Post by: peaches626 on October 17, 2008, 03:10:04 pm
Post by: SlimPickens on October 17, 2008, 02:28:03 pm
Hedge Fund Manager: Goodbye ... And Think Pot
Andrew Lahde, manager of a small California hedge fund, Lahde Capital, burst into the spotlight last year after his one-year-old fund returned 866 percent betting against the subprime collapse.
Last month, he did the unthinkable -- he shut things down, claiming dealing with his bank
counterparties had become too risky. Today, Lahde passed along his "goodbye" letter, a rollicking missive on everything from greed to economic philosophy. Enjoy:
Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.
Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, "What I have learned about the hedge fund business is that I hate it." I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.
There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.
I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.
So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don\'t worry about my employees, they were always employed by Mr. Springer\'s company and only one (who has been well-rewarded) will lose his job.
I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life -- where I had to compete for spaces in universities and graduate schools, jobs and assets under management -- with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.
On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government.
Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man\'s interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft\'s near monopoly. I believe there is an answer, but for now the system is clearly broken.
Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won\'t see it included in BP\'s, "Feel good. We are working on sustainable solutions," television commercials, nor is it mentioned in ADM\'s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country?
Ah, the female. The evil female plant -- marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let\'s stop the rhetoric and start thinking about how we can truly become self-sufficient.
With that I say good-bye and good luck.
All the best,
Andrew Lahde
http://www.cnbc.com/id/27239479
Post by: derickw on October 14, 2008, 08:52:12 am
Post by: BennyBoomers on October 13, 2008, 09:41:04 pm
• NASDAQ 1844.25 +194.74 +11.81%
• S&P 500 1003.35 +104.13 +11.58%
This is what the markets closed at today. Historic day to say the least. It was the highest one day jump in the Dow EVER.
Needless to say it was a crazy day at work...glued to my desk and phone all day...
good info on the day:
http://www.msnbc.msn.com/id/3683270/
Post by: krispy on October 13, 2008, 06:08:38 pm
Post by: wildcoyote on October 13, 2008, 03:53:14 pm
Dow Jones Industrial Average(DJI: ^DJI)
Index Value: 9,207.61
Trade Time: 3:41PM ET
Change: 756.42 (8.95%)
Prev Close: 8,451.19
Open: 8,462.42
Day\'s Range: 8462.18 - 9222.58
52wk Range: 7,773.71 - 14,168.50
Post by: Spacey on October 09, 2008, 01:00:44 pm
Quote from: wildcoyote;207015
I\'m not hiding anything. I run my own finanical planning/brokerage business (for now).
Spacey- I\'ll send you a business card and brochure in a nice hand addressed envelope.
You and I might have something to talk about, sir.
Please do. I will look at it and depending on if I feel like I am getting sued or not, I might keep it but it might also end up in the trash.
Post by: wildcoyote on October 09, 2008, 12:54:53 pm
Spacey- I\'ll send you a business card and brochure in a nice hand addressed envelope.
Post by: FreeSpirit on October 09, 2008, 12:44:54 pm
Post by: Spacey on October 09, 2008, 12:40:13 pm
Quote from: wildcoyote;207001
Quote from: SlimPickens;206866Quote from: Spacey;206851Quote from: SlimPickens;206841Quote from: wildcoyote;206789Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
D..A...M..N!!!
What exactly do you do for work, wildcoyote? You in evictions?
re-po man, slum lord?
Funny you say that. I did evictions from 1999-2002. Though if this keeps up I may seek work in the field again. It\'s certainly a recession proof business.
As for repo man, slumlord, I\'ve never invested in a tow truck or a slum. Though upon further examination of my stock portfolio, that was my folly.
Don\'t explain yourself, boss, answer the question.
Post by: wildcoyote on October 09, 2008, 12:32:51 pm
Quote from: SlimPickens;206866
Quote from: Spacey;206851Quote from: SlimPickens;206841Quote from: wildcoyote;206789Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
D..A...M..N!!!
What exactly do you do for work, wildcoyote? You in evictions?
re-po man, slum lord?
Funny you say that. I did evictions from 1999-2002. Though if this keeps up I may seek work in the field again. It\'s certainly a recession proof business.
As for repo man, slumlord, I\'ve never invested in a tow truck or a slum. Though upon further examination of my stock portfolio, that was my folly.
