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crisis over?

I think I get it. The problem is that the 10% is hurting the banks in a significant way. Banks still have to pay employees, and pay off the loans that they themselves have made. They also need to make sure that customers have access to the money that they have placed into the bank.

So the banks become worried. They stop lending to other banks, and drastically slow the rate of business and consumer loans as the economy continues to decline. Now there is very little cash floating around. The bank is worried that they will lose everything. They are worried that the other banks who owe them money will go under, and be unable to pay their loans. They especially worry that people with savings accounts will suddenly appear and demand to empty the accounts...

So business slows down for a while. No new investments are made. They try to desperately juggle the foreclosed properties, which they don't want, and will likely lose a lot of money on. You buy a house for $250'000. Bank loans you that money, which you give to the seller. You promise to repay that money, plus interest over 25 years. You default after a year. Bank forecloses, and owns a house. They get rid of the house at a foreclose auction for maybe.. lats say $150'000 (As I pull numbers out of my ass). Bank loses $100'000. Put that over 10% of all their mortgages. Banks don't want your house. They want your MONEY. Without money... Bad things happen to banks.


Very simplistic, but I think I have the basic gist correct.
 
Yes that is a good outline.

The part of this that has been "mis-sold" to the public *and* US congresspeople in a more disastrous way than any securitised loan ever was, is the notion that "bailing out banks" is in any way optional if the government is going to support the credit flow to the economy. It is simply not possible to support it any other way.

The other political acts that are quite lamentable IMO are those that came from some European ministers who as recently as last week end were saying that this was not a big issue for European economies. At least that seems to have changed, courtesy of European banks now tottering over at the rate of almost one per day.
 
Shalamar said:
I think I get it. The problem is that the 10% is hurting the banks in a significant way. Banks still have to pay employees, and pay off the loans that they themselves have made. They also need to make sure that customers have access to the money that they have placed into the bank.

So the banks become worried. They stop lending to other banks, and drastically slow the rate of business and consumer loans as the economy continues to decline. Now there is very little cash floating around. The bank is worried that they will lose everything. They are worried that the other banks who owe them money will go under, and be unable to pay their loans. They especially worry that people with savings accounts will suddenly appear and demand to empty the accounts...

So business slows down for a while. No new investments are made. They try to desperately juggle the foreclosed properties, which they don't want, and will likely lose a lot of money on. You buy a house for $250'000. Bank loans you that money, which you give to the seller. You promise to repay that money, plus interest over 25 years. You default after a year. Bank forecloses, and owns a house. They get rid of the house at a foreclose auction for maybe.. lats say $150'000 (As I pull numbers out of my ass). Bank loses $100'000. Put that over 10% of all their mortgages. Banks don't want your house. They want your MONEY. Without money... Bad things happen to banks.


Very simplistic, but I think I have the basic gist correct.
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The problem is a lot of people are cheering the idea of Bad Things Happening To Banks, not understanding that soon Bad Things Will Happen To Them if no one can get credit or a loan.
This is why the Lou Dobbs of the world and their demogogury on this issue is so dangerous. And Dobbs, with his experience of covering the economy, should really,really, know better.
 
Hmmmm.....

Credit restricted...

Assets stuck...

Money can't move...

So basically the economy is constipated and Congress is about to attempt the Worlds Largest Enema.



<snnnnaaaaaap>
This may hurt a bit.
:eye-poppi
 
dudalb said:
Boy, that last statement will really go over well here.
As General Sherman said "Vox Popoli, Vox Humbug".
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I think you may have misunderstood me (or perhaps I you?). I wasn't suggesting that the view I perceived the majority to have was right.* I was just saying that I think a lot of people will not understand the detail but will just feel a little chagrined that, to them, we seem to be talking about bailing out the banks who've made billions of dollars profit in previous years just because they've ballsed up and made a loss now.

*Just as I thought I'd made it clear that I recognised that my view was probably naive.
 
drkitten said:
ROI is "return on investment"; basically, how much money you make for every dollar invested in the business.
And, yes, it's related to risk tolerance
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Err, I am quite AWARE of what ROI means thank you.
Quite possibly. That's not, however, a good thing. It means that you're wasting a lot of profit-making opportunities.
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That's a matter of opinion and perhaps a valid business model, but just because you see it that way doesn't mean I have to agree with it.
Yes, if you take BIG risks you COULD make BIG profits, but you could also lose your shirt.
Different strokes, I guess!?

Actually, it means exactly the opposite; when the uptake happens, they'll be returning something like 10x the profits you are, precisely because they're fully-invested in the business instead of running it like a hobby.
Especially if you're the sort of hobbyist that doesn't even track your ROI.
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Total line of unsupported BS NOTED? When was the last time you looked at my books to know whether I track ROI. As for hobby - well I guess if I show a mid to high 5 figure profit for the last 10 years instead of going into debt and living off of credit cards I don't have a REAL business - must by nice to live on planet businessidiots
 
Think it's time to do a inventory on small items like light globes, bottled gas,etc all the things that ain't made local could be impossible to get. I'm old enough to remember my father bringing home a bag of rice on his push bike that he had bought on the black market in rural Australia 1944. The local shops only had local product, seems like it's happening again. Once the commerce motor stops it will be hard to start again.
 
