why not just let the banks fail at this point.

[The Moz 69]

It's becoming more clear we are headed to a great depression - If that's the case and it looks that way why keep digging the hole deeper? What were going to spend 100 billion to save citigroup , another 700 bil for a stimulus package , according to Obama maybe more than that . We are going to spend all this for what to stave off a all out depression for how long a year , 6 months ? The only option IMO is let it happen and work on the recovery as long and painful as it will likely be.

[Vikings4ever 496]

Because politicians will do anything to make it look like they're fixing the problem, no matter how much it screws us over long term.

[IGotWorms 3,366]

Because nobody wants another Great Depression.

[Snoopy1 0]

Because nobody wants another Great Depression.

 

My Dad said it built character.

[Isotopes 1]

I really don't think we are headed for another great depression. There were a lot of factors that led to the great depression and things are bad but not that bad.

[titans&bucs&bearsohmy! 2,745]

Let me preface this with an aknowledgement that I (like most of you) know d!ck about finance or economics.

 

But it seems to me that our economy has got itself into a pretty interesting pickle. Namely this.

 

The key to the American economy is consumer spending, as we don't make anything anymore, and our trade deficits are huge.

 

Problem with that is that prices have risen at higher rates than wages have. Thus, for years, during the good times, people have been spending on credit.

 

Now, all the institutions that issue that credit are collapsing. How is the American consumer going to spend us out of recession when wages are not keeping up with prices, jobs are being lost, and there is little credit availiable? The credit crunch also greatly feeds into the housing meltdown and the auto industry woes. People cannot buy houses and cars without credit.

 

So the answer to the OP question is simply that, without banks, there is no chance out economy can pull itself out of this slump. The American consumer simply does not have the means to spend without them.

 

Of course, one can dispute the wisdom of having an economy based upon the reckless spending on credit by the consumer, but in the short term, that's the only answer.

 

I suppose that rather than bailing out the banks, the U.S. govt could use the $700,000,000,000 to just make its own loans. Issue government credit cards and mortgages and car loans. Hell, that actually may be more effective than letting the banks piss it away on bonuses and dividend payments. But I doubt we want the government actually serving as a bank in the direct lending sense.

[The Moz 69]

Were not headed for a great depression?

 

Banks are failing left and right and we are throwing 100's of billions at them to keep them a float and they:

 

A. aren't firing management and execs aren't being held accountable.

B. not regulating them to assure they don't make the same mistakes.

 

The auto industry is on the verge of going total belly up

 

unemployment is skyrocketing with no real bottom in sight

 

The world economy is in total limbo not having a clue where this all ends or how bad it really is causing markets to have huge gains and larger losses.

 

We keep borrowing billions and might as well burn it the actual good it's doing.

 

CUT loses now - let citigroup fail as well as other on the verge - once that happens full scale depression will hit shortly and begin to bottom out - after the dust settles work as country on rebuilding without making the same mistakes as before.

 

Thats the only solid long term solution - bailout after bailout digging hole deeper - is doing nothing for us but buying us maybe a year at current levels - which kinda suck as it is.

[Isotopes 1]

Were not headed for a great depression?

 

Banks are failing left and right and we are throwing 100's of billions at them to keep them a float and they:

 

A. aren't firing management and execs aren't being held accountable.

B. not regulating them to assure they don't make the same mistakes.

 

The auto industry is on the verge of going total belly up

 

unemployment is skyrocketing with no real bottom in sight

 

The world economy is in total limbo not having a clue where this all ends or how bad it really is causing markets to have huge gains and larger losses.

 

We keep borrowing billions and might as well burn it the actual good it's doing.

 

CUT loses now - let citigroup fail as well as other on the verge - once that happens full scale depression will hit shortly and begin to bottom out - after the dust settles work as country on rebuilding without making the same mistakes as before.

 

Thats the only solid long term solution - bailout after bailout digging hole deeper - is doing nothing for us but buying us maybe a year at current levels - which kinda suck as it is.

 

I am not saying things are good but do soem reading on the great depression. Things were much worse.

[The Moz 69]

I am not saying things are good but do soem reading on the great depression. Things were much worse.