Post by: SlimPickens on October 09, 2008, 09:40:33 am
Quote from: Spacey;206851
Quote from: SlimPickens;206841Quote from: wildcoyote;206789Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
D..A...M..N!!!
What exactly do you do for work, wildcoyote? You in evictions?
re-po man, slum lord?
Post by: Spacey on October 09, 2008, 09:05:44 am
Quote from: SlimPickens;206841
Quote from: wildcoyote;206789Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
D..A...M..N!!!
What exactly do you do for work, wildcoyote? You in evictions?
AIG might need a bailout for those who worry my insurance business is stable and secure.
Post by: derickw on October 09, 2008, 08:20:50 am
Quote from: kindm\'s;206804
AIG is asking for almost another 40 Billion on top of the 85 they just got
all this after there scandal the other day when they brought all the execs to a secluded resort after the initial 85billion and spent 440,000 to party it up........ these **** guys have some nerve...... and the big wigs approved and received over 2 million in salary bonuses full well knowing the business was going down the shitter...... **** clown shoes!!!!!! what about all the people they let go.......
http://www.financialpost.com/news/story.html?id=866284
Post by: SlimPickens on October 09, 2008, 07:37:31 am
Quote from: wildcoyote;206789
Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
D..A...M..N!!!
Post by: wildcoyote on October 08, 2008, 09:08:27 pm
Quote from: GLuft3;206814
Think About This...
If you had purchased $1,000.00 of Nortel stock one year ago, it would now be
worth $49.00.
With Enron, you would have $16.50 left of the original $1,000.00.
With WorldCom, you would have less than $5.00 left.
If you had purchased $1,000.00 of Delta Air Lines stock you would have
$44.00 left.
If you had purchased United Airlines, you would have nothing left.
The current situation vs. the accounting scandals of 2001 vs. the airlines inability to turn profit = apples, oranges, bananas
Quote from: GLuft3;206814
But, if you had purchased $1,000.00 worth of beer one year ago,
drank all the beer, then turned in the cans for the aluminum recycling
refund,
you would have $214.00.
Eh? Only If you could score a 30 pack for about $6.
Post by: GLuft3 on October 08, 2008, 08:43:19 pm
If you had purchased $1,000.00 of Nortel stock one year ago, it would now be
worth $49.00.
With Enron, you would have $16.50 left of the original $1,000.00.
With WorldCom, you would have less than $5.00 left.
If you had purchased $1,000.00 of Delta Air Lines stock you would have
$44.00 left.
If you had purchased United Airlines, you would have nothing left.
But, if you had purchased $1,000.00 worth of beer one year ago,
drank all the beer, then turned in the cans for the aluminum recycling
refund,
you would have $214.00.
Based on the above, the best current investment advice is to drink heavily
and recycle.
This is called the 401-Keg Plan...
Post by: oldnewbie on October 08, 2008, 08:32:18 pm
http://seattlepi.nwsource.com/business/1310ap_fed_aig.html
go figure?
Post by: kindm's on October 08, 2008, 07:22:15 pm
Post by: wildcoyote on October 08, 2008, 05:06:12 pm
This didn\'t exactly happen to me but here, is the type of thing I\'ve been dealing with.
Quote
Stamford (AP) -- A 60-year-old Stamford man is charged with threatening to blow up a downtown bank, angry over the performance of his investment accounts.
Police say Stephen Montalvo was charged Tuesday with committing an act of terrorism and first-degree threatening.
Police say Montalvo entered a local branch of a well-known national bank, then told employees he would blow it up and kill everyone inside because he was unhappy with his investment accounts.
Police would not name the bank, citing the ongoing investigation. The FBI\'s counter-terrorism task force is involved in the case, a police spokesman said.
Montalvo was held on $150,000 bond for arraignment Wednesday in Stamford Superior Court. Information was not immediately available on whether he had an attorney.
Today I alone I\'ve been told twice I have a secure place in hell, and an old woman told me she\'s praying I get cancer.
BTW- Mark for President
Post by: Spacey on October 03, 2008, 08:55:15 am
Post by: derickw on October 03, 2008, 08:44:28 am
Post by: Spacey on October 02, 2008, 05:14:21 pm
Quote from: Mark;205591
It\'s all explained in Part III
http://www.zeitgeistmovie.com/
This is the propaganda you peddle these days?
Quote from: derickw;205584
i just dumped all the money i had in stocks that were doing well to buy up as many shares of the cheap good stocks...... it\'s a long shot but with any luck i\'ll be able to make up some of the loot i lost. either that or i just lost a couple grand. i guess i\'ll find out tomorrow when the bail-out goes through......
