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[quote author="awgee" date=1221870816][quote author="No_Such_Reality" date=1221870340][quote author="Allison C." date=1221865475] :-) I will not choke you, your presence is vital to this forum! But his words of the Fed having an infinite balance sheet keeps haunting me. What does he mean by that? </blockquote>


The FED doesn't have an infinite balance sheet. If they try to use it like it, the end result is Argentina.</blockquote>


The FED does have an infinite balance sheet. And, the end result is Argentina. What do you mean try? They are using it. They just created between $170 billion and $250 billion in the last four days. They are about to create a few trillion to buy OTC derivatives from financial institutions.



The Fed creates money. Where do you think a Federal Reserve Note comes from? What do you think the limits are to the amount of currency the Fed can create? Yes, there are consequences, but that does not mean they do not have the ability or that they are not using that ability.</blockquote>


I will take it one step further, and I would postulate this may not be a bad thing in our current circumstances. We are witnessing monetary deflation on a never-before-seen scale. Even with all the printing they are doing, I question whether or not they can keep up with the rate of monetary destruction. Ordinarily, cranking up the printing press would be very inflationary, but in this circumstance, the printing money is being balanced by credit destruction. Helicopter Ben is going to get to test out all of his academic theories.



It seems to me the real trick is to know when to stop. Once the banks are recapitalized, continued printing will be extremely inflationary because the banks will start creating credit again, and we will have a wild expansion of money supply.
 
Inflation in double digits by next year.



Because of the bailout home prices will still continue to come down but not as much, however they will also lose value due to major inflation.



Homes will still be worth 500K, but buying a bag of chips will also be 9.99 and 2012s mustang will be 85K!
 
[quote author="morekaos" date=1222249308][quote author="morekaos" date=1221733714]The 4 Horseman of the Apocolypse. Bear Stearns, Lehman, Morgan and Goldman. Two down, two to go</blockquote>


I am a big man. I can admit when I am wrong...



<span style="font-size: 13px;"><strong>Buffett boosts Goldman Sachs with $5-billion investment</strong></span>



http://latimesblogs.latimes.com/money_co/2008/09/warren-buffett.html</blockquote>


Huh... So Buffet investing in this company instantly makes it a great company?



Seriously, if Warren were the Pope it'd be all the same. Long ago, it used to be that great companies with potential would come up and in turn Buffet would invest in them. Today, everybody is so hung up on his words that the chain of causation has reversed.
 
**Not sure where to post this because <u>6 months ago </u>seems like forever considering all that has happened since, but these essays have helped clue in a layman like me as to what is actually going on.



<a href="http://thejournal.epluribusmedia.net/index.php/op-ed/44-general op-ed/62-the-crash-is-past-comes-now-inflation"><strong>The Crash is past, Comes now Inflation</strong></a>





"...what we?ve done over the past 30 years of deregulating banking and finance is create incentives for speculating and arbitrage, while creating disincentives for actual investment of capital in the real economy. We have shifted from industrial capitalism to financial capitalism. <strong>Rather than building a new economy of alternative energies and green technologies, Wall Street, U.S. elites, and the oilarchies have dug in to defend what they have. They have dug in to defend the past. </strong>"



<a href="http://agonist.org/stirling_newberry/20080227/fire_the_fed"><strong>Fire the Fed</strong></a>



"Don't like this? Fire a whole mess of politicians. But on the way through, fire the fed.



Are there solutions. At this point, not really. What's going to happen here is that the powers that be are going to inflation tax their way out of this downturn, that's what they keep saying they will do, and since they get to vote raises for their own salaries, there's no reason to believe they won't. After the downturn is over, it will be a very slow recovery. Then, at some point, you, the public, will be sick and tired of being sticked and fired, and will do almost anything to get rid of the corrosion of your money. You'll demand pain, and you will get it.



The question you have to ask yourself is, what are you going to get for this? I mean, <span style="color: red;">several times in the last generation there have been bail outs and pain, and each time you've said that you are too busy watching American Idol to run things</span>, so let the wealthy ruin them. <strong>The next no strings attached bail out will be your last, because after that, you'll be working for people in Dubai and Beijing.</strong>



And when monarchies and oligarchies give orders, they expect to have them carried out."



**Stick a fork in the American empire because we're done and the mass is simply too dumb to know it.



Edit: Revised link as essay was moved.
 
<strong>Congressman Ron Paul



Statement before the Joint Economic Committee



?The Economic Outlook?



September 24, 2008 </strong>



Mr. Chairman, I believe that our economy faces a bleak future, particularly if the latest $700 billion bailout plan ends up passing. We risk committing the same errors that prolonged the misery of the Great Depression, namely keeping prices from falling. Instead of allowing overvalued financial assets to take a hit and trade on the market at a more realistic value, the government seeks to purchase overvalued or worthless assets and hold them in the unrealistic hope that at some point in the next few decades, someone might be willing to purchase them.



One of the perverse effects of this bailout proposal is that the worst-performing firms, and those who interjected themselves most deeply into mortgage-backed securities, credit default swaps, and special investment vehicles will be those who benefit the most from this bailout. As with the bailout of airlines in the aftermath of 9/11, those businesses who were the least efficient, least productive, and least concerned with serving consumers are those who will be rewarded for their mismanagement with a government handout, rather than the failure of their company that is proper to the market. This creates a dangerous moral hazard, as the precedent of bailing out reckless lending will lead to even more reckless lending and irresponsible behavior on the part of financial firms in the future.



