D L X
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Obama And Geithner Plan Causes Stock Surge!

Mon Mar 23, 2009 11:24 pm

Obama and Geithner introduced their plan to relieve companies suffering from having toxic assets on their books today. It's a public/private partnership where the assets are put up for auction so they can be accurately valued, the government matches the bid on those assets, and if the asset turns into a winner based on its new value, both the buyer and the government take the profit. If it turns out to be a loser, the buyer and the government share in the loss (which has already been paid for).

Wall street ATE IT UP!! They LOVE it! Stocks soared upon the announcement, and apparently, Geithner knows what he's doing after all.

DXing, Dreadnought, NIKV, and all other conservatives that had complained about Obama's lack of a plan... well, what do you think?
 
Gsoshutout55
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 23, 2009 11:43 pm

you conveniently left out the most important, and most costly aspect: the government also pays the difference between the combined bids and what the banks deem "fair value"

eg a $100 "asset" or "security" is deemed by a bank to be worth $100, the private bidder puts up $7, the government matches that $7, but also "loans" the banks the remaining $86...
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:01 am

GSO, that may be true, although I wonder how many toxic assets will be bought at only 14% of their owners' already depressed valuations, and even still, it's a loan, not a purchase. But the point is still valid: Wall Street thinks this is an excellent plan. So where are the naysayers?

I'd hope to get a couple responses before noon EST tomorrow.  Wink
 
PPVRA
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:10 am

Stocks surged after Bush passed that initial $700bi as well. . . and then they crashed again.
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
Gsoshutout55
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:22 am

we'll see if the values area already depressed "enough". sorry about the rampant use of quotation marks, but so many of the words being used are arbitrary and I need to somehow highlight that.

The entire reason that the banks are holding out for the government $$ is that they know their assets are near worthless. IF they were worth more than the paper they were printed on, they would have already unloaded them in massive quantities to shore up their god awful balance sheets.
 
Gsoshutout55
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:27 am

You've also got to remember that in large part the stock markets are driven by the people...and most are not exactly the most...qualified individuals to make decisions. For example, I jumped on the "rally" bandwagon today, thus helping drive prices up. No, I don't think a whole lot of this plan, but I'll ride it up and dump it all, possibly tomorrow, for a profit. Then I'll short everything on the way down. All it takes is a few people to think its a good idea, then more people buy, then more, then I jump on, more buy, etc... The point is just because the stocks rally doesn't mean diddly squat.

i just kind of rambled on there...so if parts don't make sense there's your reason.
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:33 am



Quoting GSOShutout55 (Reply 5):
You've also got to remember that in large part the stock markets are driven by the people

I don't really buy that. Large stock market movements are caused by educated institutional investors -- they are the ones that are paying attention to the news and can understand the significant pieces of information contained within. Yes, there are lots of me-too types (like you admit to being today  Wink ), but they're not the ones that push whole markets.
 
windy95
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:44 am



Quoting D L X (Thread starter):
If it turns out to be a loser, the buyer and the government share in the loss

The market was up because once again Uncle Sam would be covering for the private sector. The new plan to buy up bad bank assets is an improvement over the original Paulson TARP plan for the government to simply buy up toxic assets directly. The private part of the plan solves that problem, but the public half , the reliance on substantial taxpayer funding is another misstep, and could ultimately cost trillions of more dollars. The private partner shares in the upside but the taxpayer will be on the hook again for the downside.

The bill for us so far includes the $410-billion omnibus spending bill (with more than 8,500 earmarks) . Then there’s the $787-billion economic stimulus bill which passed. On Friday, the Congressional Budget Office predicted that the president’s proposed budget would produce a $9.3-trillion deficit during the period from 2010-19.

That’s $2.3 trillion worse than the White House predicted in its budget and, if accurate, would make the deficit unsustainable, according to the president’s own budget director!

So I would not be all cheery yet for Obama and his favorite Tax evader.
 
Gsoshutout55
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:50 am

I'm not a me too type...I've learned when and how to follow the money. Although what you say regarding institutional investors is true, I don't believe they are the ones causing any major moves.
Large institutional investors also typically buy and sell in a slightly different market...you don't just go out and buy or sell 1,000,000 shares of AAPL of CAL for example. There are firms that specialize in finding buyers/sellers for very large transactions.