I took the liberty of having my crack team of financial analysts look into your stock market moves and the following chart is our forecast of your investments.
(https://thebreakfast.info/proxy.php?request=http%3A%2F%2Fwww.greekshares.com%2Fuploaded%2Ffiles%2Fstock_market_crash.jpg&hash=7184c1ff5a9957a378d7b142a152c3fac8f35a18)
Post by: Mark on October 02, 2008, 04:47:19 pm
http://www.zeitgeistmovie.com/
Post by: derickw on October 02, 2008, 04:25:55 pm
Post by: delfunk1 on September 30, 2008, 08:28:05 pm
For the past twenty years, our government has proclaimed they want us to be the nation of ownership or some crap. Therefore through legislation like the "community reinvestment act" and so on persuaded banks to relax their credit polices. This ofcourse results in banks extending credit to people who frankly can\'t afford it. But this is ok, because the prices of homes are going up, and deadbeats can take out second mortgages and have all the money they want. Meanwhile the banks take the mortgages, sell them off, they become securitized, where these big investment banks and corporations buy them.
Now fastforward when all these shitty ARM mortgages rate\'s go up after 5 years. People can\'t pay their mortgages, they default, the banks get screwed, these big companies get screwed, because nowadays so many more people have a stake in someone\'s loan.
Now my concern is when these big Investment banks bought these mortgage securities, they bought them based on their credit ratings. Moodys S&P etc. gave all these securites A ratings, meaning low risk.
Now these banks were basically paying the ratings agencies for the good ratings. Why isn\'t anyone going after these companies that falsely rated these mortgage backed securities? I feel that if these securites were accurately rated to begin with, so many of these big companies wouldn\'t have such a high stake in them.
Post by: derickw on September 30, 2008, 11:55:36 am
smoke and mirrors my friends
!["Image]("http://img521.imageshack.us/img521/8444/clownshoescu4.jpg")
![]("http://g.imageshack.us/img521/clownshoescu4.jpg/1/")
Post by: Yoda on September 30, 2008, 11:52:35 am
Post by: jking on September 30, 2008, 11:48:27 am
Post by: SlimPickens on September 30, 2008, 11:38:56 am
Quote from: bdfreetuna;205026
Quote from: tyzack;205017It appears as though the republicans (of which I am one, registered, donating and all that ****) are actively trying to create another Great Depression.
Sucks to be throwing all that money in the shitter.
The shitter is what this country will be in if they don\'t do something soon. People fail to realize the ripple effect of this melt down.
Post by: bdfreetuna on September 30, 2008, 10:10:43 am
Quote from: tyzack;205017
It appears as though the republicans (of which I am one, registered, donating and all that ****) are actively trying to create another Great Depression.
Sucks to be throwing all that money in the shitter.
Post by: SlimPickens on September 30, 2008, 10:03:11 am
are you freakin\' kidding me, the worlds economy is threatening a crumble that rivals the great depression and you\'re switchin\' yer vote out of spite?
Our government is definitely part of the problem. It\'s time for a regime change in our own country.
Post by: jking on September 30, 2008, 09:36:30 am
also, i think their slogan was a misprint.... i have been told by several folks \'in the know\' that it was supposed to be \'Companies First\' but someone made a typo.... :evil:
Post by: tyzack on September 30, 2008, 09:09:29 am
Quote from: Yoda;205013
Thank you Republican(t\'s). I know that this isn\'t the ideal plan for anyone and no one wants to pay more taxes, but something has to be done. I\'ll actually give Bush a little credit because he\'s actually trying to get this deal worked out, but his party just doesn\'t seem to get it.
It appears as though the republicans (of which I am one, registered, donating and all that ****) are actively trying to create another Great Depression.
I can see it now;
Quote
In US history classes 80 years from now, kids will learn how "margin trading" caused, or was the scapegoat for the Great Depression in the late 1920s, after a decade of politcal corruption, corporate free-for-all and a general "anything goes" mentality. The country was "rescued" from the Great Depression by the largest expansion of the federal government, and by a world war started by a former great power which felt it had been jilted after a defeat in a previous war, and an up-and-coming eastern power which saught what it thought was it\'s rightful place on the world stage.
