Oh here is somthing we can usae the money for!!!!!!!!!!!!!!!!!!!!!!!!!! Just say NO to bad debt!!
Sept. 23 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox said Congress should ``immediately'' grant authority to regulate credit-default swaps amid concern the bets are fueling the global financial crisis.
``Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure,'' Cox told the Senate Banking Committee today at a hearing on the government's $700 billion financial rescue plan. Lawmakers should provide the authority ``to enhance investor protection and ensure the operation of fair and orderly markets,'' he said.
Calls for greater regulation of the $62 trillion market have grown since the U.S. took over American International Group Inc. Sept. 16.
At least these guys are not lying to us about how they will negotiate 25 cents on the dollar for this junk. They intend not only to bail these guys but give them all their money back for this junk.
Sept. 24 (Bloomberg) -- Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke signaled that their priority is shoring up the nation's banks even if it means they don't get taxpayers the cheapest prices for the devalued assets the government buys.
Bernanke told lawmakers yesterday the government won't pay ``fire-sale prices'' for the mainly mortgage-related securities Paulson aims to buy in a proposed $700 billion rescue. Instead, officials want to set a long-term value on assets, intending to hold them until they mature or markets improve.
Sept. 24 (Bloomberg) -- Eighteen months ago, U.S. Treasury Secretary Henry Paulson told an audience at the Shanghai Futures Exchange that China risked trillions of dollars in lost economic potential unless it freed up its capital markets.
``An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,'' Paulson said.
That advice rings hollow in China as Paulson plans a $700 billion rescue for U.S. financial institutions and the Securities and Exchange Commission bans short sales of insurers, banks and securities firms. Regulators in the fastest-growing major economy say they may ditch plans to introduce derivatives, and some company bosses are rethinking U.S. business models.
``The U.S. financial system was regarded as a model, and we tried our best to copy whatever we could,'' said Yu Yongding, a former adviser to China's central bank. ``Suddenly we find our teacher is not that excellent, so the next time when we're designing our financial system we will use our own mind more.''
I think the American tax payer must reach out and save all the fools in other countries also, don't you?
Federal Reserve plows $30 billion into money markets overseas to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.
The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement.
<< <i>If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
94% of Americans have no idea of what is going on and what is still left buried out there in bad paper. If they knew that $700B was being suggested as the panacea for the losses on $1 QUAD in potentially bad paper they would freak out.
Paulson, like all his Wall Street brethren is of no help in this current situation. We'd be better off with someone more distanced from the banking industry. Ron Paul would not be a bad choice.
This is "his" business and he will know how to turn a profit.
Now that's the POTY.
roadrunner >>
Perhaps you dont like it from my mouth, but perhaps from Warren Buffet's it makes more sense
From Briefing.com......Goldman Sachs: Buffett Interview on CNBC
Says not a time thing but a price thing... 'price is right. terms are right, people are right, and I decided to write a check'... 'If I did not think the government was going to act I would not be doing anything this week, I would be pulling back'... says it would be a mistake if the government walks away from Paulson proposal... not saying Paulson plan eliminates all the problems, but it keeps us from going off the precipice... says the market could not have taken another week like we saw last week... says it is everybody's problem; economy is like a bath tub, 'you can't have cold water in the front and hot water in the back'... says collapse of institutions involved would have halted industry... 'no plan will be perfect but I am happy Paulson has the imagination to step up and do something'... notes money market fund move by Paulson was a very important stroke... believes things will get worse if Congress doesn't approve a plan, or a plan close to the Paulson proposal... says every major institution is trying to de-leverage and you need someone to leverage up and the only one that can do that is the U.S. government... says if the government does it right they 'will make a lot of money'... says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'... .. says he is not buying any instruments because he does not want to leverage up... says private sector can not save the system because they can not borrow as cheap as the U.S. government... says should not write executive pay out of the Paulson plan but the oversight board should be very strict on managers... throws his support behind Paulson... first investment Buffet has made in an Investment bank since Solomon back in 1987 which did not work out well; believes this deal is much better
Of course there is always a great possibility that Congress will mess it up. The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount.
On the bright side, you wont have to pay for your house and could probably buy a new car for 80% off if you have cash.
<< <i>I think the American tax payer must reach out and save all the fools in other countries also, don't you?
Federal Reserve plows $30 billion into money markets overseas to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.
The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement. >>
And this is exactly why the dollar has rallied. I heard the Austria central bank president state that there is huge demand for dollars. Like I have say numerous times, the USD does have to smell great, just better than everyone else. Our Govt has the ability to combat this crisis, other govts do not.
"The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount."
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis?
Mark Piersall Random Collector www.marksmedals.com
<< <i>I noticed a poll on the Lou Dobbs Show that said 94% of the American People were against the Bailout and 6% were for it. I do not believe I have ever seen such a lopsided poll! >>
I think that reflects the populist belief that this is some kind of payoff for the big boys, while the little guy picks up the tab. That might be plausible if we were only talking about one or two investment firms, but the scope of this goes way beyond that. It's also tempting to think that election year politics is involved, and there has been a fair amount of grandstanding by Congress and the candidates. But I think that's more a cya to show that they are engaged in solving the problem, regardless of the result. I think when this all plays out the breadth of it will be shocking.
I also suspect that polls were against the Chrysler loan and S&L bailout. But the Chrysler loan was paid back in full and ahead of schedule, and ultimately saved many industry jobs. The S&L crisis was resolved as well. Hopefully history will be able to look back on this as a success too, but it's far from certain now.
Perhaps you dont like it from my mouth, but perhaps from Warren Buffet's it makes more sense
Thank you, but from either mouth it makes no sense. This is advice from the same Buffet who either couldn't make a good profit with 120,000,000 oz of silver or was given an offer by the FED/Treasury that he couldn't "refuse." Buffet "bailed" on silver (and the counter-party line) and moved him closer to the govt party line. For giving up on silver maybe he was offered first dibs on some cheap financial assets when they caved in. As a note they recently offered him the best part of the mono-line insurers "assets" but I think WB realized even those were junk, and sweeter deals would be forthcoming.
Buffet now contributing $10 BILL towards the Goldman Sachs "charity" is certainly a worthy cause even though it won't accomplish anything longer term (other than future political and financial favors to Buffet and his BHC). With dozens of billions of BH money plus his own invested in this economy, you can rest assured that WB is interested in protecting that stake. Funny that WB didn't think much of Paulson's "imagination" years ago when the Hankster "stepped up" and helped to make otc derivatives a major part of the financial landscape. Back then WB called them Weapons of Financial Mass Destruction. Today he's got Paulson's back. Apparently times change.
From Briefing.com......Goldman Sachs: Buffett Interview on CNBC
Says not a time thing but a price thing... 'price is right. terms are right, people are right, and I decided to write a check'... 'If I did not think the government was going to act I would not be doing anything this week, I would be pulling back'... says it would be a mistake if the government walks away from Paulson proposal... not saying Paulson plan eliminates all the problems, but it keeps us from going off the precipice... says the market could not have taken another week like we saw last week... says it is everybody's problem; economy is like a bath tub, 'you can't have cold water in the front and hot water in the back'... says collapse of institutions involved would have halted industry... 'no plan will be perfect but I am happy Paulson has the imagination to step up and do something'... notes money market fund move by Paulson was a very important stroke... believes things will get worse if Congress doesn't approve a plan, or a plan close to the Paulson proposal... says every major institution is trying to de-leverage and you need someone to leverage up and the only one that can do that is the U.S. government... says if the government does it right they 'will make a lot of money'... says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'... .. says he is not buying any instruments because he does not want to leverage up... says private sector can not save the system because they can not borrow as cheap as the U.S. government... says should not write executive pay out of the Paulson plan but the oversight board should be very strict on managers... throws his support behind Paulson... first investment Buffet has made in an Investment bank since Solomon back in 1987 which did not work out well; believes this deal is much better
I like the way that paragraph ended. He screwed up with the Solomon deal during a very similar crisis back in 1987, and today he's infallible in the biggest crisis since he's been paying taxes. Could be that he got some superb terms in the GS deal that 100% cover his $10 BILLION. Still, investing in a "broke-bank mountain" of debt hardly seems sensible. Why not buy up some cheap precious metals firms, energy companies, oil companies, etc. Getting into bed with GS doesn't seem like something his shareholders would welcome.
