CONSUMER ALERT Dow drops 777 points

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Couture's Gallery

Couture's Gallery

PFG, Picture Framing God
Joined
Jul 11, 2006
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Young Harris, Ga
vote failed on rescue and dow closed 777 down
 
I liquidated all of my stocks on Friday, I figured this would happen either way. If the bailout had gone through, it would not have happened today, more like a week or two. All the bailout would have done is give the banking industry more money that they would be afraid to loan out. It would have devalued the dollar by a large amount, making inflation a given. The market crashed today by more points than the beginning of the great depression, the dollar was up. Tomorrow will be an interesting day, bargain hunters may push it back up, or everyone and their brother will be trying to unload whatever stocks they have.

I do know this for sure, I have not sold anything today, dead in the water. I don't know what it's like in the rest of our industry, but from where I'm sitting, it looks bleak.

John
 
It was a wild ride. I watched much of the proceedings today since we are closed Mondays. The votes were there before the political campaigning began.

I haven't read the plan but any way you look at it the whole thing is darned if you do darned if you don't.

Just a note for those who don't know, Paulson was CEO of Goldman Sachs which was a major culprit in this whole problem. He got the job because they thought he might be able to unwind this carp without crashing the economy. Personally, I don't think any one or any thing can prevent what must happen. Just a shame that it had to get so out of control before the correction.
 
People have to realize that you have to ride the wave...you haven't "lost" anything until you take it out! The DOW is at the level it was in 1999 when Clinton was in office. It rose, now it is correcting itself. Be patient, don't get frightened and cause things to slide further.

REMEMBER to BREATHE!!!! And, make sure you vote correctly in the next election. MORE IMPORTANTLY, REMEMBER TO VOTE!!!!!!!!!!!!!!!

my 2 cents

Elaine
 
Jeff Rodier said:
Just a note for those who don't know, Paulson was CEO of Goldman Sachs which was a major culprit in this whole problem. He got the job because they thought he might be able to unwind this carp without crashing the economy. Personally, I don't think any one or any thing can prevent what must happen. Just a shame that it had to get so out of control before the correction.
Click to expand...
At the risk of mixing metaphors, this is what happens when you put the fox in charge of the henhouse with no adult supervision.
:kaffeetrinker_2: Rick

I posted this in a Warped thread the other night but I think it bears repeating. I also sent this to my Senator.

How Wall Street Can Bail Itself Out Without Destroying The Dollar
By Thom Hartmann

For Grover “Drown Government In The Bathtub” Norquist, this bailout deal will work out very well. At a proposed cost of $4,780 per taxpayer, it’ll further the David Stockman strategy of so indebting us that the next president won’t have the luxury of even thinking of new social spending (expanding health care, social security, education, infrastructure, etc.); taxes will even have to be raised just to pay for the bailout. It’ll debase our currency, driving up commodity prices and interest rates, which will benefit the Investor Class while further impoverishing the pesky Middle Class, rendering them less prone to protest (because they’re so busy working trying to pay off their debt). It’ll create stagflation for at least the next half decade, which can be blamed on Democrats who currently control Congress and, should Obama be elected, be blamed on him.



But there’s another way: Create an agency to fund the bailout, loan that agencythe money from the treasury, and then have that agency tax Wall Street to payus (the treasury) back.

It’s been done before, and has several benefits.

In the United Kingdom, for example, whenever you buy or sell a share of stock(or a credit swap or a derivative, or any other activity of that sort) you paya small tax on the transaction. We did the same thing here in the US from1914 to 1966 (and, before that, we did it to finance the Spanish American Warand the Civil War).

For us, this Securities Turnover Excise Tax (STET) was a revenue source. For example, if we were to instate a .25 percent STET (tax) on everystock, swap, derivative, or other trade today, it would produce – in its firstyear – around $150 billion in revenue. Wall Street would be generatingthe money to fund its own bailout. (For comparison, as best I candetermine, the UK’s STET is .25 percent, and Taiwan just dropped theirs from.60 to .30 percent.)

But there are other benefits.

As John Maynard Keynes pointed out in his seminal economics tome, The General Theory of Employment, Interest,and Money in 1936, such a securities transaction tax would have the effectof “mitigating the predominance of speculation over enterprise.”

In other words, it would tamp down toxic speculation, while encouraging healthyinvestment. The reason is pretty straightforward: When there’s no cost totrading, there’s no cost to gambling. The current system is like going toa casino where the house never takes anything; a gambler’s paradise. Without costs to the transaction, people of large means are encourage tospeculate – to, for example, buy a million shares of a particular stock over aday or two purely with the goal of driving up the stock’s price (becauseeverybody else sees all the buying activity and thinks they should jump ontothe bandwagon) so three days down the road they can sell all their stock at aprofit and get out before it collapses as the result of their sale. (Weironically call the outcome of this “market volatility.”)

