everybody should read this article and get mad! (credit card, lending, fees)

[floridasandy]

* The Worst Is Not Behind Us***** : Information Clearing House - ICH

for those who don't want to read the entire article here is a section of interest:
Credit losses will be well above $1 trillion and closer to $2 trillion, as such losses will spread from subprime to near-prime and prime mortgages and home equity loans (and the related securitized products); to commercial real estate, to credit cards, auto loans and student loans; to leveraged loans and LBOs, to muni bonds, corporate bonds, industrial and commercial loans and credit default swaps. These credit losses will lead to a severe credit crunch, absent a rapid and aggressive recapitalization of financial institutions.

--Almost all of the $700 billion in the TARP program will be used to recapitalize U.S. financial institutions (banks, broker dealers, insurance companies, finance companies) as rising credit losses (close to $2 trillion) will imply that the initial $250 billion allocated to recap these institutions will not be enough. Sooner rather than later, a TARP-2 will become necessary, as the recapitalization needs of U.S. financial institutions will likely be well above $1 trillion.

[KevK]

Yes, we can all look forward to a diminshed standard of living and probably higher taxes.

[Stac2007]

It's not like economist did not see what was ahead of us. We the people were continually lied to by Wall Street and the Federal Government. There will be no change until we re-enact regulations on the financial/banking markets as well as major changes to our government and their relationship with big business. No special interest dollars to our elected officials and no crazy banking fees/penalties financial institutions which can be charged to their customers as a means of regaining some of their losses due to bad lending decisions.

[Movie Lover]

Just ****in' great. My big chance blown to hell.

[Philip T]

Originally Posted by KevK

Yes, we can all look forward to a diminshed standard of living and probably higher taxes.

I know by local City-Data standards I am probably considered a "doomer," but I do not match on that at all. We are doing Real Estate shopping, and I am and have been watching rents falling before we even make offers -- means we get more for the same money. And Real Estate purchase prices are dropping, as well, again that means more for the same money when we get ready to buy.

In business, I am watching raw materials costs drop like rocks. Strange thing is my product (commercial electricity) is holding strong. (I am still amazed on that part . . . how long that stay?)

As far as taxes . . . most are totally dependent on profits -- and since I am highly re-investing in the business, itself (means lots of business expenses) taxes are practically non-existent.

What is not to love?

Keep in mind KevK -- winning is less about the cards you are dealt than how you play them.

[Humanoid]

Originally Posted by Philip T

As far as taxes . . . most are totally dependent on profits -- and since I am highly re-investing in the business, itself (means lots of business expenses) taxes are practically non-existent.

Yeah, one of the nice things about businesses even if you are just a pass through entity. These days equipment is looking like a better place to put your money anyways...


Also, why do the banks get all the blame? They didn't force Americans to take out loans. Without the willingness of Americans to go into massive debt to purchase the latest toys this would have never happened. The American public is just as much to blame for this mess as the financial institutions. The government is just the extension of the people so you can't blame it without blaming the people.

[Philip T]

Originally Posted by Humanoid

These days equipment is looking like a better place to put your money anyways...

t h a n . . . . . like say in those silly pieces of paper -- what do they call them?

Oh yeah Stocks and Bonds -- that are sold to folks by brokers who get paid commissions while pretending to be their friends and "financial advisers."



Yeah, that whole Stock Market thingy always looked like some serious mass stupidity to me. But then again, that is just my bent and how I tend to play the game.

Most amazing thing to me is that people are surprised they are going worthless.

[Humanoid]

Originally Posted by Philip T

Most amazing thing to me is that people are surprised they are going worthless.

Well, they are worthless in so much as the company is worthless. There is nothing wrong with the bond/stock markets and are important parts of the economy. The problem is when a bunch of people that don't understand the markets start buying into them with their 401(k) because they think its going to get them a great return.

Surely, you don't think being able to sell shares in your company to raise money is a bad thing? Or selling bonds to fund expansion etc.

Anyhow, I think the problem is when the "average joe" gets involved not the markets themselves. In the 1960's the volume on the Dow was around 3.7 million....where as in the 2000's its been at least 1 billion.

[Philip T]

Originally Posted by Humanoid

Surely, you don't think being able to sell shares in your company to raise money is a bad thing? Or selling bonds to fund expansion etc.

Hey if that is how they wish to business, it is more their business than mine.

I would think that the minimum folks would require is that the companies they send money to would be profitable. Yunno, make money, make a profit and pay dividends. A good P/E ratio and all that? But folks stopped buying stocks based on that YEARS ago. Now it is just nonsense based on what some Greater-Fool may come along buy the otherwise worthless paper for more than what the first guy paid.

For me, it goes deeper -- if I do not know clearly what the intent of the money is -- it is a No Go on a moral and ethics basis. Honest and open are . . . well . . . Honest and open. Don't see much of that in Wally Street.

Anyhow, I think the problem is when the "average joe" gets involved not the markets themselves. In the 1960's the volume on the Dow was around 3.7 million....where as in the 2000's its been at least 1 billion.

Sure Average Joe discarded his moral compass and went wandering after the false profits. With the same results that has yielded for thousands of years here on Planet Dumb.

[Humanoid]

Originally Posted by Philip T

I would think that the minimum folks would require is that the companies they send money to would be profitable. Yunno, make money, make a profit and pay dividends. A good P/E ratio and all that? But folks stopped buying stocks based on that YEARS ago. Now it is just nonsense based on what some Greater-Fool may come along buy the otherwise worthless paper for more than what the first guy paid.

This is pretty much what the stock markets have become, but this doesn't mean they aren't useful and necessary for the modern economy. From the companies point of view the stock market (and bond market) is still useful, its just from the investor point of view that it has turned into some sort of ponzi scheme.

Part of the problem is that there is a tax incentive to lower dividends in preference to capital gains.

But this isn't true of bonds. Its just debt and is pretty much tied to what it pays out yearly rather than price movements which are rather modest.