Also note his caveat above: "says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'. "
Paying what those illiquid securities is worth is akin to paying NOTHING for them. I'll pay nothing for them as well....sign me up. You can bet that the price paid will be far closer to 100% than 0%. Whatever they are sold for, will be above FMV, you can bet on that. There will be no money made by anyone on such poor quality assets, except maybe the banks when they pawn them off for real money above FMV, to the US taxpayers. Who will value those assets....one of the crooked accounting firms that have been in this mess knee-deep with the banks? Is there even an honest Wall Street accounting firm left?
Of course there is always a great possibility that Congress will mess it up. The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount. .....and the banksters would not have it any other way. Keep that tether line tight.
It's not clear to me if this paragraph is from the orig article as those don't even sound like words Buffet would utter publically. Congress will not mess up this tossing of the bone to the begger banks. They will hem and haw and look like they care, but they will cave in and give up the bucks...for us. At least in that way they can look taxpayers in the eye and say they really thought "hard about it" before consenting.
What shill will come forward next for Hanky Panky, Bill Gates??
<< <i>"The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount."
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
did you leave "You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount." on purpose? if there is no flow of fiat then yes it would collapse in a very short period of time, what we saw a week ago today was the tip of the iceberg, when banks STOPPED their flow....ie LIBOR shot relatively to the moon that day and financial system stood not still but trembling in it's own wet diaper.
just curious....as i have wondered if there was a oligopoly of traditioanl PM (gold and silver) available , what would it's value be? or a quasi-monopoly similar to OPEC? if for some reason it turns out that USA has 75%-80% of the gold still in it's bus depot locker in Fairbury, NE., would they just say $50 an ounce or $5000 an ounce. what about the mining companies?
the gold bugs and the investment hedgers have such little of it, even if used for doorstops and an Armageddon type economic collapse.
The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount....
This is going to happen with or without the current $700B bailout occuring. That is, all but the last sentence.
To keep the above from occuring, additional bailouts in the $10-$20 TRILLION range over the next 1-7 years will need to occur. And that's not saying it couldn't be loads more. $700B only covers the amusement park entrance fee to start up this game of musical chairs The FED and Congress will have to take the easy route and pump in the required TRILLIONs to keep the S.S. Wall Street afloat. But putting lipstick on pigs like GS and MS and calling them commercial banks doesn't turn them into risk-free assets. Deleveraging of bogus assets will continue to destroy paper wealth. At the same time considerable inflation will occur as the bail out money hits the markets. Gold can be knocked back yet again but the next move to record highs has already begun.
"There will be no money made by anyone on such poor quality assets, except maybe the banks when they pawn them off for real money above FMV, to the US taxpayers."
Well, you got that right, me thinks. If the waiter leaves the dinner tab in front of the taxpayers seat at the table then it will be near FMV. If say Japan or China or any other foreign suitor offers to pick up the tab, we're talking maybe 10 cents on the FMV and that would seem to be a very generous offer for an "asset" that has an unknown value and seems to poision any holder that touches it.
With dozens of billions of BH money plus his own invested in this economy, you can rest assured that WB is interested in protecting that stake. Funny that WB didn't think much of Paulson's "imagination" years ago when the Hankster "stepped up" and helped to make otc derivatives a major part of the financial landscape. Back then WB called them Weapons of Financial Mass Destruction. Today he's got Paulson's back. Apparently times change.
We live in interesting times.
I've emailed both of my U.S. Senators this morning. They can't say that they don't know how at least one of their constituents feels about it.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>"There will be no money made by anyone on such poor quality assets, except maybe the banks when they pawn them off for real money above FMV, to the US taxpayers."
Well, you got that right, me thinks. If the waiter leaves the dinner tab in front of the taxpayers seat at the table then it will be near FMV. If say Japan or China or any other foreign suitor offers to pick up the tab, we're talking maybe 10 cents on the FMV and that would seem to be a very generous offer for an "asset" that has an unknown value and seems to poision any holder that touches it. >>
If there is money to be made from this toxic debt you can be sure that the taxpayer will not get a whiff of it , they will be like IPO s that only get offered to their buddies.
<< <i>"The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount."
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
And you wont hear it in the media for just mentioning it would cause it to happen.
Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. Your employer would not be able to collect money due him since his customer cannot secure credit. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. Your grocercy store will be closed becasue it will be empty. All who work there will be out of work.
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
You electric company will not accept gold filings, but it will accept dollar bills. More people know the value of a dollar---worthless, of course, right, LOL--but they dont know the value of PMs. Most will be more inclined to accept dollars than gold. Feel free to disagree, you wont hurt my feelings.
Berkshire's preferred stock in Goldman will pay 10 percent and can be bought back any time at a 10 percent premium. The warrants allow Berkshire to buy $5 billion in common stock at $115 per share any time over the next five years.
A lot of upside potential there. The warrants are already in the money and are not callable. Now only if the US Treasury can get such a deal……
How good are those warrants if the price of GS tanks into the toilet like the big banks have done so far? I can only think that such a "sweet deal" was given because the stock will eventually tank in line with all the worthless derivatives GS currently owns.
Our govt has the capability to combat this crisis better than all the other G-8 and G-15 countries? How is that, because our "printing press" is bigger than theirs? Or is it because we have more gold on paper in Fort Knox than they do?
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
Ask the people of Zimbabwe if they'd rather have the fiat today or a handful of gold coins. As far as the "buddy" up above I'd tell him to shove his 20 gallons of gas while I got it from someone at a cheaper price who wasn't my "buddy." The farmer can keep his cow if it's not fairly priced. In such a fabricated barter economy the pog would be well tracked and known about the community, as would be oil, gas, and similar in-demand commodities. In such an economy do you think your FRN's would be worth anything but heating value? Who'd accept them? I'd take the metal, esp more tradeable and divisable 90% coin.
Please name me instances during ANY US banking crisis of the past 225 years where gold couldn't have bought you food, clothing, shelter, and whatever else you desired? Americans are becoming reintroduced to gold & silver once again. I for one would be happy to accept gold fillings for barter (once tested of course).
How much value will gold and silver have during a crisis? Hard to say. I think water, food shelter, power, and cash will be more important. The cash will be important for paying the mortgage and bills during the crisis and during any unemployment.
The gold and silver will serve as a way of preserving wealth until the economy begins to take shape in a newer form.
“Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills.”
Dave this is all true, but these threats by the big players that everything will collapse are just terrorist threats.
I have done my homework in my local Texas community. None of the banks here have any derivatives, credit swaps, or any of that crap. Our largest grocer here H.E.B. is owned by a billionaire with muti millions in the bank.
In the great depression the stock markets tanked by 18% and unemployment went to 17%. That’s the worst it’s ever been.
These bankers want us to fund their folly and we should just say NO! This is not 700 Billion, here is what we have already spent, and with the new 700 Billion this will put us to 1.46 Trillion and climbing.
So what is the total? Well nobody knows for sure. All of the derivatives are owned by the wealthiest Americans or foreigners, just let them take their lumps.
Bailouts are bankrupting our country Senate Conservatives Fund, September 23, 2008
The Stimulus Plan Cost: $152 billion in direct spending
Bear Stearns Cost: $29 billion in Federal Reserve non-recourse loans
Housing Bill (H.R. 3221) Cost: $42.5 billion in direct spending.
GSE legislation that will provide temporary authorities to give confidence to markets. Fannie and Freddie Takeover Cost: $200 billion in stock warrants.
Lehman Brothers Cost: $87 billion in advances backed by the Federal Reserve Other Costs: $70 billion (from Federal Reserve & FRBNY)
AIG Bailout Cost: $85 billion in loans.
Money Market Mutual Fund Backings Cost: $50 billion in pledged assets.
PLUS: Latest Plan: Socializing Bad Loans Cost: $700 billion for the latest proposal.
Total Paulson Bill to Date: $715.5 billion New Requested Authority: $700 billion Total Since January 2008: $1.416 TRILLION
Wouldn't this be the ideal time to put up a true non-profit US FEDERAL RESERVE Bank (ie owned by the US govt and its taxpayers, with real reserves, and really a Bank)?
The old FED could be phased out. Since the taxpayers are footing the $1.4 TRILL and all that comes after it, why not just put up our own bank and ditch the FED once and for all? The FED had 95 yrs to get it right and failed. Time to change hands.