 

 

what was that much worse pretty much the same senerio's are unfolding. All throughout 1928 and early 29 market went up and down in giant swings - much like it is right now. Only difference is then we didn't bailout any banks so it hit us head on and right away - we are bailing out banks but it isn't fixing a thing only delaying it.

[edjr 5,611]

The only way to fix this problem is to not allow anyone to use credit for anything anymore, until it's fixed.

 

This problem is all based on fake credit and fake money.

[fruitjacket 0]

Let me preface this with an aknowledgement that I (like most of you) know d!ck about finance or economics.

 

But it seems to me that our economy has got itself into a pretty interesting pickle. Namely this.

 

The key to the American economy is consumer spending, as we don't make anything anymore, and our trade deficits are huge.

 

Problem with that is that prices have risen at higher rates than wages have. Thus, for years, during the good times, people have been spending on credit.

 

Now, all the institutions that issue that credit are collapsing. How is the American consumer going to spend us out of recession when wages are not keeping up with prices, jobs are being lost, and there is little credit availiable? The credit crunch also greatly feeds into the housing meltdown and the auto industry woes. People cannot buy houses and cars without credit.

 

So the answer to the OP question is simply that, without banks, there is no chance out economy can pull itself out of this slump. The American consumer simply does not have the means to spend without them.

 

Of course, one can dispute the wisdom of having an economy based upon the reckless spending on credit by the consumer, but in the short term, that's the only answer.

 

I suppose that rather than bailing out the banks, the U.S. govt could use the $700,000,000,000 to just make its own loans. Issue government credit cards and mortgages and car loans. Hell, that actually may be more effective than letting the banks piss it away on bonuses and dividend payments. But I doubt we want the government actually serving as a bank in the direct lending sense.

 

I'll try to be a bit more diplomatic than Stick (although I respect and agree with his opinion).

 

Your analysis is partially correct. The real problem behind all of this is that we live on credit. Period.

Nobody buys a couch, TV, stereo, clothes, etc. with cash anymore. Everybody borrows to purchase everything except basically groceries.

 

Credit companies/Banks have long made a fortune off the credit market. I think this is obvious, so I'll leave it at that.

Unfortunately, credit at it's roots, was doomed by a process called Fractional Reserve Banking.

(if you want to know more, google it...it's long to explain)

This basically allows the Federal Reserve to "make" credit. IE...they "make" money, lend it to banks at a modest interest rate (coincidentally, ever hear of "the fed lowered interest rates today....."?), which in turn gives the banks MORE money to loan out. We borrow it to buy more stuff, the economy grows, we have jobs, etc. The cycle repeats itself over and over and over.

 

BUT....here's the flaw.

 

When you manufacture (print) money over and over and over, what does it do to the value of your dollar? Of course it decreases it's purchasing power, which in turn not only perpetuates(forces) more and more borrowing by consumers (you and I), it also raises the price of everyday goods and services (inflation). It's a perpetual cycle, which unknown by most people, is also inevitably exponential. Once the cycle consumes the ability of the everyday worker to actually save money (overall, say on an annual basis), it cannot be reversed.

 

Did you know that as of 2004, for the FIRST TIME IN OUR COUNTRY'S HISTORY....we collectively, as a nation, have a NEGATIVE savings rate.

That means that overall, all Americans (poor, rich, unemployed, retired) have spent more than we've been able to save for the last 4 years.

That means low equity. It also means no collateral. Yet, what is the only way to keep the economy running?

 

Borrow more from the banks. The problem is, EVERYTHING already is in credit. It's been borrowed, and there's no collateral now.

If we don't borrow, we can't spend. If we can't spend, businesses don't make sales, are forced to cut jobs, and thus our economy inevitably collapses.

That's a recession.

 

A depression is really just a prolonged severe recession. FWIW.

 

So...this is where we are at today.

 

People will point blame at the Democrats for forcing Freddie and Fannie to give subprime loans (which based on markets, drives home prices up) to people who aren't qualified.

That's part of the problem, but it's not even a half-truth. Deregulation of the markets may have caused some of the issues as well. To argue either point as the sole cause of the problem is like saying smoking a cigarette once caused you lung cancer.