Old Bob said:
Think it's time to do a inventory on small items like light globes, bottled gas,etc all the things that ain't made local could be impossible to get. I'm old enough to remember my father bringing home a bag of rice on his push bike that he had bought on the black market in rural Australia 1944. The local shops only had local product, seems like it's happening again. Once the commerce motor stops it will be hard to start again.
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Uh no.
 
Old Bob said:
Think it's time to do a inventory on small items like light globes, bottled gas,etc all the things that ain't made local could be impossible to get. I'm old enough to remember my father bringing home a bag of rice on his push bike that he had bought on the black market in rural Australia 1944. The local shops only had local product, seems like it's happening again. Once the commerce motor stops it will be hard to start again.
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You have been watching "Mad Max" too often.
 
drkitten said:
That's funny, you weren't ten posts ago.
You can't track what you don't about.
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REALLY, What the Rule 8 ARE you babling on about???


If you are talking about this
Translation : My business has an ROI almost indistinguishable from a mattress.
... especially if you can afford to lock half your yearly expenses away in a cash investment.

wow - could you translate that 'cause I don't even know if I am supposed to be insulted or what!?
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I was refering to your incoherent what ever it was about a mattress! Which, on reading it again, I THINK you may have meant that my RETURN ON INVESTMENT is flat as in not making a lot of money?! .

But if that is the case then where would I get the excess cash to pay my current bills, invest in my company AND afford to save enough money to cover my expenses for 6 months.!?
So your comment just appears to be idiotic without a coherent explaination of what it is you meant to say.
 
I had to leave for a while, but let me get back to the original reason I returned to this post.

It seems that the Bail Out in now soundly WORKING!
At least it seems so if yuo ignore everything else other then what the folks at AIG are doing - which it having a PARTY!

It only took these scum bags A WEEK to piss through $400,000

I don't know abuot you but THAT's SEVERAL YEARS OF MY SALARY and I know it's MORE THEN 12 YEARS of the average income!


And what did they do with it - Spaw treatments at a private resort. NICE!
So not only do they NOT think that there is a crisis having their company in bankrupcy the new infusion of TAX dollars naturelyy made them thing VACATION.


Yea we DEFINATELY NEEDED the bailout. after all you simply can not get a decent facial on private money.,
 
Magyar said:
So your comment just appears to be idiotic without a coherent explaination of what it is you meant to say.
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Let me put it this way, very bluntly.

I don't take diet advice from fat people.

I don't take money management advice from poor people.

Based on everything you've said in this thread about your oh-so-marvelous business, you've put yourself firmly in the "don't take money management advice from Magyar" camp. You don't know how to manage your own lemonade stand, and you're telling me that you know better how to manage a multibillion dollar company?
 
Old Bob said:
Think it's time to do a inventory on small items like light globes, bottled gas,etc all the things that ain't made local could be impossible to get. I'm old enough to remember my father bringing home a bag of rice on his push bike that he had bought on the black market in rural Australia 1944. The local shops only had local product, seems like it's happening again. Once the commerce motor stops it will be hard to start again.
Click to expand...

Okay, everyone is laughing at this, for no reason. Take a step back and think about it for a second.

The money supply is going to get lower. That means that the banks are going to pull loans on borderline customers.

Who are they? Well sometimes bad mortgages, sometimes small businesses, and sometimes truckers. Yup. You know RoadToad? He has tales of woe about how goddamn much the trucking industry already sucks.

Throw in random collapse of part of the network of truckers who are in the margins, random collapse of the businesses they are shipping too, etc., and you have a small problem.

It is not the 'end of industrialized society.' It just means that there may well not be any lightbulbs or tissues or toilet paper or soap one week.

Yes, it will all sort itself out eventually, but if you're in a small town, it probably doesn't hurt to have a weeks supply of any nonperishable you can't do without (hint: TOILET PAPER) just in case.
 
GreyICE said:
Okay, everyone is laughing at this, for no reason. Take a step back and think about it for a second.

The money supply is going to get lower. That means that the banks are going to pull loans on borderline customers.

Who are they? Well sometimes bad mortgages, sometimes small businesses, and sometimes truckers. Yup. You know RoadToad? He has tales of woe about how goddamn much the trucking industry already sucks.
Click to expand...

Why would trucking be so vulnerable?

Obviously, starting up in road-haulage can be very capital-intensive, but there are many operators out there who can continue their existing business without needing further credit. If lenders are wary, some fleet renewals might get postponed, but so what? Somebody will still take goods from A to B, as long as that somebody can invoice for more than the cost of fuel, pay, wear & tear &c.

Pressure on fuel prices has eased, too.

I'd worry more about the construction industry. ;)
 
bobrayner said:
Why would trucking be so vulnerable?

Obviously, starting up in road-haulage can be very capital-intensive, but there are many operators out there who can continue their existing business without needing further credit. If lenders are wary, some fleet renewals might get postponed, but so what? Somebody will still take goods from A to B, as long as that somebody can invoice for more than the cost of fuel, pay, wear & tear &c.

Pressure on fuel prices has eased, too.

I'd worry more about the construction industry. ;)
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Someone can get the goods there. Without a weeks slippage? Well, maybe. Maybe not. If you're in a big urban area, you're fine. If you're out in the country where the power can fail for a week at a time, well... stock some stuff. After all, someone theoretically should be fixing those power lines too...
 
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