<< <i>Wouldn't this be the ideal time to put up a true non-profit US FEDERAL RESERVE Bank (ie owned by the US govt and its taxpayers, with real reserves, and really a Bank)?
The old FED could be phased out. Since the taxpayers are footing the $1.4 TRILL and all that comes after it, why not just put up our own bank and ditch the FED once and for all? The FED had 95 yrs to get it right and failed. Time to change hands.
roadrunner >>
Now if only we could get this into the debate going on right now.
<< <i>Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
<< <i> And you wont hear it in the media for just mentioning it would cause it to happen.
Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. Your employer would not be able to collect money due him since his customer cannot secure credit. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. Your grocercy store will be closed becasue it will be empty. All who work there will be out of work.
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
You electric company will not accept gold filings, but it will accept dollar bills. More people know the value of a dollar---worthless, of course, right, LOL--but they dont know the value of PMs. Most will be more inclined to accept dollars than gold. Feel free to disagree, you wont hurt my feelings. >>
Thanks for the response, but you are jumping around and not explaining it very clearly...or at least not clearly enough for my thick head. You said:
<< <i>1. Everything in this country operates on credit. >>
-Ok..
<< <i>2. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. >>
-I am still with you.
<< <i>3. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. >>
- Are we talking about the retail customer buying gas and bread on a Credit card, or a business buying gas and bread for resale?
<< <i>4. Your employer would not be able to collect money due him since his customer cannot secure credit. >>
- I think you are making an assumption you cannot make here. Most consumers, and retailers for that matter, are not using bank credit to make operating purchases. The credit between 2 businesses is not the same credit as between an individual and their credit card. Exxon extends its own credit to localstation, LLC for the purchase of the gas. The credit is not a bank line of credit or credit card. It is a temporary 'line of credit' if you will between those 2 businesses. The 'credit' you speak of is simply a timing issue of when the goods are delivered and when the invoice is paid. It has nothing to do with the banking system, other than the check that is written and sent through the mail. I would also wager a guess that most customers are not using credit to buy groceries or gas, except for convenience. While there are surly exceptions, it is not the norm.
<< <i>5. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. >>
- Why not? Any business, particularly a small or mid size businesses like a gas station or food market, borrowing money from a bank or using credit to meet payroll is close to failure anyway, either that or foolish. I will grant you that there are some business models where they use credit lines to smooth uneven sales, but grocery stores and gas stations are not those types of businesses.
I get you with the discounted PM side of things. On that I totally agree with you.,
Mark Piersall Random Collector www.marksmedals.com
On the other hand, since they don't know if the 700 billion will cover the problem (most are doubtful) and since say that they need the money RIGHT NOW, it seems safe to say that we are talking about scared money. We all know that scared money is always wrong and therefore it does seem like a fair question to ask: "Just what does 700,000,000,000 United States Dollars actually buy?"
Since it appears many of our politicians are pandering to ingnorance about the fed and wall street, the 700 billion may not get through and if that happens the contraction in the economy could be quite severe and in that scenario PMs will get beaten down in value like any other asset. If the measure passes PMs could be a decent hedge and it would be prudent to have some reasonable portion of your assets in them. if it doesn't, I would sell any PMs. you'll be able to buy them much cheaper later, imho.
The $700BILL bailout will be passed, no question. Inflation trumps deflation everytime. The only question at that point is how long before Begging Ben and Huckster Hank are back for more.
Paulson and Bernanke are piss poor communicators, but they are doing what they honestly believe they must.
The "bailout" as many like to call just like they did back in 1990 with the RTC ended up making money for the treasury and if done correctly will make money for the treasury again...of course the Jerry Springer mentality will only see it as a bailout for fat cat bankers, untill he can't afford his smokes and his six pack of tall boys. What should alarm the PM bugs is that some of the less conspratorial posters who have contributed to this thread are also having real financial concerns....and inflation is far from that real concern...in fact I hope we continue to have some inflation at this point. And I unfortunately after listening to the hearings am not conviced that congress will do, what unfortunately they must do, which is pass this this admitedly huge funding proposal without dragging it out, watering it down and making it ineffectual.
Yes, I was rambling. It has been tough to both trade and write a response in this thread I think you understand my point though about credit. If all business were to stop tomorrow, how easy would it be to collect from your business partners? It takes just one person in the chain to disrupt the cycle. If A cant collect from B, then there is a good chance he will not be able to pay C, who wont pay D, ect.
Goldsaint,
Some in this thread would want you to believe that every bank will go under, the FDIC is bankrupt, and only gold will save you. I have already written about my questioning of the banking system and to summarize I believe it to be in decent shape. The investment banks--now there are none--were too highly leveraged to operate in a deflationairy environment. European Banks are in worse shape, and there economies/govts too small to handle the problem.
As far as the stock market during the depression.....it did lose over 90% of its value from 1929 to 1933. I am not so sure that the comments issued by the big wigs are idle threats. We are already seeing economic fallout. Caterpillar had to pay much higher interest rates to rollover debt yesterday, which will hurt corporate earnings and hinder expansion, Also Bank America said it will no longer fund McDonalds franchise loans. So here we already have 2 completely unrelated companies hurt by the credit crunch.
Roadrunner,
I never said gold wouldnt be able to provide you with shelter or food and my examples show that. However, I think many would be suprised when their $1000/oz gold only bought them $500 worth of goods. I and everyone here knows you would accept gold for payment. I just hope you have a cow or gasoline to trade for it.
There is an old saying in business, “If you owe the bank a $1,000 and cannot pay you are in trouble, but if you owe the bank a million dollars and can not pay the bank is in trouble”. Continuing to add billions upon billions to this fire is not going to take care of the trillions this problem will demand.
Most likely before 1980 most of us did not even have a credit card and our lives went on everyday.
Wall mart and many other firms now take money from your checking account in an electronic instant and give you back your check.
I understand that big companies might have to pay more for credit and business might slow down. I believe we are long over due for a long recession that the Fed just refuses to let us have to correct the hot economy of the last few decades.
The issue here is throwing good money after bad, and not only that, but throwing it into a fire that cannot be put out by more debt. Again the problem is debt and bad investments. This is a multi-trillion dollar worldwide problem and the new 700 Billion is not going to solve this.
Yesterday it was money markets in Europe, I guess today we will be pouring money into Hong Kong?
By KEITH BRADSHER and HEATHER TIMMONS Published: September 24, 2008
HONG KONG — Throngs of depositors lined up outside the headquarters and branches of the Bank of East Asia here on Wednesday to withdraw their money, highlighting widespread anxiety in Asia that Wall Street’s recent difficulties might spread across the Pacific. The Bank of East Asia, Hong Kong’s third-largest with $51 billion in assets. Depositors who lined up outside the company’s headquarters in the city center said that they no longer fully trusted any financial institution.
Associated Press 11:11 AM CDT, September 24, 2008 Bank of America said late Tuesday it is not freezing any lines of credit to McDonald's fast-food chain's franchise owners, despite reports to the contrary.
On Tuesday, a media report cited an internal memo from the No. 1 fast-food chain that said the bank would not increase its existing lending amount to McDonald's franchisees who were seeking to expand -- as part of McDonald's plans to grow its drink offerings -- and advising them to seek other financing options.
But a Bank of America representative said Tuesday any memo that says it's freezing credit is "factually inaccurate."
No problem-o Mr. Rough here is 25 Billion for you guys. I mean we can print all of this you want!
For workers at the General Motors truck plant in Flint, Michigan, the nearby Wooden Keg pub is like a shelter from the economic storm ripping across the US. Craggy men in baseball caps and well-worn T-shirts nurse bottles of Budweiser at the bar, peering up at a muted TV showing live coverage of OJ Simpson’s armed robbery trial in Las Vegas. Lew Rough, a 50-year-old industrial equipment contractor, says the local economy was already so bad, people were immune to further shocks.
Mr Rough’s reaction is important; he is part of arguably the most fiercely contested demographic group in November’s election: white, working-class voters in the mid-western rust belt.
Mention the proposed $700bn (€475bn, £375bn) bail- out of Wall Street and the patrons of the Wooden Keg are more animated. “People who can’t pay their mortgages are going to look at Wall Street and say, ‘if they got bailed out why not me?’,” says Mr Rough. “It sends a message that if you screw up, the government will be there to help.”
