Ahira's Hangar

When people are talking about Wall Street, they are largely talking past tense.

There are no more investment banks which operate without much (if any) regulation anymore.

That is a huge plus right there!

There is certainly still stock trading and the like, and large consumer banks, which are all under much tighter regulation and control than the investment banks were. So some important components of Wall Street are still there - just not the wild eyed Robber Barons of the new century.

That is what these guys running these companies and pushing these bad investments and mortagages were - Robber Barons like in financial legends of the late ninteenth century. Larger than life crooks with larger than life fortunes built largely by exploiting other people.

And yeah - so far a lot of these guys look like they will get away with it (though at the very least the people in charge of Freddie and Fannie and a lot of congressmen who fed from that trough look like they will be heavily investigated and perhaps charged down the line).

And yeah - at least the smarter ones will be lazing around on beaches overseas, living on the preoceeds of their Cayman Island and Swiss bank accounts.

But the thing is - because of the damage these greedy creeps have done, the rest of us (and I am not just talking US - this is a major worldwide issue due to how heavily foreign economies are invested and tied to ours) are facing at the very least a sharp recession (look to third quarter earnings statements which will be out in October to see if we are already in one) and at worst - a major depression.

I hate seeing a bailout, too - but I would hate even more to have millions of people lose their jobs, see all sorts of companies both large and small fail, and if things get really bad - see famine in Third World countries because they cannot get lines of credit to purchase food and medical supplies for their poor.

You see - the main problem right now is the credit markets. What is going on with the stock market is not the problem. Without credit businesses will go under, people cannot get mortagages or loans on things like cars, students cannot get loans, etc.

The underlying problem is that the credit markets have gone to hell with all of the bank failures (which make the surviving banks very paranoid about lending money) and with all of the subprimes mortgages that people are defaulting on.

It is the failure of the credit markets that could make the entire economy collapse.

And yes, I have been following this. As I have told my children, it could well be the most important historical event in the US since WW2.

If one good thing can come out of this, I am hoping that Reagonomics and the whole asstarded idea that the markets can take care of themselves and do not need oversight or regulation - when the markets are founded on pure profits and greed - will die a long overdue death.

I'm not sure how much I like the idea of just adding popular measures to it, so people will pass it just for the popular ones. But I suppose that if the people really do need it, it will be better to go through. I had hoped for some real social/governmental change outta this though, which a bailout will prevent.

--A

Well, I hate the whole thing to begin with - but when many leading economists and leading financial legends such as Warren Buffet (America's leading investor for decades, and in control of many billions of dollars - and supposedly a Democrat) say it is needed...then it is probably needed.

And I sure as hell do not want a really bad recession - or worse - somewhere down the line. (Though the economic indicators that have started coming out now for the third quarter indicate that we are indded already in a recession).

And yeah - I'm on two minds about the tax cuts as well. When your country's debts and spending are completely out of control, is it really the time to cut revenues?

Both houses passed a huge train bill today in favor of Amtrack - which is a great good. Bush hates Amtrack, but the bill passed with enough support in both houses to override a veto. We really need to find a way to move people around in a safe manner that uses less fuel, and trains are a great way to do that.

The Senate also passed a big green (solar and wind) energy package today. This is also a must.

So besides the credit/economic crisis, the Congress is also attempting to deal with another huge problem today - the energy/oil crisis.

I just wish that these problems could be dealt with a way that does not involve throwing billions of dollars at them.

Now both houses have passed the bill, and Bush has signed it into law.

The Senate loaded it down with huge amounts of pork in pretty much direct bribes to wavering House members to get them to vote in favor - the pork would help those peoples' districts directly. For example, some of the pork was directed towards rum makers in Puerto Rico and the US Vigin Islands - because it was actually to get the vote of a congressman whose district has a lot of rum warehouses and distibution centers.

Disgusting, but if it keeps us from going into a multi-year heavy recession or worse, I can live with it. I think.

I hope the Congress bailout plan works -- which is no guarantee, right? The scale of this financial mess gets more absurd and frightening with each passing week, it seems.

Heh. That's what we get for living next door to a giant.

Analysts on the news here have been assuring us that the Canadian banking system is in better shape than that of many other countries. Question is, should I believe them, or are they like the stewards on the Titanic, saying everything is all right even as the ship is sinking?

I saw on the news that building permits in Canada fell by 14% in August. Economists had anticipated only a 1.5% drop. This is supposed to be one of those important "economic indicators" that the pundits pay attention to. What it means in the "real world" I'm not clear on.

Markets are in free fall again today with the bad economic news from Europe. They had to suspend trading twice on the main Russian exchange today.

When I looked brefly at the AOL news, one of their top stories today was that a major US grocery store chain (Safeway, we do not have them around here) will be pulling stuff off of shelves soon because they cannot get anymore credit to buy food to sell it, and might soon be out of business.

Okay, that's fairly stunning news. Safeway has a number of stores in Winnipeg. In fact, it's the dominant grocery chain here. If Safeway goes under...that could mean a lot of people out of work.

Just to give you an idea of how widespread these subprime mortgages were:

Bank of America took oevr the bankrupt Countyrwide mortgage comany, which had issued a boatload of them throughout the US:

Now

I was just watching the middle of the night repeat coverage of the Presidential Debate.

And then suddenly CNN broke into the coverage with a breaking news story.

Now, when they break into the middle of the debate coverage at 2AM like that, your first thought (or at least my first thought was):
Oh crap. What well respected world leader died or where was the huge natural or manmade disaster???

Oh Lord, amid the fears of a worldwide recession, the Asian markets tanked last night.

The Japanese Nikkei index (which I think is the second largest in the world after Wall Street) lost almost 10% of its value. Yeah - on one day. An unbelievable amount of wealth just vanished into thin air.

Really bad news out of Asia - Europe has probably just started trading, and we are hours away yet from North American markets opening. I am not expecting rainbows and fluffy kittens in Europe and the Americas when they open.

And the thing is - as horrific as the markets have been -they are merely a symptom of the underlying problem.

As they do not have nice little graphs or statistics following the credit markets, we can only follow it by looking at the symptoms such as the markets crashing or businesses going under.

It is like trying to follow the progress of a septic patient through his/her fever.

What about the big bailout you ask?

While the deal was approved, none of the money has been distributed yet, to my knowledge.

And after it starts being distributed, then we will have to see if it even works.

I doubt we have seen the bottom yet, and that might be the most frightening thing of all.