Financial Meltdown (1 Viewer)

[jazzeum]

Apparently, the SEC is temporarily going to ban short sales, a drastic step.

Short sales, for the novice, is where you sell stock you don't own and then buy it at a lower price. You are betting that stocks will go down.

 

[Njja]

John,

Tom: Wow day trading, in 30 years in the market I never tried it. You must

have nerves of steel!

I always bought my stock and held the certificates long long term. Bought

Coke and got 4 splits so far. Home D has given me 9 splits.....of course I

passed on Ebay can't win them all.

Todays investor face a different market many of the Blue Chips have so many

shares outstanding the era of the split may be coming to an end.

I know lots of traders sell short, buy options, trade commodities, buy MBS's

oh......thats how this thread got started.

 

[Njja]

Apparently, the SEC is temporarily going to ban short sales, a drastic step.

Short sales, for the novice, is where you sell stock you don't own and then buy it at a lower price. You are betting that stocks will go down.

Yes and where do they get the stock you don't own to sell.......why they

take it out of the account of someone allowing the Broker to hold their

shares. Kind of like the parking lot attendant renting your car while your

having diner.

This might have something to do with the Leman Bros problem, I read that

Broker transactions did not have to be completed if the Broker declared

bankrupcy before the close date of the transaction.

Can you imagine if shares you owned and were held by Leman Bros were sold

short and then caught up in the bankrupcy?

Say Brad what do you think of this mess?

 

[jazzeum]

John,

I don't think we should be bailing out these people. They made their bed, now let them lie in it. When my son goes to college in a couple of year and I have to pay umpteen dollars, will the government bail me out? I don't think so. It's best to let all the bad blood flow and then build up from there.

If I recall correctly, one of the principal causes of the Depression was the purchase of stock on margin. You could put as little as 10 percent down and then repay the balance at some future time. When there was a run and the margin calls finally took place, everything collapsed like a house of cards. This seems to be happening here. People, then, as now, thought there would be little risk and great reward. Seems like we're finding out this is not the case. Let's hope the whole financial system doesn't come crashing down because, let's face it, most of us are not prepared to sell apples on the street corner, either mentally or physically. In the 20s people were not that far removed from bad economic times and were used to the boom and bust cycles. We've gotten a little fat and lazy. If a depression were to happen, god knows what would happen but it would be bad.

We wouldn't have to worry about the falling bodies because the windows in today's skyscrapers can't be opened!

 

[tdubel]

John,

Tom: Wow day trading, in 30 years in the market I never tried it. You must

have nerves of steel!

I :

No, just young and dumb! I didn't mention the margin calls, tax capital loss carryover until I die, etc!!! I did get a couple of cool trips to Vegas, Bahamas out of it! Fast women included......just kidding on that part, my future wife was included and she still is, ain't love grand. I just stopped buying stocks and now buy toy soldiers.....

TD

 

[Njja]

Brad:

Very insightful as I would have expected! You are correct everyone was

buying on margin and Joe Kennedy and his partner leaked stories through

their newspaper connections to influence the market. When it crashed they

had sold off their positions and he walked off with 180 Million!

We walked off with the Securities and Exchange Commission......wonder

what they have been doing lately?

Brad if things get really bad......when I get back to Jersey I will open a

farm stand selling Jersey Tomatos......you can be my legal advisor......just

in case they really are radioactive!

 

[Njja]

No, just young and dumb!

Tom I'm sure you were never dumb! Actually when the dust settles and the

bottom of the market is reached it might be a time to step back in. You start

small never invest with money you need, you could buy 10 shares of a

company like Coke then join their investment plan buy a share a month before

you know it you have 100....then move on to another say Johnson & Johnson

follow the same program before you know it you will feel like JP Morgan.

 

[OldDragon]

... ain't love grand. I just stopped buying stocks and now buy toy soldiers.....

TD

Now I know ... why the prices of toy soldiers are rising.

 

[bromhead]

Here is my take.

It's a breakdown of society and values. The US Government is willing to bale out the rich and put the burden on the middle class. Where is the ballout for those folks would were not financially smart or made aware of the risk in their mortgage. Why aren't there any laws broken..cause the people in power make the rules and the people in power get the bale out.

