You know that, even though the game is online, there has to be a player right? Glider is a computerized "player" that plays the game for you, doing mindless killing to level the character up.
How do you think banks make money? They make money by making loans. If they can't make loans, they can't make money.
And "More than they can afford" is an imaginary number. When WAMU tanked it was after its banking clients withdrew 17 billion dollars of their money in a 10 day long bank run. 11 days before they were saying, "Well, we're not doing great but we have 17 billion in liquidity over our required margins, and that should be plenty."
Meh. They were both massively exposed in the mortgage market, and, technically, they both got bought out. The thing that killed wamu was a 17 billion dollar bank run, but they were already under their capital requirements and had been for some time.
I think you'll find that most people's pensions and savings will recover value just like any other investment. Markets are cyclical. What goes down comes back up...in time.
If you don't want the value of your funds to change, by all means put them in a bank and collect interest...If you can find one that can afford to pay interest, since it can't, in your world, loan out any money.
Actually, to extend the analogy, the company (country) hired me (the legislature) because they thought that I (they) knew what I (they) were doing.
It is too late, when the shit hits the fan, to try to jump in and take control. You have to hope that you made the right choice when everything was going well.
That's what pisses me off about government in general. When I vote for someone, I'm imagining nuclear fucking war, and I want my guy to be there making decisions. Other people vote for someone they'd want to hang out with in a bar.
Holy shit! A good objection! You're the first one;)
I'm definitely in favor of taking Paulson out of the loop; I don't trust him either. And the buyout is another Bush corporate handout, there is no question about that.
But the liquidity crisis is very real, and it will have pretty nasty ramifications well beyond the market. Having that money out there will calm everyone down, and give the banks some room to breathe.
I'd like to see the control go to some accountable body. I like the provisions against executive pay, I like the government stake in the business to offset the cost, though the further entanglement that represents sucks.
I think it's actually a bad thing, simply because loans are not a "right now" sort of asset. You just can't know really.
The problem here is that the loans are guaranteed by assets, and the value of those assets are used to offset the risk. So if the value of that house goes down by 50%, then that loans immediate "value" takes that into account.
But if the guy never defaults (which he very well may not), then the loan is still worth the same in the long run, and the house price ends up meaning nothing.
Trying to figure out what a 20-year loan is worth "today" is absurd. The land may get demolished by an earthquake and completely devalue. Or a big tech industry could pop up right across the street and the value skyrocket. In the latter case, the bank would be praying for him to default because they'd make money on the deal...Indeed, that's likely a chunk of the reasoning behind the above prime rate mortgages; banks wanting to repo an appreciating asset.
Previously banks made this judgment based on an expectation of future trends, and this worked out pretty well. The mortgage packages kept their value better during downturns, and the banks really didn't lose money in the long run, so clearly they weren't making huge risks...
In this case the APMs and the loosening of the capital reserve on the big boys made for some huge ugly problems. Without those, I think we wouldn't have a problem at all, FAS 157 or no FAS 157. I do think the 157 added some instability, however.
It's a problem of scale; you can't really buy a mortgage package as a private investor, and, to make it worse, it's a "more is better" situation.
It's like selling insurance. If you sell insurance to one guy, and he dies early, you're fucked. But if you sell insurance to a million guys, only about 8% of them are going to die early, so you're going to make a nice profit.
Right now they're thinking between 10 and 20% of the above prime rate mortgages may end up in default. That's not a problem, if you've got enough of them, and they're often packaged with lower risk mortgages, which evens it out even more. We went through a lot worse after the S&L collapse.
In a concrete example, imagine a bank owns a formerly AAA-rated residential mortgage-backed security (RMBS) composed of Alt-A loans, which are better than sub-prime but less than prime. About 5% of the loans were delinquent, and there are no high-risk option ARM (above prime rate-mortgages) in the security. It is offered at 70 cents on the dollar. If you bought that security, you would be making well over 12% on your money, and 76% of the loans in the portfolio of that security would have to default and lose over 50% of their value before you would risk even one penny.
