Right or wrong many businesses NEED a line of credit to operate. It's a buffer that allows us to run the small margins we do. Take away LOC in an unexpected move like this and all hell WILL break loose.

Actually it's $2333...

...but I say skip the bailout. I'd rather take the beating now than draw it out and have it be even worse a year from now.

yep slow steady DOES WIN THE RACE.................time after time.

i too live in a zip code that has not wavered in appreciation.

my credit score is platiniummmmm, like beyond plutonium. last i checked 861.

the only people that are going to be hammered are the ones who stuck their necks way out there.

i too was caught somewhat by the land deals a flying here a few years back. thought about leveraging one piece of property for another and playing monopoly.

but back of my head said "no" what if things change??????????????????

well things have changed...............BIG TIME!

now we are going to watch people that lived on big time credit hang themselves

out to dry! or just hang themselves!

Depends on what you mean by hammered.

If you think unemployment is high now, if it hits the fan, it will skyrocket.

Imagine getting laid off and going to look for a job and all there is is minimum wage stuff. Wanna try to cover your monthly nut on 30-40 hrs. a week of that?

And that's if enough people can still afford to buy fast food that McDonald's even stays open.

A lot more people can get hammered than you think. Including you and me.

Of course not. But you're talking dramatic, Chicken Little worst case. Obviously a lot of other things would go to crap after job loss.

Matteo, I'm picking on you a bit, because I agree with your overall logic. But the impact will greatly vary depending on your location, habits, and financial situation.

We are headed for the biggest global financial crash in most of our lifetimes. Followed by the most economic pain most of us will have ever seen. The chance of avoiding this is getting smaller and smaller.

I hope you guys enjoy it.

At some point, you'll figure out that this is not a spectator sport.

And on the financial situation of your employer. Do you know what your employer's balance sheet and liquidity looks like? Do you know what management's contingency plan for a full-blown financial crisis is? How indispensable are you? All pertinent questions.

John,

You're a smart guy, but that's quite a crystal ball you have there, IMHO.

Best,

How in the world will banks be able to kick so many people out of their houses if defaults start to skyrocket? They're already overwhelmed to the point that it can be a year from the time you mail your keys in before the sheriff comes to toss you out. If I lose my job and/or my tenants in VA stop paying, I really don't see what the bank can do to me other than trash my credit score. And if that happened, what would make more sense? Burn through my cash, trying to keep the creditors off my back? Or let it all go to hell and save my cash for essentials like ammo and food?

Are you saying I should just start looting now?:rolleyes:

Are you fairly confident a "bailout" would avert this type of disaster? What about the fundamental problems of credit that run rampant in our society? We still (as individuals, as well as a country) buy far more things on credit than we can actually afford. For some of us, our homes (and those of our neighbors) still cost far more than what incomes can support. Does infusing 700 billion dollars into the system change that?

I don't mean to be snide or argumentative in those questions. You're a financial guy, and I'm not. But what about opinions, such as those held by guys like Ron Paul, that as painful as this correction will be (sans bailout), it will be far less painful than the resulting depression that will happen if our government prints and distributes $700 billion of cash it doesn't really have?

What's the lesser of the two evils?

finally, a financial plan i can get behind

Not my crystal ball. Just look at the financial markets. What are they saying?

Stock markets have plunged to 2004 levels, and decline is accelerating (slope of curve is getting more negative). Technically the SPX has support here, but if broken, next obvious support is 2002 levels. Debt markets look even worse. VIX (implied volatility fear gauge) is at 2002 levels.

Yet market still hasn't given up on the rescue plan. You can see that from the intra-day action. If and when the rescue plan is fully dead, market has lots more room to go down.

I have not given up. I find it very hard to believe that Congress will ultimately refuse to spend 0.5% of GDP upfront to avoid an economic slide that will cost the country far more than that. I think that at some point, Joe Sixpack will finally figure it out - when the pink slips start flying. So I think we will ultimately have a rescue plan, a market recovery, and some chance to limit the economic damage. But a rescue plan when, a recovery from what levels, and limited damage relative to what? From lower levels.

This is something we (the USA) needed to do, the sooner the better. The longer it is delayed, the less effective it will be, the greater the cost, and the more damage in the meantime.

There is another wild card. Which is, what do other countries think of what is going on here? It matters a lot, because if Japan, China, Europe get too scared, and cut back or cease buying Treasuries, then the consequences will be even worse.

