US stock market bail out

Slice · 26-09-2008, 11:40 AM

Anyone think its a little wrong to be encouraging failed firms to keep doing business under the assumption that if they get in trouble the govt will bail them out?

On a side note how fast can you set up a failing finance firm to get a slice of the action

shmoo · 26-09-2008, 11:56 AM

ummm I think its more like propping up deposit taking institutions as a desperate attempt to secure average peoples savings.

And regarding that insurance mob - they are just such a fuggin massive company that if it went under, then the sun would go out and acid rain would start falling....ie it would be like living in London.

Reidstah · 26-09-2008, 11:58 AM

Yeah when you word it like that it sounds dodge for sure. But as far as I know they have no other choice at the moment. If the Govt don't bail them out the whole economy goes down and everyone loses.

Rider · 26-09-2008, 12:04 PM

It is wrong to do it but you will be fucked if you dont. Hopefully the will regulate them more in the future and everyone will learn their lesson i hope.

BTW I am not an economic expert and there fore my oppinions are based on what i have heard in the media

polonyman · 26-09-2008, 01:49 PM

its a complicated problem over there, its not like one big company was dumb and had to get bailed out. the system over there thats supposed to "spreak the risk" ended up putting most of the financial pressure on the books of the largest corporations when it isn't entirely their fault. in fact, it was mainly the smaller lenders at fault that caused the initial problems. there needs to be stringent regulations on how money is handled, particularly when it can affect the ecnonomy like this.

chew · 26-09-2008, 02:42 PM

Surely you are not advocating a return to a socialist type system of state control instead of letting market forces run the joint?

Mr John · 26-09-2008, 03:21 PM

Privatise profits, socialise losses?
Looks like a win/lose very very badly situation

rabbit · 26-09-2008, 04:54 PM

what realy erks me is the barstards that have squandered the trillion $ have been payed big bucks to do so and with the bailout will keep thier huge incomes and the poor mug in the street payes for it through taxs and the devaluation of the us$. The us arrears rate on morgages is only 3% assuming they all fall over and 50 % of the asset is still solid the total loss is still only 1.5 % why is everyone panicing? because only about 1% of loand funds is supported buy fisical $ is the bank the rest is theoretical money suported bu realestate security.
In the Us the banks dont trust the other banks and interbamk loans have stoped so the system is going into gridlock because the banks dont trust each other but they want the punter to trust them and the gov. to bail them out. Stinks dosent it.

shmoo · 26-09-2008, 05:08 PM

I actually agree with what Krudd has said about this. The Fed has no choice but to prop up the system, but they need to follow that up with serious legislative change to minimise the likelyhood of it happening to this extent again.

rabbit · 26-09-2008, 05:18 PM

If the Gov had to move in I would support the Gov helping the poom mug that is getting kicked out of his house to meet the payments and keep the house.
So the banks should have to submit default loans the the gov to take over and the banks would recieve no fee charges or comissions of these loans (share the pain)
Then the Govemment could manage the borrowers through their financial problems keeping people on houses and probable eventuly gatting most of the money back.
Not fork out a trilian $ to the banks to prop up a system that is being badly managed due to gread and unsound practices. (would you lend someone $420k to by a $300k house? insane)

smeghead · 26-09-2008, 06:24 PM

FBI have several investigations that are ongoing & there have already been a few arrest; looks like a bit o fraud was mixed in with the rest of the insanity.

chew · 27-09-2008, 04:58 AM

We havent really learnt a lot or changed since some bearded guy alledgedly threw the money lenders and scribes (lawyers) out of the temple have we? Then to add insult, to quote Douglas Adams we "Nailed him to a tree for saying "lets be nice to each other for change.""

D'Artagnan · 27-09-2008, 08:06 AM

I'm in the 'let them take the fall camp' only because, in my uneducated view, the package will only prolong the inevitable meltdown.

The losers in this will be the Mum's and Dad's and the companies that performed well.

If you want a deregulated capitalist system, you can't bail it out. Should they have better controls in place? Probably.

D'Art

Slice · 27-09-2008, 03:04 PM

I figure if they HAVE to bail it out at least take some control over the companys or make a large amount of interest payable. the tax payer is getting jack all in return here.

thro · 27-09-2008, 03:07 PM

Effectively what is happening:

US government is taxing the average joe more to bail out wall street. 700bn US = something like $5000 each for every taxpayer if i'm not mistaken?

Let the cunts go broke! They fucked up, they deserve it!

The US government is already WAY too far in debt to foreigners to be doing shit like this.

But... the cynic in me says they are doing this explicitly and *deliberately* to devalue the shit out of the us dollar.

edit:
Put it this way: If Kevin Rudd wanted $7000 of your hard earned money to bail out say... NAB or Bankwest - what would you say?

Ev · 27-09-2008, 03:33 PM

SO who got rich? in this process... the developers and builders, the land releasers ie ? the government "sold" the land to developers(?gave land to their buddies? who marked it up?)

While Joe public slaved away having to pay inflated prices and try and manage unrealistic loans they could not afford, who will never get a bail out on their now rooted credit rating

Is that what happened? Interesting topic

Deej · 27-09-2008, 04:56 PM

Well .... who is more at fault?:

1. Is it the banks who are prepared to throw money at risky borrowers at high LRV’s?

2. Is it the borrower who knows they have little-to-no ability to meet repayments when honeymoon periods are over, go ahead with the loan anyway, and are punting on wages growth and growth of the asset they borrowed against to stay ahead?

3. Or Wall Street who package the above into mortgage backed derivatives, got a descent S&P rating for them, and then sold them off to anyone who will buy them?

theblackman · 27-09-2008, 05:42 PM

lack of regulation.

rabbit · 27-09-2008, 06:40 PM

the problem with the bail out is the people who did the lending and took big comittions and no responsability get away with it. let those institutions who dont know how to rud a bank properly go broke. Maybe the poeple left over when it settles down will have learnt something.

Ev · 27-09-2008, 07:24 PM

They scapegoated a couple of the "Big Sharks" insider trading investigations, it is the system at fault though as insider trading happens all the time anyway just most the time it is hard to charge people for it

Predators and prey: if this happened in the jungle you'd blame nature and have to accept it, however if someone set this stockmarket "jungle" up in a negligent corrupt manner, and this was pre-warned of, I think you'd know who to blame.
I don't know what you'd be able to do about it though!

But I do hope our systems of government and the market burn