Let me say that again: seventy-six percent would have to default. But with the FAS 157 mark-to-market, the bank has to sell it for even less, and so they lose their shirts by being forced to sell an undervalued asset in order to cover costs.
It's not a bad deal, and other banks are taking advantage; Bank of America, Citigroup, and others are snapping up the mortgage packages as they hit the market...It's a sweet deal for them and they know it. Unfortunately, they don't have anywhere near enough capital to buy them all.
There needs to be someone who can step in and take up the mortgage packages without tying up all their liquidity. Since all the bank stocks have tanked, there is nothing left for the banks to sell to raise capital, so there are issues, and hence, government intervention.
Just because people don't want to spend 700bil doesn't mean they don't want something to be done: all the polls say that the economy is by far and away the big issue right now.
It's human nature, unfortunately, to want the problem to go away without costing anyone anything.
In 2004 the SEC removed the "Fixed Leverage Rule" for a handful of investment banks. That rule stated that they had to have 10% of their holdings in liquid assets...A safety net basically. You know what banks those were? Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, and Bear Stearns.
That was pretty fucking stupid of the SEC, eh? Those jokers put that extra 10% into the market, and at the first downturn, they fucking crashed because they had no assets.
But then look what happened. The traditional banks jumped on the assets. Bank of America, Citigroup, Mitsubishi Financial--all traditional banks with large chunks of liquid assets--they jumped in and bought assets cheap, and they're going to reap HUGE gains from their foresight, and, indirectly from a very sensible piece of regulation.
You can't expect a bank to have 100% of what it needs on hand. It just doesn't work that way. 10% is plenty, and the proof of that is how well the traditional banks are weathering this.
Well...no. Assuming that 10 100k mortgages with an expected return of 250k were sold for 1.5 million, then the expected final value would be 2.5 million, and the complete loss of a mortgage (which is pretty unlikely, since, if they default, you still have the house which has residual value) you're only going to be making 2.25 million instead of 2.5 million.
So you'd need to lose 4 mortgages before you broke even, assuming the seized houses were worth nothing. More likely you could lose 5 or even 6 before you broke even (assuming the houses were were worth ~80% of the mortgage value each, which is pretty low).
Most numbers I've seen are putting the estimates at around 15-20%, so you're more likely to lose about half that many, which would still make it a good buy.
Eh. The stock crash happened because of a bunch of non-rich investors freaking out (and today's bounce happened because a bunch of rich investors jumped on bargain priced stocks). Financial hard times generally aren't all that bad for the rich: they're rich.
Saying the bailout is specifically a bailout for rich people is just false; some rich people will benefit, but by and large the rest of the economy will benefit more. Banks are being forced to horde their liquidity, and they're unable to raise more capital because their stock prices are hugely devalued. This has a dramatic effect on the entire economy (pause for Libertarian whinging), and should be averted.
By promising a large chunk of change, and helping the banks keep their credit lines open, business as usual can continue, loans can be made, business can be done, and the market will calm down.
As the market calms down, companies will again be able to raise capital by selling stock, and thus they'll be able to pay their debts (and employees); fewer people will lose their jobs, and not losing their jobs, won't lose their houses either, so the "bad" mortgages bought by the gov't will probably end up breaking even as a worst case, and even if they don't the gov't'll make more revenue off a running economy than off a tanking economy, and it'll all even out.
That's the thing about the Constitution; it has a few rights that it explicitly guarantees, and it has a few rights that it specifically removes, and everything else it leaves alone.
The legislature has the power to collect revenue (Article 1, Section 8, First sentence. Income tax is specifically dealt with in the 16th Amendment), and the legislature has the power to spend revenue (Article 1, Sections 7 and 8) "to pay the Debts and provide for the common Defence and general Welfare of the United States", and that pretty much covers this situation in its entirety.