House clears $25bn for carmakers By Bernard Simon in Toronto
Published: September 25 2008 00:36 | Last updated: September 25 2008 00:36 The House of Representatives on Wednesday approved a $25bn package of low-cost loans to help hard-pressed carmakers and their suppliers finance plant modernisation at a time of restricted access to public capital markets.
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Henry Paulson
More of Warren Buffet's view on his investment in Goldman. This from the AP:
....Goldman Sachs' shares had been tumbling ahead of the announcement of the government rescue plan last Friday as investers feared it could face the same kinds of funding squeezes as befell BSC and Lehman Bros. Buffet had no mention of what is happening in Washington, but he did heap praise on the NY-based company:
"Goldman Sachs is an exceptional institution. It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance." Warren Buffet.
Buffet's timing in this acquistion is impeccable, esp for a company known to be on the brink of insolvency. Considering Buffet's distaste for those who sponsered destructive derivatives, his praise of GS seems misplaced. After all, GS was the major player behind mortgaged backed securities. And they were smart enough at the time to profit from them and then step away like BSC got hit by the shrapnel. In fact GS shorted the MBS market all the way down starting in 2007. Team play at its best. But this great bunch of thinkers couldn't see the end game for credit default swaps, interest rate derivatives, and other contagion they were invested into? Obviously the managment of GS is not as smart as Buffet claims or they wouldn't need his bailing money. BH's $5B-10B stake won't make much difference considering GS has many TRILLIONS in derivatives still to deleverage. But it gives GS days, weeks or months of continued operation until the next crisis hits them.
As far as what this and other bailouts of the week does to gold short term...anyone's guess.
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Henry Paulson
Hey! I got the same email!!! Good one, db.
I am next of kin. Pick me! Pick me!
Q: Are You Printing Money? Bernanke: Not Literally
I would agree with everything you said on Buffet. I just take exception to his public "praise" heaped on those "financially sound, global brand-named intellectuals" over at GS. Now they are proven to be insolvent just like every other former "investment" bank. Would WB have been invited to the party if they weren't beyond repair?
That Hanky Panky letter is a hoot. But I wonder if there is a single Nigerian who would fall for it?
Buffet is old and has plenty of money ($62B). He will not mind for long if he looses a few billion and comes out smelling like a national hero. If it fails...oh well.
Mark Piersall Random Collector www.marksmedals.com
The Creation of the Second Great Depression by Ron Paul
Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we're being told it's unavoidable.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences – predictable, that is, to those who understand sound, Austrian economics – are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us. Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals. Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process. There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind – another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity. The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
Credit Derivatives Market Shrinks 12%, First Decline
By Shannon D. Harrington
Sept. 25 (Bloomberg) -- Credit-default swap dealers reduced outstanding contracts for the first time amid efforts to cut risk by cleaning up the derivatives market.
The volume of trades in the worldwide market fell to $54.6 trillion from $62 trillion in the first half, the International Swaps and Derivatives Association said in a statement yesterday. It was the first decline since New York-based ISDA started surveying traders seven years ago.
Credit-default swaps grew 100-fold since 2001 as insurance companies, hedge funds and investors used the derivatives to protect against bond losses and speculate on companies' abilities to pay their debt. Traders are unwinding trades and protecting against losses after credit markets froze amid the worst U.S. housing crisis since the Great Depression. Regulators are starting to call for more oversight of the unregulated market following the bankruptcy last week of Lehman Brothers Holdings Inc.
``I would expect that if they were to re-poll next week, you would see an even smaller number from netting activities and trade cancellations surrounding the Lehman Brothers default,'' said Brian Yelvington, a strategist at CreditSights Inc. in New York.
“Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.”
Poor Ron Paul, It is not that we are not paying attention as per the polling data. It is that the people in Washington are now running their own game and could care less about what their folks want.
I have said this many times here, nothing, and I mean nothing, is going to change in Washington until we have term limits for congress.
By JULIE HIRSCHFELD DAVIS, Associated Press Writers 15 minutes ago
WASHINGTON - Warned of a possible financial panic, key Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry and said they would present it to the Bush administration in hopes of a vote within days.
Emerging from a two-hour negotiating session, Sen. Chris Dodd, D-Conn., the Banking Committee chairman said, "We are very confident that we can act expeditiously."
On Wall Street, financial markets grew more upbeat as the Dow Jones industrial average at times rose more than 300 points
One of the things that I will definitely take away from this economic quagmire, is never to watch congress while they are attempting to create laws. My father always told me, two things you don't want to see being made in the process, are sausage and law, and I think law is much more gory in the making!
Asin, you are absolutely correct about retesting the lows. You may have missed my response right after you posted that, I said:
"Friday September 05, 2008 10:17 AM
No doubt we can retest and already are retesting certain levels as of today. If sentiment gets real bearish we could bounce. But I wouldn't bet on it, quite yet. Bear markets, the last 100 years have averaged about 1.6 years in duration with an average drop of a little more than 30%, so it would probably be reasonable to expect another 10% or so down and 6-9 months before any real uptrend takes place. Although, no bear markets are ever the same, and we will have to let this play out over time, we certainly have seen this type of down trend and volatility before, as recently as 2003, even if everyone wasn't always watching"
One thing I do find very interesting on this board, is that unless I'm all wet, more people that post on this thread would follow Sinclairs advice than Warren Buffets. I guess I'm in the minority, or just swimming
Term limits and completely revamping the district boundaries. Makes more sense to do it by county or equal area blocks. They have cut them up to look like a bunch of crooked snakes in a ball.
NumbersUsa, FairUs, Alipac, CapsWeb, and TeamAmericaPac
Let's not get too overjoyed at the idea that the "trading" volume of credit derivatives decreased by 10% in the first half of 2008 ($62T to $55 TRILL). The real question should be how much has the notional dollar amount of all the credit derivatives decreased, if any, over the past 6 months. The notional value was last pegged at $62TRILL. and was growing. A 10% decrease in a commodity growing at say 20% per year is not a decrease at all. Until we start digging into the total notional value and decreasing it, nothing has been accomplished.
Bottom line, that there are still $62 TRILL of credit derivatives out there. If there was a decrease in total trading it could also be due to the fact the most illiquid of derivatives simply are too toxic to be traded. The gene pool of semi-liquid derivatives has shrunk considerably and one would expect the amount of trading to drop off....possibly to zero at which point the market would be frozen solid. Let's not raise the victory flag just yet. Getting credit derivatives down to under $10 TRILL would be something to cheer about assuming the taxpayer didn't eat $10 TRILL in losses to get there.
When some folks remark that gold investors dance with glee over jumps in the price of gold ---
Let's take a hard look at the floor of the stock exchange while traders get all happy about the biggest bailout for the financial system in history.
If anything, this should be a very somber moment. The bloom will be off the rose as soon as the hard realities of what is being done to us, finally sinks in.
Those tax increases accompanied by job losses - it will all be here soon enough. But don't worry, the government will be here to help you.
Q: Are You Printing Money? Bernanke: Not Literally
would you rather have the gold you bought last year or the stock you bought last year? i know we agree on this, i just don't get all excited about rapid positive swings, unless you think we saw the basement today for Wall Street, which i know few if any do.
i just see a bunch of frightened people, knowing the sun will rise for at least a few more weeks.
Comments
Just say NO to bad debt!!
Sept. 23 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox said Congress should ``immediately'' grant authority to regulate credit-default swaps amid concern the bets are fueling the global financial crisis.
``Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure,'' Cox told the Senate Banking Committee today at a hearing on the government's $700 billion financial rescue plan. Lawmakers should provide the authority ``to enhance investor protection and ensure the operation of fair and orderly markets,'' he said.
Calls for greater regulation of the $62 trillion market have grown since the U.S. took over American International Group Inc. Sept. 16.
They intend not only to bail these guys but give them all their money back for this junk.
Sept. 24 (Bloomberg) -- Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke signaled that their priority is shoring up the nation's banks even if it means they don't get taxpayers the cheapest prices for the devalued assets the government buys.
Bernanke told lawmakers yesterday the government won't pay ``fire-sale prices'' for the mainly mortgage-related securities Paulson aims to buy in a proposed $700 billion rescue. Instead, officials want to set a long-term value on assets, intending to hold them until they mature or markets improve.
Sept. 24 (Bloomberg) -- Eighteen months ago, U.S. Treasury Secretary Henry Paulson told an audience at the Shanghai Futures Exchange that China risked trillions of dollars in lost economic potential unless it freed up its capital markets.