And I would argue against you, the masses (retail investors), drive the markets. I'd also argue that at present, most market participants are speculators and market players, not investors. Sorry, I don't have any concrete evidence to support my claims, they are just my opinions. In the meanwhile, I'll scrounge around for some "facts" to support my arguments.
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 12:59 am



Quoting Windy95 (Reply 7):
The private partner shares in the upside but the taxpayer will be on the hook again for the downside.

Not true. If the assets fail, both the government and the buyer lose.

As for the latter part of your post, it's not germane to this topic. Let's try to keep this thread on point.

Quoting GSOShutout55 (Reply 8):
you don't just go out and buy or sell 1,000,000 shares of AAPL of CAL for example.

Sure, but the DOW average doesn't include AAPL and CAL, but rather investments that institutional investors _do_ tend to go after. Same for the S&P 500. Not only are the DOW and S&P good indicators of what the market as a whole is doing, they are good indicators of what the institutional investors think about the market.

I'll cede some ground though - it's probably a mix of the two.
 
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stasisLAX
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 2:11 am

Quoting D L X (Thread starter):
Wall street ATE IT UP!! They LOVE it! Stocks soared upon the announcement, and apparently, Geithner knows what he's doing after all.

Geithner might know what the plan is supposed to do in the end, but I think that It’s overly complicated. The plans has a crapload of different parts that need to all work together, it attempts to involve investors from the private sector, and these is no agreement that the banks will be willing to sell these toxic assets to create the program. The markets knee-jerk reaction today was good, but I have my doubts if this will last for long. The plan itself may not be sufficient to protect taxpayer's monies, uber-complicated (even for the financial services industry) and it might not work if enough banks refuse to participate in the plans bidder process.

In all, it's the nationalization of corporate losses and the privatization of corporate profits, IMO.

[Edited 2009-03-23 19:14:27]
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 2:54 am



Quoting StasisLAX (Reply 10):
In all, it's the nationalization

Let me stop you there. There's an AWFUL lot of misuse of this word "nationalization" going on, mostly coming from the republican party and its media. Nationalization is not what's going on in the United States, even under these new programs. Nationalization means that the government has taken control of something, not that the government owns something or part of something. The government has investments just like any other large organization. For instance, the government has wide ranging investments to provide retirement benefits for long-term government employees. Is that nationalization? No. Not hardly. Besides, did anyone call it nationalization when the previous administration considered putting our social security funds into the market? No, even though that would have significantly upped government ownership of publicly traded entities. So, let's be a little more careful when throwing that word around.

Quoting StasisLAX (Reply 10):
these is no agreement that the banks will be willing to sell these toxic assets to create the program.

I think banks will be quite eager to get rid of these assets and hold them as more appropriately valued assets.

Quoting StasisLAX (Reply 10):
The plan itself may not be sufficient to protect taxpayer's monies, uber-complicated (even for the financial services industry) and it might not work if enough banks refuse to participate in the plans bidder process.

If it turns out to be a great success, can we count on you to say it was a success? I mean think about it today. Just taking into account the S&P 500, which gained 7% today: the S&P represents a market capitalization of about $7.85 Trillion. That means that a 7% gain is $550 Billion. The S&P companies are worth $550 Billion more today than they were yesterday, largely because of this plan! I think the money we spend is well worth it if it can make the rest of the economy grow $550 Billion in a day. Four days like this, and we will have already passed the total amount of toxic assets out there. (About $2 T.)


DXing? Dreadnought? NIKV? Where are you?
 
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stasisLAX
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 3:33 am



Quoting D L X (Reply 11):
misuse of this word "nationalization" going on, mostly coming from the republican party

As a long-time registered Libertarian, I believe that both the Republican party and the Democratic party leadership have full and equal blame in the lack of oversight on the banking industry and the inherent fraud/misconduct that took place within the industry. The greed of the industry executives and their paid influence in Washington not only destroyed their firm's individual and institutional shareholder's value, but have damn near forced the global economy into a depression.  vomit 
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
flybyguy
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 4:34 am



Quoting PPVRA (Reply 3):
Stocks surged after Bush passed that initial $700bi as well. . . and then they crashed again.

That's what I thought. Anyways, since when is wall street opinion worth anything? Since November '08 the market has been schizophrenic going up and down like a friggen roller coaster. The Dow alone loses several hundred points when anyone in Washington sneezes wrong and gains hundreds of points when some intangible economic statistic is up a fraction of a percentage point.

