Originally posted by uzlessEver heard 0f the South Sea Bubble, the Tulip Mania, Polly Peck, Kingston Communictions and Northern Rock for a start?
They are just providing short term money (loans) available to banks that need it.
To simplify the explanation consider the following:
The people losing money are the ones that bought the bad investments. And by bad investments (or "securities" ) we mean investments largely based in the US Housing market. A person will buy a house and need say ...[text shortened]... frickin mess....all caused by greedy US businessmen...surprise surprise.
😞
Greedy hunan nature rhe world over.
Originally posted by uzlessHere's an excerpt from a good article in the Business section of the NY Times:
This statement shows your idiocy.
Everyone from the NYTimes, CNN, Wall Street, Warren Buffett, Steven Levit, BBC, CBC, and every frickin media outlet around the world have said that everything (with maybe the exception of the Bear Stearns bailout) was absolutely necessary. It's horribly wrong that US taxpayers are on the hook for this, but the alternat ...[text shortened]... ld have less money than they do now and the rest of us would have been fine. Idiot.
AMF
THE BIG MEGILLAH For the last few weeks, a growing chorus of voices has called for the establishment of a new Resolution Trust Corporation, the entity the government devised in the wake of the savings and loan crisis to take over, and eventually sell off, the assets of failed S.& L.’s. On Wednesday, that chorus got its most powerful voice, when Paul Volcker, a former Federal Reserve chairman, co-authored an op-ed article in The Wall Street Journal.
That crisis, however, was very different from this one. Most of the assets in the S.& L. crisis were real estate — which are always going to have value. And the government didn’t have to acquire them; it simply took them over and, over time, sold them. This time, the assets are complex derivatives of uncertain value that the big firms will actually be selling to the government.
But how is the government going to assess these securities — and what price will it pay for them? In many cases, these securities aren’t being sold because they are still overvalued on a firms’ books. That is, their mark-to-market price is unrealistically high. Will the government buy it at the too-high price? If it does, the firms won’t have to take additional write-downs — but it will constitute a huge, unjustified bailout of Wall Street. (More moral hazard.)
But what if the government drives a hard bargain, and gets the securities for what they are really worth — 20 cents on the dollar, say, instead of 50 cents? In that case, the firms would have to take yet more enormous write-offs, which would further damage their balance sheets, and they would have to raise billions more in capital. Maybe the removal of these bad assets would allow the firms to raise the capital. But maybe not — meaning one or more could conceivably have to file for bankruptcy, creating yet another spasm of financial turmoil. It’s a huge roll of the dice by the government.
Finally, there is the question of how much it will ultimately cost. “Institutions so far have written down $550 billion globally of bad debt,” said Daniel Alpert, managing director of Westwood Capital. “We think that when you add up all the problems in the residential housing market still to come — further erosion of housing prices, mortgage foreclosures and so on — we are going to need another $1 trillion of write-downs.”
In other words, for all the toxic securities that Wall Street has acknowledged holding, there will be yet more mortgage-backed paper that will go bad as the housing market continues to fall. As much as we all hope the worst is over, it’s probably not.
http://www.nytimes.com/2008/09/20/business/20nocera.html?8dpc=&_r=1&adxnnl=1&oref=slogin&adxnnlx=1221923684-QGrLyjWW8z7VqURNidKweQ
Guess not "everyone" thinks the government bailout ideas are "absolutely necessary".
Obviously the right amongst us are having severe problems with reality.
However, I can't but imagine that it's possible for various individuals to wreck the economy and forcing governments to bail it out.
Read: Person X destroys the economy (why? how does he profit from this behaviour) and the tax payer pumps in billions of dollars to keep things going (who's getting this money... is it X?).
See. It's all too bizarre to be true.
Originally posted by shavixmirYup, it sure is Mr X getting rewarded for incompetency by the taxpayer...nice one Mr Retard Cowboy!
Obviously the right amongst us are having severe problems with reality.
However, I can't but imagine that it's possible for various individuals to wreck the economy and forcing governments to bail it out.
Read: Person X destroys the economy (why? how does he profit from this behaviour) and the tax payer pumps in billions of dollars to keep things going (who's getting this money... is it X?).
See. It's all too bizarre to be true.
What galls me is that these companies, were the same ones employing accountants to avoid paying taxes when they were making billions in profits.
It would be an interesting statistic to see how many years it would have taken them in tax returns to "pay back" the bail out $700 billion, had they not crashed, and continued trading as before!
My guess is about 1000 years.
Any advance?