The US Economy in the crapper starting Monday?

[hanratty21]

So, let me get this straight, Frets. It's ok for you to lie on the internet about various conspiracy laden concepts and all kinds of fat-cat nonsense that you speak of, but if someone wants to lie about poker on this same forum that you choose to plug full of half-truths and pseudo-news quotes, you close the thread? I call shenanigans.

[Frets]

Wakey, Wakey.

While it was a bad week on wallstreet that lead to the bailout plan contrary to popular belief it wasn't the worst week since the great depression.
Look back 21 years ago.
Also look at Kashkari's plan. He's partially nationalized the top banks so that (alledgedly) they can infuse capital in the smaller banks. A smarter plan would be to simply use the capital to invest in the smaller instituions. If the bigger banks don't want to play the game find out what happens when they are competing against the government. Or aquire the debt at market value from the banks and set a fixed rate that consumers can pay.

The source of the banking problem wasn't fannie and freddy. It was overvaluing the purchase by lenders in order to sweeten the pot on returns. Banks and thier insurers failed to see the risk in selling loans that would be beyond the means of consumers to pay back.

[hanratty21]

It was a bad year (or what could have been several years) that led to the bailout. Let's get that straight.

Now, why is it that the plan (allegedly) infuses capital? Is this because it wasn't originally posted at www.mymomsnewsbasement.com or some other schlock organization that manages to claim themselves as newsmen, though their agenda is to post lies and half truths in order to further their own popularity by getting conspiracy theorists to buy into their nonsense?

Next part...why is it that only the LENDERS were overvaluing these properties? Isn't it even remotely possible that greedy purchasers were just as culpable in the process? It behooves those looking to get in and out of a property in a year or two to have the value of that property inflate by double digit percentages year after year probably even moreso than it would the original lender.

I've said it before, I'll say it again. Banks are not in the real estate business. Foreclosures and bad loans are bad for business (case in point with today's mess that we are in.) Once you accept that fact (yes...bolded for effect) than we can begin to agree on those pieces of information that are truths...and those that are half-truths.

[Frets]

So of course now you are stating that two former Goldman Saks employees had nothing to do with them bailing out Goldman Saks

The mess the banks are in is the mess they made for themselves. Last time I looked there are at least two parties in a loan three if you count the insurer.
EVP whined earlier about stupid people making bad decisions when they signed the loan. I submit that the party that draws the contract should understand the risks and be prepared to face them.

[gerbick]

Frets... I'm gonna have to say that the banks are in a mess because consumers have been living above their means for far too long. Banks wouldn't suffer if people paid their bills on time.

Now of course, that leads to the argument to why people couldn't pay their bills... but it's really down to the payer. They pay, not as many problems.

[koolbabs2000]

Lately, there has been a lot of discussion about the Lehman crisis. Spending money that they didn't have and going beyond their means is one of the main reasons for their situation today. In fact, that is the cause for the current economic crisis in the US. When one sees all this happening, one can only remember the good old days. Then, 'karz' was bad. People looked down upon those who took loans. Parents would not give their daughter's hand in marriage to a man with loans. But of course, times have changed now.

Almost everyone has a loan. The buzz word is EMI (equated monthly installment). Today, one can buy everything on EMI - a house, a television, an i-Pod. In fact, someone just bought a fancy BMW 3 series on EMI, instead of buying a cheaper car outright with cash. Many prefer to take public transport, but they are old men with old thoughts! Coming back to what caused the crisis ... imagine having Rs 2 lakhs in your bank account, no regular income, yet buying a house worth Rs 65 lakhs, in the hope of selling it for a higher price. Even if the price of the house fell by just 5 per cent (that is Rs 3 lakhs), one will go bankrupt.

This is what Lehman Brothers did. With around USD 20 billion, they went and bought assets worth over USD 600 billion. Isn't it suicidal and simply foolish?

There are a few lessons which may be learnt:

1. Live a balanced life and avoid overspending.

Tip: As soon as you get your monthly salary, set aside a fixed amount, usually 35 per cent, for insurance, savings and investments. You can spend the rest.

2. Not all loans are bad. Loans that are 'need based' (home loans, education loans) can always find a place in your finances against those that are largely 'want based' (personal loans, car loans).

3. Borrow only if repayment is financially comfortable.

A thumb rule: Keep EMIs within 30 per cent of your monthly income.

[hanratty21]

@koolbabs - your statement about Lehman is 100% correct.
@Frets - Goldman is not Lehman.
@Gerbick - again...correct.

Banks make money when they lend money and collect more interest than they are paying out to depositors. That's it. There is no magic pill, no X-File, no conspiracy. That's it. When commercial banks don't get paid, they lose money. That's it.

I get it Frets. It's you against the world. The entire system of the world has been set up by some skull and bones lunatics with a hidden agenda to fleece you and the rest of the sheep out of their money and life. The government, Wall Street, the power companies, Microsoft, Amtrak, Quiznos, and even pulitzer prize winning news agencies have all colluded to create some grand scheme which will leave you attached to a blood/money sucking machine for years to come. I get it. I really do. Perhaps it's time to pick a pill and leave the Matrix altogether.

[FlashLackey]

If banks have to offer sub-prime loans in order to open a branch in a new neighborhood, they have to pick their poison.