US Bailout fails- Wall St dives

[jaybone]

I'm not a crazy politic or economic head but I've been watching what is going on in the US with a keen interest. Sorry if this is in the wrong forum, but I think it's pretty relevant.

This is truly some crazy shit.

I still haven't fully formed my opinions on it all, as I can see valid arguments both for and against the bailout.

I don't really want to reward the corporate dumb-asses who had no regard for simple economics and gave out way too many stupid loans.

But the effects on the average American who may lose their retirement savings is pretty damn scary. As Canadians, we are sleeping next to the elephant, as they say, so you know a lot of the shit will be heading here as well.

So, Congress just voted against the bailout- Wall St has taken it's biggest one day drop ever- bigger then 911, and tomorrow I am hoping we can pick up the pieces.

Any thoughts on, what may be, a pretty damn significant moment in our lives? I may be over-reacting. I'm sure my mortgage and savings are safe and I live within my means, but the whole mess has me wanting to join Booche in the basement with our tinfoil hats- counting down the days 'till 2012.

[Groove Fetish]

honestly- my gradmother had been predicting that we were heading for another great depression for years...could be....we'll see. Funny thing in relation to all this is at the show in Saraycuse the otehr night I was chating with a kid form Florida and he said he knew banks in Flroida were running out of money as people we re coming and drawing all thier cash out.

Freaky.

[tigger]

Bail out individual home owners ,also when did putting your funds on the open market did it become secure.This has a giant stink on it.

[Guest Low Roller]

I'm terrified to even look at my mutual fund portfolio right now.

[KarinGarage]

I'm terrified to even look at my mutual fund portfolio right now.

me too! luckily i got 30 years till I'll retire. Hopefully everything will be better by then!

[boiler]

The Ads by google is advertising instant loans in this thread for me.

[Basher]

See, when the banks were reaping ginormous profits, were they sharing it with the American taxpayer? This is an open market. I understand that the collapse of the US banking industry has wide-reaching effects, but where does it stop?

If ALL airlines went bankrupt, would the US government bail them out? Auto manufacturers? I mean, there are a number of industries that touch practically everyone.

[CyberHippie]

I think the shit is really starting to hit the fan and a lot is going to happen over the next few months...

The speaker of the house referred to the US being in a state of marshal law, and we all know what that means... The US has also stationed 4000 troops in the US, to quell any civil uprisings. Police state here we come!

Things are going to happen pretty fast now until 2012...

Will the UFOs show themselves on October 14th? Or will something else big happen on that date? Will there still be a US election?

Keep you eyes peeled, I think things are about to get real interesting...

[CyberHippie]

If ALL airlines went bankrupt, would the US government bail them out? Auto manufacturers?

I was under the impression that the governments were bailing out the the airline and auto industries on a very regular basis?

[dancingbear]

yeah they just gave the auto industry 25 billion.

[boiler]

Capitalism is just a theory. A theory which has repeatedly failed to prove itself in this century. It's self serving to only help certain people in society, while all the regular people in the world get fucked, over and over again. What we need is a new economic hero to come up with something new, that works.

[phishtaper]

i work with a bunch of senior Economists and this has been coffee chat for weeks now. its an enormously complex situation that has fallout far beyond the housing market. the mortgage sector has essentially become bankrupt and its absolutely necessary to prop it up.

mortgages are routinely packaged and sold as investment commodities and virtually all investment funds, pension plans, businesses with short-term surplus cash, and any entity with money to invest, has been buying these mortgages because of their high return on investment. now that the value of the "asset" has plummeted, everyone is scrambling. its not just the rich bankers that need to be propped up, its the entire mortgage industry and everyone (ie. everyone!) who owns a piece of it. this is kinda like what would happen if tomorrow, gold was suddenly worth half of what its worth today.

thankfully, the type of lending formula used in the US that has caused this crisis isnt in use to any large extent in canada, so we will not take a direct hit. people will not lose their homes here ... but, all canadians with a pension or some other investment portfolios that includes asset-backed mortgages will see a devaluation in them. panic in canada has nothing to do with houses, it has everything to do with investing in US-based mortgages.

and if its any consolation to the masses, most of those rich mortgage bankers who got us into this mess have lost the bulk of their net worths. most have lost between 50% and 90% of what they had. US regulators took steps to prevent them from short selling quite some time ago, so they are stuck with their useless portfolios.

[jayr]

I'm really not that knowledgable about this stuff but if people in the U.S. lose their homes because of this who gets them? The Banks? The Government?

[phishtaper]

whoever holds the mortgage, usually "the bank".

[mark tonin]

whoever holds the mortgage, usually "the bank".

Here's my take on it:

The bank lends somebody money to buy a house, with no money down.

The person who "buys" the house can't make the mortgage payments, and eventually abandons the home.

The home depreciates in value because the housing market is falling and because the home has become run down after being neglected and/or abandoned.

The bank now "owns" the home, but it's worth less than it was before, and they can't find anybody to buy it. In a number of cases, the bank doesn't even want to own the home because the cost of cleaning it up, making it safe, and paying taxes is more than the house is even worth. From what I understand, there are legal battles happening in parts of the US because the banks actually don't want to own certain homes because they are then liable for taxes, cleanup costs, and any harm done to people (squatters) hurt inside. Cities are going to court to force the banks to "own" and deal with these homes.

And people, pension and investment managers, etc. have invested via the banks in these worthless properties. What a mess!

And that's only the housing side of it, which I sort of understand from the reading I've done. Some of the other investment situations out there are much more complex and difficult to understand. In some cases, it's because they don't really make sense, as people are using credit and other people's money in ridiculously risky ways. It makes me appreciate my grandfather's reluctance to use credit and to pay cash for everything.

What a mess.

Peace, Mark

[Schwa.]

and if its any consolation to the masses, most of those rich mortgage bankers who got us into this mess have lost the bulk of their net worths. most have lost between 50% and 90% of what they had. US regulators took steps to prevent them from short selling quite some time ago, so they are stuck with their useless portfolios.

[phishtaper]

Here's my take on it:

The bank lends somebody money to buy a house, with no money down.

The person who "buys" the house can't make the mortgage payments, and eventually abandons the home.

The home depreciates in value because the housing market is falling and because the home has become run down after being neglected and/or abandoned.

The bank now "owns" the home, but it's worth less than it was before, and they can't find anybody to buy it. In a number of cases, the bank doesn't even want to own the home because the cost of cleaning it up, making it safe, and paying taxes is more than the house is even worth. From what I understand, there are legal battles happening in parts of the US because the banks actually don't want to own certain homes because they are then liable for taxes, cleanup costs, and any harm done to people (squatters) hurt inside. Cities are going to court to force the banks to "own" and deal with these homes.

And people, pension and investment managers, etc. have invested via the banks in these worthless properties. What a mess!

that's pretty much it, mark. a colleague was saying he has property in florida and abandoned houses in his area are now infested with pests and mold because water, power, AC, etc. were shut off. he said it could possibly take just 8 to 12 weeks for an abandoned house to get to the point where it would have to be demolished for health/safety reasons. brutal.

[Schwa.]

my dad is a snowbird and went to Ft. Myers last year. when we went to Langerado he showed us entire neighbourhoods of 1-2 million dollar houses that were empty because of this mess. Imagine an entire neighbourhood of empty mansions. crazy.