"revised" bailout helps us right?

Question

ok now that paulson changed his mind and will now be injecting capital into the banks rather than directly buying the troubled assets, im thinking this is great news for RE investors right? i feel the bailout was a joke from the beginning- it was not nearly as much as needed and it wasnt going to help correct the root of the problem; my analogy- its giving a 400 pound woman a mini lipo when you really need to be stapling/ possibly removing her stomach all together....had the govt bought the assets we as investors would have had actual competition when it came to bidding for REOs and other deals. now that that plan has washed away and the govt is now stupidly "injecting" billions of our hard earned taxpayer dollars into a system that doesnt work as we have learned, its really just like giving a fiend on the streets more and more cash in which to buy their dope with. the banks have already made it quite clear they are not great with managing money and have reported buying other banks with the money that they have been given which is not what the govt wanted them to do... whos more incompetent at this point, citi, ect. or the us gov? whatever money is handed out during this 1st round bailout (im sure we'll see double digits rounds) is going to get burned up and they'll be back for more in 09... im just not understanding their way of thinking here. if theres X billions of dollars in bad loans right now, why do they think its contained at X amount right now, when in reality it could explode to XX amount in 09?? its common sense that more and more people will be defaulting with the rising unemployment and a shitty econ.... thoughts?

Account Closed · Answer

Lee - I hope you had a great Thanksgiving, too. I've been reflecting as well on this topic. Or I should say the topic variant we've hijacked this thread over too. It's been eating at me quite a bit over the last few weeks. What started out as a quest to get more fundamental currency knowledge to better raise my financial IQ turned me into feeling cynical, played and hopeless. Especially after finding quotes by various founding fathers warning against the exact financial system we have in place. Then I'll see someone posting something here along the lines of "socialism -> democrats -> bailouts", and I'll feel further anger, as this has nothing to do with socialism, nor democrats, nor capitalism and republicans. Then I'll feel further anger on how the system is cleverly set up to hide from the public what it really is going on, and the chances of the masses getting it are slim. We'll have these bailouts until the fundamental banking system is changed, no matter what party runs things. Luckily, possibly from having a holiday of gratitude among us, I am starting to get back to appreciation. Life could be a lot worse than the way things really do work. And the way things really do work, still offer a lot of opportunity for those who are not lazy and who know how to work the system. The system is not what are founding fathers wanted at all, but it is what it is, and I am grateful to have more knowledge, even if it is a little painful. I kind of enjoyed my ignorant bliss :) I appreciate those who have jumped in on the topic, instead of letting me hang out there like some sort of conspiracy theory guy. I am not. I didn't even like the X Files.

Account Closed · Answer

Lee great post! Thanks Will, I am with you. I know you're not suggesting that you want the country to fail. As far as the CEOs getting bailed out, I felt the same way not long ago. The only difference is with my current perception it makes sense to me why they will get bailed out. We're not in a free market, it's a market controlled by a private banking cartel, one in which if there was no debt, there would be no money in circulation. That includes any federal reserve notes in your wallet right now. With all my Fed rants lately I am not suggesting it's something we can change either. At least not for many years and through a lot of pain (which will happen no matter what) I think Lee nailed it by taking it in the direction of - "How can we get in on this Right now?" In fact that is initially how I started studying so much about it. Seller Financing!

Account Closed · Answer

"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." -Thomas Jefferson

Account Closed · Answer

I am with Jack on his statement. I am also with mikeoh, and Krzysztof, and everyone else that basically sees an economic collapse eminent and necessary for real recovery. Will, normally I'd be with you in letting them fail. However, I don't think the market will correct itself in our context. Perhaps if we did not have the Fed, and tied our currency back to gold instead of having a fiat currency. If we were in that context I think the market would correct itself, but I don't see how given our structure and fiat money. Maybe short term we'll luck out and things will balance for a bit, but ultimately, every system similar to ours has collapsed in the past. The odds really are against us in the long run. The founding fathers would not have let a Fed (the way ours works) even exist. We veered off path. From my perception - which I will admit is only that, and I am happy to be wrong - the bailout only prolongs the collapse. Without it the economy collapses sooner rather than later.