 

The problem is we are at the point where some much credit is tied up in bad home mortgages, bad loans, etc., that collectively we now cannot borrow enough to keep consuming at the enormous rate we've been at for the last 20 years.

 

So the answer to all this problem of too much credit, and too much borrowing is:????

 

Give the banks (bailout) more money to borrow out.

 

Now do you see why it's absolutely STUPID to do?

 

Our government only sees that the banks are strangled with bad loans, and all their money is tied up, so they figure we need to give these banks more money, so they can in turn lend it to us, continue to make a profit off those loans, we can continue to consume things we obviously cannot afford, and the cycle can continue (to get worse).

 

IF that doesn't pi$$ you off; you still don't understand. They are TAXING you (to borrow to the banks), so that banks can again lend money to you, make a PROFIT off of your interest payments, and then prices can continue to go up, the value of the dollar goes down, and your savings and retirement loses value (whether you believe it or not, it is) daily.

 

 

So, is the correct answer to give the banks more money to lend to us?

 

Or is it possible that the REAL problem is the ability to "Make" money for banks (fractional reserve banking), so this ridiculous lending process can continue?

 

If you chose the latter, welcome to a new world of personal enlightenment. Ron Paul's words during one stupid Presidential Debate in May of 2007 convinced me to read up on everything I just wrote above. For the last (almost) 2 years, it's all I've been doing.

 

It'll scare the living dogshit out of you, when you finally, totally understand where we're headed. And there is NOTHING they can do.

[NorthernVike 2,080]

The only way to fix this problem is to not allow anyone to use credit for anything anymore, until it's fixed.

 

This problem is all based on fake credit and fake money.

 

 

Why would you limit credit for people who are responsible with their credit? They are the only ones who will be spending and help recover from this debacle. Not everyone has gone out and bought 52' flat screen TV's you know.

[Isotopes 1]

what was that much worse pretty much the same senerio's are unfolding. All throughout 1928 and early 29 market went up and down in giant swings - much like it is right now. Only difference is then we didn't bailout any banks so it hit us head on and right away - we are bailing out banks but it isn't fixing a thing only delaying it.

 

To start.

We have had a few banks fail...during the depression pretty much every bank was closed. The dust bowl also occurred which also really put a hurt on us.

 

I am no expert but have done some reading and the great depression was pretty much a perfect storm of different circumstances happening at once.

[NorthernVike 2,080]

Your analysis is partially correct. The real problem behind all of this is that we live on credit. Period.

Nobody buys a couch, TV, stereo, clothes, etc. with cash anymore. Everybody borrows to purchase everything except basically groceries.

 

 

Wrong. Many people like myself still do. The only thing I borrow to purchase are vehicles. There are many people who are responsible with their money but you will never hear about them in the media because it makes for boring news.

 

 

I swear, half the problems we have right now are because the press is saying the sky is falling

 

 

 

 

BTW are you BLS?

[fruitjacket 0]

Wrong. Many people like myself still do. The only thing I borrow to purchase are vehicles. There are many people who are responsible with their money but you will never hear about them in the media because it makes for boring news.

I swear, half the problems we have right now are because the press is saying the sky is falling

BTW are you BLS?

 

No...you're wrong. You are an exception to the masses.

Don't get me wrong...you do it the way it's supposed to be done. Matter of fact, the same way I do it.

I have 1 credit card with a balance on it. 1.

Otherwise, (aside from my home), I'm debt free.

I do, however, agree, there are SOME good borrowers out there. They are a minority however.

 

Yes...

[fruitjacket 0]

To start.

We have had a few banks fail...during the depression pretty much every bank was closed. The dust bowl also occurred which also really put a hurt on us.

 

I am no expert but have done some reading and the great depression was pretty much a perfect storm of different circumstances happening at once.

 

22 sound like a few?

[Mungwater 588]

Wrong. Many people like myself still do. The only thing I borrow to purchase are vehicles. There are many people who are responsible with their money but you will never hear about them in the media because it makes for boring news.