If the market behaves for the next year like it's behaved since the beginning of this mortgage mess, all the gains made by the stock market today will be lost by the end of next week.
"Are you a pretender... or a thoroughbred?!" - Professor Matt Miller
 
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 4:45 am



Quoting Flybyguy (Reply 13):
That's what I thought. Anyways, since when is wall street opinion worth anything? Since November '08 the market has been schizophrenic going up and down like a friggen roller coaster.

Very true, you can't solely look at the Dow and its daily gains or losses as an indicator of total market sentiment. Today was also a very low-volume day, which means the Dow's knee-jerk soar isn't quite as far-reaching as some posters allude to and should NOT be taken as a harbinger of things to come.
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dxing
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 5:04 am



Quoting D L X (Thread starter):
DXing, Dreadnought, NIKV, and all other conservatives that had complained about Obama's lack of a plan... well, what do you think?



Quoting GSOShutout55 (Reply 1):
eg a $100 "asset" or "security" is deemed by a bank to be worth $100, the private bidder puts up $7, the government matches that $7, but also "loans" the banks the remaining $86...



Quoting PPVRA (Reply 3):
Stocks surged after Bush passed that initial $700bi as well. . . and then they crashed again

Bought sums the situation up. The banks have been holding these assests for one simple reason, government backed dollars.

Quoting D L X (Reply 6):
I don't really buy that.

You ought too. I bought a bunch of Citi stock at $1.05 a share then turned around and sold it at $3.00 before the split. I'm not a day trader but there are still a lot of them out there.

Quoting D L X (Reply 9):
Not true. If the assets fail, both the government and the buyer lose.

Incorrect. Even if I don't buy any personally, which I probably won't, I'm still an owner through my tax dollars.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
baroque
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 7:21 am



Quoting D L X (Reply 9):
Quoting Windy95 (Reply 7):
The private partner shares in the upside but the taxpayer will be on the hook again for the downside.

Not true. If the assets fail, both the government and the buyer lose.

Even more than that, according to whoever it was on the Lehrer Newshour, the private buyer loses first and then the government so that the private interest acts as a cushion against this rather precious creature the US taxpayer losing.  angel  Which is why the upside has the opposite bias - presumably!

Quoting D L X (Reply 11):
Nationalization is not what's going on in the United States, even under these new programs.

Correct. It is quite funny to watch the waltz around the nationalization icon. Step on that (the line marked "Nationalization") and you will be sucked to your doom appears to be the rule of the game. But in truth it is about as reasonable as the kids game of not stepping on the lines on the pavement (aka sidewalk). At times it will be better to grasp the nettle.

Which is the main bit that would worry me about the great antidote plan to cure the US of the toxic asset syndrome. You all will end up dancing such an elaborate fandango around the involve private capital shibboleth, that you (all again) might end up falling over your own feet.

Recommendation: Hire Hugo C for an afternoon, he would fix it!!!  duck   duck  Well, have you actually seen him do worse than Wall St - so far!!  fluffy 

Presumably with the stock market, either these cats are all dead and we are headed to Zero, or one of them will turn out to be a living cat, but which one???
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 11:55 am



Quoting DXing (Reply 15):
I bought a bunch of Citi stock at $1.05 a share then turned around and sold it at $3.00 before the split.

And the reason why you did that was because you saw that the market was surging. You didn't cause the surge, you rode the surge.

Quoting DXing (Reply 15):
Quoting D L X (Reply 9):
Not true. If the assets fail, both the government and the buyer lose.

Incorrect. Even if I don't buy any personally, which I probably won't, I'm still an owner through my tax dollars.

Um, I'm not sure how that's responsive to what I said. What does what you said have to do with what I said? That if an asset bought under this plan fails, both the government and the buyer lose on that investment?
 
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Dreadnought
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 3:39 pm



Quoting D L X (Thread starter):
DXing, Dreadnought, NIKV, and all other conservatives that had complained about Obama's lack of a plan... well, what do you think?

I have not had the chance to read anything about the plan or even watch the news shows about it, so I reserve judgement. I'm up to my ears atm. But if it works and does not mean that the government has to shell out more money, that would be a good thing for the country.
You have enemies? Good. That means you've stood up for something, sometime in your life. - W. Churchill
 
windy95
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 8:16 pm



Quoting D L X (Reply 17):
That if an asset bought under this plan fails, both the government and the buyer lose on that investment?