Oh please. I'm no fan of the government, but they're not in a position to just "fix" the problems with the economy, and they don't really need Joe Sixpack's crap advice piling up.
Of all the coverage I've seen on the current problems, hardly any of it actually hits the real roots of the issue. The 700,000,000,000 bailout is being pushed (hilariously) not because anyone who knows really thinks it'll solve the problem, but because the people who are pushing it know it will be perceived that way, and calm down the markets.
The whole issue revolves around the new FAS regulation from a year ago (157, if anyone cares) which required the banks to revalue their investment holdings based on the daily current market values, which, due to a current housing market glut, are tanking. In the long term most of these assets have a much higher (and more stable) value, but since they're being measured in the short term, these horrible reports are coming out and scaring the shit out of everyone.
Frankly, having the government snap up a chunk of semi-stable investments which, in all likelihood, will render an eventual profit isn't a bad deal if it will get all the goddamn market amateurs to stop having hourly shit-hemorrhages.
But all the average scmuck knows about the situation is that the government is going to "throw away" 700bil on something that will (depending on their view) save/destroy the economy. They've got no idea, no more than the better informed people who are pushing it, and their attempts to get in the way are just causing problems.
To use an IT metaphor; the mainframe has eaten itself, and you're trying to fix it, and you've got to do things that may or may not destroy data, but that have to be done regardless just to get the system running again. Is it productive to listen to all the people who have a stake in the data screaming their uninformed opinions? Not really. I think Congress is displaying a distinct lack of tact, but I've been known to tell a CFO to go fuck themselves sideways a time or two myself, and I'm finding it hard to blame them.
Agreed. I think a lot of people think that way, and then end up doing it for 40 years anyway because they ramp up their standard of living to the point where they can't "support" it without that million dollars a year.
The funny thing about being rich is that, once you have a chunk of money, you start hanging out with people who have so much more money than you that you start feeling poor again, so you try to get even more money, etc, etc, etc. Fucking rat race.
Shrug. Depends on how much you care about money, vs family and crap like that. If I offered you a 60 hour a week job that paid 1,000,000 a year and required lots of travel, would you be tempted?
It's tempting to me, and I've put my family ahead of my career for years.
The Republican's can't even begin to talk about "Earn it" when they've got the worlds biggest corporate handout going through congress right now.
I tend to vote Dem (because there are no small government republicans anymore, and the goddamn religious right makes me ashamed to live in this country), and I absolutely think that this law is perfectly fine.
If you make more than 75,000 a year, close to twice the national average salary, and you can't fucking negotiate a contract that pays you what you think you deserve, then I don't see why a company should be forced to pay your overtime. If you don't like it, get another job.
Frankly, this industry is one of those places where merit and skill matters so much, where absolute raw ability is key, and all this talk of unions frankly makes me sick. Let's take away any actual personal merit, and instead institute a system of seniority and privilege.
And fucking computer professionals comparing themselves to fucking janitors is a joke. You're not entitled to a 6 figure salary, and not having one doesn't make you poor.
That's a false dichotomy. It is possible to get a good IT job where you don't have to give up your life. It probably won't pay as well as one where you have to give up your life, but you know what? That's why those jobs pay so well.
You can't eat your cake and have it too. If you want an active family life, that will impact on your career.
Tell it to "Doctor" Phil...His TV career didn't even start until after they took away his license to practice.
Jack Thompson has exactly the same credentials: a PhD(Juris Doctorate) with no license to practice. "Good morning, Dr. Thompson, now tell us about the evil videogames."
Slashdot Mirror
You know that, even though the game is online, there has to be a player right? Glider is a computerized "player" that plays the game for you, doing mindless killing to level the character up.
How do you think banks make money? They make money by making loans. If they can't make loans, they can't make money.
And "More than they can afford" is an imaginary number. When WAMU tanked it was after its banking clients withdrew 17 billion dollars of their money in a 10 day long bank run. 11 days before they were saying, "Well, we're not doing great but we have 17 billion in liquidity over our required margins, and that should be plenty."
