Does anyone agree with the $700 bailout?

Superfreak said:
Because they do not have the capital to do so and the time to unwind the debt. The Fed can also cheat by flooding the market with cash. That would provide liquidity that the banks (now with clean balance sheets) could loan out and loosen credit in the markets.
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I dunno, I would think with foreign investors thrown in that there should easily be enough capital. I also think they've already looked and with much of it there is simply too much bad equity in relation to the good.

One aspect not mentioned in all of this is our debt:
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perhaps in better times we could afford this and it would be a more worthwhile debate, but we just can't and there is no guarantee that these will be the last companies to be in this position.
 
Obfuscate said:
If they were worth 65 cents on the dollar private banks would buy them. It's a bad deal no matter what. Credit will get tight but with our excesses of the past we need to pay them off and get them behind us. Paul Volcker knew this when he raised rates to 20+% and haulted credit in the last 70's early 80's. Too bad Bernanke and Paulson are no Volcker.
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I said at most pay 65. Currently they ARE trading at 70 cents on the dollar. But the bulk of the bad debt is trading around 15-30 cents on the dollar. The Fed can buy those up, along with debt that is not in crisis (those pricing in the 60-70 cent range) and can make the taxpayers a nice return in the process.
 
Superfreak said:
That is EXACTLY what they need to do. Which looks to be the case. As long as they go with the Congressional plan and not Bush's... which also looks to be the case as Bush has begun capitulating to Congress on most points.
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It's what Bernanke was talking up on CSpan yesterday. If they get them for 15-25 cents, then man. It's still an infusion of inflation, but I can see an upside.
 
The world seeing us go over $10 trillion in debt (which is very soon) could be one of those numbers that is a pyschological breaking point for loss of confidence in lending to our government. It's got to give someday.
 
Superfreak said:
The biggest problem, that no one is talking about (probably what Bernanke told Congress that spooked them so bad) is that banks are not loaning money to one another. When that happens, credit tightens up for damn near everyone.

If we do nothing, the costs to the taxpayers is going to run in the hundreds of billions anyway due to the FDIC having to step in and cover assets. By doing a debt for equity swap (which for the record is not a bailout) the taxpayers will most likely benefit in the long run.

Again, this is provided they get the equity in exchange for taking on the bad debt.
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Well, reports are that the democrats got everything they wanted, which means, definitely equity.

But I look at this differently than you. They purposefully set out to bankrupt the government. If McCain gets in he will use this as the reason we "have to" privatize everything across the board.

I don't want the 700 billion - 1 trillion dollar fucking bailout. I am 100% against it.
 
KingCondanomation said:
I dunno, I would think with foreign investors thrown in that there should easily be enough capital. I also think they've already looked and with much of it there is simply too much bad equity in relation to the good.

One aspect not mentioned in all of this is our debt:

perhaps in better times we could afford this and it would be a more worthwhile debate, but we just can't and there is no guarantee that these will be the last companies to be in this position.
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Wrong.... no one has the capital to come in and resolve this. They cannot attain the credit to do so either. They also do not have the time to unwind the debt. They also cannot use the Fed to flood the market with dollars.

Again, this deal has the ability to LOWER our debt.
 
Superfreak said:
I said at most pay 65. Currently they ARE trading at 70 cents on the dollar. But the bulk of the bad debt is trading around 15-30 cents on the dollar. The Fed can buy those up, along with debt that is not in crisis (those pricing in the 60-70 cent range) and can make the taxpayers a nice return in the process.
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You're a fucking fool, or a liar. No company will sell good assets; they will only sell the shit to the government.
 
Damocles said:
It would be cool if we could retire the National Debt using this means. However 2.2 Trillion 30 years down the road... that's a long way away and Americans don't tend to have that kind of attention span. I suspect they'll sell of much earlier than that, at a profit, but not nearly that much.
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Attention span? 30 years? Many of us will be dead, I don't think our attention spans will be playing a part!
 
Darla said:
Well, reports are that the democrats got everything they wanted, which means, definitely equity.

But I look at this differently than you. They purposefully set out to bankrupt the government. If McCain gets in he will use this as the reason we "have to" privatize everything across the board.

I don't want the 700 billion - 1 trillion dollar fucking bailout. I am 100% against it.
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Again, it is NOT a bailout if you are swapping debt for equity.

