Jon Adams

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A Minority Of One

News & Issues > Wall Street Equals Main Street ...
 

Wall Street Equals Main Street ...

Many people were caused to believe the Paulson Plan as modified was a 'bailout" of Wall Street. Nothing could be further from the truth.

First, the 770bn plan was a combination of capital infusions that were aimed at freeing the frozen credit markets. Banks are not dealing well with other banks because of the enormous hidden bad debts some banks hold on their books due to the sub-prime mortgages they carry. Second, when credit slows or stops there is little liquidity. That means few, if any, new loans can be made. That in turn deepens the effect of the freeze.

Next, the Fed would buy many of the bad or risky mortgages in packages, hold them while renegotiating those loans to allow the homeowners to remain in their domiciles and keep paying on them. This could even result in a profit down the road for the Treasury. Of course, many of the mortgages would be failures anyway. Therein is the risk factor.

Without credit the country has no economy. Everything runs on credit.

Wall Street isn't a remote place anymore. If you have a retirement account, a pension fund, a 401K, a Keogh or an IRA, your investments are 99 percent on Wall Street. What happened yesterday is when the Dow Jones Industrials fell 777.68 points, the American people lost over 1 Trillion two hundred million dollars. Much of that was lost to pensions, 401Ks, IRA accounts and other retirement securities.

When you get your month-end statement, check to see how much it cost you.

The flip-side is what happens without a plan in effect. Without credit flowing through the financial system you will lose more. Your interest rates will increase. Your credit limits cannot be increased, and I just heard that some credit cards are LOWERING those limits to get more capital. Forget college loans, car loans, new mortgages - even with AAA credit scores - and revolving credit.

Farmers will fail. Small businesses won't be able to order Christmas merchandise. Independent gasoline stations won't be able to order more fuel for the pumps. The Internet businesses that rely on credit card purchases will slow to a virtual halt. Many businesses won't be able to meet payrolls. On and on.

What happens on Wall Street doesn't stay on Wall Street.

It comes right into your wallets and purses.

We are all in this together.

posted on Sept 30, 2008 8:31 AM ()

Comments:

Another thing that I feel is important:

By creating another $700 billion out of thin air, in addition to the $630 Billion they created the day before yesterday (are you aware of that?...without anyone's consent, they did that), you are depreciating the value of your dollars to save the credit industry that got us into this mess in the first place. It's not going to solve anything because it will only drive up inflation, excessively. So, now, the price of everything is going up, (most likely will triple before all is said and done because of hyper inflation), but, Jon, where is your income going, what direction?

Who gives a rat's butt if you can or can't get a loan at that time because guess what? Based on your income to cost ratio, you're not going to be able to afford it anyway.

Also, libertarianism is not something you can subscribe to and then just leave. Libertarianism is a belief; it's an understanding of what is. I'm a life-time republican who is discovering that my principals fall in line with the libertarian belief. I am constant, and stick to my principals. I'm not a wishy-washy sort of person who jumps from one bandwagon to another because of my emotions or my personal financial situation. I am fiersly independent and I live to do what is right for all. I am the least selfish person you will ever come in contact with. My opinion and perspective come after great contemplation, tremendous unbiased thought, and incredible amounts of research. I try to always make certain I know exactly what I am talking about. It is never about me. It is always about what is right and what is best for everyone. That makes all the difference in the world in deciding what is best for the next 7 generations to come for that is who will be affected by the extremes of this mess. It will be far worse for them than it will be for us

Paulson, Bush, Obama, McCain, Wall Street lobbyists, and a slew of others have one goal - TO PROTECT THEIR INTERESTS. That $700 Billion will NEVER make it to the credit market allowing for you and me to obtain a loan that we would not otherwise have received. It will be absorbed by the top of the pyramid and if you think otherwise, my dear friend, you're not understanding the magnitude of those at the top of the pyramid and how and where that money will go first. They are THIEVES attempting to raid the national treasury and you are advocating for them to do so. Shame on you. I still love you and I think yo are great but shame on you for promoting such a horrible thing. Innocently or not, ignorance is no excuse.

Please, take a little bit of time to learn about the Derivatives market. Once you do, you will learn that this $700 billion is an effort to line THEIR pockets before everything crashes just as it was to bailout AIG, Fannie Mae and Freddie Mac. Those three institutions were bailed out because of the DERIVATIVES. Don't get sucked into that MSNBC crazy think. I watched Suzie on Larry King the other day and her crazy rants about credit, credit, credit. She's wrong, John. Just like those FAUX News bubbble heads who were bullying Paul Schiffer, those idiots are all wrong.

