September 15, 200818 yr Lehman filed for bankruptcy today. A.I.G took $40 million from the Fed to stay afloat. WaMu is on the verge. Merrill Lynch was sold for fractions of its worth this time last year. Freddie Mae and Fannie Mac were recently nationalized. No word from either campaign at this point.
September 15, 200818 yr Lehman bankrupt; Merrill Lynch sold http://www.cnn.com/2008/US/09/15/banks.bigchanges/index.html AIG can loan itself $20B - N.Y. http://money.cnn.com/2008/09/15/news/companies/AIG/index.htm?postversion=2008091512 Wall Street pulls oil down to $94 http://money.cnn.com/2008/09/15/markets/oil/index.htm WaMu shares hit hard http://money.cnn.com/2008/09/15/news/economy/wamu/index.htm?postversion=2008091513 Best Buy pays $127M for Napster http://money.cnn.com/?cnn=yes
September 15, 200818 yr This is what happens when deregulation is taken too far. The free markets work great until they crash.
September 15, 200818 yr Far from a crash... Some of these companies made bad bets and they are now paying for them. The market will sort it all out.
September 15, 200818 yr Far from a crash... Some of these companies made bad bets and they are now paying for them. The market will sort it all out. The market will sort it all out? That's one heck of a euphemism. When your home loses 20% of its value, your 401K tanks, and you lose your job, you can take heart in knowing that it is just the market "sorting it all out." By the way, how do you get your financial news? Smoke signals? :lol:
September 15, 200818 yr Author The market will sort it all out. Indeed. However, the market has no concern for how long that takes, who it affects along the way, or how it affects them. The market will sort it all out? That's one heck of a euphemism. When your home loses 20% of its value, your 401K tanks, and you lose your job, you can take heart in knowing that it is just the market "sorting it all out."
September 15, 200818 yr In this mess, we have seen the effects of overreaching deregulation. When the actions of a small number of relatively unaccountable people can have a disproportionately large effect on the country's financial infrastructure and economy, you know you've stripped out too much regulation.
September 15, 200818 yr The market will sort it all out? That's one heck of a euphemism. When your home loses 20% of its value, your 401K tanks, and you lose your job, you can take heart in knowing that it is just the market "sorting it all out." By the way, how do you get your financial news? Smoke signals? :lol: First off, I'm not in any way an economist...but, the idea of "the market working itself out" has always been right but I'm not sure we can count on that anymore. In the past, American companies struggled, American people changed purchasing habits, American companies revived, and the markets improved. With so many American companies being bought by foreign companies, there isn't as much incentive to put those earnings back into America. I'll still think the economy will improve, but in my opinion the bounce back won't be as quick or as strong because of the above (no matter the president).
September 15, 200818 yr This is what happens when deregulation is taken too far. The free markets work great until they crash. Actually, goverment intervention played a big role in creating this problem.
September 15, 200818 yr Actually, goverment intervention played a big role in creating this problem. Really? The government forced financial institutions to develop complex instruments and strategies to conceal the underlying default risk? Please, do tell.
September 15, 200818 yr The market will sort it all out? That's one heck of a euphemism. When your home loses 20% of its value, your 401K tanks, and you lose your job, you can take heart in knowing that it is just the market "sorting it all out." By the way, how do you get your financial news? Smoke signals? :lol: If your 401k tanks that is your own fault for not being allocated properly. If you are a long term investor, the market will sort it all out and the markets will make new highs once again. Downturns are an opportunity. Capitalism is not without problems, but there is not a better system out there. I would guess, and it can probably be validated by many on here, that I know more about finance and how the markets work than you do (not an attack, just my opinion). Even if I did get news via smoke signals.
September 15, 200818 yr Indeed. However, the market has no concern for how long that takes, who it affects along the way, or how it affects them. I agree, however the markets are the most efficient means for this and will take less time than any other medium. Again I stress the importance of proper allocation and looking at your risk vs. reward profile.
September 15, 200818 yr Ah, we can get over 100 posts on Obama's phantom Muslim faith but struggle to get 10 replies in a much more important thread.
September 16, 200818 yr Really? The government forced financial institutions to develop complex instruments and strategies to conceal the underlying default risk? Please, do tell. The government didn't force them to do anything. It just provided a strong financial incentive that encouraged risky behavior. By reducing the fed funds rate below the rate of inflation, the fed was in effect giving away "free money" and therefore the financial instutitions were willing to loan money to just about anybody. This doesn't excuse the financial instutions from loaning money to people who lacked the financial resources to repay the loan, or to people who lacked enough collateral in the event they defaulted on the loan. Neither does it excuse those people who accepted a loan they should have known they couldn't repay. However, it does mean that this financial crisis was more complex than a free market gone awry; government intervention played a role also. In addition, I just don't buy the idea that the financial institutions that are in trouble now were duped into buying something other than what they expected. In the first place, these are Wall Street professionals whose job it is to know the details of these financial instruments. Secondly, it is inconceivable that you could hide trillions of dollars in subprime loans from these institutions any more than you could hide the state a Delaware. Both are simply too big not to be noticed. The bottom line is that these financial institutions were willing to assume the risk because they never expected the subprime realestate bubble to burst.
September 16, 200818 yr Ah, we can get over 100 posts on Obama's phantom Muslim faith but struggle to get 10 replies in a much more important thread. People are much more opinionated when it comes to religion/politics. Financial discussions are a little different IMO. I do not know enough to contribute to this thread. That's why I've avoided it thus far.
Archived
This topic is now archived and is closed to further replies.