I totally disagree with your theory that they did this deliberately. While Bush is indeed a moron, there is no way anyone would do this deliberately. How does this help the case to 'privatize"????

McCain is not getting in. You don't have to worry about that anymore. The media coverage is going to hand the Presidency to Obama.
 
Superfreak said:
Wrong.... no one has the capital to come in and resolve this. They cannot attain the credit to do so either. They also do not have the time to unwind the debt. They also cannot use the Fed to flood the market with dollars.

Again, this deal has the ability to LOWER our debt.
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Would this just be a temporary ownership of the equity and once those mortgages run out then the Fed is out of the business?
I really hate nationalization and government ownership, I don't want to see some sort of American version of Crédit Lyonais set up.
 
Damocles said:
It's what Bernanke was talking up on CSpan yesterday. If they get them for 15-25 cents, then man. It's still an infusion of inflation, but I can see an upside.
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Without question it will spark inflation in the short term. But it should not take long to get the credit situation resolved once this deal is done. My guess is by second to third quarter next year (at the latest) they would be able to start driving interest rates back up to fight inflation. Provided of course that they get the bad debt refinanced into fixed rate.
 
Superfreak said:
Without question it will spark inflation in the short term. But it should not take long to get the credit situation resolved once this deal is done. My guess is by second to third quarter next year (at the latest) they would be able to start driving interest rates back up to fight inflation. Provided of course that they get the bad debt refinanced into fixed rate.
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This comes at a bad time for me. I'm in the market for a business loan and I've been holding off as loans are very tough to get right now and I seriously don't want to liquidate assets to buy a franchise. If they get this done it won't be long before that cash will be out there again. I'm at a quandary. I don't like government intervention, but I see a lot of upside in this for me personally as well as the capacity to actually get rid of actual debt for the nation itself.
 
KingCondanomation said:
Would this just be a temporary ownership of the equity and once those mortgages run out then the Fed is out of the business?
I really hate nationalization and government ownership, I don't want to see some sort of American version of Crédit Lyonais set up.
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No, most likely the Fed would turn around and sell the equity positions pretty quickly.

Once the banks/brokerages balance sheets are clean, their stock prices should move up pretty quickly over the next several months. My guess is that they would sell their positions at that point. Because you are correct, we do not want the government owning these positions long term.
 
SF has yet to explain how investements nobody wants suddenly become profitable. How does this work. WHat is the "unwinding" process you speak of?
 
Superfreak said:
Again, it is NOT a bailout if you are swapping debt for equity.

I totally disagree with your theory that they did this deliberately. While Bush is indeed a moron, there is no way anyone would do this deliberately. How does this help the case to 'privatize"????

McCain is not getting in. You don't have to worry about that anymore. The media coverage is going to hand the Presidency to Obama.
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You obviously weren't watching Morning Joe this morning!

If the government is broke, there's no money for many things, and we'll be told we have to make "painful decisions" none of which will hurt anyone but average citizens.

I'm sorry, I'm dead set against this. I am not against giving them some money, but then there needs to be a cooling off period. Not 1 trillion dollars, and with the AIG bailout, and the bear stearns bailout and the Freddie Mae Fanny Mac debacle, how much has this cost us already?

Meanwhile SF, these mortgage defaults have spread past the subprime market. People are losing their jobs and have been for some time. Credit card delinquencies are going to be racheting up. There is much worse to come.

Frankly, the worse thing about this plan? It's not going to work.
 
Damocles said:
This comes at a bad time for me. I'm in the market for a business loan and I've been holding off as loans are very tough to get right now and I seriously don't want to liquidate assets to buy a franchise.
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If you can, wait a couple of months. This deal goes through and credit will begin flowing again.
 
Superfreak said:
Again, it is NOT a bailout if you are swapping debt for equity.

I totally disagree with your theory that they did this deliberately. While Bush is indeed a moron, there is no way anyone would do this deliberately. How does this help the case to 'privatize"????

McCain is not getting in. You don't have to worry about that anymore. The media coverage is going to hand the Presidency to Obama.
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Correction:
The media coverage of the facts is going to hand this to Obama
 
Don't ignore me, sf, you lying piece of shit bastard. You explain how these investments turn a profit when people in the business of recognizing profit do not want to touch them with a ten foot pole.

The taxpayers are not the personal piggy bank of wallstreet fuckups. And you can take your threats of calamity and shove them. You make me sick.
 
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