+1

I'm just numb over the Congressional vote. The market reacted - probably the purist read of the situation.

I just an average guy like most and this will have an impact on me, my jobmy family and my lifestyle. This is a bad situation with no good alternative. Speaking for myself, I see no recovery for 5 -10 years.

I realize that cash is king but it is uselss when there is nothing to buy because credit is unavailable to businesses and they can't produce the goods and services. Be careful what you wish for - no one knows where this is going.

I'm not going to go through the financial/economic stuff. I've posted a lot about it and you can find lots of information, either read it, or don't.

I'll just point out two things.

First, an analogy that may help understanding.
- Suppose you've got a guy who is extremely obese, weak heart, diabetic, hypertensive, doesn't exercise, etc.
- Would you immediately force him into a sustained regimen of 300 calories/day, no medication, 20 miles/day forced marches?
- Probably not, because you'd have a good chance of killing him.
- Instead, you'd put him on a 1,000 cal/day diet, treat as needed w/ medication, gradually ramp up his exercise.
- Right now, we are headed for the Bataan Death March treatment regimen. If you want the patient to live, better not do that.

Second, suppose you don't know what to think so you need to find someone to listen to.
- In a financial/economic crisis, at least pay attention to what the financial and economic experts think.
- Warren Buffett says the govt needs to step in, he's just the world's most successfull investor. Paul Volcker too, he broke the back of inflation in the 1970s. Bill Gross, who runs more bond money than anyone in the world. Etc, etc. The guys who genuinely know what is going on are pretty darn clear.
- And you're going to counter with Ron Paul? Give me a break. Who's next, Fred Thompson?

Originally Posted by kstar
unlike the '29 crash, i would argue there are huge amounts on cash "on the sidelines" as well as a very large number or corporations with no debt.

I believe that credit needs will be filled in many creative, market driven ways by this, so far, "wait and see" cash.

That's how things should work in a capitalistic system, imho.

+ 100

87 blk coupe

Clyburn (D) of SC and Greg Judd (R) of NH...were almost crying.....

When the children are scared it is up to the parents to reassure thier children. When the parents are arguing so much that they can't reassure their children, the children remain scared....well there is just no telling what might happen now.

i dont understand this. i agree with the other's response. this isnt a spectator's event. i also have great credit...all of it wont mean a thing if companies start to fold, people quit spending, and unemployment spirals out of control. it will be hideous.

I post an honest question, and you reply with a pedantic post. Very classy, jyl.

Yes, true, but no one, the fat man or his doctors, have the disciple to ever get a diet started. Nothing is going to happen until the fat man up and dies from a heart attack one day.

I'm sorry, but I'm not buying your argument that the average person is too naive to understand what is going on. People can understand that you don't keep pumping money into a failed system.

We are all going to 'suffer' in some way. But given the vast material wealtht his country has, I find the hand wrigging and dooms day predictions ring hollow. The citizens of this country are tired of having the scam artists in Washington raising yet another boogy man as justification for making the rich richer. Their not buying it.

AMERICA IS NOT GREAT BECAUSE OF MONEY. WE ARE GREAT BECAUSE WE ARE AMERICANS.

If you life will be destroyed because you can't have the latest tricket or electronics item, then thats not much of a life, and I think people are starting to figure that out.

Perhaps you have read this jyl? http://en.wikipedia.org/wiki/The_Wisdom_of_Crowds

Well we are gona see what happens either way...I hope that the system rights itself. However the risk of failure is HIGH...I tend to vote taking the course of less risk.

One of the many reasons I can't get behind the bailout is the fact that a small cadre of individuals in the banking and finance industry have personally extracted enormous amounts of cash in the process of driving things into the ground; a good chunk of the bailout will be to subsidize the 7-figure incomes for some of them and golden parachutes for the rest. With all the dead weight off these companies books, they'll be free to hand themselves even more bonuses.

fat katz get smoooooshed auf der autobahn of life!

You've got your opinions based on experience and some T/A and I have my opinions based on experience and some dried goat entrails; neither one of us has a crystal ball and can predict what's going to happen tomorrow and beyond. You appear to be stating you do know what's going to happen, but maybe I am mistaken.

There are sound, fundamental reasons to not support today's failed legislation, but I have hope a free-market based solution may emerge. On principle, I cannot support the government controlled intervention as outlined in EESA.

I read that equity market caps were clipped for $1.2T today, and there is probably more to come. Trillion dollar band aids aren't going to fix this problem, IMHO.