Eighty years after the first Great Depsression, there was the Second Depression. The causes of this Second Depression, were largely the same; it was preceded by a decade of politcal corruption and corporate free for all. The root of the new finicial crisis was again caused by a new finicial instrument - subprime mortages and mortage-backed securties - that, when they failed, took the entire market down with them.
At the time of the Second Depression, there was a former world power which felt it had been jilted after it\'s defeat in a previous war and an eastern power which saught to assume what it thought was its rightful place on the world stage.
People I work with have been saying things like "Is this how this administration operates? Based off fear? "Trust us that we have to go to war in Iraq, they have WMDs." Well, they were wrong about that. Now they are sayign "Trust us about the ecomony." But they have been wrong before."
I disagree with that argument because the politcal leadership of both parties were behind this bill. It was the fringe members on both sides that killed it. Whether or not Speaker Polici gave a politcal speach before the bill doesn\'t matter.
If your party\'s new theme is "Country First" **** do it.
Post by: Yoda on September 30, 2008, 08:29:11 am
Post by: SlimPickens on September 30, 2008, 07:04:50 am
Post by: delfunk1 on September 29, 2008, 08:40:43 pm
http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html
Quote
Commentary: Bankruptcy, not bailout, is the right answer CAMBRIDGE, Massachusetts (CNN)
-- Congress has balked at the Bush administration\'s proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.
This bailout was a terrible idea. Here\'s why.
The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.
Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.
This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.
Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.
The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.
Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.
In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy\'s allocation of its financial resources.
Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.
Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.
Further, the current credit freeze is likely due to Wall Street\'s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.
The costs of the bailout, moreover, are almost certainly being understated. The administration\'s claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.
If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.
The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.
Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.
So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.
The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
Post by: Gfunk on September 29, 2008, 08:13:28 pm
Post by: bezerker on September 29, 2008, 07:47:45 pm
Post by: Gfunk on September 29, 2008, 06:24:35 pm
Quote
I\'ll Speak Very Slowly.
by RenaRF
Mon Sep 29, 2008 at 12:59:57 PM PDT
Little known fact: I have a degree in economics. I went to one of the top three economics schools in the country, and graduated with honors.
Caveat: The area I studied was WAY academic. Rather than adhere to market economics, my school focused on the inherent rationality and irrationality of actors in markets. In other words, it focused on the role of investors and their individual and collective emotions as market drivers in and of themselves, completely outside of principles of accountancy or market math.
So with that, over the fold and I\'ll give my dumbed-down impression of the state of the economy and markets.
RenaRF\'s diary :: ::
I\'ll try to forget that I\'ve just heard Boehner, Blunt, and Cantor blame Pelosi\'s SPEECH for the failure of the Rescue Bill.
And make no mistake - this is a rescue bill. Stop thinking of its central premise as that of a "bailout". While some "bailing out" will, by necessity, occur, the rescue is the key focal point of this bill.
I tried to explain this to Mr. RenaRF over the past ten days or so. Here\'s what I want you to picture:
(https://thebreakfast.info/proxy.php?request=http%3A%2F%2Fimg404.imageshack.us%2Fimg404%2F6504%2Fzygote3dmalehumananatompb9.jpg&hash=411c73921875f7acb04de0fbe0d9ddad15e6f0b5)
Yep. The human body, from an anatomical perspective.
Imagine now that that human body, pictured above, in its entirety, is the economy. Different parts of the body represent different sectors of the economy. So maybe an arm is the pharmaceutical sector. And maybe a leg is the IT sector, and another leg the energy sector. But the central system to the human body is the heart. If it doesn\'t function, all other systems in the body shut down.
So go back in time about nine or ten years and think of the dot economy. I\'m going to grossly oversimplify here, but as a member of the IT industry in my professional life, I saw the bursting of the dot.com bubble up close and personal. Long-standing practices of moving companies to initial public offerings (IPOs) were abandoned in the dot.com boom. Prior to the easing in lending regulations and standards, a company generally needed five years of business history and some consistent quarterly performance that indicated a path to profitability before it would be considered for IPO. Yet in the make-money-fast culture of the late nineties, those standards were abandoned. Companies with mere months of business history and no discernible path to profitability were being approached for IPO. Underwriting financiers would take preferred stock interest in those companies and amass stock for literally pennies per share. When the company publicly launched, those same underwriters would turn around and push the stock and cause its value to go up. They would wait until their best estimate of a peak and sell out, making ridiculous profits.
