Prepare to get smashed - 1 trillion wiped off Wall Street

[moXJO]

Re: Prepare to get smashed - 1 trillion wiped of wall street

Its a bit late for a bail out now they seem to have left it a bit to long. Not only that, but after all the time that this issue has been brewing they could only came up with a half ass plan at the last minute. I don't think sentiment would change in the current environment even if it did go through.

 

[nomore4s]

Re: Prepare to get smashed - 1 trillion wiped of wall street

The thing is Korrupt, I'm not sure this bail out will stop the US from going into a deep and painful recession.

And surely Wall St have to take some of the blame for thier own greed.

While not a certainty, there are signs that this could be worse then a recession.
Credit markets freezing and banks going bust is not a good sign, isn't that what happened leading into the depression?

 

[korrupt_1]

Re: Prepare to get smashed - 1 trillion wiped of wall street

I'm not saying that the bailout will turn the market around and prevent a recession... but it will lessen the damage to a degree... SOME ACTION is better than none...

I'd rather try to bandage a cut arm rather than let it be. The bandage is not going to take the pain away or heal it over night... but atleast the wound won't fester and end up amputating it!!

The US needs the bailout... or else it's going to get even worse (as if it isnt bad enough!!!)

 

[jaithomson]

Re: Prepare to get smashed - 1 trillion wiped of wall street

I think u mean 4500 for the All Ords?

The Dow will be under 10k tonight for sure.

Not according to the best Dow Jones Forecast website -

dowjonesforecast.com of course..!

 

[Tysonboss1]

Interesting opinon,..

http://www.propertyinvesting.com/newsletter/september08-update

 

[rthakkar]

Re: Prepare to get smashed - 1 trillion wiped of wall street

I'll be on the prowl today looking for something hit really hard; only a small buy. Simply because I do not believe the fed will allow for over a thousand points to be wiped over a couple of days. They'll have an emergency rate cut ... or something

Apparently the rate cutes can now no longer make much of a difference. The Fed and other reserve banks worldwide have been flooding the market with dollar over last week... But the Bank's are too pessimistic about the future and would not let the cash flow..

A 100 basis points cut might help ease the pressure for a while but the troubled assets needs to be taken off the books of the bank before they can gain confidence to start lending more.

 

[Spanning Tree]

Bailout also has the moral hazard problem. If big banks always know the Government will bail them out when times are tough, what is stopping them from taking big risks? People need to face the consequences of their recklessness otherwise there is no incentive for prudence.

 

[rthakkar]

Bailout also has the moral hazard problem. If big banks always know the Government will bail them out when times are tough, what is stopping them from taking big risks? People need to face the consequences of their recklessness otherwise there is no incentive for prudence.

That is why you have regulations and regulatory bodies to monitor unjust user and abuse of free market.

Sadly though, the time for such regulations has passed. The house is on fire and you cannot debate why there wasn't a fire alarm in place before. The fire needs to be put off before any other actions

If one or two big banks were failing due to their risky portfolio, I would have been a Nay voter last night. However, this is a different crisis, it a crisis affecting the whole financial industry in the US and the world - particularly Western economies. I strongly believe the bill should have passed in favour of the bailout if it is even really a bailout.

The financial institutes of which the assets were to be purchased from won't be making a profit. One of the last speaker in yesterdays speech mentioned - that for every $1 that the banks would have invested in bad assets last year, they would get 30c in return according to the plan.. I.e they are making a loss! but at least they are getting a buyer.

Again Sadly enough, the common public likes playing with fire as majority opposed to the bill.

 

[Smurf1976]

Re: Prepare to get smashed - 1 trillion wiped of wall street

I'm not saying that the bailout will turn the market around and prevent a recession... but it will lessen the damage to a degree... SOME ACTION is better than none...

Agreed there's a need to do something. However, I do think it's only fair and reasonable that the financial industry (in general) be subject to ongoing higher taxation to pay for it. They stuffed up, they pay the bills.

So, first thing yes let's do the bailout.

Then introduce some sort of tax on the activities of investment banks and get the money back - with interest of course.

And the third thing I'd like to see is a requirement relating specifically to infrastructure of national importance (ports, power, toll roads etc). That requirement being that in the event of financial problems of a bank etc preventing continuation of physical operations as usual, the asset simply passes straight to the taxpayer at zero cost. The bank etc takes a total loss if they can't get their act together.

Australia (or any other country) would be outright ruined if these failing investment banks had their hands on our roads, power etc and we had to bail those industries out so I do think we need protection there. Babcock and Brown has of itself cost the state government over $1000 per head of population in Tasmania alone over a single project - just imagine if it were more than one project and other states were similarly affected. We'd be outright screwed.

Reason for my somewhat negative attitude toward the whole investment banking thing is simply this. I've yet to see even the slightest bit of proof as to how the whole speculation, derivatives etc boom has benefited the real economy or the average citizen at all. All we've ended up with is a hollowed out economy and a massive bill to pay.

Why can't we just go back to a proper economy without all this rubbish? You know, the way that pushed the US, Australia and others forward for generations rather than this new model which has seen most Western countries stagnate. That way was innovation and production, not speculation.

 

[Uncle Festivus]

Re: Prepare to get smashed - 1 trillion wiped of wall street

Why can't we just go back to a proper economy without all this rubbish? You know, the way that pushed the US, Australia and others forward for generations rather than this new model which has seen most Western countries stagnate. That way was innovation and production, not speculation.

We will eventually get back there, we might just overshoot on the way down?

The problem was that money shuffling within the fractional reserve banking systems was ever so lucrative, all the while never actually producing anything physical.

So in the middle of the biggest financial threat to the planet since the 1st Great Depression the designated drivers of the world economy have - gone on holidays!