When do I get my income taxes back for my bale out!!!!

I still think we have not yet seen the real problems this crap will generate. The last of the bale outs is not yet completed. The last CEO of a bale out has not received his golden parachute. The guys running Freddy Mac and Fanny Mae got payouts worth a very considerable amout of money. So, for those in power, if your business fails you win. If you business succeeds, you win.

Where is the bale out for the tax payer from these greedy immoral degenerates. And I lump both parties in this mess. The Clinton administration started the mortgage system as it exists today and the Bush administration says "Good job Brownie."

Well said Chief,,a breakdown of society and values,,I lived thru that after hurricane andrew,the great disaster of 92,,the only thing that stopped the looters were armed homeowners. My kids have mentioned how worried they are for the future of their kids and believe things were "better" in my time as to leadership and things in general, my feelings being there was plenty of not good leadership or problems but a lot of increased order and regulation in society plus a bit of dignity with things,,I do not believe the unregulation of everything in the past years has been positive. I ll never look at the old Britains set # 482,Royal Army paymasters in the same light.

 

[Spitfrnd]

I already gave you somewhat of my view.
Yes you have......and I still do not know if this meltdown bothers you or not?

Yes it represents a classic and unfortunate convergence of bad (however well meaning) decisions by government and investment bankers blinded by greed. That said, I do not think it is financial or social Armageddon. I have explained why in my last post.

[I have read your explanatons which doesn't seem to hold anyone responsible.

See my above answer.

[I don't believe it is the place of the Federal Government to use our Tax Dollars to Bail out private business. Do you?

I have answered that one before as well, generally no but it some cases it may be the best of several bad results. In the case of AIG, it is also a good investment. This is really not a case of the taxpayers bailing out the rich but an effort to override market dysfunction to prevent much short term instability that would cause many average citizens to suffer even more. The theory is the same as trying to curb excessive inflation or deflation. Will this work, well we are an experiment with a limited sample size but it does have a logical basis?

[I believe the American people deserve to be told why this was allowed to happen before we let the same bunch of idiots attempt to fix it. Do you?

Welcome to a democracy; there are many published statements on the causes and with the planned Congressional and administrative hearings, there will be more that you could ever want. I still think I gave you the shorthand version above.

[There is really one simple question here......who decided a person could borrow 125% of the value of a home without anyone verifying their income? Do you think this was a reasonable decision?

Of course it was a stupid decision, as was the decision to try and increase home ownership above 64%. One begat the other. The change in lending rules was not driven by a desire to provide mansions to the rich; they can afford to pay. Rather it was to qualify people with limited or no credit for things they really could not afford on the theory that the value of their main asset (the home) would always appreciate. There were many sane people (Buffet included) that noted that was a bad idea but they were ignored. Of course the change was not overnight but rather incremental which made it all the more insidious. The rules were slightly expanded and that worked, so then they were expanded some more, and so on.

If you or anyone else is really interested, send me a PM with your email and I will send you a blunt and very, very crude graphic presentation of why the subprime crisis occurred that was circulated widely among financial types and lawyers. Warning, the language is very adult only.

 

[theBaron]

..That said, I do not think it is financial or social armageddon. I have explained why in my last post...

I agree, Spitfrnd, use of the term "meltdown" is the worst kind of sensationalism. I don't mean to criticize anyone here in the forum for that term, I decry the news media, who live from ratings, for using such terms.

It's serious, but it's not a depression, it's not 1929, and it's not the Second Coming.

But what can we expect from blow-dried suits and skirts, who live for the next sound bite and have to fill 24 hours of programming time? Just more vapid, sensational, superficial news entertainment.

 

[Combat]

I still see Porsche, BMW, Mercedes dealerships selling cars at 50-90K, people buying gas or toy soldiers (whatever the price) - so how bad can things be? Mostly a perception problem that does not have much impact on the average person. They feel anxiety because of the news, but otherwise wouldn't have a clue. If you have a lot of money in the market, you took a big hit. Not exactly Tom Joad material.

 

[jazzeum]

Tom Joad material? Hopefullly not. If we get to that point, then things will be very, very bad.