But the governemnt loses most of it. The private sector gets almost all of the upside but has no risk on the downside. That is why the market went up. (also good housing numbers yesterday played a part). The private sector (Wall ST and the Banks) only have to pony up a 7 % down payment and the GOV (you) are financing the rest. If it goes south then the private sector does not have to pay the loan back (and only lose their 7%) and we the people take it in the shorts again over the same toxic assets. The same private sector who the Obama administration hates and is going out of his way to demonize received the best deal out of this again. This is a bailout for the Toxic assets and should once again not be doen. Plus with the government backing these assets will be priced higher thus we wil be overpaying for them.

Quoting D L X (Reply 9):
As for the latter part of your post, it's not germane to this topic. Let's try to keep this thread on point.

Pointing out that we have wasted our tax dollars on bad programs already and are about to bail out the same Characters again is not germane to the thread?.
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 9:39 pm



Quoting Windy95 (Reply 19):
The private sector gets almost all of the upside but has no risk on the downside.

I hate to repeat myself, but this is simply wrong. The government and the buyer are 50-50 partners in the asset. Both rise and fall together.

Quoting Windy95 (Reply 19):
If it goes south then the private sector does not have to pay the loan back

Where are you getting this from?

Quoting Windy95 (Reply 19):
The same private sector who the Obama administration hates

Ahh... it's all clear now.

Quoting Windy95 (Reply 19):
received the best deal out of this again.

Well, then maybe you need to adjust your thinking about whether Obama hates them, considering you think they just received the best deal.  Wink

Quoting Windy95 (Reply 19):
Plus with the government backing these assets will be priced higher thus we wil be overpaying for them.

How do you figure?
 
baroque
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 10:13 pm



Quoting D L X (Reply 20):
Quoting Windy95 (Reply 19):
If it goes south then the private sector does not have to pay the loan back

Where are you getting this from?

Perhaps from the same bucket that folk use to conclude that Airbus only has to repay Repayable Launch Investment if it makes a profit on the project? It seems to be a big bucket!
 
Flighty
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 10:16 pm

This is all crap. The government should not be borrowing my money to engage in this junk. If some rich guys failed, let them fail. It is asinine to think we can create a synthetic market run by premiers or politboro members from Washington, and that it's going to work out just great. When you put kindergardeners in front of a trillion dollars, it gets hoover-ed up on toys and play-dough, which appears to be what happened here.
 
windy95
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 10:19 pm



Quoting D L X (Reply 20):
Quoting Windy95 (Reply 19):
The private sector gets almost all of the upside but has no risk on the downside.

I hate to repeat myself, but this is simply wrong. The government and the buyer are 50-50 partners in the asset. Both rise and fall together.

The fed is supplying the financing to buy the assets. If the private sector does not pay back the loan is that a 50/50 loss? All of the risk goes to the taxpayer

Quoting D L X (Reply 20):
Quoting Windy95 (Reply 19):
The same private sector who the Obama administration hates

Ahh... it's all clear now.

Yes it is very clear that Maobama dislikes capitalism

Quoting D L X (Reply 20):
Quoting Windy95 (Reply 19):
received the best deal out of this again.

Well, then maybe you need to adjust your thinking about whether Obama hates them, considering you think they just received the best deal.

No they just had the leverage in making the deal.

Quoting D L X (Reply 20):
Quoting Windy95 (Reply 19):
Plus with the government backing these assets will be priced higher thus we wil be overpaying for them.

How do you figure?

Being backed by the government will put them at a higher price than if it was just the private sector with no guarantee. It will make them sell at a higher price so if it does not work then we will have been robbed for even more Taxpayer cash.
 
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Dreadnought
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RE: Obama And Geithner Plan Causes Stock Surge!

Tue Mar 24, 2009 11:31 pm

Government is again monkeying with the markets, trying to make it do unnatural things just like they did before, and which led to the bubble and crash.

And instead of learning the lesson, they are trying to reinflate the same real estate and credit bubbles that blew up in our faces, all over again.

Has anyone heard about China pushing for a new international reserve currency at the G20 summit? That's a clear sign that China is not willing to buy any more T-Bills, having seen Obama's reckless spending habits. Get ready for double-digit inflation, guys, it's just around the corner...