Wholesale systemic changes are needed with LESS government, again, IMHO.

Best,

No, the bill has specific provisions in it saying that banks that participate will not be able to let their execs take huge golden parachutes.

The Morning Joe gang on MSNBC had Jim Kramer on for a segment today, and he said while that's a good thing about the bill, there will be some execs that say, "Heck no, we are not going to participate!" because they are focused on one thing:

Their golden parachute. (Kramer put his face in his hands.)

He acknowledged that some of these dudes are so greedy, they will let their whole bank go down around them in order to get "theirs."

Even so, always remember this... not everybody on Wall Street is an evil, greedy Gordon Gecko.

Sounds good to me.

Even if it is true that "something" needs to be done, my strong sense is that this particular piece of "something" was not the right answer.

Evidently some think that the bailout is more like giving the guy another case of doritos and saying, "we'll figure out a painless way to make you healthy again, just give us more money and some time."

LOL :D





Now you got my tastbuds all riled up. :mad:

Maybe they just got off the phone with their stockbrokers? :D

I don't care what's written in the bill. . . .the fat-cats will get theirs first. I'm glad it didn't pass. My wife and I are going house hunting this weekend...with cash. We're in the Southeast where values have fallen but nothing like CA. A cash buyer in this market should be able to strike a very sweet deal.

This so called "crisis" is just a matter of money changing hands. People will go broke (those who's livelyhood is based on irresponsible credit) and people will get rich. I don't buy into all the doomsday predictions posted here. Given the choice, I think I will take whatever steps put me on the side of the people who will get rich. When life gives you lemons....time to make lemonade.

Quit watching CNN. The sky isn't falling.

Here is something interesting to think about.

In times of great stress, when everyone is desperate to raise capital, it is not necessarily the case that they throw out the bad and keep the good. Sometimes they are forced to throw out the good and keep the bad.

We see this in the equity markets sometimes. When the market is dislocated, and investors need to raise capital, you don't sell what you want to sell, you sell what you can sell. Which means the higher-quality, more liquid stuff. And in those periods we see stocks of good companies go down harder than stocks of bad companies.

Apparent this happens in the debt markets too. Last week, I read, there were periods when the yield on investment grade bonds were actually higher than the yields on junk grade bonds. Because institutions desperate to raise cash were selling whatever could sell, meaning their best assets.

I wonder if the same could happen in the consumer and business credit markets?

I heard an anecdote today, a businessman went to do a routine renewal of a $1.8MM loan. He was denied. The bank agreed his credit was excellent, but explained they needed to reduce their lending. They knew he would pay back the loan, whereas a borrower with worse credit might not. So they called in his loan.

Something to keep an eye on.

Good luck with that. Find me the private institution with $700BN in buying power and the ability to hold illiquid investments for the long run.

Do we really need a bailout
 

Has anyone noticed the timing of this problem? It looks political to me, like yelling FIRE while in a theater. I have heard several financial gurus stating the fed could make money out of this bailout when they sell off the securties. If they can do it so can private investors and there are a lot of them that would like to try. I think this has little to do with the credit market and more to do with socializing our financial markets. If that happens they control what businesses get loans and what "strings" are attached. In other words total control of all businesses in this country.

HELLOOO?

We have a War on two fronts! They may not be the money makers they once were, unless you are a contractor in Iraq of course. But a little escalation, and maybe another front (Iran) or two (hmmm), and bingo! Everybody makes out!

Great time to be in the war business! Buy Bombs!

Indeed.

Sorry, but I've posted so many times on this, and have expended a lot of time doing so. I can't repeatedly retype those answers for each new person who joins the conversation.

EXACTLY MY THOUGHTS!

basic econ 101.....................BUY LOW SELL HIGH!

god almighty ya'd think the 2nd coming of the messikan revolution was gonna start at the close of the bell today!!!!

had to throw that in after watching direct tv's "DUCK YOU SUCKER" with james colburn and rod steiger yesterday. a classic western based on pure crap pulp fiction done poorly, but none the less a good colburn flick with lots of death/mayhem/pretty women/guns/dynamite/trains/deserts/messikan food/tequila/beer.

Why does it have to be one institution?

I would argue there's well over $1T in cash sitting this out.

If the illiquid assets are worth holding, some money will want to hold them, IMO.

I am aware that my reasoning may be flawed and my predictively ability is imperfect. But, respectfully, your certainty about what is right and wrong and about what tomorrow brings is unreasonable . . . IMO.

Best,