This bailout is a slipshod proposal, slapped together haphazardly and forced on an unwilling Congress with the threat that not passing it will lead to the collapse of the financial system. Some of the proposed alternatives are no better, for instance those which propose a government equity share in bailed-out companies. That we have come to a point where outright purchases of private sector companies is not only proposed but accepted by many who claim to be defenders of free markets bodes ill for the future of American society.



As with many other government proposals, the opportunity cost of this bailout goes unmentioned. $700 billion tied up in illiquid assets is $700 billion that is not put to productive use. That amount of money in the private sector could be used to research new technologies, start small business that create thousands of jobs, or upgrade vital infrastructure. Instead, that money will be siphoned off into unproductive assets which may burden the government for years to come. The great French economist Frederic Bastiat is famous for explaining the difference between what is seen and what is unseen. In this case the bailout's proponents see the alleged benefits, while they fail to see the jobs, businesses, and technologies not created due to this utter waste of money.



The housing bubble has burst, unemployment is on the rise, and the dollar weakens every day. Unfortunately our leaders have failed to learn from the mistakes of previous generations and continue to lead us down the road toward economic ruin.
 
We are apt to shut our eyes against a painful truth... For my part, I am willing to know the whole truth; to know the worst; and to provide for it. --Patrick Henry
 
[quote author="muzie" date=1222318982][quote author="morekaos" date=1222249308][quote author="morekaos" date=1221733714]The 4 Horseman of the Apocolypse. Bear Stearns, Lehman, Morgan and Goldman. Two down, two to go</blockquote>


I am a big man. I can admit when I am wrong...



<span style="font-size: 13px;"><strong>Buffett boosts Goldman Sachs with $5-billion investment</strong></span>



http://latimesblogs.latimes.com/money_co/2008/09/warren-buffett.html</blockquote>


Huh... So Buffet investing in this company instantly makes it a great company?



Seriously, if Warren were the Pope it'd be all the same. Long ago, it used to be that great companies with potential would come up and in turn Buffet would invest in them. Today, everybody is so hung up on his words that the chain of causation has reversed.</blockquote>


He is usually right more than he is wrong. He is certainly not the Pope but I don't usually bet against him. He got some great terms and this looked a lot like his purchase of Solomon. Did pretty well with that one in the end.
 
[quote author="morekaos" date=1222397373][quote author="muzie" date=1222318982][quote author="morekaos" date=1222249308][quote author="morekaos" date=1221733714]The 4 Horseman of the Apocolypse. Bear Stearns, Lehman, Morgan and Goldman. Two down, two to go</blockquote>


I am a big man. I can admit when I am wrong...



<span style="font-size: 13px;"><strong>Buffett boosts Goldman Sachs with $5-billion investment</strong></span>



http://latimesblogs.latimes.com/money_co/2008/09/warren-buffett.html</blockquote>


Huh... So Buffet investing in this company instantly makes it a great company?



Seriously, if Warren were the Pope it'd be all the same. Long ago, it used to be that great companies with potential would come up and in turn Buffet would invest in them. Today, everybody is so hung up on his words that the chain of causation has reversed.</blockquote>


He is usually right more than he is wrong. He is certainly not the Pope but I don't usually bet against him. He got some great terms and this looked a lot like his purchase of Solomon. Did pretty well with that one in the end.</blockquote>


It's not just Buffett, Goldman has always been a good company. I mean, they even knew the sh*t storm was brewing and they shorted subprime mortgages. And I ask: When has Goldman had a losing quarter?
 
Attn Knife Catchers: JP Morgan says home prices to decline 44% peak to trough, 58% if we get a 'severe recession'.



<a href="http://calculatedrisk.blogspot.com/2008/09/jpmorgan-conference-call.html">Calculated Risk JP Morgan cliffs notes.</a>



<em>eat some of this permabears</em>



and lookout Turtle Rock/Irvine/Newport.
 
[quote author="graphrix" date=1222407344][quote author="morekaos" date=1222397373][quote author="muzie" date=1222318982][quote author="morekaos" date=1222249308][quote author="morekaos" date=1221733714]The 4 Horseman of the Apocolypse. Bear Stearns, Lehman, Morgan and Goldman. Two down, two to go</blockquote>


I am a big man. I can admit when I am wrong...



<span style="font-size: 13px;"><strong>Buffett boosts Goldman Sachs with $5-billion investment</strong></span>



http://latimesblogs.latimes.com/money_co/2008/09/warren-buffett.html</blockquote>


Huh... So Buffet investing in this company instantly makes it a great company?



Seriously, if Warren were the Pope it'd be all the same. Long ago, it used to be that great companies with potential would come up and in turn Buffet would invest in them. Today, everybody is so hung up on his words that the chain of causation has reversed.</blockquote>


He is usually right more than he is wrong. He is certainly not the Pope but I don't usually bet against him. He got some great terms and this looked a lot like his purchase of Solomon. Did pretty well with that one in the end.</blockquote>


It's not just Buffett, Goldman has always been a good company. I mean, they even knew the sh*t storm was brewing and they shorted subprime mortgages. And I ask: When has Goldman had a losing quarter?</blockquote>


Warren only buys excelent firms with first class managment teams who have fallen out of favor with the rest of the lemming-esque investing public.



I just watched Paul Begala call GWB a "high functioning moron, even congress treats him as such, both parties" and am still laughing my ass off. Totally disrespectful? Sure. Wrong? Wow, I don't wanna think about it.
 
[quote author="zovall" date=1222416724]<a href="http://money.cnn.com/2008/09/25/news/companies/JPM_WaMu/index.htm?postversion=2008092520">JPMorgan to buy WaMu - report</a></blockquote>
Can someone please explain to me why would this make WaMu safer? Wasn't JP Morgan in trouble and that's why it became a bankholding and not an investment bank.
 
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