Meh. They were both massively exposed in the mortgage market, and, technically, they both got bought out. The thing that killed wamu was a 17 billion dollar bank run, but they were already under their capital requirements and had been for some time.
I think you'll find that most people's pensions and savings will recover value just like any other investment. Markets are cyclical. What goes down comes back up...in time.
If you don't want the value of your funds to change, by all means put them in a bank and collect interest...If you can find one that can afford to pay interest, since it can't, in your world, loan out any money.
Actually, to extend the analogy, the company (country) hired me (the legislature) because they thought that I (they) knew what I (they) were doing.
It is too late, when the shit hits the fan, to try to jump in and take control. You have to hope that you made the right choice when everything was going well.
That's what pisses me off about government in general. When I vote for someone, I'm imagining nuclear fucking war, and I want my guy to be there making decisions. Other people vote for someone they'd want to hang out with in a bar.
Holy shit! A good objection! You're the first one ;)
I'm definitely in favor of taking Paulson out of the loop; I don't trust him either. And the buyout is another Bush corporate handout, there is no question about that.
But the liquidity crisis is very real, and it will have pretty nasty ramifications well beyond the market. Having that money out there will calm everyone down, and give the banks some room to breathe.
I'd like to see the control go to some accountable body. I like the provisions against executive pay, I like the government stake in the business to offset the cost, though the further entanglement that represents sucks.
It's an interesting question.
I think it's actually a bad thing, simply because loans are not a "right now" sort of asset. You just can't know really.
The problem here is that the loans are guaranteed by assets, and the value of those assets are used to offset the risk. So if the value of that house goes down by 50%, then that loans immediate "value" takes that into account.
But if the guy never defaults (which he very well may not), then the loan is still worth the same in the long run, and the house price ends up meaning nothing.
Trying to figure out what a 20-year loan is worth "today" is absurd. The land may get demolished by an earthquake and completely devalue. Or a big tech industry could pop up right across the street and the value skyrocket. In the latter case, the bank would be praying for him to default because they'd make money on the deal...Indeed, that's likely a chunk of the reasoning behind the above prime rate mortgages; banks wanting to repo an appreciating asset.
Previously banks made this judgment based on an expectation of future trends, and this worked out pretty well. The mortgage packages kept their value better during downturns, and the banks really didn't lose money in the long run, so clearly they weren't making huge risks...
In this case the APMs and the loosening of the capital reserve on the big boys made for some huge ugly problems. Without those, I think we wouldn't have a problem at all, FAS 157 or no FAS 157. I do think the 157 added some instability, however.
It's a problem of scale; you can't really buy a mortgage package as a private investor, and, to make it worse, it's a "more is better" situation.
It's like selling insurance. If you sell insurance to one guy, and he dies early, you're fucked. But if you sell insurance to a million guys, only about 8% of them are going to die early, so you're going to make a nice profit.
Right now they're thinking between 10 and 20% of the above prime rate mortgages may end up in default. That's not a problem, if you've got enough of them, and they're often packaged with lower risk mortgages, which evens it out even more. We went through a lot worse after the S&L collapse.
In a concrete example, imagine a bank owns a formerly AAA-rated residential mortgage-backed security (RMBS) composed of Alt-A loans, which are better than sub-prime but less than prime. About 5% of the loans were delinquent, and there are no high-risk option ARM (above prime rate-mortgages) in the security. It is offered at 70 cents on the dollar. If you bought that security, you would be making well over 12% on your money, and 76% of the loans in the portfolio of that security would have to default and lose over 50% of their value before you would risk even one penny.
Let me say that again: seventy-six percent would have to default. But with the FAS 157 mark-to-market, the bank has to sell it for even less, and so they lose their shirts by being forced to sell an undervalued asset in order to cover costs.
