The headlines are saying the dow is falling because of consumer spending and the fact that we are in a recession. Yeah right. Sure, like that info wasn’t already known.
Gee guys, you think the real reason could be ummm…The terrorist attack in India! Let’s see a financial center in a country gets attacked….what did you think was going to happen? Plus, how many US companies have offshore centers there?
Now, you can see why the dow is truly down today.
Before the Government goes bailing everyone out, they should consider the guys they don’t have to bailout and the impact it will have on their businesses.
Note: forgive this simplistic scenario but you’ll get the overall point. Let’s say you own a bank and you chose not to give out risky mortgages. And let’s say you also chose not to buy up other banks risky mortgages. You also choose not to invest your profits into mortgage bonds because you don’t know which are risky and which aren’t.
If you were a bank and you chose not to do those three things then you would be called an “idiot” by nearly everyone in the industry between say 2003 – 2007. Most of the other banks you were competing against were making millions of dollars on loans you refused to make. But, let’s say you managed to keep your bank open and were still turning a profit, not at the levels of other banks but still a profit.
Now, it’s 2008 and you look pretty smart. You are still turning a profit while your competitors are hurting and even going out of business which means their customers are coming to your bank. Great you are set! Wait, your competitors have hired lobbyist to fly to Washington to try and get the government to help them out. The government is broke so they say no but your lobbyists are smart. They start scaring everyone into thinking that if their clients fail then the whole system will fail and everyone (meaning voters) will suffer and blame those in congress. They also get newspaper columnists to write articles scaring the public into believing this scenario. Pointing out that “Joe Blah Blah” is at risk of losing his job and his money.
So Congress jumps on board. Now, the government is pouring money into your competitors even though they made bad business decisions. Your competitors survive and the bailout makes potential customers and investors more likely to actually throw their money into your competitors instead of your bank. Guess what? The Variables just changed and you were penalized for not being an “idiot”.
You go out of business and your competitors gobble up your bank only to make the same mistake again in 5 years. The executive boards and managers of those banks avoid any real damage and go on to repeat their mistake once again. After all, they made millions and when they started to face losses…government bailed them out. What’s the downside?
Or take that scenario and say you are an automaker or a builder or an airline.
Posted in bailout, Business, Day to Day Stuff, Deep Thoughts, Democrats, Economy, Housing, lending crisis, mortgage, Mortgage Industry, News, Politics, real estate, republicans, Stupid Things
Tagged bailouts, Economy, mortgage
I missed this story when it first came out but I find it pretty interesting considering all that is happening in the world markets right now.
It’s a mystery that has got British law enforcement officials and others across the planet scratching their heads. Put bluntly, enough heroin to supply the world’s demand for years has simply disappeared.
The United Nations Office on Drugs and Crime (UNODC) describes the situation as “a time bomb for public health and global security”.
I really don’t have much else to add as I don’t have the answers. I have my own theories but they are just that. I’ll just say that we know that Afghanistan is producing more opium this year than even last year (when the numbers went so high)…but where is it? That’s a lot of temptation and a lot of power within the reach of a lot of groups, both good guys and bad guys.
I decided to actually watch CNN tonight to hear what all the pundits had to say about the bailout failing to pass. Let’s just say my head hurts now. Before I even get into the Dems and Repubs, it’s amazing to me that we only hear one side of this argument. Everything on the news is how the bailout just has to be passed and it was a major mistake not to pass it. What about the other side?
I even heard these morons say that yes the bailout is horrible but we just have to pass it. We do? Can’t we pass something else? Don’t we have the power to rewrite bills or make new bills that may work better? I seem to remember reading that in Government Class. CNN completely ignored the other side of the argument in all their newscasts tonight. It’s like I’m listening to the state run news network just repeating the talking points handed to them by the administration…strange feeling. This is the United States of America, right?
Ok, now on to Congress…Now let me see, I’ll start with the Repubs blaming Pelosi’s speech (her Speech!) for the bill not passing. Seriously?
- Did your feelings get hurt? How old are you idiots?
- Just once, just once, I would love to hear the Republicans take responsibility for their actions. Guys you failed to get the votes to pass this bill. End of story.