They're wrong because they're not thinking about what is best for the country and the entire country's economic system because they don't understand it. All they have learned through their financial exerience is how to make money for themselves. They're thinking about what is best for their own pockets without realizing how terrible that is for our country. That is where so many are going wrong. It's not about each of us, it's about our Country and the nation as a whole and saving our dollar before it's gone. That is the real issue. The $700 billion won't save our dollar; it will ENSURE that it fails.
comment by whereabouts on Oct 1, 2008 6:52 AM ()
John, credit IS the problem. LOANS are the problem. The natural or of things is correcting itself by the credit crunch.
comment by whereabouts on Oct 1, 2008 6:11 AM ()
Not only is it a bailout... it is just another step down the slippery slide to socialism. I could go along with a loan at a low percentage rate that had to be paid back.. but, it really doesn't matter now, because it was voted down. We still need to come up with a plan and I fear what the leaders of the Hill will come up with next. Personally, I think Bush needs to get rid of Paulson and that Palousi hasn't a clue concerning economics and should stick to having tea parties instead of trying to run the government. Just my humble opinion.
comment by anniel on Sept 30, 2008 2:07 PM ()
I read Eddie's (MyBloggers) blog -- he weighed in on being overjoyed that the bail-out failed. I commented to him that it was affecting Ed and me adversely already and we were not "on Wall Street". He says he "understands" and realizes there will be some difficulties. I think he doesn't realize how bad it will be and that his own situation may change drastically as well. He wanted to know if anyone else was joyous. He got a few groupies to agree. Oh, vomit.
comment by tealstar on Sept 30, 2008 1:36 PM ()
It is a bailout. Whenever new money is created, as would be the case with this $700 billion, inflation goes up and that depreciates everyone's cash value. All new money that is infused into the market is absorbed at the top tier of the pyramid. Little to none ever trickle downs to you and me.

John, this plan, and any like plan, is not the answer and serves to only exasperate the problem. The problem at hand is a devaluing of the US dollar. And printing $700 billion more dollars only compounds that problem in a very serious way.

If you study the depression of the 20's and 30's, you'll see that the government's interference in trying to "prevent" a crash, trying to maintain prices, constant interfering with the natural cycle of business is WHY that depression lasted for 16 years.

CREDIT is the problem, not the solution. The credit market will tumble no matter what. Just like the housing bubble, and any other out-of-control market, it can never sustain the bubble indefinitely and it's bound to burst. The longer you attempt to patch it with temporary solution, the worse you make the crash when it inevitably comes, and it will come.

There is a much greater monster boiling out there that is the Derivatives market which is a 1 QUADRILLION disaster about to be unleashed upon the globe. The derivatives market is simply legalized gambling on debt. With the Global GDP only equal to about $60 Trillion dollars, how in heavens could the Derivatives market climb to 1 Quadrillion? Because people placed "bets" with money they did not and do not have and those people will be unable to pay those bets when they come due, as they very well expediently will.

The crisis in the Derivatives market is WHY we had to bailout AIG, Fannie Mae, and Freddie Mac. The Derivatives most widely used form was that of the CDS - "credit" default swaps. People bet (invested) on the debt exchanging hands. No that those "bets" on all those mtg debts are coming due because those mortgages are failing and there isn't any money to pay for them, the "Fed" swooped in and manipulated Congress into bailing out these firms, but really it is to protect the crashing Derivatives market from all their careless gambling on the excessive and toxic credit debt.

The money being provided to infuse these failing firms and the economy goes to those on the TOP of the pyramid. Again, you and me and the rest of the common man will NEVER see even a trickle of that money. So, yes, this is a BAIL OUT of Wall Street.

It is the most sophisticated, most high profile money laundering scam of counterfeit dollars that has ever been perpetrated on global mankind.
comment by whereabouts on Sept 30, 2008 12:24 PM ()
I know what your saying and we should not have to bail out
these crooks,but we have to do something,not sure what.
comment by fredo on Sept 30, 2008 10:10 AM ()
I think part of the problem is people didn't understand it and called their Reps based on the headlines: bailout, etc. As a result, some cowardly Reps voted on this based on how it would effect their reelection chances rather than on what is actually best for the country. It produced lovely results in just a day (insert sarcasm).
AJ
comment by lunarhunk on Sept 30, 2008 9:30 AM ()
Too bad the greed of Wall Street reflects us all. If the Gov't gets involved then it could ripple into us becoming a Socialist society like Cuba and China.
comment by draco on Sept 30, 2008 9:00 AM ()
Thanks, Jon, for stating this situation so clearly. My heart aches for my aging, ill stepmother, whose pension was creamed yesterday, and my dear friend, who watches her lifetime retirement savings crash around her ears, and for so many experiencing the same thing. We are all in this together....
comment by marta on Sept 30, 2008 8:58 AM ()
comment by kristilyn3 on Sept 30, 2008 8:54 AM ()

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