The whole house of cards caught up with the dot.com bubble and the segment itself returned to some level of reality. But remember - in my example, I made the IT industry a leg. You can lose a leg and still live a full, functioning life.
It is fundamentally different with the financial services industry. Because you can\'t cut out a heart without death of the remainder of the body that it supports.
Blood that flows to and from the heart is comparable to money that flows through the market. The availability of money to leave the heart and travel to other areas of the body - market sectors - is what drives the overall economy. It touches EVERY area of the economy.
Let\'s say you own a successful dry cleaners in your town. You\'re profitable, you manage your expenses well, and you\'ve provided some number of jobs back to the community. All of your financial fundamental are in place for expansion. You\'ve scoped out an area where competition will be minimized and where your proven business model is likely to thrive. You don\'t personally, however, have the money to take a lease on space and hire enough people to run your second location with all of its equipment requirements and the like. You need to borrow that. In a functioning economy, a lender would be happy to lend you the money to expand. You\'re a great risk - you have a business model that has proven to be successful. But you can\'t get the money. And you can\'t get the money because there IS no money to lend.
Another example. Let\'s say you work for a large, multi-national IT company. Let\'s say further that the market has been kind to you. Your profit projections have consistently been spot-on quarter over quarter. All of your underlying financials are strong. You are in the top one or two in your market segment, and you certainly don\'t have your personal business invested in mortgage-backed securities.
Only in many ways, you DO have your business invested in mortgage-backed securities, at least tangentially. Because you do what many business of your size do on a daily and weekly basis. You borrow money to keep your daily operating costs covered. That means payroll, benefits, etc., are covered in the short term with full knowledge that, at the end of, say, a quarter, you will fully pay those short term loans back. But the business bank who underwrites your short-term operating line of credit IS a member of the financial services industry. And because that industry is tainted by bad debt, and because THAT has caused credit of any kind to tighten, you now cannot take a 7-day loan to cover payroll. You and your 280,000 employees now are not able to meet your payroll obligations.
A final example. Your car blows up. You don\'t live in an area where public transportation is readily available. You have a good job and a good credit history. You need a loan to get a new car so you can keep going t work and keep working. Only you can\'t get that loan. It has nothing to do with your personal credit-worthiness - it has to do with the fact that money simply isn\'t available to lend to you for buying a car.
The financial services sector is the heart of the economy. They have **** up badly in the last couple of years, but really, they\'ve generally **** up because we have allowed it. Companies don\'t exist to provide good jobs or good benefits. Companies exist to turn a profit, and public companies exist to return value to their shareholders. They are made to do this on a quarterly basis. A good quarterly report returns profit to shareholders. A bad one returns no profit to shareholders (generally). So why would we think, after removing regulations and failing to enforce most of those that remained in place, that Wall Street would do anything beyond what we have made it possible for them to do? And that, in a nutshell, is to work the system - mostly within the law - to return insane short-term quarterly profits and therefore shareholder value. The idea that business would think a) long term (when we are painfully short-term focused from a market perspective; and b) do things to benefit people rather than their own bottom line is counter-intuitive because we don\'t reward business for behaving in that fashion.
Right now, we are literally on a tightrope called credit. Whether or not you have a job to go to tomorrow, and a job that can actually honor its payroll obligation, is an open question. If your company has enough cash on hand to pay its operating expenses, consider yourself lucky. Many other people, who work for good companies, will find that there isn\'t money for them to be paid. The heart will have stopped pumping blood to all extremities of the body economic.
And a final few notes - this idea that Republicans have that the market can bear this out is ludicrous. Further ludicrous is the idea that some kind of mortgage insurance construct would work. If companies could make money with that methodology, they would have already been doing it. No one\'s biting because no one can underwrite this debt for the amount of time it will require for the paper amount to match the value of the underlying collateral.
And the idea that all of these Representatives are getting "50 to 1" phone calls against the bailout does NOT remove them of their fundamental responsibility to be stewards of the American economy and the American public as a whole. This **** is complicated. The idea that the average person can fully understand the implications and the intricacies defies logic. I have the requisite education background and I don\'t fully understand all the details around the current economy and the implications of any rescue legislation.
This is a sad, tragic day for America. Legislators decided that their need to be re-elected exceeded their responsibility to the Americans they represent.
I would suggest that those who believe we have to hold our nose and save the heart of the economy reach out to our Congresspeople and tell them so. Best of luck to everyone.