- They BLAMED THE SPEECH! They continue to just amaze me.
Ok now I’m going to rip the Dems…so any Democrats out there who can’t take it then you better look away.
- Pelosi why do you still have a job? Every day that you wake up do you look in the mirror and just ask yourself if you can screw up as bad as you did the day before?
- Did the Dems blame the Repubs for not getting enough votes? They said that they got their fair share and the Republicans didn’t get theirs. Are your legs broken? Get off your asses and go get more votes if you believe in this thing so much. WTF? That’s the weakest argument I’ve ever heard…oh wait. They blamed THE SPEECH!
So CNN went on to say that the house Republicans who voted against the bill were putting their re-elections ahead of the country. But, then they went on to say that 90% of the calls into those same Repubs offices have been against the bailout. Don’t they work for those people? Aren’t they supposed to represent them? I’m so sick of this crap about putting the country ahead of everything else…this is not the Soviet Union! You are free to have differing views here in this country. In fact, it’s healthy and natural.
The majority of American people do not support this bill and the congress who represents them voted it down. So what’s the problem? If it’s so important then explain it to the people of this country and stop trying to scare them into supporting it. I mean, I know that’s Bush’s only motivational tactic but someone in congress should be able to do something. How about those two idiots running for President? Maybe they could explain it to the American people. I’m pretty sure that’s how this whole thing called government was supposed to work.
And does anyone, anyone have a problem with the Democrats in Congress lining up behind President Bush on this?
I know this post is long but I got one more thing to say. Where is Dick Cheney? Where do you think his money is? Dubai?
Posted in Barack Obama, Business, Day to Day Stuff, Deep Thoughts, Democrats, Dick Cheney, Economy, George Bush, John McCain, Media, Nancy Pelosi, News, Obama, Politics, republicans
I’ve had quite a few people ask me about the economy lately…what I think of the bailouts and whose fault all this is. And most of the time I just don’t know where to start. It’s not simple to explain.
First of all, anyone who says they can provide a quick summary of the problem is wrong…there is not a quick summary of this. It’s not just about the risky mortgages given out over the past 10 years, it’s not just about the consumer debt, and it’s not just a Republican or Democrat issue.
It is affecting the entire world…global crisis if you will. So that should tell you right away that this isn’t simple. Let’s take a look at some of the issues going on right now:
- That 700 Billion Dollar Number means absolutely nothing. They just made it up. “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
- The original bailout bill was only 3 pages! 3 Pages for 700 billion dollars? Anyone who knows anything about bills realizes that this is unheard of. They just wanted a blank check with no oversight and didn’t even try to disguise it. Those that think it is a bad thing that the bill is a lot longer now need to go back and read that “700 Billion” one more time.
- Paulson is leaving office in 4 months – meaning he can be heavily infuenced by outside forces in his decision making
- The bailout will not help the average person at all. That’s why they don’t care that the majority of Americans are against it.
- It’s only putting off the inevitable…the market has to correct itself at some point. Housing Prices were artificially high and interest rates artificially low.
- Why are these other spending bills going through right now? Nasa buying Russian Spacecraft, Missile Defense Systems, Huge Defense Spending Bill – 634 billion
- If you want to try and protect yourself. change your money into something other than US dollars.
There is one interesting question that really makes you think. Who is putting the pressure on the US Gov’t to do this Bailout Deal ASAP? I don’t have the answer…and it makes my head hurt to speculate on it.
And for all of you that say that the bailout is needed and everyone who is in the know agrees…read this.
And if you want to learn a little more about this crisis then take a look at the derivatives bubble and the credit default swaps. It’s not so much that the banks gave out bad mortgages as it is what they did with those mortgages once they had them. And I think Obama and McCain have zero idea what to do. McCain proved in the Republican primaries that he is clueless on the economy.
But notice again how fear is playing a role in all of this and the Democrats are the first to fold…leaving so called “Rebel Republicans to fight”. Rebel Republicans – who see Paulson’s proposals as socialism by the back door – were warned they will be responsible for causing an “amazing catastrophe” if they continue to oppose the plans, which would see taxpayers buy up the bad debts of failing banks.