``An open, competitive, and liberalized financial market can effectively allocate scarce resources in a manner that promotes stability and prosperity far better than governmental intervention,'' Paulson said.
That advice rings hollow in China as Paulson plans a $700 billion rescue for U.S. financial institutions and the Securities and Exchange Commission bans short sales of insurers, banks and securities firms. Regulators in the fastest-growing major economy say they may ditch plans to introduce derivatives, and some company bosses are rethinking U.S. business models.
``The U.S. financial system was regarded as a model, and we tried our best to copy whatever we could,'' said Yu Yongding, a former adviser to China's central bank. ``Suddenly we find our teacher is not that excellent, so the next time when we're designing our financial system we will use our own mind more.''
Federal Reserve plows $30 billion into money markets overseas to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.
The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement.
<< <i>If 94% of America thinks this is a bad deal then that tells me it is absolutely the right thing to do. The problem is the the typical American has no idea what the bailout entails or what the consequences would be if this does not go through. There are 100s of billions just sitting on the sideline waiting to buy up these distressed assets but are afraid to pick a bottom. With a Govt backstop they will now have incentive to make a market. The Govt probably wont even need $700 billion.
We should be very lucky to have Paulson involved. This is his business and he will know how to turn a profit.
94% of Americans have no idea of what is going on and what is still left buried out there in bad paper. If they knew that $700B was being suggested as the panacea for the losses on $1 QUAD in potentially bad paper they would freak out.
Paulson, like all his Wall Street brethren is of no help in this current situation. We'd be better off with someone more distanced from the banking industry. Ron Paul would not be a bad choice.
This is "his" business and he will know how to turn a profit.
Now that's the POTY.
roadrunner >>
Perhaps you dont like it from my mouth, but perhaps from Warren Buffet's it makes more sense
From Briefing.com......Goldman Sachs: Buffett Interview on CNBC
Says not a time thing but a price thing... 'price is right. terms are right, people are right, and I decided to write a check'... 'If I did not think the government was going to act I would not be doing anything this week, I would be pulling back'... says it would be a mistake if the government walks away from Paulson proposal... not saying Paulson plan eliminates all the problems, but it keeps us from going off the precipice... says the market could not have taken another week like we saw last week... says it is everybody's problem; economy is like a bath tub, 'you can't have cold water in the front and hot water in the back'... says collapse of institutions involved would have halted industry... 'no plan will be perfect but I am happy Paulson has the imagination to step up and do something'... notes money market fund move by Paulson was a very important stroke... believes things will get worse if Congress doesn't approve a plan, or a plan close to the Paulson proposal... says every major institution is trying to de-leverage and you need someone to leverage up and the only one that can do that is the U.S. government... says if the government does it right they 'will make a lot of money'... says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'... .. says he is not buying any instruments because he does not want to leverage up... says private sector can not save the system because they can not borrow as cheap as the U.S. government... says should not write executive pay out of the Paulson plan but the oversight board should be very strict on managers... throws his support behind Paulson... first investment Buffet has made in an Investment bank since Solomon back in 1987 which did not work out well; believes this deal is much better
Of course there is always a great possibility that Congress will mess it up. The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount.
On the bright side, you wont have to pay for your house and could probably buy a new car for 80% off if you have cash.
Knowledge is the enemy of fear
<< <i>I think the American tax payer must reach out and save all the fools in other countries also, don't you?
Federal Reserve plows $30 billion into money markets overseas to ease credit stresses
WASHINGTON (AP) -- The Federal Reserve, in coordinated action with foreign central banks, plowed $30 billion into money markets overseas Wednesday, part of an ongoing effort to fight a global credit crisis.
The Fed's action -- taken at 1 a.m. EDT -- sets up temporary "swap" arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.
"These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said in a brief statement. >>
And this is exactly why the dollar has rallied. I heard the Austria central bank president state that there is huge demand for dollars. Like I have say numerous times, the USD does have to smell great, just better than everyone else. Our Govt has the ability to combat this crisis, other govts do not.
Knowledge is the enemy of fear
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis?
Random Collector
www.marksmedals.com
<< <i>I noticed a poll on the Lou Dobbs Show that said 94% of the American People were against the Bailout and 6% were for it.
I do not believe I have ever seen such a lopsided poll! >>
I think that reflects the populist belief that this is some kind of payoff for the big boys, while the little guy picks up the tab. That might be plausible if we were only talking about one or two investment firms, but the scope of this goes way beyond that. It's also tempting to think that election year politics is involved, and there has been a fair amount of grandstanding by Congress and the candidates. But I think that's more a cya to show that they are engaged in solving the problem, regardless of the result. I think when this all plays out the breadth of it will be shocking.
I also suspect that polls were against the Chrysler loan and S&L bailout. But the Chrysler loan was paid back in full and ahead of schedule, and ultimately saved many industry jobs. The S&L crisis was resolved as well. Hopefully history will be able to look back on this as a success too, but it's far from certain now.
Thank you, but from either mouth it makes no sense. This is advice from the same Buffet who either couldn't make a good profit with 120,000,000 oz of silver or was given an offer by the FED/Treasury that he couldn't "refuse." Buffet "bailed" on silver (and the counter-party line) and moved him closer to the govt party line. For giving up on silver maybe he was offered first dibs on some cheap financial assets when they caved in. As a note they recently offered him the best part of the mono-line insurers "assets" but I think WB realized even those were junk, and sweeter deals would be forthcoming.
Buffet now contributing $10 BILL towards the Goldman Sachs "charity" is certainly a worthy cause even though it won't accomplish anything longer term (other than future political and financial favors to Buffet and his BHC). With dozens of billions of BH money plus his own invested in this economy, you can rest assured that WB is interested in protecting that stake. Funny that WB didn't think much of Paulson's "imagination" years ago when the Hankster "stepped up" and helped to make otc derivatives a major part of the financial landscape. Back then WB called them Weapons of Financial Mass Destruction. Today he's got Paulson's back. Apparently times change.
From Briefing.com......Goldman Sachs: Buffett Interview on CNBC
Says not a time thing but a price thing... 'price is right. terms are right, people are right, and I decided to write a check'... 'If I did not think the government was going to act I would not be doing anything this week, I would be pulling back'... says it would be a mistake if the government walks away from Paulson proposal... not saying Paulson plan eliminates all the problems, but it keeps us from going off the precipice... says the market could not have taken another week like we saw last week... says it is everybody's problem; economy is like a bath tub, 'you can't have cold water in the front and hot water in the back'... says collapse of institutions involved would have halted industry... 'no plan will be perfect but I am happy Paulson has the imagination to step up and do something'... notes money market fund move by Paulson was a very important stroke... believes things will get worse if Congress doesn't approve a plan, or a plan close to the Paulson proposal... says every major institution is trying to de-leverage and you need someone to leverage up and the only one that can do that is the U.S. government... says if the government does it right they 'will make a lot of money'... says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'... .. says he is not buying any instruments because he does not want to leverage up... says private sector can not save the system because they can not borrow as cheap as the U.S. government... says should not write executive pay out of the Paulson plan but the oversight board should be very strict on managers... throws his support behind Paulson... first investment Buffet has made in an Investment bank since Solomon back in 1987 which did not work out well; believes this deal is much better
I like the way that paragraph ended. He screwed up with the Solomon deal during a very similar crisis back in 1987, and today he's infallible in the biggest crisis since he's been paying taxes. Could be that he got some superb terms in the GS deal that 100% cover his $10 BILLION. Still, investing in a "broke-bank mountain" of debt hardly seems sensible. Why not buy up some cheap precious metals firms, energy companies, oil companies, etc. Getting into bed with GS doesn't seem like something his shareholders would welcome.
Also note his caveat above: "says should not pay what the institutions paid or what they are carrying on their books but what they are worth; 'I will bet that they will come out with a profit'. "
Paying what those illiquid securities is worth is akin to paying NOTHING for them. I'll pay nothing for them as well....sign me up. You can bet that the price paid will be far closer to 100% than 0%.
Whatever they are sold for, will be above FMV, you can bet on that. There will be no money made by anyone on such poor quality assets, except maybe the banks when they pawn them off for real money above FMV, to the US taxpayers. Who will value those assets....one of the crooked accounting firms that have been in this mess knee-deep with the banks? Is there even an honest Wall Street accounting firm left?
