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Dr. Bob is Robert Hsiung, MD,
bob@dr-bob.orgShown: posts 28 to 52 of 52. Go back in thread:
Posted by Sigismund on October 3, 2008, at 16:26:24
In reply to Re: Reverse auction » Sigismund, posted by Nadezda on October 3, 2008, at 11:37:31
Posted by Bobby on October 3, 2008, at 23:16:59
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 3, 2008, at 12:35:20
Dinah--my friend,
You're right about so many things--and I've always been amazed at how much sense you consistantly make. However, I remember the 70s well---like, "The world is out of oil!" for example. If I remember also,people thought we were heading for another ice age. I'm hip to those who seek to control the masses through fear. Back then if my memory serves me correctly----Joe Walsh put out an album(remember those?) and the title was, "You can't argue with a sick mind." Well, I confess, I probably fall into that catagory and have suffered because of my ignorance when it comes to the nuts and bolts on some of the issues in the great game of life. I base most of my beliefs on nothing more than personal experiences and neurotic theories. Just for reference, We were having quite a load of financial difficulties a while back. It started when our mortage company --without any warning----chose to raise our payments by a thousand dollars a month----yes $1000 extra each month( and, no, it was not an adjustable loan). We tried to reason with them---but they said tough luck--that's the way it is. We got behind on our credit cards while trying to adjust to the added burden. We had always paid our bills--on time---but then--the credit card companies(both of them) told us that since we were behind on our payments that our interest rates were going up to the maximum percentage allowed--something like 28%. Not only that--but they froze our credit limits immediately--instantly--which mean't that with the added increased interest -- we went over our limits immediately as well--and that was an added charge for exceeding. Forget what they say about companies "willing to work with their customers" I tried personally--multiple times--no quarter. We were not big spenders living high. We were fortunate to rise above our troubles--but not before sinking to the lowest depths. I'm not talking about folks losing their stocks and bonds or second homes-or yet even a retirment fund. I'm talking about families who struggle to put food on the table on a daily basis. They're not thinking about Wall Street. I'm sure that most of the super rich take comfort in the fact that the blame can be spread thin enough not to put their fortunes at risk. After all, "It's the financial environment's fault" It's just when I see corporate CEOs being fired for bad performance--and then retiring with a 20+ million dollar golden parachute---it ticks me off. Just seeing a person driving around in a Hummer, while simultaneously talking on the cell phone and being rude and aggressive on the road----gives me little doubt as to why other people in the world hate us Americans. I think it's greed alright--the love of money. I'm sure that folks will come out of the woodwork trying to convince me otherwise --impressing with their vast knowledge of the global ecomomy and their superior grasp of all thing financial--and in many instances --they'll be right. But a good lawyer can get a guilty client set free or an inocent client put in prison-----night becomes day and day becomes night. The mortgage crisis did set things off----and people "should" have known better--but they have to live somewhere. Somebody had to push those loans and dreams---and who better to know the ultimate consequences of such foolish decisions than the the lenders--the predators. That's what they do for a living. Now, our government is mortaging our kids' futures to remedy --to reward---those practices.They are supposed to be leaders--not followers. And you know what? Maybe the country can't afford that kind of mortage----but the same experts are selling the same old story that fueled our present crisis.And so the vicious cycle continues and history repeats itself. Sure I'm just angry with the whole mess--and I'm lashing out. But I'd like to think that my opinion is representative of a majority of the hard working people who once made this country the envy of the rest of the world. So--I'll wallow in anger for a while at what has just transpired--until I'm capable of making a rational judgment. I guess Joe was right---"you can't argue with a sick mind."
Posted by Bobby on October 3, 2008, at 23:42:00
In reply to Re: Oops-- there goes the economy... » Dinah, posted by Bobby on October 3, 2008, at 23:16:59
I've been recieved two "Pre-approved" credit card offers this week from banks that have gone under--guess they know they'll get paid one way or the other---pad,pad,pad. Please excuse my spelling, grammar and punctuation in my previous post-----I had lots of fun in school and it's late :)
Posted by Dinah on October 3, 2008, at 23:44:44
In reply to Re: Oops-- there goes the economy... » Dinah, posted by Bobby on October 3, 2008, at 23:16:59
I'm sorry, Bobby. I should be careful with the "reply to" button. My post wasn't directed at you. I certainly don't think you have a sick mind (certainly not moreso than me) or that you can't be reasoned with. I'm just frustrated in general. The local politicians on both sides of the aisle are posturing. The local republicans were against the bill, the local democrats were for it. The local radio station is trying to explain what's going on, but it's all in bits and pieces and hard to put together.