[Edited 2009-03-24 16:37:48]
You have enemies? Good. That means you've stood up for something, sometime in your life. - W. Churchill
 
D L X
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RE: Obama And Geithner Plan Causes Stock Surge!

Wed Mar 25, 2009 12:52 am



Quoting Dreadnought (Reply 24):
Government is again monkeying with the markets, trying to make it do unnatural things just like they did before, and which led to the bubble and crash.

Actually, it's pretty well settled that a complete lack of regulation and oversight led to the crash. This plan should help clean up the mess. Don't you think?

Quoting Dreadnought (Reply 24):
having seen Obama's reckless spending habits.

**chuckle**
 
dl021
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RE: Obama And Geithner Plan Causes Stock Surge!

Wed Mar 25, 2009 2:17 am

Does anyone not find it funny that the government holds to this mark-to-market accounting rule, which killed several otherwise healthy companies, and is now swooping in to buy up the remnants and use tax dollars to gain control they've never had before?
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Dreadnought
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RE: Obama And Geithner Plan Causes Stock Surge!

Wed Mar 25, 2009 3:02 am

Quoting D L X (Reply 25):
Actually, it's pretty well settled that a complete lack of regulation and oversight led to the crash.

You forgot one thing. Two things led to the crash. First was, as I said, government attempting to manipulate the markets into providing "affordable housing" - an honorable desire but as usual with such manipulization attempts, it ended up making housing more expensive as well as exposing millions of people to unaffordable loans, not to mention the financial institutions that had to carry them.

The second (and secondary) cause was what you mentioned. I say secondary because without the first, there would not have been a need to regulate Fanny/Freddy and the subprime mortgage market in the first place.

Since the primary cause was already a given by the end of the 90s, and expanded to such an extent that it was impossible to roll back politically (that's always the danger with such social programs), Republicans in Congress and the White House pushed for better oversight and regulation of the industry, specifically the part that eventually failed. They were fought every step of the way by the democrats, including people like Chris Dodd and Barney Frank who amazingly are the people in charge of fixing what they actively helped break.

Quoting D L X (Reply 25):
This plan should help clean up the mess. Don't you think?

No, I don't, because it once again is an attempt to manipulate the markets. It will inevitably lead to another exaggurated bubble/bust cycle and will inevitably cost the taxpayers further trillions to cough up (I don't say 'clean up', because they will probably do it again, and again).

The only way out of the cycle is to:

Allow Fanny and Freddie to go into recievership and fail.

Put mark-to-market rules on hold for a minimum of 3 years, with financial firms allowed to resume it at any time before that if they so choose.

Eliminate CMA and it's quota system on mortgages.

After a short shock, the market will refind its balance and regain its true value. Then you can grow again.

Some people here are pilots. As any pilot knows the first time he takes control of an airplane, the most important part of flying is to avoid hamfisted control inputs - i.e. overcorrections. Government trying to manipulate the markets leads to one overcorrection after another, and the problem gets bigger, and bigger. The markets are subtle, and can act instantly on thousands of parameters. The heavy hand of government is too brutal to control it. Policies that might be a good idea now might be a bad idea in 3 hours. The best thing a government can do to ensure prosperity is to leave the markets alone as much as they can while ensuring a level playing field. The markets will take care of the rest - they always have. Government interferance and spending has never rescued an economy - ever.

Quoting DL021 (Reply 26):
Does anyone not find it funny that the government holds to this mark-to-market accounting rule, which killed several otherwise healthy companies, and is now swooping in to buy up the remnants and use tax dollars to gain control they've never had before?


Yep. But few even understand what it is.

[Edited 2009-03-24 20:03:29]
You have enemies? Good. That means you've stood up for something, sometime in your life. - W. Churchill
 
dxing
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RE: Obama And Geithner Plan Causes Stock Surge!

Fri Mar 27, 2009 11:13 pm



Quoting D L X (Thread starter):
Wall street ATE IT UP!! They LOVE it! Stocks soared upon the announcement, and apparently, Geithner knows what he's doing after all.

So much for that surge.

http://finance.yahoo.com/echarts?s=%5EDJI#symbol=%5EDJI;range=5d

Quoting D L X (Reply 17):
And the reason why you did that was because you saw that the market was surging. You didn't cause the surge, you rode the surge.