It's not a bad deal, and other banks are taking advantage; Bank of America, Citigroup, and others are snapping up the mortgage packages as they hit the market...It's a sweet deal for them and they know it. Unfortunately, they don't have anywhere near enough capital to buy them all.
There needs to be someone who can step in and take up the mortgage packages without tying up all their liquidity. Since all the bank stocks have tanked, there is nothing left for the banks to sell to raise capital, so there are issues, and hence, government intervention.
Just because people don't want to spend 700bil doesn't mean they don't want something to be done: all the polls say that the economy is by far and away the big issue right now.
It's human nature, unfortunately, to want the problem to go away without costing anyone anything.
That would cause fairly large problems actually.
In 2004 the SEC removed the "Fixed Leverage Rule" for a handful of investment banks. That rule stated that they had to have 10% of their holdings in liquid assets...A safety net basically. You know what banks those were? Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers, and Bear Stearns.
That was pretty fucking stupid of the SEC, eh? Those jokers put that extra 10% into the market, and at the first downturn, they fucking crashed because they had no assets.
But then look what happened. The traditional banks jumped on the assets. Bank of America, Citigroup, Mitsubishi Financial--all traditional banks with large chunks of liquid assets--they jumped in and bought assets cheap, and they're going to reap HUGE gains from their foresight, and, indirectly from a very sensible piece of regulation.
You can't expect a bank to have 100% of what it needs on hand. It just doesn't work that way. 10% is plenty, and the proof of that is how well the traditional banks are weathering this.
Well...no. Assuming that 10 100k mortgages with an expected return of 250k were sold for 1.5 million, then the expected final value would be 2.5 million, and the complete loss of a mortgage (which is pretty unlikely, since, if they default, you still have the house which has residual value) you're only going to be making 2.25 million instead of 2.5 million.
So you'd need to lose 4 mortgages before you broke even, assuming the seized houses were worth nothing. More likely you could lose 5 or even 6 before you broke even (assuming the houses were were worth ~80% of the mortgage value each, which is pretty low).
Most numbers I've seen are putting the estimates at around 15-20%, so you're more likely to lose about half that many, which would still make it a good buy.
Eh. The stock crash happened because of a bunch of non-rich investors freaking out (and today's bounce happened because a bunch of rich investors jumped on bargain priced stocks). Financial hard times generally aren't all that bad for the rich: they're rich.
Saying the bailout is specifically a bailout for rich people is just false; some rich people will benefit, but by and large the rest of the economy will benefit more. Banks are being forced to horde their liquidity, and they're unable to raise more capital because their stock prices are hugely devalued. This has a dramatic effect on the entire economy (pause for Libertarian whinging), and should be averted.
By promising a large chunk of change, and helping the banks keep their credit lines open, business as usual can continue, loans can be made, business can be done, and the market will calm down.
As the market calms down, companies will again be able to raise capital by selling stock, and thus they'll be able to pay their debts (and employees); fewer people will lose their jobs, and not losing their jobs, won't lose their houses either, so the "bad" mortgages bought by the gov't will probably end up breaking even as a worst case, and even if they don't the gov't'll make more revenue off a running economy than off a tanking economy, and it'll all even out.
Shrug. That's a problem with any investment. Look at all the people who bought into oil thinking that would never go back down.
In this I think the public perception of action is the primary need...As with most financial crises, this one is mostly driven by panicking investors.
Show me where it says that they can't do it.
That's the thing about the Constitution; it has a few rights that it explicitly guarantees, and it has a few rights that it specifically removes, and everything else it leaves alone.
The legislature has the power to collect revenue (Article 1, Section 8, First sentence. Income tax is specifically dealt with in the 16th Amendment), and the legislature has the power to spend revenue (Article 1, Sections 7 and 8) "to pay the Debts and provide for the common Defence and general Welfare of the United States", and that pretty much covers this situation in its entirety.
Most of the conservatives here are fiscal and civil liberty conservatives, not moral and social conservatives.