I wasn't kidding when I said I don't panic, in general. But this crisis was looming for a while, and I'm pretty upset about it. From what I can decipher, which isn't as much as I'd like, the reason it all came to a head so quickly has something to do with marked to market asset valuation. And trying to figure out whether it's a good or bad thing is beyond my current powers.
The best I can tell from what I'm hearing is that the bailout isn't so much to shore up the market (although that surely is a consideration), but because credit markets are out of money due to the housing crash. Everything from the State of California to people applying for college loans to people trying to get mortgages or credit are affected. So the bailout is to help just the situations you're talking about. Or so they say.
I'm not sure how mortgage companies can ask for more than the amount agreed upon. I suppose the fine print might contain some clause that kicks in when the value of a house drops below a certain percentage of the outstanding loan? I have heard of people having their mortgage line of credit accounts canceled because of the drop in home values.
My general understanding is that right now mortgage companies are being fairly understanding because the last thing they want are more homes. But that may be a local thing.
It *is* a bad situation, and one that everyone should be angry about. I just wish that the anger would be directed in such a way as to make sure this never happens again. The trouble is that politicians are up for reelection every few years, and they don't seem to take a long term stance. It wouldn't be popular to make some of the changes that need to be made. But they do need to be made. Bailing out while continuing the same poor policies is just going to create another problem down the line. I really am frustrated that regulations weren't put in place after the savings and loan crisis. I really am frustrated that something as simple as risk adjusted FDIC premiums isn't a given.
I'm sorry about your personal difficulties with tight credit, Bobby. I do know it's easier to talk about things in abstract than in the particulars. That's what makes all of this so hard.
Posted by Bobby on October 4, 2008, at 0:40:49
In reply to Re: Oops-- there goes the economy... » Bobby, posted by Dinah on October 3, 2008, at 23:44:44
Dear Lord,
I'm sorry if my post was taken as ,in ANY shape ,form or fashion, an attack on you. I think you know I have only love for you. I was thinking more along the lines of the policy of Detente--as set up by Henry Kissinger---speaking of the 70s.---peaceful coexistance. My mind deteriorates at night. I've just lost my faith in justice prevailing for the middle class and lower in the chain. Money buys a lot of influence in government----I've been there and seen it on a national level on a personal level---you'd be surprized at deals made under the table---right and wrong mix and blur when the stakes are so high. this is not some psychotic theory to make my case more convincing---it happens. My youthful idealism has been shattered. Misleading and deception has become a neccesary evil in order to compete with countries who train their kids strive and often meet ungodly expectations. It's always the old smart guys who send the kidsoff to get killed---to do thier bidding. It's the same with the terrorists--ever heard of an old leader blowing himself up for allah? they train thier kids in hatred from a young age.Im sorry --but this whole thing reeks of evill. ake care dianah--one of my oldest ands trusted feinds----it's 1:36 am --and I've got to sleep..............later--when my mind 's workingww! night
Posted by Dinah on October 4, 2008, at 9:39:12
In reply to Re: Oops-- there goes the economy... » Dinah, posted by Bobby on October 4, 2008, at 0:40:49
Bobby, one of my oldest and most trusted friends, I hope we can achieve more than peaceful coexistence. Firm allies don't have to agree on *every* point.
You don't have to convince me about political decision making. I wasn't even surprised by what I read in "Bad Bet on the Bayou" although I admit I couldn't finish reading it. I hate to be distressed about things I have no control over. In fact, I know the economy is one of the factors behind my recent slide. I wasn't surprised, but I wish I could choose to put it aside as easily as the book.
As far as I am concerned, we're just fine. As always.