I swear, half the problems we have right now are because the press is saying the sky is falling

BTW are you BLS?

 

I buy everything in cash, I have a company car, so I don't even have that, but I agree. Cars and Houses are the only thing I would buy with credit. If I wanted a new TV, I would simply put money away each paycheck (while not slowing down my investments) until I had enough extra, then go buy it. I even paid for my lasik that way, lady looked at me a little funny when I gave her my debit card for the bill. I swear, the credit cards I do carry have not left my wallet in well over a year (even then it was just for the miles)

 

What makes me mad is that while I'm doing everything that you're supposed to do, I'm watching my mutual funds, IRA, and 401K go into the schitter. I almost feel like I'm the one getting punished for doing it the right way.

[NorthernVike 2,080]

What makes me mad is that while I'm doing everything that you're supposed to do, I'm watching my mutual funds, IRA, and 401K go into the schitter. I almost feel like I'm the one getting punished for doing it the right way.

 

 

Ain't that the focking truth.

 

The Gov't will bail out everyone else, forgive their debt, set them up for life, all for living beyond their means while people like you and I will pay for the whole focking thing

[fruitjacket 0]

Ain't that the focking truth.

 

The Gov't will bail out everyone else, forgive their debt, set them up for life, all for living beyond their means while people like you and I will pay for the whole focking thing

 

 

Learn to assimilate. Socialism is coming, and you will BE punished if you do not obey.

 

I'm in the same boat buddy. I bought my house in June of 2006. At the freakin PEAK of overvalued homes. I paid $220k for a house that I just discovered is worth a rock-solid $178k.

 

I haven't missed a payment or been late once. And while I'd love to walk away from it and just let the Govt say "it's ok", I'm not going to.

Because it's wrong. Period.

[NorthernVike 2,080]

Learn to assimilate. Socialism is coming, and you will BE punished if you do not obey.

 

I'm in the same boat buddy. I bought my house in June of 2006. At the freakin PEAK of overvalued homes. I paid $220k for a house that I just discovered is worth a rock-solid $178k.

I haven't missed a payment or been late once. And while I'd love to walk away from it and just let the Govt say "it's ok", I'm not going to.

Because it's wrong. Period.

 

 

Ouch! That will leave a mark.

 

 

At least you are smart enough to know that the value will return in the future. Its the fockchops that cut and run leaving the rest of us to flip the bill that pixx me off.

 

Luckily for me I bought in 97'. Home prices up here have not skyrocketed like they did in other parts of the country thou. They have increased slowly but surly, just like they should. So I have not seen a big drop in value, just more of a leveling off.

[fruitjacket 0]

Ain't that the focking truth.

 

The Gov't will bail out everyone else, forgive their debt, set them up for life, all for living beyond their means while people like you and I will pay for the whole focking thing

 

 

BTW...FWIW...you STILL don't get it. You'll b1tch and complain about paying your debt, living within your means, etc. and now having to bail everyone out, but you'll DO NOTHING about it.

 

Nobody wants to hear somebody just b1tch. Get off your a$$ and do something.

Yes..I'm calling you out.

 

The problem (as I clearly laid out for all of you in lamen's terms) is the methodology for obtaining credit (or creating it).

THAT is the real problem. Credit has been around forever in one form or another.

It's when you borrow, and having nothing to back it with that causes problems.

 

Fractional Reserve Banking is THE problem. Period.

That means the Federal Reserve MUST BE SHUT DOWN, and the US Dollar MUST be backed by Gold or Silver (which also PREVENTS fractional reserve banking).

 

Until you comprehend those facts...you're no help to alleviate the same problem that plagues people like you and I.

 

Am I pi$$ed off...you're goddamned right I am. I just know who to be mad at.

You and I need to sit down and have a beer.

 

Read something. http://en.wikipedia.org/wiki/Fractional-reserve_banking

[NorthernVike 2,080]

You and I need to sit down and have a beer.

 

 

 

I'll drive

[heavy-set 39]

My Dad said it built character.

so does a paper route

[fruitjacket 0]

I'll drive

 

 

Fair enough.

[TheBlade 3]

I'll drive

I think you and I are the only ones that caught on.