Of course there is always a great possibility that Congress will mess it up. The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount. .....and the banksters would not have it any other way. Keep that tether line tight.
It's not clear to me if this paragraph is from the orig article as those don't even sound like words Buffet would utter publically. Congress will not mess up this tossing of the bone to the begger banks. They will hem and haw and look like they care, but they will cave in and give up the bucks...for us. At least in that way they can look taxpayers in the eye and say they really thought "hard about it" before consenting.
What shill will come forward next for Hanky Panky, Bill Gates??
roadrunner
<< <i>"The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount."
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
did you leave "You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount." on purpose? if there is no flow of fiat then yes it would collapse in a very short period of time, what we saw a week ago today was the tip of the iceberg, when banks STOPPED their flow....ie LIBOR shot relatively to the moon that day and financial system stood not still but trembling in it's own wet diaper.
just curious....as i have wondered if there was a oligopoly of traditioanl PM (gold and silver) available , what would it's value be? or a quasi-monopoly similar to OPEC? if for some reason it turns out that USA has 75%-80% of the gold still in it's bus depot locker in Fairbury, NE., would they just say $50 an ounce or $5000 an ounce. what about the mining companies?
the gold bugs and the investment hedgers have such little of it, even if used for doorstops and an Armageddon type economic collapse.
sorry to ramble...caffeine!
This is going to happen with or without the current $700B bailout occuring. That is, all but the last sentence.
To keep the above from occuring, additional bailouts in the $10-$20 TRILLION range over the next 1-7 years will need to occur. And that's not saying it couldn't be loads more. $700B only covers the amusement park entrance fee to start up this game of musical chairs
The FED and Congress will have to take the easy route and pump in the required TRILLIONs to keep the S.S. Wall Street afloat. But putting lipstick on pigs like GS and MS and calling them commercial banks doesn't turn them into risk-free assets. Deleveraging of bogus assets will continue to destroy paper wealth. At the same time considerable inflation will occur as the bail out money hits the markets. Gold can be knocked back yet again but the next move to record highs has already begun.
roadrunner
Well, you got that right, me thinks. If the waiter leaves the dinner tab in front of the taxpayers seat at the table then it will be near FMV. If say Japan or China or any other foreign suitor offers to pick up the tab, we're talking maybe 10 cents on the FMV and that would seem to be a very generous offer for an "asset" that has an unknown value and seems to poision any holder that touches it.
We live in interesting times.
I've emailed both of my U.S. Senators this morning. They can't say that they don't know how at least one of their constituents feels about it.
I knew it would happen.
<< <i>"There will be no money made by anyone on such poor quality assets, except maybe the banks when they pawn them off for real money above FMV, to the US taxpayers."
Well, you got that right, me thinks. If the waiter leaves the dinner tab in front of the taxpayers seat at the table then it will be near FMV. If say Japan or China or any other foreign suitor offers to pick up the tab, we're talking maybe 10 cents on the FMV and that would seem to be a very generous offer for an "asset" that has an unknown value and seems to poision any holder that touches it. >>
If there is money to be made from this toxic debt you can be sure that the taxpayer will not get a whiff of it , they will be like IPO s that only get offered to their buddies.
<< <i>"The alternative is that 80% of the people you know are out of work in a week. Your gas station and grocery stores will be empty within a week. Your credit card will not work and your bank will not open. Your employer will not have money to pay your wage. You will not be able to convert your gold/silver into a barterable asset without suffering a huge discount."
Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
And you wont hear it in the media for just mentioning it would cause it to happen.
Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. Your employer would not be able to collect money due him since his customer cannot secure credit. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. Your grocercy store will be closed becasue it will be empty. All who work there will be out of work.
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
You electric company will not accept gold filings, but it will accept dollar bills. More people know the value of a dollar---worthless, of course, right, LOL--but they dont know the value of PMs. Most will be more inclined to accept dollars than gold. Feel free to disagree, you wont hurt my feelings.
Knowledge is the enemy of fear
<< <i>Gold and gas are always more likely to have value as currency that cows in our society >>
Tell that to your hungry kids.
Knowledge is the enemy of fear
<< <i>
<< <i>Gold and gas are always more likely to have value as currency that cows in our society >>
Tell that to your hungry kids. >>
I gave them the choice and they said they could not live on milk alone and that we should have lots of gold and grow vegetables in the back yard
Berkshire's preferred stock in Goldman will pay 10 percent and can be bought back any time at a 10 percent premium. The warrants allow Berkshire to buy $5 billion in common stock at $115 per share any time over the next five years.
A lot of upside potential there. The warrants are already in the money and are not callable. Now only if the US Treasury can get such a deal……
CG
Our govt has the capability to combat this crisis better than all the other G-8 and G-15 countries? How is that, because our "printing press" is bigger than theirs? Or is it because we have more gold on paper in Fort Knox than they do?
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
Ask the people of Zimbabwe if they'd rather have the fiat today or a handful of gold coins. As far as the "buddy" up above I'd tell him to shove his 20 gallons of gas while I got it from someone at a cheaper price who wasn't my "buddy." The farmer can keep his cow if it's not fairly priced. In such a fabricated barter economy the pog would be well tracked and known about the community, as would be oil, gas, and similar in-demand commodities. In such an economy do you think your FRN's would be worth anything but heating value? Who'd accept them? I'd take the metal, esp more tradeable and divisable 90% coin.
Please name me instances during ANY US banking crisis of the past 225 years where gold couldn't have bought you food, clothing, shelter, and whatever else you desired? Americans are becoming reintroduced to gold & silver once again. I for one would be happy to accept gold fillings for barter (once tested of course).
roadrunner
The gold and silver will serve as a way of preserving wealth until the economy begins to take shape in a newer form.
“Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills.”
Dave this is all true, but these threats by the big players that everything will collapse are just terrorist threats.
I have done my homework in my local Texas community. None of the banks here have any derivatives, credit swaps, or any of that crap. Our largest grocer here H.E.B. is owned by a billionaire with muti millions in the bank.
In the great depression the stock markets tanked by 18% and unemployment went to 17%. That’s the worst it’s ever been.
These bankers want us to fund their folly and we should just say NO! This is not 700 Billion, here is what we have already spent, and with the new 700 Billion this will put us to 1.46 Trillion and climbing.
So what is the total? Well nobody knows for sure. All of the derivatives are owned by the wealthiest Americans or foreigners, just let them take their lumps.
Bailouts are bankrupting our country
Senate Conservatives Fund, September 23, 2008
The Stimulus Plan
Cost: $152 billion in direct spending
Bear Stearns
Cost: $29 billion in Federal Reserve non-recourse loans
Housing Bill (H.R. 3221)
Cost: $42.5 billion in direct spending.
GSE legislation that will provide temporary authorities to give confidence to markets.
Fannie and Freddie Takeover
Cost: $200 billion in stock warrants.
Lehman Brothers
Cost: $87 billion in advances backed by the Federal Reserve
Other Costs: $70 billion (from Federal Reserve & FRBNY)
AIG Bailout
Cost: $85 billion in loans.
Money Market Mutual Fund Backings
Cost: $50 billion in pledged assets.
PLUS: Latest Plan: Socializing Bad Loans
Cost: $700 billion for the latest proposal.
Total Paulson Bill to Date: $715.5 billion
New Requested Authority: $700 billion
Total Since January 2008: $1.416 TRILLION
The old FED could be phased out. Since the taxpayers are footing the $1.4 TRILL and all that comes after it, why not just put up our own bank and ditch the FED once and for all? The FED had 95 yrs to get it right and failed. Time to change hands.
roadrunner
<< <i>Wouldn't this be the ideal time to put up a true non-profit US FEDERAL RESERVE Bank (ie owned by the US govt and its taxpayers, with real reserves, and really a Bank)?
The old FED could be phased out. Since the taxpayers are footing the $1.4 TRILL and all that comes after it, why not just put up our own bank and ditch the FED once and for all? The FED had 95 yrs to get it right and failed. Time to change hands.
roadrunner >>
Now if only we could get this into the debate going on right now.
<< <i>Please explain why my local bank would not open, or why the credit card will not work. Is Visa/MC in on this problem somehow? Why have I not heard this in any media source?
Why would the grocery store suddenly not be able to purchase food for resale? What do they do with all the cash they collect on a daily basis? >>
<< <i>
And you wont hear it in the media for just mentioning it would cause it to happen.