Posted by Bobby on October 4, 2008, at 20:49:39
In reply to Re: Oops-- there goes the economy... » Bobby, posted by Dinah on October 4, 2008, at 9:39:12
Wow! I got up this morning and read my last post---it was awful! I don't even remember writing the last part of the last post. I must have been really tired. I wasn't taking psych meds----and I don't drink alcohol. I'm sorry Dinah--and anyone else---if I alarmed you. Things are much brighter these days than a year ago for us. I just get really passionate when I see an injustice against people with no recourse in the matter. I would never ever suggest anything like communism as an alternative---but I can see what Karl Marx was talking about when he wrote about the widening gap between the rich and poor----and violent revolution . Desparate people tend to take desperate actions. I plan to vote against all incumbents this election in protest___however counter productive and illogical that may sound
Posted by Deneb on October 5, 2008, at 22:58:15
In reply to Re: Oops-- there goes the economy..., posted by Bobby on October 4, 2008, at 20:49:39
I don't understand anything about the economy. What's happening? (in laymans terms)
I read something about the US printing money to pay for printing money and about dictators, civil war and stuff.
It sounds scary? Is it?
Posted by Sigismund on October 6, 2008, at 0:55:40
In reply to Re: Oops-- there goes the economy..., posted by Deneb on October 5, 2008, at 22:58:15
People lent too much money and now that the loans cannot be repaid they are going broke, and because some of them are too big to be allowed to fail the government will assume some of the debt.
Governments around the world seem to have decided they will not allow a run on the banks, which they have done by guaranteeing deposits.
But this isn't the end of it. It should have some way to go.
Actually, the 700B is going to be borrowed from the oil producing countries and the Chinese, isn't it, and will be a debt owed to them.
So it could affect how the world sees the US dollar as a reserve currency.
That's the best I can do. I know nothing about economics either.
Posted by Dinah on October 6, 2008, at 9:53:11
In reply to Re: Oops-- there goes the economy..., posted by Deneb on October 5, 2008, at 22:58:15
I don't understand how it can be helpful to think of it in those terms. It kind of tosses out serious discussions of what happened and how to prevent it from happening again.
It has a lot more to do with greed on the part of some, poor judgment and excess optimism and fear on the part of others, and the understandable tendencies of people to ride a bubble assuming it will never burst. Which leads to overvaluation, in this case mainly of real estate. And a correction.
Why that led to a crisis is better explained by others.
http://money.cnn.com/2008/10/03/markets/thebuzz/index.htm?postversion=2008100316
I was reading this and some other articles the other day. Trying to find something past the superficial.
I don't quite understand all of it. Apparently some banks became technically insolvent because of an accounting system that was put into place to correct the overstatement that arose in the previous accounting method.
Under the old method allowed assets to be carried at what the company paid for them, with a few exceptions. This allowed companies to carry artificially inflated assets on their balance sheet, to be shown as being solvent when they weren't. This was changed to marked to market, where assets are shown at what a willing buyer would pay for them. If you have a packet of mortgage loans in a time when home values are falling and foreclosures are high, it might be hard to find a buyer willing to shoulder the risk even at a large discount on price. So if you have an asset of mortgage loans in the amount of $100, prior to the crash you may have found someone willing to pay $70 for them. But in the current situation, it might be hard to find someone to pay $20 for them. Suddenly a company went from having lots of assets worth lots of money and being solvent (holding assets in excess of debt, or possibly having enough liquid assets to pay for upcoming debt. I'm not sure.) to holding nearly worthless assets and being insolvent.
Which, I suppose, is better than the previous way where you didn't know. BUT, those assets are artificially low at the moment. They're backed by mortgages on real homes where a lot of the mortgages and a lot of the homes are worth considerably more than the $20 the market would bear right now.
Also, because buyers are only willing to pay $20 on $100 right now, lending institutions can't sell their mortgages to third parties to free up more money to make loans. Even those companies who have cash on hand aren't about to lend it out because they want to keep their liquidity for safety's sake.
This bailout, as I understand it, promises to buy some of those mortgage packages for more than $20 but hopefully less than $70. If managed well, the cost to the taxpayer will be significantly less than the initial amount funded, because the mortgages being purchased have more value in them (in payback over time and in value when the market recovers) than they are currently selling for.
