Re: Economic failure impacts even kiteboarders
Posted: Thu Sep 18, 2008 10:01 am
OK, I was done with this thread but I couldn't resist. The more people I hear say things like "take all your money out of the bank, the world is ending, etc" the more I think we are close to the bottom. To get to a bottom, all the dead wood needs to be cleared out and people need to capitulate. This usually results on a big burst of selling but once there are no more people to sell, things bounce. A few more big down moves and bank failures and we might be there. BTW, Warren Buffett bought another company today.
As far as credit swaps, I think any expert will say that these are way out of hand and need to be on a regulated exchange. I hope this comes out of the debacle. But like it or not, our system relies on faith in the system and not hard assets. Note that if it was based on hard assets, we would not be anywhere near where we are today as far as prosperity and technology. It is all about intellectual capital. If people lose faith in the system then we have no system-- a huge risk. I don't think anyone knows how bad it could get if this happens. This is exactly why people shouldn't be peddling fear at this point.
Jon: you are right that because of leverage that Fannie and Freddie can be worthless without the underlying houses going to $0. However, look at their balance sheets-- their total liabilities are $1T, not $5T (the total value of the loans they underwrote). So with the federal debt of $10T and if Fannie and Freddies' assets get written down to $0, then taxpayers will be on the hook for another $1T, or a 10% increase in the federal debt. It has NOT doubled! Do your own homework and stop relying on blogs and the media. I'm not sure why you believe some news and not others. All reports have an agenda. And people have an uncanny knack for finding the data that supports their beliefs and discounts other data. The question is, why are you so negative?
BTW, I went out to Sherman yesterday evening and it was super sweet! When I was out on the water I wasn't worried about any of this.
As far as credit swaps, I think any expert will say that these are way out of hand and need to be on a regulated exchange. I hope this comes out of the debacle. But like it or not, our system relies on faith in the system and not hard assets. Note that if it was based on hard assets, we would not be anywhere near where we are today as far as prosperity and technology. It is all about intellectual capital. If people lose faith in the system then we have no system-- a huge risk. I don't think anyone knows how bad it could get if this happens. This is exactly why people shouldn't be peddling fear at this point.
Jon: you are right that because of leverage that Fannie and Freddie can be worthless without the underlying houses going to $0. However, look at their balance sheets-- their total liabilities are $1T, not $5T (the total value of the loans they underwrote). So with the federal debt of $10T and if Fannie and Freddies' assets get written down to $0, then taxpayers will be on the hook for another $1T, or a 10% increase in the federal debt. It has NOT doubled! Do your own homework and stop relying on blogs and the media. I'm not sure why you believe some news and not others. All reports have an agenda. And people have an uncanny knack for finding the data that supports their beliefs and discounts other data. The question is, why are you so negative?
BTW, I went out to Sherman yesterday evening and it was super sweet! When I was out on the water I wasn't worried about any of this.