Lee Common · Answer

It's funny you should mention that. I went to Rothschild bank & was checking out e-mail addresses then started trying different variations untill I found the one that went through to David Rothschild. I've been sending e-mails for about a month no response yet but I have not been blocked either! I figure who cares what people say he would make one hell of a powerful alliance. :type:

Lee Common · Answer

Matty M, First I hope you had a wonderful Thanksgiving with family. & to tell you the truth I was wondering what kind of a response I would get from that post. Hence I spent some time considering what I said over the holiday. In my personal opinion in this day & age with so much of our economy based on emerging technologies & securities. I do think that some form of our system is beneficial. I also think that the majority don't understand the system & could care less what is going on in the big picture. Most people are happy to just have a nine to five & lack any real ambition. Success is simply having a family & being able to provide for that family. I respect that and realze that most true happiness comes from family. In the past people have always been held to their cast by education your father was a boatright you are a boatright, However today with the freedom of available information & any one persons ability to educate themselves at thier own leasure. There has been too much speculitive investing by individuals who are being ruined by other peoples bad advice & half baked investment vehicles. I guess what I am saying is it is no-ones fault but your own in the decisions you make & the consequences of those decisions, but that in our current system so much is already being taken from us in all forms of tax (some unconstitutional). I feel that could be being invested on our "the peoples" behalf prior to "paying the bills". Where under the proper supervisoin we each should be getting a check every quarter on those gains where we could choose to reinvest or buy that new ipod. I do not condone some sort of violent revolution. I would say we need to make a difference through the establishment & institutions. Get truly ethical individuals with the best interests of the people in mind to form an allegiance & start making a difference. But hey what do I know I'm just planting seeds.

Will Barnard · Answer

Matty, my post was implied more to the companies who are in financial trouble. The management and CEO's of these companies are responsible for this and no one else. If I own and run a business and then get too far into debt and do not have enough income to survive, what happens? I go out of business and some other competitor picks up more biz. It is the way the business world works. I did not mean to suggest that we should let our Country fail, just to say that I can not see how giving money to the same individulas that put themselves in this situation to begin with (by the wya, they still have their own golden parachuttes) makes any sense. All it does is delay the inevitable, their failure. IMHO.

Lee Common · Answer

Money "created" from paper is still paper! The FED prints money from nothing the Gov. pays the FED in T-bills more paper. Banks take that "money" from nothing & lend 10 times more nothing than there is, charging us real $$$ on thier made up money. You try it you go to jail! We pay with real goods & services! Money is created from goods & the people make all the goods & provide the services to support the supply & demand of those goods & and the institutions keep all the wealth what are we left with debt debt debt and more F-ing Debt! I don't even want to get started on how wealth comes from land & what's going on there! but ok When you sell a house the bank writes a mortgage from there nothing money. Who makes more you or the bank on the sale of your house? The bank by 2 1/2 times the value of the home (on a 30 year fixed @ 7%) & that's if you had it paid off. That is what the system is baised on & that is all the general population will ever get from it. Monopoly (literally) money & DEBT How can we get in on this Right now? Seller financing

Jack Ryan · Answer

Problem is letting them fail = economic collapse. If mark to market / transperancy was possible I think the FED would have employed that strategy (like Sweden 1990). However they didn't probably because ALL the banks are insolvent. Keep in mind in a fractional banking system lending creates money. When lending stops and the velocity of money stops money is destroyed. This is heavily deflationary... So in a sense we really do need our banks (unfortunately).

Jack Ryan · Answer

Wait until all this "bailout" spending really starts to snowball. We're already at over $8 trillion in all of the FED's alphabet soup lending facilities, at some point the US Dollar will price in a default (or at least severe inflation). When this occurs your oil is not going up by just 6%, it's going up by 600%.