"Darn. That sucks but it's nothing compared to the number of other businesses that are shutting down. It's only going to get worse as some of the smaller and mid-sized businesses get socked with higher taxes next year." - Richard Miles
“I'm agreeing with Alex Scoble - it's not a bailout. It's a rescue. Yes, the money goes to the big financial institutions. But you've got to realize we've all benefited from those institutions in the past. They don't exist in a vacuum.”
I'm with you Hutch. I've said it before and I'll say it again, this 'rescue plan' needs to happen. I am just disappointed that the original bill didn't pass so the politicians could have the time they needed to add all sorts of complete nonsense to the bill. - Aaron Krug
I'm not sure buying mortgage-backed securities is the right answer, but if this crisis encourages executives to think twice (or even once) about being highly-geared all to the good. - Flitcraft
It's like spitting in the ocean, guys. It's not going to help. It'll help for a few weeks, maybe. No one believed me five years ago, no one believed me a year ago, and no one seems to believe me about this bailout bill now. So, that's cool - let's have this conversation again in a month or so... round and round... - Anthony Citrano
We've benefited from these institutions? They're the ones that created all this bad debt. They're the ones that caused this problem. They're the ones that should take the brunt of this. If we prop up failures, we'll be looking forward to massive inflation and probably the continuation of lousy financial practice. If you knew the government wasn't going to let you crash and burn for being a loser, why would you ever stop? - ·[▪_▪]·
Anthony - I'm not going to predict the future on this one. I'll defer to the Treasury and Fed Reserve. But there is a huge credit freeze occurring right now, which will affect all of us. Letting institutions die over several months won't help the credit freeze. It's just going to make everyone skittish. - Hutch Carpenter
d[▪_▪]b ♫ - Those institutions are the underpinning of the capital markets. The things you buy - they come from companies that made them. To make those things, those companies tapped the capital markets. Lose a fluid, well-functioning capital market, and you lose out on a lot of the things we enjoy today. But no one really sees the role of capital markets that way - it's all "hidden" in the CFO's office and in financial institutions. - Hutch Carpenter
The bill needs to be dropped until the $112 billion in earmarks are gone. - Spencer
Well, there already is a credit chill. Let's be clear. Credit has not stopped, nor will it likely with so much money out there. It will tighten ... a lot. But ... why not? We've all been complicit in the easy money culture. As for buying the paper, the last round was at 22 cents on the dollar. If we pay over that we're getting a bad deal. - AJ Kohn
Trickle down effect. You want a mortgage the big lenders need to exist in a secure place, if you want those GM interest rates GM needs financing for themselves and their financing arm. The majors really affect us, it just occurs more indirectly so people don't see how it affects them thus the sense of being ripped off when the Gov steps in. - Roger Kondrat
We aren't talking about personal credit here though AJ, but institutional credit. The kind that most businesses need in order to run their businesses. - Alex Scoble CISSP
Again, businesses with good risk profiles will still get credit. Those that don't ... won't. When VC money gets tight startups need real business plans ... is that so bad? - AJ Kohn
I'm not talking about startups here...What about businesses that are designed to run on very thin margins? What do you think this does to them when their loan rates go from 2% to 8% overnight? This is a real problem that if it gets worse could seriously damage the entire system. Now maybe you can ride out the storm, but most of us can't. - Alex Scoble CISSP
I know I sound like Scrooge McDuck but ... if a business runs on very thin margins and is counting on historically low loan rates to stay in business ... what does that say about the business? I get that it sucks but ... businesses are not entitled to these things. In fact, I'd posit that the bust of weak businesses gives rise to new, better ones. As for riding out the storm - where is the data to say that most (which makes it seem like it's >50%) won't make it. - AJ Kohn
AJ - the loan rate is actually pretty instrumental to capital expenditure decisions by businesses. Spike it up a few points, a lot of new development stops. And it's not just the rate. It's the availability of credit at all. - Hutch Carpenter
@Hutch: Yes. The market is more illiquid now because they're waiting on Congress. Why dump the bad paper at 20 cents when the government is going to buy it at 50 cents. They're waiting to see how much they'll have to loan and how much to reign in lending. Think about it ... what better way to get the sweetheart deal than to sit on the money. - AJ Kohn
Well if the fair market price is currently at 20 cents, then that's what the government should buy it at.... - Alex Scoble CISSP
When you dump assets at 20 cents on the dollar as a bank, you end up with an out-of-whack balance sheet that makes it hard to get new funds from anywhere. That flows from the CFO's back-office to the front door where credit is extended. - Hutch Carpenter
@Alex: I'd be ... less unhappy if that's what occurred but I've heard Bernanke essentially say they'll overpay because the real value would create too high a writedown for some and push them into bankruptcy anyway. They're banking on holding this for 20 years and coming out ahead. Do we think the government is smarter than the bankers when it comes to risk/reward calculations? - AJ Kohn
@Hutch: Absolutely! So, why not let the stronger banks take the risk on these assets instead of the government. The banks have already dialed back lending (for a year or so now) and have a better way to defray writedowns through strong lending right? - AJ Kohn
BTW - I very much appreciate the dialog here and I know I'm not necessarily right. [edit] But I think I am ;) - AJ Kohn
Hutch, I'm not asking people to predict the future - but rather to logically look at the numbers and rather than panic about this latest threatened mushroom cloud and do something expensive yet useless like this bailout. Mostly agree with what AJ is saying here. If you're running your business (or your life) entirely on credit vapor, there's something fundamentally wrong. And Alex, consumer credit is a major contributing factor in this issue. Mortgages, HELOCs, etc... - Anthony Citrano
