you can study in great detail, that take a lot of effort. Both can be extremely complex. But to call either a science is a misnomer IMO.

[Phanuthier]

Originally Posted by Ronald Pagan

The suggestion that for some reason China is going to stop lending to the U.S. is completely ludicrous.

It's a mutually dependent arrangement. Neither side has anything to gain from walking away from it.

China will keep lending no question about it. The only issue is to kickstart growth again.

Obviously its not going to be to zero. But, there will come a point that China can only "lend so much" which will be the issue. While China will always lend to the US, I don't think its a good idea to depend on them so heavily and forever*.

* = although I realize the USA will probably depend on China to lend them lunch money for the next century

[Phanuthier]

Originally Posted by Daradon

Well I think that proves it ISN'T a science. I mean, I know the term, and I know the similarities, but there are still a lot of people, scientists mostly, who get really uppity when they hear the term 'economic science'. And I don't blame them really. Some with the term 'political science'. Both are things you can study in great detail, that take a lot of effort. Both can be extremely complex. But to call either a science is a misnomer IMO.

Possibly... its an emperical science. The word "science" is used rather loosly, and that doesn't really bother me. I could argue that medicine, pharmacology and even what I'm doing (electrical engineering/integrated circuit design) isn't a science either.

[Ronald Pagan]

Lol economics a science?

Yeah take it from an economist, we ain't scientists.

[Jedi Ninja]

Originally Posted by Ronald Pagan

The suggestion that for some reason China is going to stop lending to the U.S. is completely ludicrous.

It's a mutually dependent arrangement. Neither side has anything to gain from walking away from it.

China will keep lending no question about it. The only issue is to kickstart growth again.

A few years ago, the suggestion that housing prices could go down by 25 to 50% was also considered crazy talk, as was talk of $40 oil or of a 40-50% decline in the stock market.

Watch the Frontline episode I posted earlier. Especially the second half of the show that focusses on the growing entitlement programme debt. Then tell me, if you were China, would you continue funding huge deficits for 20 years into the future. At some point, the debt load reaches the tipping point, this surely cannot go on forever, and there is eventually a limit on the appetite of the Chinese government for US debt. Once we reach that tipping point, the only option for the US government will be to print money. This isn't going to happen tomorrow, but it isn't going to take 10 years either.

EDIT: Here's the episode mentioned above:
http://www.pbs.org/wgbh/pages/frontline/tentrillion/

[Ronald Pagan]

Then tell me, if you were China, would you continue funding huge deficits for 20 years into the future. At some point, the debt load reaches the tipping point, this surely cannot go on forever, and there is eventually a limit on the appetite of the Chinese government for US debt. Once we reach that tipping point, the only option for the US government will be to print money. This isn't going to happen tomorrow, but it isn't going to take 10 years either.

If you were China what would be opportunity cost of not funding those deficits? People think that China has nothing to lose from pulling out. It has everything to lose, more than the U.S. actually if they stopped lending.

The idea that they're running out of currency to lend is silly as well. Their current account surplus exceeds what they lend alone not even factoring for economic growth. While the surplus is diminishing there no indication that they have any less of any appetite for foreign reserves (U.S. holdings) as the dollar is again asserting itself as the global reserve currency.

Sure they could diversify and invest in Euros but in all honesty, the Euro is a much riskier investment. The Euro zone looks weak, has had huge GDP drops and demographics do not look good long-term. Compared to U.S. dollars, already the reserve currency switching to that lending makes no sense.

Put youserlf in the position of a Chinese policy makers. Why on Earth would you quit lending? What else are you going to do with your massive surpluses? Let it sit?

Even if the surpluses diminish, barring a global economic calamity it will rebound and they'll be forced to do something with them. No other choice. Chimerica is alive and well.

[Azure]

Originally Posted by Phanuthier

Ok lets try not to turn this into a 2-person discussion here. You are confused. Proof?

Committed? Sure, $12.8T or whatever. Spent?

$2T-3T

I can't post the graph here because for some reason it comes out all garbled, but Bloomberg breaks down exactly where the money is going.

They've committed $12.8 billion....obviously not all of it has been spent, but a few trillion has been spent so far....outside of the TARP program, and trillions more WILL be spent in the future.

The NYT article clearly points out the commitment that the Federal Reserve has, where the money is going, and how much as been spent to date.

$5.4 trillion as an investor, $1.3 trillion spent, $2.3 trillion as a lender, $734 billion spent, $2.1 trillion as an insurer, $286 billion spent.

Some of the spending was announced on March 23, some before that.....but you cannot deny, without being blindly ignorant, that the government has committed $12.8 trillion to solve this crisis.

I could break it down even further, but I sense there is no point. I may have gotten the 'spent' and 'committed' mixed up a couple times, and I apologize for the confusion, but my original point still stands.

The commitment by the US government equals $12.8 trillion. That is what the original article I posted said, and every other article since then touched on it.

[macker]

Originally Posted by Ronald Pagan

If you were China what would be opportunity cost of not funding those deficits? People think that China has nothing to lose from pulling out. It has everything to lose, more than the U.S. actually if they stopped lending.

The idea that they're running out of currency to lend is silly as well. Their current account surplus exceeds what they lend alone not even factoring for economic growth. While the surplus is diminishing there no indication that they have any less of any appetite for foreign reserves (U.S. holdings) as the dollar is again asserting itself as the global reserve currency.

Sure they could diversify and invest in Euros but in all honesty, the Euro is a much riskier investment. The Euro zone looks weak, has had huge GDP drops and demographics do not look good long-term. Compared to U.S. dollars, already the reserve currency switching to that lending makes no sense.

Put youserlf in the position of a Chinese policy makers. Why on Earth would you quit lending? What else are you going to do with your massive surpluses? Let it sit?

Even if the surpluses diminish, barring a global economic calamity it will rebound and they'll be forced to do something with them. No other choice. Chimerica is alive and well.

__________________________________________________ ___________

http://business.theglobeandmail.com/...l_gam_mostview
This article speaks to this. Savers vs Spenders.....Long term I am putting my money on the Savers....

"When we see hints that China might get out of the U.S. dollar, world stock markets react."
Prof. Jiang added: "When we see talk that more stimulus might be coming from the Chinese government, the whole world pays attention."
China did not seek the spotlight. It has been thrust into it by the economic crisis. China's is the only major economy that is still experiencing growth, though the pace is down by half since last year, and the rest of the world is still hoping that Chinese dynamism will help pull the world economy out of the ditch.
The economic crisis has also thrown doubts on the free-market model of capitalism championed by the United States, making China's state-guided model look better by comparison.
"China is saying, 'It is no longer time for us to be lectured by you guys. Your model failed. We have to put in something that works better, both in our own interest and for the whole world,' "