meazza Posted March 17, 2008 Share Posted March 17, 2008 http://online.wsj.com/article/SB1205695986...pecial_coverage wow Link to comment Share on other sites More sharing options...
The Poojer Posted March 17, 2008 Share Posted March 17, 2008 I prefer Sublime Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted March 17, 2008 Share Posted March 17, 2008 So what... Shop to you drop baby! As gas prices go higher, people will just default on their unsecured debt... Oh well, something will give. Link to comment Share on other sites More sharing options...
Fan in Chicago Posted March 17, 2008 Share Posted March 17, 2008 http://online.wsj.com/article/SB1205695986...pecial_coverage wow I wish somebody can explain to me why the Fed stepping in to save a financial firm from bankruptcy is a good thing. Link to comment Share on other sites More sharing options...
Lurker Posted March 17, 2008 Share Posted March 17, 2008 I wish somebody can explain to me why the Fed stepping in to save a financial firm from bankruptcy is a good thing. Financial systems worldwide are built on three essentials: leverage, cash flow and confidence. Under the first leg, you only need $5-$6 dollars of your own money to control $100 of assets, whether they be loans, mortgage backed securities, treasuries, etc. Under the second, you have to have constant access to funding sources which allow you to 'roll over' obligations on the $100 of assets you control with new money as these debts become due. Legs one and two rely entirely on the third--confidence. If the funding providers (hedge funds, pension pools, insurers, etc.) lose confidence in the folks they're placing their money with, the whole system breaks down. If the market views Bear Stearns as a one-off collapse, they'll roll with it and keep the money flowing. If the market views it as the tip of the iceburg and decides to pull their money out of the entire sector, then we'll have Snake Plissken running around in Manhattan before you know it. The Fed is stepping in to maintain confidence in the system, nothing more. Link to comment Share on other sites More sharing options...
Fan in Chicago Posted March 17, 2008 Share Posted March 17, 2008 The Fed is stepping in to maintain confidence in the system, nothing more. I agree with what you are saying. However, I think this bail out is horse ***t. The financial institutions are masters of risk theory and if a multitude of bad decisions results in several institutions going under cos of Bear Stearns, then so be it. Let the shake-out happen. Don't interefere with the self-correcting mechanisms. These large financial companies & their employees reap handsome rewards when times are good. They should in no way be bailed out when the times are bad. Heck, do these same banks bail someone out for defaulting on their mortgages ? Why should they be the recipients of good will and that too from the government with money from you and me ? Link to comment Share on other sites More sharing options...
Lurker Posted March 17, 2008 Share Posted March 17, 2008 I agree with what you are saying. However, I think this bail out is horse ***t. The financial institutions are masters of risk theory and if a multitude of bad decisions results in several institutions going under cos of Bear Stearns, then so be it. Let the shake-out happen. Don't interefere with the self-correcting mechanisms. What's being bailed out are everyone's 401(k) balances--which would go to sh-- if the financial markets tank due to a lack of confidence. I agree, it stinks to support whiteshoe I-bankers when this happens...but the alternative is a whole lot worse. Link to comment Share on other sites More sharing options...
meazza Posted March 17, 2008 Author Share Posted March 17, 2008 What's being bailed out are everyone's 401(k) balances--which would go to sh-- if the financial markets tank due to a lack of confidence. I agree, it stinks to support whiteshoe I-bankers when this happens...but the alternative is a whole lot worse. http://online.wsj.com/article/SB1205745619...pecial_coverage Looks like there could be more to come... Link to comment Share on other sites More sharing options...
Fan in Chicago Posted March 17, 2008 Share Posted March 17, 2008 What's being bailed out are everyone's 401(k) balances--which would go to sh-- if the financial markets tank due to a lack of confidence. I agree, it stinks to support whiteshoe I-bankers when this happens...but the alternative is a whole lot worse. I don't see how that would occur if people have a balanced portfolios and/or invested in indexed funds. Sure in the short term their 401Ks may tank due to the sentiment. But these financial institutions tanking should not negate a fundamentally sound investment strategy. For example, if the 401K are invested in funds owning shares of Microsoft, Google, AT&T etc. how does the failure of a Bear Stearns affect my 401k value in the long run ? Link to comment Share on other sites More sharing options...
Chef Jim Posted March 17, 2008 Share Posted March 17, 2008 What's being bailed out are everyone's 401(k) balances--which would go to sh-- if the financial markets tank due to a lack of confidence. I agree, it stinks to support whiteshoe I-bankers when this happens...but the alternative is a whole lot worse. Most 401k accounts went to shiit the last time there was lack of confidence in the market (2000-2003). When I checked in October of 2007 those that stayed invested in their 401k accounts and continued to dollar cost average in where greatly rewarded without a massive fed intervention. We act like this stuff has never happened before. Link to comment Share on other sites More sharing options...
Lurker Posted March 17, 2008 Share Posted March 17, 2008 I don't see how that would occur if people have a balanced portfolios and/or invested in indexed funds. Sure in the short term their 401Ks may tank due to the sentiment. But these financial institutions tanking should not negate a fundamentally sound investment strategy. For example, if the 401K are invested in funds owning shares of Microsoft, Google, AT&T etc. how does the failure of a Bear Stearns affect my 401k value in the long run ? The S&P 500 is down 16% since October. Throw in a little financial market panic and and you could double that. Now you've got people with one-third less retirement wealth who'll be dumping stocks left and right trying to find a safe haven. It could get real ugly, real fast regardless of how well-balanced your portfolio is. Link to comment Share on other sites More sharing options...