Post by: Mark on September 29, 2008, 05:18:13 pm
Post by: Spacey on September 29, 2008, 04:25:00 pm
Quote from: derickw;204950
touche
HA!
so true.
Quote from: Drew_Kingsley;204952
The $49.09 I have in the bank is still there. The $3 in my wallet are also safe.
In a related story, getting paid once a month sucks. Can\'t wait for that direct deposit to hit tomorrow.
I get paid twice/month and can barely wait for the next check.
You=better than I
Post by: Drew_Kingsley on September 29, 2008, 04:23:06 pm
In a related story, getting paid once a month sucks. Can\'t wait for that direct deposit to hit tomorrow.
Post by: derickw on September 29, 2008, 04:19:07 pm
!["Image]("http://img184.imageshack.us/img184/3789/stoppretendingfb1.jpg")
![]("http://g.imageshack.us/img184/stoppretendingfb1.jpg/1/")
Post by: Spacey on September 29, 2008, 03:52:49 pm
Quote from: derickw;204945
Quote from: Spacey;204943Quote from: SlimPickens;204942Quote from: derickw;204938man my 401K is taking a freak\'n hit..... i think i\'d rather cash out and pay the tax penalty rather than keep freak\'n loosing money to noone...... this is bullshit
You\'re too late for that. Should made changes 8 months ago (not that I made them).
Right now, ya just gotta ride it out.
Honestly, does it even matter? You are going to work until you die, why do you need a retirement fund?
so i have something to borrow from when i want to go to Europe on vacation.... duhhhhhh. i\'m a wook, i can\'t save money.
wookies don\'t go on vacation either.
they are always on vacation and sometime they go to work.
dirty Sasquatch
Post by: derickw on September 29, 2008, 03:39:23 pm
Quote from: Spacey;204943
Quote from: SlimPickens;204942Quote from: derickw;204938man my 401K is taking a freak\'n hit..... i think i\'d rather cash out and pay the tax penalty rather than keep freak\'n loosing money to noone...... this is bullshit
You\'re too late for that. Should made changes 8 months ago (not that I made them).
Right now, ya just gotta ride it out.
Honestly, does it even matter? You are going to work until you die, why do you need a retirement fund?
so i have something to borrow from when i want to go to Europe on vacation.... duhhhhhh. i\'m a wook, i can\'t save money.
Post by: Spacey on September 29, 2008, 03:32:26 pm
Quote from: SlimPickens;204942
Quote from: derickw;204938man my 401K is taking a freak\'n hit..... i think i\'d rather cash out and pay the tax penalty rather than keep freak\'n loosing money to noone...... this is bullshit
You\'re too late for that. Should made changes 8 months ago (not that I made them).
Right now, ya just gotta ride it out.
Honestly, does it even matter? You are going to work until you die, why do you need a retirement fund?
Post by: SlimPickens on September 29, 2008, 03:25:30 pm
Quote from: derickw;204938
man my 401K is taking a freak\'n hit..... i think i\'d rather cash out and pay the tax penalty rather than keep freak\'n loosing money to noone...... this is bullshit
You\'re too late for that. Should made changes 8 months ago (not that I made them).
Right now, ya just gotta ride it out.
Post by: Spacey on September 29, 2008, 03:23:59 pm
Quote from: Todd;204935
Quote from: Spacey;204932This country is ****.
I for one have order me a company of the Rosetta Stone to learn Chinese.
Cancel your order. I have a free copy I\'ll burn for you.
Fair enough.
Order=canceled.
Toa chie!
Quote from: derickw;204938
man my 401K is taking a freak\'n hit..... i think i\'d rather cash out and pay the tax penalty rather than keep freak\'n loosing money to noone...... this is bullshit
You are young enough to have a rebound.
You will regret it when the Chinese come along later.
Post by: derickw on September 29, 2008, 03:08:47 pm
Post by: Drew_Kingsley on September 29, 2008, 02:50:58 pm
This stuff terrifies me, but I don\'t know if understanding it better would scare me more or less.
Post by: Todd on September 29, 2008, 02:49:10 pm
Quote from: Spacey;204932
This country is ****.
I for one have order me a company of the Rosetta Stone to learn Chinese.
Cancel your order. I have a free copy I\'ll burn for you.
Post by: Spacey on September 29, 2008, 02:21:49 pm
I for one have order me a company of the Rosetta Stone to learn Chinese.