Everything in this country operates on credit. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. Your employer would not be able to collect money due him since his customer cannot secure credit. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. Your grocercy store will be closed becasue it will be empty. All who work there will be out of work.
Now lets suppose you have a bunch of gold coins. You think they are worth $2000/oz. But you have a buudy who has a 500 gallon tank of gasoline and you need gas. He says, I'll trade you 20 gallons of gas for 1 oz of gold. How much is that 20 gallons of gasoline worth? Or suppose a farmer will sell you a cow for 5 oz of gold, is the cow worth $10,000? You have to feed your family. When push comes to shove and someone has something that you need, you will be forced to discount the value of your gold, or you will go without.
You electric company will not accept gold filings, but it will accept dollar bills. More people know the value of a dollar---worthless, of course, right, LOL--but they dont know the value of PMs. Most will be more inclined to accept dollars than gold. Feel free to disagree, you wont hurt my feelings.
Thanks for the response, but you are jumping around and not explaining it very clearly...or at least not clearly enough for my thick head.
You said:
<< <i>1. Everything in this country operates on credit. >>
-Ok..
<< <i>2. When the tanker truck pulls into the gas station, the driver does not stand there and wait for payment in $100 bills. Same for the guy delivering bread to the grocery store. The store owner buys the gas/bread on credit. >>
-I am still with you.
<< <i>3. V and MA are not in trouble, but they would not be able to secure financing to lend it to you so you can buy gas and bread. >>
- Are we talking about the retail customer buying gas and bread on a Credit card, or a business buying gas and bread for resale?
<< <i>4. Your employer would not be able to collect money due him since his customer cannot secure credit. >>
- I think you are making an assumption you cannot make here. Most consumers, and retailers for that matter, are not using bank credit to make operating purchases.
The credit between 2 businesses is not the same credit as between an individual and their credit card. Exxon extends its own credit to localstation, LLC for the purchase of the gas. The credit is not a bank line of credit or credit card. It is a temporary 'line of credit' if you will between those 2 businesses. The 'credit' you speak of is simply a timing issue of when the goods are delivered and when the invoice is paid. It has nothing to do with the banking system, other than the check that is written and sent through the mail. I would also wager a guess that most customers are not using credit to buy groceries or gas, except for convenience. While there are surly exceptions, it is not the norm.
<< <i>5. He wont be able to meet the payroll. You will be out of work. The guy delivering bread will be out of work. The guy repairing the truck wll be out of work. >>
- Why not? Any business, particularly a small or mid size businesses like a gas station or food market, borrowing money from a bank or using credit to meet payroll is close to failure anyway, either that or foolish. I will grant you that there are some business models where they use credit lines to smooth uneven sales, but grocery stores and gas stations are not those types of businesses.
I get you with the discounted PM side of things. On that I totally agree with you.,
Random Collector
www.marksmedals.com
roadrunner
the economic sector will mean absolutely nothing. One without the
other is just a waste of money.
Camelot
<< <i>Bluelobster 2008 still has a long way to go down. We will test the new lows by November. >>
The "bailout" as many like to call just like they did back in 1990 with the RTC ended up making money for the treasury and if done correctly will make money for the treasury again...of course the Jerry Springer mentality will only see it as a bailout for fat cat bankers, untill he can't afford his smokes and his six pack of tall boys. What should alarm the PM bugs is that some of the less conspratorial posters who have contributed to this thread are also having real financial concerns....and inflation is far from that real concern...in fact I hope we continue to have some inflation at this point. And I unfortunately after listening to the hearings am not conviced that congress will do, what unfortunately they must do, which is pass this this admitedly huge funding proposal without dragging it out, watering it down and making it ineffectual.
Yes, I was rambling. It has been tough to both trade and write a response in this thread
Goldsaint,
Some in this thread would want you to believe that every bank will go under, the FDIC is bankrupt, and only gold will save you. I have already written about my questioning of the banking system and to summarize I believe it to be in decent shape. The investment banks--now there are none--were too highly leveraged to operate in a deflationairy environment. European Banks are in worse shape, and there economies/govts too small to handle the problem.
As far as the stock market during the depression.....it did lose over 90% of its value from 1929 to 1933. I am not so sure that the comments issued by the big wigs are idle threats. We are already seeing economic fallout. Caterpillar had to pay much higher interest rates to rollover debt yesterday, which will hurt corporate earnings and hinder expansion, Also Bank America said it will no longer fund McDonalds franchise loans. So here we already have 2 completely unrelated companies hurt by the credit crunch.
Roadrunner,
I never said gold wouldnt be able to provide you with shelter or food and my examples show that. However, I think many would be suprised when their $1000/oz gold only bought them $500 worth of goods. I and everyone here knows you would accept gold for payment. I just hope you have a cow or gasoline to trade for it.
Knowledge is the enemy of fear
There is an old saying in business, “If you owe the bank a $1,000 and cannot pay you are in trouble, but if you owe the bank a million dollars and can not pay the bank is in trouble”. Continuing to add billions upon billions to this fire is not going to take care of the trillions this problem will demand.
Most likely before 1980 most of us did not even have a credit card and our lives went on everyday.
Wall mart and many other firms now take money from your checking account in an electronic instant and give you back your check.
I understand that big companies might have to pay more for credit and business might slow down. I believe we are long over due for a long recession that the Fed just refuses to let us have to correct the hot economy of the last few decades.
The issue here is throwing good money after bad, and not only that, but throwing it into a fire that cannot be put out by more debt. Again the problem is debt and bad investments. This is a multi-trillion dollar worldwide problem and the new 700 Billion is not going to solve this.
Yesterday it was money markets in Europe, I guess today we will be pouring money into Hong Kong?
By KEITH BRADSHER and HEATHER TIMMONS
Published: September 24, 2008
HONG KONG — Throngs of depositors lined up outside the headquarters and branches of the Bank of East Asia here on Wednesday to withdraw their money, highlighting widespread anxiety in Asia that Wall Street’s recent difficulties might spread across the Pacific.
The Bank of East Asia, Hong Kong’s third-largest with $51 billion in assets.
Depositors who lined up outside the company’s headquarters in the city center said that they no longer fully trusted any financial institution.
Associated Press
11:11 AM CDT, September 24, 2008
Bank of America said late Tuesday it is not freezing any lines of credit to McDonald's fast-food chain's franchise owners, despite reports to the contrary.
On Tuesday, a media report cited an internal memo from the No. 1 fast-food chain that said the bank would not increase its existing lending amount to McDonald's franchisees who were seeking to expand -- as part of McDonald's plans to grow its drink offerings -- and advising them to seek other financing options.
But a Bank of America representative said Tuesday any memo that says it's freezing credit is "factually inaccurate."
For workers at the General Motors truck plant in Flint, Michigan, the nearby Wooden Keg pub is like a shelter from the economic storm ripping across the US.
Craggy men in baseball caps and well-worn T-shirts nurse bottles of Budweiser at the bar, peering up at a muted TV showing live coverage of OJ Simpson’s armed robbery trial in Las Vegas.
Lew Rough, a 50-year-old industrial equipment contractor, says the local economy was already so bad, people were immune to further shocks.
Mr Rough’s reaction is important; he is part of arguably the most fiercely contested demographic group in November’s election: white, working-class voters in the mid-western rust belt.
Mention the proposed $700bn (€475bn, £375bn) bail- out of Wall Street and the patrons of the Wooden Keg are more animated. “People who can’t pay their mortgages are going to look at Wall Street and say, ‘if they got bailed out why not me?’,” says Mr Rough. “It sends a message that if you screw up, the government will be there to help.”
House clears $25bn for carmakers
By Bernard Simon in Toronto
Published: September 25 2008 00:36 | Last updated: September 25 2008 00:36
The House of Representatives on Wednesday approved a $25bn package of low-cost loans to help hard-pressed carmakers and their suppliers finance plant modernisation at a time of restricted access to public capital markets.
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury
Henry Paulson
....Goldman Sachs' shares had been tumbling ahead of the announcement of the government rescue plan last Friday as investers feared it could face the same kinds of funding squeezes as befell BSC and Lehman Bros. Buffet had no mention of what is happening in Washington, but he did heap praise on the NY-based company:
"Goldman Sachs is an exceptional institution. It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance." Warren Buffet.