Actually I bought the stock on March 9th, well before this announcement and sold it on the day of the announcement. Good thing too cause it dropped to 2.67 on Wednesday and ended the week at 2.60 a share.

Quoting D L X (Reply 17):
Quoting DXing (Reply 15):
Quoting D L X (Reply 9):
Not true. If the assets fail, both the government and the buyer lose.

Incorrect. Even if I don't buy any personally, which I probably won't, I'm still an owner through my tax dollars.


Um, I'm not sure how that's responsive to what I said. What does what you said have to do with what I said? That if an asset bought under this plan fails, both the government and the buyer lose on that investment?

Perhaps you didn't read the details. The private buyers can use government loans to make their purchases which don't have to be repaid if the plan self destructs. It's a no lose situation for those investors. Perhaps that one reason why the plan won't be open to the general public.

Quoting D L X (Reply 20):
I hate to repeat myself, but this is simply wrong. The government and the buyer are 50-50 partners in the asset. Both rise and fall together.

Perhaps you should read the plan.

http://www.scribd.com/word/full/1357...ccess_key=key-1ivumghbovmbfq04rtbz

It clearly states that the FDIC will insure the debt.
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RE: Obama And Geithner Plan Causes Stock Surge!

Sat Mar 28, 2009 12:02 am



Quoting Dreadnought (Reply 27):
Some people here are pilots. As any pilot knows the first time he takes control of an airplane, the most important part of flying is to avoid hamfisted control inputs - i.e. overcorrections. Government trying to manipulate the markets leads to one overcorrection after another, and the problem gets bigger, and bigger. The markets are subtle, and can act instantly on thousands of parameters. The heavy hand of government is too brutal to control it. Policies that might be a good idea now might be a bad idea in 3 hours. The best thing a government can do to ensure prosperity is to leave the markets alone as much as they can while ensuring a level playing field. The markets will take care of the rest - they always have. Government interferance and spending has never rescued an economy - ever.

Excellent analogy. Too bad that so many people still fail to understand how all of this actually works. Lost in the mire of bonus upsets and the Fannie/Freddie finger pointing drivel is the stark reality that when people screw up, the market punishes them punitively by killing their value. Whether it happens gradually or overnight is only a function of the severity of the mistake, but in any case, it will happen. The fact that people have lost this basic confidence is a harbinger of doom for the confidence the market has in itself - and we've seen the effects over the last six months.

Let's hope reason returns at some point, but I have my doubts.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
D L X
Topic Author
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RE: Obama And Geithner Plan Causes Stock Surge!

Sat Mar 28, 2009 7:08 pm



Quoting DXing (Reply 28):
So much for that surge.

http://finance.yahoo.com/echarts?s=%...nge=5

Looks like the gains were held. Before the plan was announced, the DJIA was at 7445. At the end of the week, it was at 7776. Hmmm...

Quoting DXing (Reply 28):
Actually I bought the stock on March 9th, well before this announcement

Then you CERTAINLY didn't cause the surge! Case dismissed.

Quoting DXing (Reply 28):
http://www.scribd.com/word/full/1357...ccess_key=key-1ivumghbovmbfq04rtbz

It clearly states that the FDIC will insure the debt.



Quoting DXing (Reply 28):
Perhaps you should read the plan.

http://www.scribd.com/word/full/1357...ccess_key=key-1ivumghbovmbfq04rtbz

It clearly states that the FDIC will insure the debt.

Oh, I see what you're saying now. You're talking about the government being on the hook for the mortgage. You have to take into account though that the private buyer cannot buy the whole asset with a loan. There has to be at least a 6-1 debt-to-equity ratio. This is little different from yours or my mortgage.
 
dxing
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RE: Obama And Geithner Plan Causes Stock Surge!

Sat Mar 28, 2009 11:39 pm



Quoting D L X (Reply 30):
Looks like the gains were held. Before the plan was announced, the DJIA was at 7445. At the end of the week, it was at 7776. Hmmm...

Which is still down how much for the year? Or since the President was elected?

Quoting D L X (Reply 30):
Then you CERTAINLY didn't cause the surge! Case dismissed.

Which was exactly my point.

Quoting D L X (Reply 30):
You're talking about the government being on the hook for the mortgage.