Post by: krispy on September 29, 2008, 01:19:45 pm
Quote from: oldnewbie;204885
Quote from: krispy;204883come bail me out Gov! I lost my financial backers, closed my store, and am now unemployed, broke, and worried... All in two weeks, I went from the top of my game to wondering how to pay the mortgage, car payment, etc...
but now stoops is in the breakfast so it\'s all good?
Yes, all is good in the universe as long as I get to see Stoops at the helm of half a dozen keyboards...
Post by: Gfunk on September 29, 2008, 01:13:59 pm
Post by: jking on September 29, 2008, 01:09:05 pm
also, the math is off. 85b divided by 200m = $425. not $425,000... how no one ever checks the math on these forwarded emails is beyond me....
Post by: galenas on September 29, 2008, 12:51:40 pm
Quote from: oldnewbie;204885
Quote from: krispy;204883come bail me out Gov! I lost my financial backers, closed my store, and am now unemployed, broke, and worried... All in two weeks, I went from the top of my game to wondering how to pay the mortgage, car payment, etc...
but now stoops is in the breakfast so it\'s all good?
:lol:
Post by: oldnewbie on September 29, 2008, 12:44:02 pm
yeah....right
Post by: Spacey on September 29, 2008, 12:43:28 pm
Quote from: derickw;204901
screw AIG why should we have to help out these guys for making shitty business decisions...... i don\'t freak\'n get it.
America has taught me that if I **** up in life, I will be bailed out.
Post by: derickw on September 29, 2008, 12:41:23 pm
Post by: Gfunk on September 29, 2008, 12:36:38 pm
Post by: Spacey on September 29, 2008, 12:32:49 pm
Quote from: krispy;204883
come bail me out Gov! I lost my financial backers, closed my store, and am now unemployed, broke, and worried... All in two weeks, I went from the top of my game to wondering how to pay the mortgage, car payment, etc...
It is small business who really need the bail out.
Not a bad plan you have posted, Mark.
Post by: Mark on September 29, 2008, 12:29:50 pm
I\'m against the $85,000,000,000.00 bailout of AIG.
Instead, I\'m in favor of giving $85,000,000,000.00 to America in a "We Deserve It Dividend."
To make the math simple, let\'s assume there are 200,000,000 bonafide U.S. Citizens age 18+.
Our population is about 301,000,000 +/- counting every man, woman and child.
So 200,000,000 might be a fair stab at adults 18 and up.
So divide 200 million adults 18+ into $85 billon that equals $425,000.00 each.
My plan is to give $425,000 to every person 18+ as a "We Deserve It Dividend."
Of course, it would NOT be tax free. So let\'s assume a tax rate of 30%.
Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000.00 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket.
A husband and wife would have $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads. Put away money for college - it\'ll be there safe in a bank - creates money to loan to entrepreneurs.
Buy a new car - create jobs.
Invest in the market - capital drives growth. Pay for your parent\'s medical insurance - health care improves. Enable Deadbeat Dads to come clean - or else.
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And, of course, for those serving in our Armed Forces.
If we\'re going to re-distribute wealth let\'s really do it...instead of trickling out a puny $1,000.00 ("vote buy" ) economic incentive that is being proposed by one of our candidates for President.
If we\'re going to do an $85 billion bailout, let\'s bail out every adult U.S. Citizen 18+!
As for AIG - liquidate it. Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.
Here\'s my rationale…We deserve it and AIG doesn\'t.
Sure it\'s a crazy idea that can "never work."
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 Billion "We Deserve It Dividend" more than I do the geniuses at AIG or in Washington, D.C.
And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.
Post by: oldnewbie on September 29, 2008, 12:27:18 pm
Quote from: krispy;204883
come bail me out Gov! I lost my financial backers, closed my store, and am now unemployed, broke, and worried... All in two weeks, I went from the top of my game to wondering how to pay the mortgage, car payment, etc...
but now stoops is in the breakfast so it\'s all good?
Post by: krispy on September 29, 2008, 12:22:22 pm
Post by: tyzack on September 29, 2008, 11:57:40 am
It would apear as though it hadn\'t. Really the one proposed item that I really thought would be the most helpful to all parties (banks and borrowers) would be the ability to re-negoiate a loan to more favourable terms if it was one of the ones that the government took over.
Since that (I don\'t think) is in the bill, I guess I support it as a nessacry evil. I really hope it works.