What’s it called when the National Government Owns and Controls the Market?
I had hopes for him but he continues to disappoint me with his short-sightedness. He appears to be caving on offshore drilling and now he wants to tap into the strategic oil reserves.
Obama, who as recently as last month argued against tapping into the petroleum reserve located in caverns in Texas and Louisiana, proposed that the government sell 70 million barrels of oil from its stockpiles and said that releases from the reserve in the past have lowered gas prices within two weeks.
Someone please explain to these idiots that this is a terrible way to deal with high oil prices. This will only offer short term relief and will only leave the country in worse shape when those 70 million barrels are exhausted. The strategic reserves are there for a reason. How do you think the military functions without gas? You think those tanks and planes work well without fuel? What happens if we attack Iran and then they respond by blocking the sea lanes of the gulf? Or maybe there’s unrest in Saudi Arabia or Pakistan? Or Venezuela sells all their oil to China? Let’s just say oil will be hard to come by.
I love how the AP hides this in the article….The last sentence of that story is the following:
Elgie Holstein, an Obama energy adviser, said that, while fewer refineries now are capable of refining the heavier stuff into gasoline, in the future that won’t be the case.
So the oil that will be replaced will be even tougher to turn into gasoline. Great! That’s just makes the idea even worse. You know, because if you really are in need of tapping the strategic oil reservers you probably don’t need the stuff quickly or anything. And “in the future”? What kind of timeframe are you talking about? When are these new refineries going up?
I suggest whenever you read an AP story that you make sure you read the last paragraph as that’s where they hide the good stuff. Don’t overlook it. And my message to Obama:
If you want to be so much like McCain then just quit the race and vote for him.
Posted in Barack Obama, Day to Day Stuff, Deep Thoughts, Democrats, Economy, John McCain, News, Obama, Politics, Presidential Candidates, republicans
I am sick of people saying that Iran is not a threat and that the US should not be scared of them. Look, Iran is a huge threat because….well. hmm.
Let’s see they might be developing nukes or maybe they are just building a power plant. Can’t really use that as a reason to be afraid of them as there are a number of countries around the globe trying to develop nukes. Not to use of course, only to level the playing field.
Speaking of Nukes, why is Iran such a threat and Pakistan not? Pakistan has nukes…we know this. They have a dictator trying to hang onto control of the country (even though he doesn’t control large parts of it). We know there are a lot of crazies that live there and terrorism not only lives there but does it out in the open. Go visit Karachi.
Let’s go back to Iran. Their military is…pretty weak. They don’t have any nuclear subs that can carry nukes to the US and they don’t have any truly long range missles. So how are they a threat to the US? They can’t attack us directly and even if they developed a few nukes…using them would be suicide.
And name the only country to ever…ever actually use nukes?
Iran is not run by a dictator, it’s run by a president (Ahmadinejad). He doesn’t have supreme control in that country so even if they had nukes it’s not like one guy is pushing the button. Iran is actually a pretty progressive country and filled with young Iranians trying to push western lifestyles on the establishment. What do you think a war will do to those young Iranians? Push them toward or away from us?
I’ve heard concerns about what Russia will do if Iran is attacked because they have many business deals with them, this is a valid concern. But, have you thought about it this way: Russia is making most of their money right now off the high price of oil…what happens if Iran is attacked…oil might double and russia would become one of the wealthiest countries on the planet. So, how concerned are they? Or do they just want to give the appearance that they are concerned?
I don’t think you can make a strong case for Iran being a threat to the US. The US has to finish the other 2 wars we started…one way or the other. And as Israel’s biggest supporter, we need to tell them that they will not attack Iran either. Doing so will put hundreds of thousands of our troops in Iraq and Afghanistan in danger. It will also sink the US economy and hurt all of Europe economically. At some point, we will have to address the taboo topic of the nuclear arsenal that Israel possesses. But you aren’t supposed to mention that.
I’ve never heard the answer to this but would you say to Iran if they want to develop nukes? If they say we want nukes because India, Pakistan, and Israel all have them and to be on a level playing field we need that technology or we will always be treated as a child at the negotiating table. Not sure I have an answer for that.