The FDIC will insure the investors. They can't lose a dime.
Warm winds blowing, heating blue skies, a road that goes forever, I'm going to Texas!
 
windy95
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 12:27 am



Quoting DXing (Reply 31):
You're talking about the government being on the hook for the mortgage.

The FDIC will insure the investors. They can't lose a dime.

Thus staritng the surge that day which was topped with the housing data that day. The investors will get to enjoy the upside and leave Uncle Sam hanging if there is a downside. It is a great plan for the investors.
 
AGM100
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 12:38 am



Quoting D L X (Thread starter):
Geithner knows what he's doing after all.

I am not sure about the plan to be honest . But I like the results over the past few days.

Not sure why it took this long but that is cool , I believe we were looking for some form of a plan and a little bit of confidence coming from the Presidents team.

What bothers me is that we still have all this spending going out , of which 99% has not even hit the "street". So this proves in my mind that what we needed all along was a simple plan with the good old fashioned confidence. As a FCON I am worried that the uptick in the market will give the Dems just the punch needed to pass that ...omnibus budget  crazy  ... so here we go.

I will assume Dems give President Bush a nod for a + 9000 market rise after his tax plan passed? ?
You dig the hole .. I fill the hole . 100% employment !
 
baroque
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 10:54 am



Quoting AGM100 (Reply 33):
I will assume Dems give President Bush a nod for a + 9000 market rise after his tax plan passed? ?

9000+ rise - which one was that more exactly?
 
AGM100
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 4:02 pm

Well in 2001 we were 6 -- and rose to near 15k ... so semantics aside it is about as credible as the 500 pt rise in the past few days . It really comes down to confidence of the people , government should just do less and let us get on with it. I am predestine we stagnate for the next few years ... we will not grow with the government becoming more and more of the economy.

As soon as the next administration starts cutting taxes and slashing programs again ( hopeful thinking)... we will be back on track.
You dig the hole .. I fill the hole . 100% employment !
 
baroque
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 5:44 pm



Quoting AGM100 (Reply 35):
Well in 2001 we were 6 -- and rose to near 15k ... so semantics aside it is about as credible as the 500 pt rise in the past few days .

Well that might be so for some index I have yet to find.

Down Jones Industrial started about 10,600 in 2001. It got down to about 8,400 after Sept 11 2001. Then it lurched to below 8000 twice in 2002 and once in 2003. So unless I am looking at something totally different, the best you have is from about 7300 but about 20 months after the start of Bush to just a bit shy of 14,000, more realistically averaging about 13,500 in 2007.

Sooooo I am not a Dem, but so far I don't have a tick for the 9000 rise you are asking to be applauded.

You might want to note that the major falls occurred after the EGTRRA, enacted in mid-2001 and that the best that could be claimed for the JGTRRA, enacted in 2003 would be a rise to just over 10,000.

Just to check we are on the same page:

http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

and

http://krugman.blogs.nytimes.com/2008/01/14/bush-tax-cut-mythology/

From which I quote:
EGTRRA arrived in the middle of a recession, but that was an accident. It was devised in 1999, when the economy was booming, to defend Bush's right flank against Steve Forbes. During the 2000 campaign, Bush sold it as a way of returning budget surpluses to the people, with not a hint that it had something to do with fighting recession. The recession story was an after-the-fact reinvention.

And EGTRRA didn't seem to help all that much. Formally, the recession ended in late 2001, but most labor-market indicators continued to worsen into mid-2003.

JGTRRA, which mainly cut tax rates on capital gains and dividends, was followed by a real recovery. And the Bushies naturally claimed the credit. But the real source of the expansion was the housing boom, which had very little to do with the tax cut.


Or as Klugman writes, today's history lesson.
 
Flighty
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RE: Obama And Geithner Plan Causes Stock Surge!

Sun Mar 29, 2009 10:19 pm



Quoting AGM100 (Reply 35):
Well in 2001 we were 6 -- and rose to near 15k ... so semantics aside it is about as credible as the 500 pt rise in the past few days .

A lot of that was based on incorrect expectations about risk. People did not realize the mkt was inevitably going to explode... "regulators," hedge funds, nobody had figured it out except 2-3-4 big people who did well. So yes, stocks went up, in large part mistakenly due to a math mistake that everybody was making.