 

[theBaron]

I still see Porsche, BMW, Mercedes dealerships selling cars at 50-90K, people buying gas or toy soldiers (whatever the price) - so how bad can things be? Mostly a perception problem that does not have much impact on the average person. They feel anxiety because of the news, but otherwise wouldn't have a clue. If you have a lot of money in the market, you took a bit hit. Not exactly Tom Joad material.

That's a very good point, and one that reminds me of an item I've heard in the news and on radio talk shows.

Polls quoted in the news all say that Americans believe that we're in a recession (or whatever red flag term the pollster chooses to use for a bad economy). But when asked how he himself is doing, the respondent most frequently says that things are going well for him. That is often cited as a symptom of the way the media present the story.

 

[Gideon]

I don't understand. We just heard that this will def cost the tax-payer hundreds of billions to absorb the bad MBS's and the market shoots up? So, everything is ok as long as people like you and me take on the bad debt?

I don't want to pay for this. I shouldn't have to pay for this. I never bought a home I couldn't afford and I didn't invest my 401 in funds with exposure in these areas. I have no debt and busiess has no debt. Why do I have to pay for this? And, if I must, why am I paying for this without any real plan moving forward on how to stop these types of activities.

I don't even know for sure if these companies did anything illegal based on how current laws are set up to deal with MSB's.

I suppose the buck has to stop somewhere and someones got to stand up and take it on. How about all those CEO's and their golden parachutes and other execs who figured out how to pull this off? I can't afford this.

 

[theBaron]

The buck should have been stopped in 1929, when Hoover was president. The government should not mix at all in the economy.

 

[Spitfrnd]

I still see Porsche, BMW, Mercedes dealerships selling cars at 50-90K, people buying gas or toy soldiers (whatever the price) - so how bad can things be? Mostly a perception problem that does not have much impact on the average person. They feel anxiety because of the news, but otherwise wouldn't have a clue. If you have a lot of money in the market, you took a bit hit. Not exactly Tom Joad material.

I agree with one clarification; no one takes a hit on a stock until they sell it or the company goes bankrupt. Until that occurs, the immediate liquid value of their assets simply rises and falls. That is why the stock market is no place for funds that are expected to be needed on short notice.

 

[theBaron]

I agree with one clarification; no one takes a hit on a stock until they sell it or the company goes bankrupt. Until that occurs, the immediate liquid value of their assets simply rises and falls. That is why the stock market is no place for funds that are expected to be needed on short notice.

Another very good point, very appropriate to mention!

 

[Njja]

I agree, Spitfrnd, use of the term "meltdown" is the worst kind of sensationalism. I don't mean to criticize anyone here in the forum for that term, I decry the news media, who live from ratings, for using such terms.

It's serious, but it's not a depression, it's not 1929, and it's not the Second Coming.



Every American has just been handed a bill for $8500 which is going to have

to be paid by higher taxes. We are allowing the people that were in charge

to fix the problem.....never a good idea.

Using terms like "Financial Meltdown" is a wake up call for Americans.....it

is not our "Duty" to pay taxes it is the governments job to serve the people,

to be financially responsible with our tax dollars and treat everyone equally.

My parents worked hard to own a home, I worked hard to own a home,

my daughter did the same, my grandaughter will benefit from all these years

of labor. This is the American way, work hard and you can achieve anything.

Its not we're going to put people in a home they can't afford, then give

the bill to everyone else.

So now we all get to write a check for $8500 to keep someone in a home

that more likely then not cost more then the one you are living in.

This home may be in foreclosure, as over 2 million are, but lets not worry

the loans will be reworked to 30 year fixed rate......that they still can't pay

for ie......."I didn't know what I was signing"

So we will go through this again in 6 months or a year when the new loans

are in foreclosure.

Bottom line is if you can't afford it.....don't buy it.

 

[Njja]

I still see Porsche, BMW, Mercedes dealerships selling cars at 50-90K, people buying gas or toy soldiers (whatever the price) - so how bad can things be? Mostly a perception problem that does not have much impact on the average person. They feel anxiety because of the news, but otherwise wouldn't have a clue. If you have a lot of money in the market, you took a big hit. Not exactly Tom Joad material.

If you buy a loaf of bread......you will see the impact.