If these banks are all teetering, but it's happening over a period of year, it's going to be ugly. We will have a recession on our hands. - Hutch Carpenter
I don't see why letting them fail is a big deal. America has been living beyond it's mean on credit for a long time. People are encouraged to go into debt for everything from houses and cars and boats all the way to gas and groceries. Why pay cash when you can put it on credit? Oh, is your card maxed? Get another one. Here, use another to buy clothes. It is absolutely insane that people have to go the point where nearly everything is paid for on credit. Finally, their greed has got to them and I say let them all burn. - Jason Shultz
via twhirl
I haven't borrowed a dime since 1988, and I don't appreciate paying for those who borrowed or lent using bad judgement. - Chris White
I don't have any credit cards. I don't pay for things I can't afford. I run my business (very successful, debt-free) without relying on credit. I don't appreciate having to pay for those who don't "get" this simple rationale. If you don't have the money for something, then don't get it. I say let them fail. But that's just me. - Andru Edwards
Jason, Chris - your focus on personal virtue is understandable. I agree with the sentiment. But this thing is bigger than teaching a lesson on the perils of borrowing. - Hutch Carpenter
what concerns me is that i see three different problems here: mortgages, commercial paper, and banks. while i understand they are related, i am not convinced that they all need the same solutions. i also haven't heard enough about the 'rescue' bill that deals with each of them. finally, i am not *at all* convinced we should be pfutzing around with tax policy while we try to sort this out. congress gets a big FAIL on this one from me. - MikeAmundsen
I'm predicting right now this bailout bill isn't going to work and I'm preparing myself for it. I suggest you do the same whether you agree with me or not - Bwana
Okay, tell me how to make housing prices in San Francisco go down. I'll vote for that bill. - Chris White
This is not a bailout bill, and it's not a rescue bill. It's a calm-down-folks-please-no-bank-run-we-need-your-deposits-please-buy-stocks-again-itsok-and-we-will-eventually-maybe-figure-something-out-and-hope-for-the-best bill. - Aviv
Great link Glen. From the NYT article: "Banks own a lot of long-term assets (like your mortgage) and hold a lot of short-term debt (which is cheaper than long-term debt). To pay off this debt, they need to take out short-term loans. In the current environment, bankers are nervous that other banks might shut them out, out of fear, and stop extending that short-term credit. " - Hutch Carpenter
Deflation will be good for the economy....in about 3 years. No bailout, no more bad housing welfare. Maybe real estate agents and mortgage brokers won't be so smug about prices always rising now. - Chris White
buffett agrees .. me, i think a three year process has just begun ... - Gregory Lent
I think that everyone is forgetting that behind everything are real people with real jobs doing real things. When those things stop getting bought, real people lose their jobs which causes them to stop buying things which causes more real people to lose their jobs. This isn't just some intellectual exercise. - Alex Scoble CISSP
No, it's not an intellectual exercise. I've been telling people for years that the real estate crisis is coming. This bill is not going to stop it. - Chris White
I agree with you Chris. What will help is to not throw good money after bad. - Richard Miles
Chris - you and me both. It's a bit frustrating to have been howling about something for years (along with many smarter folk), be written off collectively as chicken little nutjobs, then when it all comes to pass people act like: "gee, not my fault! how could I have known??" - Anthony Citrano
Mother assists teen daughters in stabbing death of elderly man. Write-up and mugshot provided. - DreaminDemon
Haven't been to the site to read this yet but I did run across it at Steve Huff's site Mother of the Year post). $15 was the take. Hope that was worth it for 'em. - Richard Miles
The American Red Cross helps keep people safe every day as well as in an emergency thanks to caring people who support our work in the community. Please support your local Red Cross - Richard Miles
No doubt. I quit adding people that I don't want to hear anything from and as soon as I get the time am going to head over and dump them. Right now I have about ten people's updates actually sent to my phone, the rest in Limbo. - Richard Miles
I love and use both pandora and last.fm...not sure if there's room for a 3rd. - Hal Rottenberg
via twhirl
The main thing I use Last.FM for is audioscrobbling my local tunes. I only rarely listen to streaming "radio", so Winamp and the Last.fm scrobbler plugin work just fine for me. - Richard Miles
I don't do a heck of a lot of television but In Plain Sight is one I enjoyed this year. I thought the finale was pretty good and the end was actually somewhat unexpected. I had thought for a couple of minutes that they were going to leave us with a serious cliff-hanger. - Richard Miles
HONK HONK MEEP HONK! (That was my day, hurting teeth in the morning, getting better around 3-4, then realized my bank account had $1,000 less than I thought). - Brandon Titus
Brenda, was it Sungrass or Sawgrass? Rings a bell for some reason. I seem to remember reading something that sounds like what you are talking about.
Hairydawg, heck yeah. I am the same way. I occasionally write about crime here but I don't know what attracted me so much to this story. Actually now that I think about it I do. The first picture of Caylee that was published online where she is lying with her face in her hands bears a pretty close resemblance to my five year old daughter.
Danielle, I saw some of it as well and then just finished listening to the audio a little while ago. After having listened to Cindy Anthony several times I am beginning to think that she just has her head stuck in the sand and like Natalee Holloway's mother is just grasping at straws. I honestly don't even think she's crazy. I know if one of my children were missing there isn't anything I wouldn't do to get them back as soon as I could. - Richard Miles
via FriendFeed MT Plugin