Investment, on the other hand, is what happens when people buy stock becausethey believe the company has an underlying value. They’re expecting thevalue will increase over time because the company has a good product or serviceand good management. Investment stabilizes markets, makes stock pricesreflect real company values, and helps small investors securely build valueover time.

Historically, from the founding of our country until the last century, mostpeople invested rather than speculated. When rules limiting speculationwere cut during the first big Republican deregulation binge during theadministrations of Warren Harding, Calvin Coolidge, and Herbert Hoover(1921-1933), it created a speculative fever that led directly to the housingbubble of the early 20s (which started in Florida, where property values weregoing up as much as 70 percent per year, and then spread nationwide, only toburst nationally starting in 1927 as housing values began to collapse), thenthe falling housing market popped the stock market bubble and produced thegreat stock market crash of 1929. That speculation aggregated enormouswealth in a very few hands, crashed the housing and stock markets, and producedthe Republican Great Depression of 1930-1942.
Franklin D. Roosevelt, as part of the New Deal, put into place a series ofrules to discourage speculation and promote investment, including maintaining –and doubling – the Securities Transaction Excise Tax. Other countriesfollowed our lead, and the UK, France, Japan, Germany, Italy, Greece,Australia, France, China, Chile, Malaysia, India, Austria, and Belgium have allhad or have STETs.

Perhaps the most important benefit of immediately re-instituting a STET in theUSA, however, isn’t that it would raise enough money to bail out the banks andbillionaires (and after that crisis is covered, could pay for a national healthcare system), or that it would encourage investment and calm down markets.Those are all strong benefits, and absent the current Republican Administrationbailout proposal would stand-alone strongly.

But the Republican Bush Administration is currently suggesting that we borrow$700 billion (or more) from China and Saudi Arabia and other countries andinvestors, add that to our national debt, and repay it with interest (makingthe actual cost over the next 20 years over $1.4 trillion). This is whatRepublican Herbert Hoover tried in 1931 when he first created the ReconstructionFinance Corporation (later totally reinvented by FDR) to bail out the banks in1931. Hoover’s RFC bailed out the bankers, paid off huge salaries in thebanking and investment world, bought him a few months (maybe that’s the realgoal of the Bush/McCain Republicans now – just hold things together until afterthe elections), but ultimately led to the failure within two years of virtuallyall the banks in the United States. The bailout failed.

Similarly, in 1998 the Japanese banks were facing a serious crisis of liquidityas the result of a bursting housing bubble in that country. The Japanesegovernment used public funds to re-float a number of large banks that year, andit similarly failed. In one example out of dozens, in 1998 135 billionYen were given from public tax funds to Ashikaga Financial Group, but thecompany limped along for a few years and in November of 2003 collapsed again,requiring a second infusion of a trillion yen from public coffers. And,as the BBC reported in a 30 November 2003 article (“Japan Bank Bail-Out ‘AOne-Off’”): “But experts warn that Ashikaga could be just the tip of theiceberg.” Professor of Finance at Tokyo University Takehisa Hayashi said,“It will come as no surprise if we see another Ashikaga case in the near future.”And they did.

Japan continues to limp along, as a result of bailing out banks rather thanfixing structural problems. (At least the Japanese had enough savings touse their own money, instead of debt, to bail out their banks.)

So bailouts don’t work, and never have. And they also have the sideeffects of damaging a nation’s credit, sucking up its taxpayers resources, and(when done with debt) weakening its currency.

So let’s go back to what we know works. After Hoover’s 1931 bailout of thebanks failed, FDR did a cold reboot of the entire system, putting into placestrong rules to prevent speculative abuse. And he doubled the STET tax,both producing revenue that more than funded the Securities and ExchangeCommission and further prevented a repeat of the speculative bubble of the1920s that led directly to the Republican Great Depression.

We’ve done it before. We financed the Spanish American War and partiallyfinanced the Civil War, WWI, and WWII with STETs. We stabilized our stockmarket with a STET from the mid-30s to 1966, and other nations are doing ittoday. It’s time to do it again, this time using the STET so tax WallStreet can pay for its own bailout.

Thom Hartmann is a Project Censored Award-winning New York Times best-sellingauthor, and host of a nationally syndicated daily progressive talk program onthe Air America Radio Network. Hismost recent books are "Screwed: The Undeclared War Against the Middle Classand What We Can Do About It and "Cracking The Code: The Art and Science of Political Persuasion
 
couture's gallery said:
vote failed on rescue and dow closed 777 down
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Ooh goodness!!! Someone alert me when I can breathe again! As for gas prices...I average only 9,ooo miles a year. For now...gonna take the $1600 job I got yesterday and do cartwheels. Thank goodness I have a thriving home-based business!
 