Judging by some of the post here there are still some bulls left looking for a bottom bargain - no capitulation yet no matter how big the falls have been so far?

 

[Pager]

I find it hard to comprehend the fact that in the US this rescue package was voted down due to the Democrats making comments that it was a republican administration that caused all this mess so some of the Republicans got a hissy fit on and voted against it because the Democrats were supporting it

Then there are the Democrats who voted against it due to low public support for a bailout and there worried they may not get re elected

Then to top it all, with probably the worst crisis in the World since WW2 they all go on holiday

Selfish F@cki#g Bast@rds

 

[Smurf1976]

Re: Prepare to get smashed - 1 trillion wiped of wall street

Judging by some of the post here there are still some bulls left looking for a bottom bargain - no capitulation yet no matter how big the falls have been so far?

I don't think the average person has any idea how serious this situation is.

Most have now noticed the fire in the rubbish bin and can see the need to do something about it. What they're forgetting is that the rubbish bin is located in a warehouse full of high explosives. Meanwhile they're arguing about whether it's really necessary to call the fire brigade.

Bottom line is that if the drivatives bomb goes off then we're ALL going to lose in some way and the overall effects are likely to be catastrophic. And it's likely to happen so quickly that you've got no chance of doing anything about it once it's clear that it's happening.

Better hope someone starts putting out that bin fire real soon...

 

[chops_a_must]

I find it hard to comprehend the fact that in the US this rescue package was voted down due to the Democrats making comments that it was a republican administration that caused all this mess so some of the Republicans got a hissy fit on and voted against it because the Democrats were supporting it

Because she'd been parading around all week like a show dog, preaching bi-partisanship and then uses it to grandstand on a political motive.

Seriously, seriously dumb, bitchy move.

Don't inflame anything, get it done, then complain.

Really immature and naive political move, and hopefully kills off any chance she has of progressing further up the chain.

 

[Sunder]

Re: Prepare to get smashed - 1 trillion wiped of wall street

I don't think the average person has any idea how serious this situation is.

Most have now noticed the fire in the rubbish bin and can see the need to do something about it. What they're forgetting is that the rubbish bin is located in a warehouse full of high explosives. Meanwhile they're arguing about whether it's really necessary to call the fire brigade.

That is an awesome summary of what is going on. I've been frustrated with many people who have been rubbing their hands in schaedenfreude (sp) glee, saying these bankers deserve it.

While they're watching the bankers burn, they're not noticing the spark that has lit the high explosive they're standing on.

 

[mayk]

Re: Prepare to get smashed - 1 trillion wiped of wall street

Bottom line is that if the drivatives bomb goes off then we're ALL going to lose in some way and the overall effects are likely to be catastrophic. And it's likely to happen so quickly that you've got no chance of doing anything about it once it's clear that it's happening.

People are always pointing to this huge derivative bomb. But almost all the major players in derivatives have now been washed away by this financial storm. What is the effect of them? At least something should be visible from the collapse of Lehman (lemon haha) brothers? Where is the evidence? BearStearns was considered to be the pioneer of this, but still world is standing on its feet...



I frankly do not fully understand drivatives, and have a vague idea that actual loss or gain is small in these trillion dollars instruments (Just the offset differences, so small that you need really huge volume to get some profit, hence trillions of dollar).

 

[nioka]

Re: Prepare to get smashed - 1 trillion wiped of wall street

That is an awesome summary of what is going on. I've been frustrated with many people who have been rubbing their hands in schaedenfreude (sp) glee, saying these bankers deserve it.

While they're watching the bankers burn, they're not noticing the spark that has lit the high explosive they're standing on.

You are right there. Also there are others waiting like the looters after the storm to pick over the remains and profit from the losses of the innocent victims.

 

[chops_a_must]

Re: Prepare to get smashed - 1 trillion wiped of wall street

You are right there. Also there are others waiting like the looters after the storm to pick over the remains and profit from the losses of the innocent victims.

You mean those savers, diligent learners and conservative risk takers?

 

[pepperoni]

Evn if the Y2k like derivative bomb went off, 1 trillion dollars will build a new warehouse ... and a country for it to live in ... and jobs for the rebuilders .. and put food on battlers tables

Bailout supporters are have a selfish interest at getting another 100k on retirement, knowing full well their kids will have to cough up $1m to cover it.

Ill forego my entire super if it means we cant stop selling off a future we dont even own.

 

[Macquack]

That is why you have regulations and regulatory bodies to monitor unjust user and abuse of free market. .

Well they obviously dont work.

The house is on fire and you cannot debate why there wasn't a fire alarm in place before. The fire needs to be put off before any other actions.

You do not put out a fire with gasoline.

Again Sadly enough, the common public likes playing with fire as majority opposed to the bill.

The public does not like playing with fire. They are scared of people with petrol cans in their hands.

 

[Smurf1976]

Re: Prepare to get smashed - 1 trillion wiped of wall street

People are always pointing to this huge derivative bomb. But almost all the major players in derivatives have now been washed away by this financial storm. What is the effect of them? At least something should be visible from the collapse of Lehman (lemon haha) brothers? Where is the evidence? BearStearns was considered to be the pioneer of this, but still world is standing on its feet...

It's working for now because many presumably aren't valuing their "assets" at actual market prices.

For example, they're broke if XYZ falls below $10. But there have been no trades for quite a while now so there's no up to date price as such. So they just keep using the last traded price from weeks ago - $20 - when in actual fact if they had to sell the value is ZERO because there are no buyers.

So they may well be broke already. It's just that they haven't updated their accounts to reflect this yet, hoping for a bailout in the meantime. Nor have they updated their accounts to reflect what they lost when some other bank went broke. (All in my opinon - I don't have firm proof of any of this).