In other words, they're Libertarians, not Republicans.
Oh please. I'm no fan of the government, but they're not in a position to just "fix" the problems with the economy, and they don't really need Joe Sixpack's crap advice piling up.
Of all the coverage I've seen on the current problems, hardly any of it actually hits the real roots of the issue. The 700,000,000,000 bailout is being pushed (hilariously) not because anyone who knows really thinks it'll solve the problem, but because the people who are pushing it know it will be perceived that way, and calm down the markets.
The whole issue revolves around the new FAS regulation from a year ago (157, if anyone cares) which required the banks to revalue their investment holdings based on the daily current market values, which, due to a current housing market glut, are tanking. In the long term most of these assets have a much higher (and more stable) value, but since they're being measured in the short term, these horrible reports are coming out and scaring the shit out of everyone.
Frankly, having the government snap up a chunk of semi-stable investments which, in all likelihood, will render an eventual profit isn't a bad deal if it will get all the goddamn market amateurs to stop having hourly shit-hemorrhages.
But all the average scmuck knows about the situation is that the government is going to "throw away" 700bil on something that will (depending on their view) save/destroy the economy. They've got no idea, no more than the better informed people who are pushing it, and their attempts to get in the way are just causing problems.
To use an IT metaphor; the mainframe has eaten itself, and you're trying to fix it, and you've got to do things that may or may not destroy data, but that have to be done regardless just to get the system running again. Is it productive to listen to all the people who have a stake in the data screaming their uninformed opinions? Not really. I think Congress is displaying a distinct lack of tact, but I've been known to tell a CFO to go fuck themselves sideways a time or two myself, and I'm finding it hard to blame them.
Agreed. I think a lot of people think that way, and then end up doing it for 40 years anyway because they ramp up their standard of living to the point where they can't "support" it without that million dollars a year.
The funny thing about being rich is that, once you have a chunk of money, you start hanging out with people who have so much more money than you that you start feeling poor again, so you try to get even more money, etc, etc, etc. Fucking rat race.
Shrug. Depends on how much you care about money, vs family and crap like that. If I offered you a 60 hour a week job that paid 1,000,000 a year and required lots of travel, would you be tempted?
It's tempting to me, and I've put my family ahead of my career for years.
Sorry...Not higher than us, higher than it was in the article...They're behind Brazil for christ's sake!
The Republican's can't even begin to talk about "Earn it" when they've got the worlds biggest corporate handout going through congress right now.
I tend to vote Dem (because there are no small government republicans anymore, and the goddamn religious right makes me ashamed to live in this country), and I absolutely think that this law is perfectly fine.
If you make more than 75,000 a year, close to twice the national average salary, and you can't fucking negotiate a contract that pays you what you think you deserve, then I don't see why a company should be forced to pay your overtime. If you don't like it, get another job.
Frankly, this industry is one of those places where merit and skill matters so much, where absolute raw ability is key, and all this talk of unions frankly makes me sick. Let's take away any actual personal merit, and instead institute a system of seniority and privilege.
And fucking computer professionals comparing themselves to fucking janitors is a joke. You're not entitled to a 6 figure salary, and not having one doesn't make you poor.
National average salary is under 40,000 dollars a year.
That's a false dichotomy. It is possible to get a good IT job where you don't have to give up your life. It probably won't pay as well as one where you have to give up your life, but you know what? That's why those jobs pay so well.
You can't eat your cake and have it too. If you want an active family life, that will impact on your career.
Crap. As==Has
You forgot the other two indefinites: "some" and "any"
As in, "The RIAA as sued some people in an attempt to prop up a failed business model but those SOBs aren't getting any money today."
Tell it to "Doctor" Phil...His TV career didn't even start until after they took away his license to practice.
Jack Thompson has exactly the same credentials: a PhD(Juris Doctorate) with no license to practice. "Good morning, Dr. Thompson, now tell us about the evil videogames."