Buffet's timing in this acquistion is impeccable, esp for a company known to be on the brink of insolvency. Considering Buffet's distaste for those who sponsered destructive derivatives, his praise of GS seems misplaced. After all, GS was the major player behind mortgaged backed securities. And they were smart enough at the time to profit from them and then step away like BSC got hit by the shrapnel. In fact GS shorted the MBS market all the way down starting in 2007. Team play at its best. But this great bunch of thinkers couldn't see the end game for credit default swaps, interest rate derivatives, and other contagion they were invested into? Obviously the managment of GS is not as smart as Buffet claims or they wouldn't need his bailing money. BH's $5B-10B stake won't make much difference considering GS has many TRILLIONS in derivatives still to deleverage. But it gives GS days, weeks or months of continued operation until the next crisis hits them.
As far as what this and other bailouts of the week does to gold short term...anyone's guess.
roadrunner
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury
Henry Paulson
Hey! I got the same email!!! Good one, db.
I am next of kin. Pick me! Pick me!
I knew it would happen.
He is getting 10% interest and below market warrants with reset protection. Not a bad deal.
If you are poor and the financial system collapses, what have you lost? If you are rich, you lose everything.
That Hanky Panky letter is a hoot. But I wonder if there is a single Nigerian who would fall for it?
roadrunner
<< <i>re Buffet. Doesn't he have the most to lose if everything falls apart? So why wouldn't he use some of his money to save the rest of his money?
He is getting 10% interest and below market warrants with reset protection. Not a bad deal.
If you are poor and the financial system collapses, what have you lost? If you are rich, you lose everything. >>
http://en.wikipedia.org/wiki/William_C._Durant
Buffet is old and has plenty of money ($62B). He will not mind for long if he looses a few billion and comes out smelling like a national hero.
If it fails...oh well.
Random Collector
www.marksmedals.com
by Ron Paul
Whenever a Great Bipartisan Consensus is announced, and a compliant
media assures everyone that the wondrous actions of our wise leaders
are being taken for our own good, you can know with absolute
certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress' throat
is not just economically foolish. It is downright sinister. It makes
a mockery of our Constitution, which our leaders should never again
bother pretending is still in effect. It promises the American people
a never-ending nightmare of ever-greater debt liabilities they will
have to shoulder. Two weeks ago, financial analyst Jim Rogers said
the bailout of Fannie Mae and Freddie Mac made America more communist
than China! "This is welfare for the rich," he said. "This is
socialism for the rich. It's bailing out the financiers, the banks,
the Wall Streeters."
That describes the current bailout package to a T. And we're being
told it's unavoidable.
The claim that the market caused all this is so staggeringly foolish
that only politicians and the media could pretend to believe it. But
that has become the conventional wisdom, with the desired result that
those responsible for the credit bubble and its predictable
consequences – predictable, that is, to those who understand sound,
Austrian economics – are being let off the hook. The Federal Reserve
System is actually positioning itself as the savior, rather than the
culprit, in this mess!
The Treasury Secretary is authorized to purchase up to $700 billion
in mortgage-related assets at any one time. That means $700 billion
is only the very beginning of what will hit us.
Financial institutions are "designated as financial agents of the
Government." This is the New Deal to end all New Deals.
Then there's this: "Decisions by the Secretary pursuant to the
authority of this Act are non-reviewable and committed to agency
discretion, and may not be reviewed by any court of law or any
administrative agency." Translation: the Secretary can buy up
whatever junk debt he wants to, burden the American people with it,
and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all
this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the
American people. The two major party candidates for president
themselves initially indicated their strong support for bailouts of
this kind – another example of the big choice we're supposedly
presented with this November: yes or yes. Now, with a backlash
brewing, they're not quite sure what their views are. A sad display,
really.
Although the present bailout package is almost certainly not the end
of the political atrocities we'll witness in connection with the
crisis, time is short. Congress may vote as soon as tomorrow. With a
Rasmussen poll finding support for the bailout at an anemic seven
percent, some members of Congress are afraid to vote for it. Call
them! Let them hear from you! Tell them you will never vote for
anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care
about responsibility and accountability? Do we care that our
government and media have been bought and paid for? Do we care that
average Americans are about to be looted in order to subsidize the
fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means
standing up against every stripe of fashionable opinion in politics
and the media?
Times like these have a way of telling us what kind of a people we
are, and what kind of country we shall be.
Link: http://www.lewrockwell.com
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Credit Derivatives Market Shrinks 12%, First Decline
By Shannon D. Harrington
Sept. 25 (Bloomberg) -- Credit-default swap dealers reduced outstanding contracts for the first time amid efforts to cut risk by cleaning up the derivatives market.
The volume of trades in the worldwide market fell to $54.6 trillion from $62 trillion in the first half, the International Swaps and Derivatives Association said in a statement yesterday. It was the first decline since New York-based ISDA started surveying traders seven years ago.
Credit-default swaps grew 100-fold since 2001 as insurance companies, hedge funds and investors used the derivatives to protect against bond losses and speculate on companies' abilities to pay their debt. Traders are unwinding trades and protecting against losses after credit markets froze amid the worst U.S. housing crisis since the Great Depression. Regulators are starting to call for more oversight of the unregulated market following the bankruptcy last week of Lehman Brothers Holdings Inc.
``I would expect that if they were to re-poll next week, you would see an even smaller number from netting activities and trade cancellations surrounding the Lehman Brothers default,'' said Brian Yelvington, a strategist at CreditSights Inc. in New York.
Knowledge is the enemy of fear
“Times like these have a way of telling us what kind of a people we
are, and what kind of country we shall be.”
Poor Ron Paul, It is not that we are not paying attention as per the polling data. It is that the people in Washington are now running their own game and could care less about what their folks want.
I have said this many times here, nothing, and I mean nothing, is going to change in Washington until we have term limits for congress.
By JULIE HIRSCHFELD DAVIS, Associated Press Writers
15 minutes ago
WASHINGTON - Warned of a possible financial panic, key Republicans and Democrats reported agreement in principle Thursday on a $700 billion bailout of the financial industry and said they would present it to the Bush administration in hopes of a vote within days.
Emerging from a two-hour negotiating session, Sen. Chris Dodd, D-Conn., the Banking Committee chairman said, "We are very confident that we can act expeditiously."
On Wall Street, financial markets grew more upbeat as the Dow Jones industrial average at times rose more than 300 points
One of the things that I will definitely take away from this economic quagmire, is never to watch congress while they are attempting to create laws. My father always told me, two things you don't want to see being made in the process, are sausage and law, and I think law is much more gory in the making!
Asin, you are absolutely correct about retesting the lows. You may have missed my response right after you posted that, I said:
"Friday September 05, 2008 10:17 AM
No doubt we can retest and already are retesting certain levels as of today. If sentiment gets real bearish we could bounce. But I wouldn't bet on it, quite yet. Bear markets, the last 100 years have averaged about 1.6 years in duration with an average drop of a little more than 30%, so it would probably be reasonable to expect another 10% or so down and 6-9 months before any real uptrend takes place. Although, no bear markets are ever the same, and we will have to let this play out over time, we certainly have seen this type of down trend and volatility before, as recently as 2003, even if everyone wasn't always watching"
One thing I do find very interesting on this board, is that unless I'm all wet, more people that post on this thread would follow Sinclairs advice than Warren Buffets.
I guess I'm in the minority, or just swimming
They have cut them up to look like a bunch of crooked snakes in a ball.
Bottom line, that there are still $62 TRILL of credit derivatives out there. If there was a decrease in total trading it could also be due to the fact the most illiquid of derivatives simply are too toxic to be traded. The gene pool of semi-liquid derivatives has shrunk considerably and one would expect the amount of trading to drop off....possibly to zero at which point the market would be frozen solid. Let's not raise the victory flag just yet. Getting credit derivatives down to under $10 TRILL would be something to cheer about assuming the taxpayer didn't eat $10 TRILL in losses to get there.
roadrunner
Let's take a hard look at the floor of the stock exchange while traders get all happy about the biggest bailout for the financial system in history.
If anything, this should be a very somber moment. The bloom will be off the rose as soon as the hard realities of what is being done to us, finally sinks in.
Those tax increases accompanied by job losses - it will all be here soon enough. But don't worry, the government will be here to help you.
I knew it would happen.
i just see a bunch of frightened people, knowing the sun will rise for at least a few more weeks.