But, I would agree that Bush's financial policies (and methods) were overall better than Obama's. Bush's war expenses were rather large, yet compared to Obama's spending, $1T was really pretty modest. The markets are depressed today in large part because people are concerned about policy uncertainty. Without strong policy, the USA is just another kid on the block. Institutions and laws used to be what made America great. But I don't think Obama wants us to be wealthy, anyway. That is my theory, anyway. He thinks money is bad.
 
EMBQA
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 3:45 pm

.....and today he forces the CEO of GM out of office the market plunges. Can anyone else name a time when our Gov't forced a CEO out of his position..?
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
mt99
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 3:47 pm



Quoting EMBQA (Reply 38):
Can anyone else name a time when our Gov't forced a CEO out of his position..?

Can you name a time when the Government invested dozen of Billions of Dollars in a private company?
Step into my office, baby
 
EMBQA
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 3:50 pm

Quoting Mt99 (Reply 39):

Can you name a time when the Government invested dozen of Billions of Dollars in a private company?

Yes I can... but in that case they fixed the problem and paid back the money

Quoting DXing (Reply 31):
Which is still down how much for the year? Or since the President was elected?

It was hanging around 11000 in late Oct - early Nov...and plunged right after that

[Edited 2009-03-30 08:52:07]
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
mt99
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 3:56 pm



Quoting EMBQA (Reply 40):
Yes I can... but in that case they fixed the problem and paid back the money

So, the approach works! But for the record.. can you name the company ur talking about?

Quoting EMBQA (Reply 40):

It was hanging around 11000 in late Oct - early Nov...and plunged right after that

The 11,000 mark was obviously a house of cards.
Step into my office, baby
 
PPVRA
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 4:04 pm

We should have the new GM plan for the whole economy:

Quote:
He also suggested that seeking bankruptcy protection may be the best way forward for both companies.

Restructuring plans may "mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger," he said.

This could make it easier for the firms to "quickly clear away their old debts that are weighing them down so they can get back on their feet and onto a path of success."

http://news.bbc.co.uk/2/hi/business/7972464.stm

He gets it!

The banks & AIG could use such a plan too!
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
AGM100
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 4:27 pm



Quoting Baroque (Reply 36):
Sooooo I am not a Dem, but so far I don't have a tick for the 9000 rise you are asking to be applauded.

Not asking for applause at all... the thread stater indeed was fishing for applause for a 500pt jump. I have said on here before that the Fed does not have as much effect as pundits make it out to be. President Bush essentially just cut some taxes ..which makes people feel good and in-turn created optimism. His message was for the most part always positive about the economy ... the current administration had to sink the economy and crush optimism in order to win the election and institute policies of control.

I am very disappointed in President Bush for his actions over the last 6 months of his admin. I believe however that most of it was reaction in a election year. With the Dems howling that the economy was collapsing the GOP could not be seen as sitting idle. President Bush failed by instituting the bail out program ..the door was open for the socialist minded politico arriving with pen and power.

Quoting Flighty (Reply 37):
But, I would agree that Bush's financial policies (and methods) were overall better than Obama's. Bush's war expenses were rather large, yet compared to Obama's spending, $1T was really pretty modest. T

The platform of " compassionate conservativeism " had me worried for the start. Although the plan sounded OK ..increaseing some social spending and tilting left while cutting taxes for corporations and cap gains. It has proved ailing in many ways. The more the fed gives license to spend ...the worse off the situation becomes. Fannie Mae and Freddy Mac are proof that federal sustainment of a core privatly driven market will not work. In other words why wouldnt CITI buy 50 billion dollars worth of Federaly backed mortgages ? It seems safe right ? It would be until someone pulles the rug out from under it .... who did that is still left to speculation.
You dig the hole .. I fill the hole . 100% employment !
 
mt99
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Joined: Wed May 26, 1999 5:41 am

RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 4:29 pm



Quoting AGM100 (Reply 43):
President Bush failed by instituting the bail out program ..the door was open for the socialist minded politico arriving with pen and power.

That's democracy in all its glory for you!
Step into my office, baby
 
EMBQA
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RE: Obama And Geithner Plan Causes Stock Surge!

Mon Mar 30, 2009 5:30 pm



Quoting Mt99 (Reply 41):
But for the record.. can you name the company ur talking about?

Chrysler in 1979-1980...
"It's not the size of the dog in the fight, but the size of the fight in the dog"

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