As I see it, greed, corruption and fear are largely responsible for this mess but I refuse to participate in the panic. As alluded to above, people who invest long term in hopes of making a decent return make the markets work to (most)everyone's advantage. Greedy, speculative investors jumping in and out and using risky, unethical business practices hoping to make a quick fortune at someone else's expense are ,in large part, the culprits here and are getting what they deserve. Unfortunately, a lot of other more responsible, innocent people are getting hurt as well. Just my thoughts but I'm no economist.
 
This article came out in Time Magazine. It basically says let the risk taking financial institutions fail, and I agree.

(QUOTE)The Administration and Congress have felt compelled to do something about the "financial meltdown," so an inefficient and inequitable "bailout plan" has been rushed through the legislature despite harsh criticism from the right and left. That's unfortunate. Both presidential candidates were stalling by qualifying the plan. Whichever candidate had had the courage to reject outright this proposal would have had the better claim to be President.(QUOTE)

Full article with this link.

http://www.time.com/time/business/article/0,8599,1845209,00.html?cnn=yes
 
The market is up 275 points so far today.

Anytime the market drops quickly, people buy in. We sell when the market is up.

Don't you really think that the downturn yesterday was Wall Streets way of trying to force the $700 Billion TARP bill?

It is all smoke and mirrors.

Hopefully they don't over do it.
 
One of the traders this morning was saying how disappointed he was that today opened on an uptick. He would have liked today to be down at the open and down at the close to keep the pressure on the bailout.

Shallow, shallow, shallow.
 
After hearing that this bill had nothing in it to help middle America....who are really the ones in need of a bail out....I'm glad that the bill didn't pass. Maybe now that Congress has to go back to the drawing board, they will be able to come up with something that everyone can live with. Then, when they do find some kind of solution, if the people don't get on board we are all in for a very bumpy ride.

I find it interesting that yesterday my UPS driver said that he didn't have to worry about the SM crashing because he didn't have any money in the market. When I asked him how his job would be affected if companies go out of business and people stop shipping?.....he said, "Oh wow, I never thought of that! I guess that wouldn't be very good for UPS or my job security."

Go figure!
 
Jerry Ervin said:
The market is up 275 points so far today.
Anytime the market drops quickly, people buy in. We sell when the market is up.
Don't you really think that the downturn yesterday was Wall Streets way of trying to force the $700 Billion TARP bill?
It is all smoke and mirrors.
Hopefully they don't over do it.
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The Congress, the Bush Administration, and Wall Street have all conspired to sell us a bill of goods with no value to the average American worker.

They all say, give us 700 billion dollars to bail out the CEO's that were playing Blackjack with other peoples money, or we will ruin the country.

I say call their bluff, don't give them any money, and let's see what happens.

I'm guessing the weak Wall St. firms will get bought by stronger firms or the Federal Gov't will take them over.
 
I wonder just what Bush meant in his speech last week when he said they had been working on this plan for months.
:kaffeetrinker_2: Rick
 
surferbill said:
I'm guessing the weak Wall St. firms will get bought by stronger firms or the Federal Gov't will take them over.
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Well, what's happening now is the Treasury is letting any big bank buy the ones who are failing, or about to.

Then sometime soon those big banks on a buying spree in turn are "too big to fail" and need to be rescued.....
 
Paul, there is a window of "to big to let fail"; the ones doing the buying are 1) Always been conservative in lending and 2) too big to fail 3)because they are too big to rescue.
 
Rick Granick said:
I wonder just what Bush meant in his speech last week when he said they had been working on this plan for months.
:kaffeetrinker_2: Rick
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Is there anyone in this country who still believes one word that comes out of this man's mouth???

Right behind Bush with zero credibility is Nancy Pelosi, and the whole leadership of Congress.

The Treasury Sec. Henry Paulson was once the head of Goldman Sachs, so he wouldn't have any conflict of interest about bailing out his old firm and country club buddies, would he?

The whole thing is a pig in poke. I don't know what that really means, but it seems to apply to this whole mess. :D
 
It seems to me that there are a few too many companies that are already to big to fail. Since... from what I understand....they insure just about every airline in the world...AGI is one of them. Which makes their problem, a world wide problem. If they fail the global ramifications could be devastating.
 
In principle, I oppose the “bailout” or “rescue” or whatever you want to call it. In principle, I am a free market economist. “Main Street” simply thinks it is to bailout the “Wall Street Fat Cats”. No one wants to reward the blood sucking leeches behind the financial melt down. Can’t blame ‘em.

But, for those of us who have retirement funds, or mutual funds or IRAs, go on-line and check your portfolios! Dollars to doughnuts it has fallen precipitously.

What does that mean to us? Fewer retirees and soon to be retirees think they will have enough disposable income to purchase custom picture framing. And, if you examine it very closely, people who work for large corporations are wondering about whether their employer will be in business next month, so they won’t be interested in the Ferosa line, either.