 

That was slick and nobody else has said word one about it.

 

 

 

 

Time until everyone starts going back and re-reading the posts.....5...4...3...

[Superdude 4]

Fractional Reserve Banking is THE problem. Period.

That means the Federal Reserve MUST BE SHUT DOWN, and the US Dollar MUST be backed by Gold or Silver (which also PREVENTS fractional reserve banking).

http://en.wikipedia.org/wiki/Fractional-reserve_banking

 

Good Idea, but that will be disaster. There isn't enoough gold and silver in the world to back up all the us dollars in the world. That would collapse the dollar to be worth nothing, causing a gold+silver rush. Welcome to a new world order.

[fruitjacket 0]

Good Idea, but that will be disaster. There isn't enoough gold and silver in the world to back up all the us dollars in the world. That would collapse the dollar to be worth nothing, causing a gold+silver rush. Welcome to a new world order.

 

 

Not actually retardo.

 

It would just inflate the value of gold.

 

Also....nice username. Where'd you steal it?

[pt_mck 7]

Learn to assimilate. Socialism is coming, and you will BE punished if you do not obey.

 

I'm in the same boat buddy. I bought my house in June of 2006. At the freakin PEAK of overvalued homes. I paid $220k for a house that I just discovered is worth a rock-solid $178k.

I haven't missed a payment or been late once. And while I'd love to walk away from it and just let the Govt say "it's ok", I'm not going to.

Because it's wrong. Period.

 

Are you planning on selling your house? No then you haven't lost a dime. Eventually the markets will recover then your house value will go up.

 

If you had $15,000 in your savings/chequing account in a bank that goes under what happens to that $? It's protected by federal deposit insurance right? Well how much is the gubment going to pay out in those claims if many banks go under? Gubments going to pay in front or in back one way or another.

[The Moz 69]

Are you planning on selling your house? No then you haven't lost a dime. Eventually the markets will recover then your house value will go up.

 

WE will be in a bear market for maybe 10 years and that's if things go well.

 

If we fix what we broke housing won't be going up to where it was - it will be set at the level it is supposed to be.

 

in 20 years - salary went up 2X while housing 5X -- Housing costs must not exceed the rate at which salary increases.

[Mungwater 588]

Are you planning on selling your house? No then you haven't lost a dime. Eventually the markets will recover then your house value will go up.

 

Just hope you don't move for the next fifteen years.

 

Your house will not go up in a bear market. Actually, it probably won't go up, it'll just go to where it needs to be.

 

ETA: The Moz got to it before I did

[pt_mck 7]

WE will be in a bear market for maybe 10 years and that's if things go well.

 

Basing this on...?

 

If we fix what we broke housing won't be going up to where it was - it will be set at the level it is supposed to be.

 

So you overpayed for your house when you bought and are complaining now?

 

in 20 years - salary goes up 2X while housing 5X -- Housing costs must not exceed the rate at which salary increases.

 

 

So housing levels will be set where it's supposed to be but go up 5x in 20 years?

 

What is your argument? You complain when your house has low value then complain when the market value outpaces salaries?

 

Market value in a property is going to fluctuate but over the long term but you should easily recoup your investment.

[fruitjacket 0]

Basing this on...?

So you overpayed for your house when you bought and are complaining now?

So housing levels will be set where it's supposed to be but go up 5x in 20 years?

 

What is your argument? You complain when your house has low value then complain when the market value outpaces salaries?

 

Market value in a property is going to fluctuate but over the long term but you should easily recoup your investment.

 

I rather enjoy your argument that The Moz's replies have no basis, and then turning around and using a stupid remark such as the one bolded above as proof.

 

My argument to you is simply this: Did your house lose value, or were you the ONLY one where the value went up in the last 2 months?

 

Arguing that housing values will appreciate isn't dumb. I get that...but your point doesn't carry much weight when we're in the current crisis and most people's 401k's have lost upwards of 30% of their value (if not more) and house values drop every single day.

[The Moz 69]

Basing this on...?

So you overpayed for your house when you bought and are complaining now?

So housing levels will be set where it's supposed to be but go up 5x in 20 years?