Chef Jim Posted March 18, 2008 Share Posted March 18, 2008 The S&P 500 is down 16% since October. Throw in a little financial market panic and and you could double that. Now you've got people with one-third less retirement wealth who'll be dumping stocks left and right trying to find a safe haven. It could get real ugly, real fast regardless of how well-balanced your portfolio is. I love the way people freak that the market is down 16% since October but nobody is saying anything about the fact that the S&P was up 80% from March of 2003 to this past October. Are all of you new to this investing stuff?? Link to comment Share on other sites More sharing options...
Chef Jim Posted March 18, 2008 Share Posted March 18, 2008 Because we all know the average American has a clear grasp of this Hell the average economist can't answer this. If they're good they'll tell you to check back with them in 12 months and they'll let you know if we're in a recession now. Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted March 18, 2008 Share Posted March 18, 2008 Because we all know the average American has a clear grasp of this Hell the average economist can't answer this. If they're good they'll tell you to check back with them in 12 months and they'll let you know if we're in a recession now. Heck... Most probably do have a grasp of things... If they are having a hard time making ends meet and are sliding backwards financially, I think they should know... They feel that pulse... It isn't what people are "telling" them... Not like they need some pencil neck geek economist to tell tell them what is going on... Like when an engineer comes in on my job and attempts to tell me "how things are"... WTF?? Get your ass out here at all hours the day and year and see for yourself! The lake is down, fix the phucking leaky lock system... Ya... ya... Stupid analogy I know... But, the "experts" are the worst... That is my point... If anything, it is the grunt that knows the best... He can't explain it... But, he knows the best... Not the one locked away in their ivory tower! Come back in 12 months? Link to comment Share on other sites More sharing options...
Chef Jim Posted March 18, 2008 Share Posted March 18, 2008 Heck... Most probably do have a grasp of things... If they are having a hard time making ends meet and are sliding backwards financially, I think they should know... They feel that pulse... It isn't what people are "telling" them... Not like they need some pencil neck geek economist to tell tell them what is going on... Like when an engineer comes in on my job and attempts to tell me "how things are"... WTF?? Get your ass out here at all hours the day and year and see for yourself! The lake is down, fix the phucking leaky lock system... Ya... ya... Stupid analogy I know... But, the "experts" are the worst... That is my point... If anything, it is the grunt that knows the best... He can't explain it... But, he knows the best... Not the one locked away in their ivory tower! Come back in 12 months? I'd like to know of the people polled, how many of them actually know what the definition of a recession is. That's got to be one of the stupidest poll CNN has done, and they've done some bad ones. Link to comment Share on other sites More sharing options...
meazza Posted March 18, 2008 Author Share Posted March 18, 2008 I'd like to know of the people polled, how many of them actually know what the definition of a recession is. That's got to be one of the stupidest poll CNN has done, and they've done some bad ones. Probably very few, but the reaction to the market actually creates more of a recession than anything. But regardless, most people just look at the main headline and don't understand anything. It only takes a + next to the dow to make them thing all is good again. Link to comment Share on other sites More sharing options...
Jon in Pasadena Posted March 18, 2008 Share Posted March 18, 2008 "J.P. Morgan Chase stands behind Bear Stearns," said J.P. Morgan's Mr. Dimon.Yeah, with a stiffie the size of Manhattan. Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted March 18, 2008 Share Posted March 18, 2008 Probably very few, but the reaction to the market actually creates more of a recession than anything. But regardless, most people just look at the main headline and don't understand anything. It only takes a + next to the dow to make them thing all is good again. You think the average person even pays attention? To the market that is? Don't they feel the forces in their pocket book? Link to comment Share on other sites More sharing options...
meazza Posted March 18, 2008 Author Share Posted March 18, 2008 You think the average person even pays attention? To the market that is? Don't they feel the forces in their pocket book? The average person picks up a newspaper and has the numbers flashed in their face over and over. They don't necessarily understand what most of it means, but they see the big numbers with negatives next to them and they start panicking. A close friend of mine just told me that he bought mutual funds. My advice was to stay away unless you knew 100% what you were getting into. He told me the salesman told him that the funds he was buying were affected by the US market. How in God's name can you find a fund that doesn't have some sort of link to the US market mess that is going on at the moment? Link to comment Share on other sites More sharing options...
ExiledInIllinois Posted March 18, 2008 Share Posted March 18, 2008 The average person picks up a newspaper and has the numbers flashed in their face over and over. They don't necessarily understand what most of it means, but they see the big numbers with negatives next to them and they start panicking. A close friend of mine just told me that he bought mutual funds. My advice was to stay away unless you knew 100% what you were getting into. He told me the salesman told him that the funds he was buying were affected by the US market. How in God's name can you find a fund that doesn't have some sort of link to the US market mess that is going on at the moment? Maybe me or others... But, that is not the averge people... The masses... Are they even in the market? They pick up the vibes just being a consumer and seeing the price of milk and gas on the rise... No? Do they even have anything... Except consuming...?? I think we are analyzing this way too much... Link to comment Share on other sites More sharing options...
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