The purpose is to free up money for lending by providing liquidity to the lenders who are currently unable to sell batches of their loans as they currently do. (Would this be the GNMA/FNMA series that many normal prudent investors consider a relatively safe investment?) And also to provide confidence to those lenders who are currently afraid to release their cash. And also to bolster the stock market which is unduly driven by fear, optimism, and guesses about what will happen next. But even proponents of the bill admit that Wall Street will take a while to respond, and is a secondary purpose, not the primary one.
Posted by Dinah on October 6, 2008, at 10:03:33
In reply to Re: Oops-- there goes the economy... » Deneb, posted by Sigismund on October 6, 2008, at 0:55:40
> ...and because some of them are too big to be allowed to fail the government will assume some of the debt.
Do you mean too big in terms of the global economy or too big in terms of influential people. If you mean the former, I'd agree. The fact that both presidential candidates voted for it even in the face of voter disapproval, when finding a way to differentiate themselves while ingratiating themselves with an angry public would be to their benefit, shows that this really had to be done. It was like creating the FDIC after the crash of '29. Some people still complain about that, but since panic can cause a disaster as well as be a reaction to it, it was a prudent move overall.
> But this isn't the end of it. It should have some way to go.
Absolutely.
> Actually, the 700B is going to be borrowed from the oil producing countries and the Chinese, isn't it, and will be a debt owed to them.
Whenever the government spends more than it owns, debt is created. The same sort of leverage that teeter totters individuals does the same for a government. We need to raise taxes or reduce spending or both to pay for this. And more importantly we need to make sure it doesn't happen again, reregulate, and keep an eye on future problems. Politicians need to think past the next election and become statesmen.
Some congressmen this time impressed me no end by saying that voting for the bill would be disastrous for them politically, but the disaster would be theirs, not the nation's. I'd like to invite those people to run here, because all too often politicians are driven by their own disasters.
> So it could affect how the world sees the US dollar as a reserve currency.
It should. If we want to be respected as a stable economy, we need to behave responsibly and prudently while not stifling genuine growth and productivity.
> That's the best I can do. I know nothing about economics either.I don't think many do. Myself included. I'd understand more if Daddy were around. It was a hobby of his, looking at the big picture. Everything I know, I learned from him.
Posted by Dinah on October 6, 2008, at 10:04:44
In reply to Re: Oops-- there goes the economy... » Deneb, posted by Sigismund on October 6, 2008, at 0:55:40
Posted by Dinah on October 6, 2008, at 10:05:38
In reply to Re: Oops-- there goes the economy... » Deneb, posted by Dinah on October 6, 2008, at 9:53:11
At least that's the best I can paste together. I might be missing salient points because I haven't yet found a source that melds all the aspects together.
Posted by Sigismund on October 6, 2008, at 14:54:34
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 6, 2008, at 10:03:33
>Do you mean too big in terms of the global economy
Yep.
The thing I left out is aset prices...shares, houses, heaps of things perhaps, which are currently falling with painful effect.
Watching the news last night I was stunned. There were just a few things in a row that blew me away (what? oil? environment? I completely forget), and I remarked to my son that when I was his age (early 70s) it was, for all its difficulties, an optimistic time.
Posted by llurpsienoodle on October 6, 2008, at 16:53:41
In reply to Re: Oops-- there goes the economy..., posted by Sigismund on October 6, 2008, at 14:54:34
> Watching the news last night I was stunned. There were just a few things in a row that blew me away (what? oil? environment? I completely forget), and I remarked to my son that when I was his age (early 70s) it was, for all its difficulties, an optimistic time.Dear GOD sigi,
You are in your nineties? Wow, take good care with all your chainsawing, drug trials and such. Remember too much stress is bad for your immune system. Best to your son too. Is he retired?
-Ll
Posted by Sigismund on October 6, 2008, at 19:50:53
In reply to Re: Oops-- there goes the economy... » Sigismund, posted by llurpsienoodle on October 6, 2008, at 16:53:41
For a 90 yo I do very well, dear Lurpsie.
I just hope I am treated with the respect due to age.
My son would like to retire, but we still have a few years left in us and would like to be kept in the manner to which we have become accustomed
Of course the world's gone downhill.....When I was a nipper..........