All of us may suffer. If something doesn’t happen (and I am wary that anything will help) some of us may not be in business next year.
 
This is an incredible moment in our history. I always knew this would happen someday. By "this" I mean something would so enrage the people that we would finally mobilize and get some things done. I just didn't expect"this" to be this.

American's woke up and said, "this is not fair," and they called their congresspersons and shut it down. It's big gamble and I hope it pays off, but I am skeptical. My employee's husband had a 30K landscaping job lined up for the rest of the summer. The job was dependent on the owners refinancing their house. It just got cancelled. Next year this couple will probably be able to refinance their house as their credit is good and work history long and stable, but one more small business is SOL due to a frozen lending market.

I can't believe the bailout got shutdown because it wasn't fair. What's ever fair? What now?
 
Bill Henry...you are absolutely correct...we are in a retirement area and feel the pinch even more in the past few days..lots of our customers live on IRA's and on dividends from thier investments..they are all taking a hit, and many are losing the health insurance benefits they were assured of by thier employers upon retirement......I know my wife and I have lost a great deal on our IRA's and other investments in the past year despite good advise from our CPA and other financial advisors..we also see many of our friends small businesses go under in the past year...and others are just hanging on like we are.
 
Investments are always up and down. Who ever said they have to always go up all the time no matter what? If you need them to always go up, you can get a savings account or cd. I've heard any broad index funds, on average, have returned over 12% annually over any given ten year period in the last 70ish years.

If I were going to be retiring in the next 5 - 10 years I would be getting my money into something much more stable. If not, you haven't lost a thing. Actually you're probably about to see some amazing returns in the next few quarters.

Can anybody tell me one thing they have canceled or decided not to buy in the last 2 days because of the “crises”. Then explain why. Here the key though, “I'm scared” isn't a valid reason.

There is no need to propagate terror where none exists.
 
Jerry Ervin said:
The Dow is up 375.00 right now!

If it keeps rallying, it could be back to where it started yesterday.
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A long way to go for that - but it is back to about where it was just before it became clear that the vote would fail. It is up primarily because of some confidence that a revised bill will pass.

This proposal is primarily a rescue of the credit markets - who wins and loses in the short run is incidental - everyone loses if nothing is done - don't kid yourself. The credit markets have frozen because of the confluence of excessive mortgage lending in a housing market that inevitably entered a down cycle, the packaging of loans for leveraged resale by Freddie, Fannie, and others, and the insidious requirement that these bonds be marked down to market as the market collapsed rather than a predictable value at maturity. Most of these things were done in good faith by many people of good will and politicians that thought they were doing "good". Both sides bear a share of blame for not heeding ample warnings. Now is not the time to weigh blame. The rub is that something must be done to park these assets until the market for them calms, and, in my opinion political agendas should be set aside.
 
I'm starting to think that if we drag this thing out for a week or two it will correct itself.

Look at the stock market.

Look at the dollar versus the Euro. It is gaining again.

Two days ago it was $1.64 = 1 Euro, today $1.40 = 1 Euro

The dollar is getting stronger not weaker.
 
Jerry Ervin said:
I'm starting to think that if we drag this thing out for a week or two it will correct itself.
Look at the stock market.
Look at the dollar versus the Euro. It is gaining again.
Two days ago it was $1.64 = 1 Euro, today $1.40 = 1 Euro
The dollar is getting stronger not weaker.
Click to expand...

What would all the doom and gloomers in the government say if everything calmed down, and nothing bad happened?
Would they just say "never mind, we don't need the 700 billion". ;)
 
Constituent mail to our reps has been running 100-to-1 against this scheme. I think the reason that Dems and Reps among us are all getting along suddenly is that we realize we all have one thing in common: we're the middle class, and we're sick of being lied to and asked to prop up the Wall Street wolves who have been getting rich from transactions rather than creating real value as we do. Maybe we're beginning to see through the divide-and-conquer strategy that has made this state of affairs possible.
:beer: Rick
 
Jerry Ervin said:
Look at the dollar versus the Euro. It is gaining again.

Two days ago it was $1.64 = 1 Euro, today $1.40 = 1 Euro

The dollar is getting stronger not weaker.
Click to expand...

Could this be a function of the Euro getting weaker as they go through their own version of this mess?
 
Boston news this evening did a story on the "main street effect" of the financial turmoil; one of the businesses featured was a frame shop, I think in Cambridge, didn't catch name.

Joseph
 
I think that the longer this drags out the better. The markets are not reacting the way the doomsayers have predicted. We got into the mess in Iraq because they rushed it through without enough thought about how to get back out or how to protect the infrastructure of that country. Now it's become a quagmire that we are stuck with. This bail out could be the same thing if it isn't done correctly. It seems to me this is one time that the turtle needs to win the race.
 
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