 

What is your argument? You complain when your house has low value then complain when the market value outpaces salaries?

 

Market value in a property is going to fluctuate but over the long term but you should easily recoup your investment.

 

A. Most speculators are saying we are focked for the next 10 years in the market - and that's if were lucky to only be in a bear market and not take on a full scale depression - google it.

 

B. When did I complain about my house value? but hey dumbass - EVERYONE who bought a house the last 8 years or so has over paid! THAT WAS THE PROBLEM and a big reason why we are in this mess.

 

Market value was what it was due to lax regulation and EVERYONE being able to get a loan on the cheap -- that MUST and will change causing Housing prices to reflect what people can actually afford. Your home value might go back but not for a long time. Look at Cali for example of much housing has gone down. Hell here in NW Indiana a house that was bought in 05 for 350K just sold for 260 - and the owner was thrilled.

[pt_mck 7]

I rather enjoy your argument that The Moz's replies have no basis, and then turning around and using a stupid remark such as the one bolded above as proof.

 

My argument to you is simply this: Did your house lose value, or were you the ONLY one where the value went up in the last 2 months?

 

Arguing that housing values will appreciate isn't dumb. I get that...but your point doesn't carry much weight when we're in the current crisis and most people's 401k's have lost upwards of 30% of their value (if not more) and house values drop every single day.

 

My market value has grown 100% in the past 7 years and is now stabilized at it's current value. I don't care about the current value of my house. If I lost 20% or gained 20% in a given year I wouldn' care. Over the long term the value will appreciate.

 

This is the panic mentallity that perpetuates recessions. People percieve a paper loss and panic and sell for a loss.

 

Don't sell your 401k now. The 30% lost will recover. Invest more in your 401k now because prices are low and you can buy more shares and make more money.

 

Jeebus people buy low sell high!!!

[Superdude 4]

Not actually retardo.

 

It would just inflate the value of gold.

 

Also....nice username. Where'd you steal it?

 

Okay fruitcake, how many US dollars are in circulation? I tried to look it up here: http://www.treas.gov/ But it makes no mention of this probably because they don't want this information out there. The shear number of dollars and it's current value can not be transferred into gold. There isn't enough of it to be mined out yet.

 

BTW No I didnt steal the name.

[Superdude 4]

Okay fruitcake, how many US dollars are in circulation? I tried to look it up here: http://www.treas.gov/ But it makes no mention of this probably because they don't want this information out there. The shear number of dollars and it's current value can not be transferred into gold. There isn't enough of it to be mined out yet.

 

Let me dumb this down for you....

 

Let's take all the gold in the world and make one big brick...

 

Not let's take all the US dollars in the world and make one big stack....

 

Now for each dollar, let's chip a small piece of the gold that is in relation to the current value os a dollar and stick it on each dollar.

 

You will run out of gold before the dollar stack is complete....

[fruitjacket 0]

Let me dumb this down for you....

 

Let's take all the gold in the world and make one big brick...

 

Not let's take all the US dollars in the world and make one big stack....

 

Now for each dollar, let's chip a small piece of the gold that is in relation to the current value os a dollar and stick it on each dollar.

 

You will run out of gold before the dollar stack is complete....

 

 

Or....you could increase the value of each 'chip' of gold until they are equal with the amount of cash. Then all subsequent transactions of printing money by the government would necessitate the acquisition of the appropriate amount of gold.

 

Jesus Tapdancing Christ you're stupid.

[Savage Beast 1]

All I know is that I live in a small house out in the woods in Oklahoma. None of this economy crap has any effect on me. A country boy can survive.

[Mungwater 588]

All I know is that I live in a small house out in the woods in Oklahoma. None of this economy crap has any effect on me. A country boy can survive.

 

I've been in Oklahoma for the last ten months, the banks should be giving you money for willing to live in this schithole. I don't know why anyone would live here on purpose.

[Savage Beast 1]

I've been in Oklahoma for the last ten months, the banks should be giving you money for willing to live in this schithole. I don't know why anyone would live here on purpose.

 

I was born and raised in this shithole state, it's all I know?