Posted by Dinah on October 7, 2008, at 3:19:31
In reply to Re: Oops-- there goes the economy..., posted by Sigismund on October 6, 2008, at 14:54:34
The seventies must have been better to you than they were to me. But I suppose I was more late seventies.
Vietnam, chloroflorocarbons, the new ice age, carbon monoxide emmissions from vehicles (do you recall when you used to gag anywhere near a road?), rampant inflation, stagflation, stratospheric interest rates, recession, civil unrest, the cold war, the nuclear arms race, the near bankruptcy of New York.
To be honest I never thought I'd live to see the turn of the century. Or if I did, we'd be knee deep in glaciers and awash in nuclear waste.
Boy, and if you look back further... World wars, plagues, slavery, the infant mortality rate... Well, even in the seventies I considered myself pretty fortunate, even if we were going to freeze to death if we didn't blow ourselves up first.
Posted by Dinah on October 7, 2008, at 3:20:23
In reply to Re: Oops-- there goes the economy... » Sigismund, posted by Dinah on October 7, 2008, at 3:19:31
Although I must confess... Our movies of the week were more colorful than what they can come up with today.
Posted by Sigismund on October 7, 2008, at 3:31:25
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 7, 2008, at 3:20:23
Yes, I meant the early seventies.
And when an Australian says the 70s, it might mean the same as when an American says the 60s?
Vietnam wasn't fun, of course.
And optimism isn't always that wonderful either, for some of those on the receiving end.
Posted by Dinah on October 7, 2008, at 3:33:04
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 7, 2008, at 3:20:23
and how could I ever forget
Watergate, impeachment, constitutional crisis
And my personal catastrophes of faith. Elvis being a drug addict. Colonel Hogan dead in a hotel room surrounded by the paraphanalia of his interesting sexual habits. Sigh. And all I got was a chaste peck on the lips...
Maybe the world is going to end some day. But I'm not going to spend whatever is left of it anxiously scanning the skies for signs of imminent collapse. Been there, done that, have the crick in my neck to prove it. Henny Penny can go about her business without me.
Posted by Dinah on October 7, 2008, at 3:55:35
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 7, 2008, at 3:33:04
Ugh. I'm sorry. It's late and I'm overtired.
All I meant to say is that things aren't *going* bad.
Things have always been bad, and things will always be bad.
Somehow we've managed to survive millenia of this. Overall, objectively speaking, we're better off now than ever. We just have the luxury and the freedom to dwell on how bad things are. And of course, I suppose the trials and tribulations of each age strike those who live them as all important and all consuming.
Posted by Nadezda on October 7, 2008, at 13:51:42
In reply to Re: Oops-- there goes the economy..., posted by Dinah on October 7, 2008, at 3:55:35
Not only are things always bad, they're always getting worse. It all started with Juvenal, if not before.
Are we going to h*ll in a hand-basket yet? Or was that several millennia ago?
Nadezda
Posted by Sigismund on October 7, 2008, at 14:56:06
In reply to Re: Oops-- there goes the economy..., posted by Nadezda on October 7, 2008, at 13:51:42
Well, imagine you lived to be a few thousand years old.
But seriously, when is the economic debate?
The last McCain/Obama was on around 11am our time.
It should be televised live.
Maybe I can get it together to find a program guide online.
Posted by Sigismund on October 7, 2008, at 15:48:25
In reply to Re: Oops-- there goes the economy..., posted by Sigismund on October 7, 2008, at 14:56:06
When I said 'optimistic' I didn't mean 'good'.
Some of the very worst times in history have been optimistic.
(I think the French and Russian Revolutions were.
When you cut down a forest the chips fly.)What I meant was that (rightly or wrongly) we looked forward then to the future with a feeling of optimism, whereas now there is (rightly or wrongly) a feeling of foreboding.
Posted by Dinah on October 7, 2008, at 17:11:04
In reply to Re: Oops-- there goes the economy..., posted by Nadezda on October 7, 2008, at 13:51:42
:-)
I do like your thought processes. Are you a true skeptic like me? Skeptics distrust the bad news as much as the good.
This is the end of the thread.
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