700 Billion.....for starters.

[dvcgirl]

That's what Bush, Paulson and Bernanke are asking for.....

Whatever number they end up with.....just double it, at a minimum and that's going to be what it costs.

 

[bsnyder]

Am I the only one who is amazed there is so little talk, here on the DIS version of Main Street, about the financial crisis?

Do people just not care?

The number is not knowable at present. There are too many unanswered questions about how the "bailout" will be structured, who will be able to participate, how they will price the toxic debt, etc, etc, etc.

We can, however, examine the past, and use those facts to learn from the mistakes made. No one seems to care about that either.

 

[Goofy'slady]

I don't think people here on the Dis don't care about what's going on; now I know this is gonna sound strange but I come here to escape and plan my Disney vacations and while I try to keep up with the financial world some of it frankly is way over my head so I don't post when the talk gets like that. I know in some way shape or form this crisis is gonna affect me and I'm not living in a fairytale world but there's little or nothing I can do about it and after a while all the talk gets to be overwhelming.

This board is for those budget minded folks who in today's financial world are trying to keep afloat and eek out a way to pay for their little slice of heaven (whatever that may be). Perhaps people are tired of talking about it, reading about it, watching it on the news and in some cases living it, so when they log on maybe they'd much rather talk about something else OR maybe they're not into talking all that much about what's in or not in their checking and savings account. There are some who do like to chat about what's going on but maybe they haven't logged on.

T.

 

[Brianne]

I'm still waiting for all the details before forming an opinion about it. I don't think anyone really knows what's going to happen yet. I, for one, hate speculating on things as important as this without knowing the details.

Who knows, maybe I'm the only one thinking that way? I just don't know how it's going to impact me, my family, friends yet.

 

[Planogirl]

I do care but right now I feel a bit clueless and helpless. I'm also wondering where it will end.

Examining the past? Yes, that's doable but I expect that no one will agree on what's really to blame but will point fingers at parties and government officials. I believe that it's likely a combination of many factors and each will need to be looked at.

 

[bsnyder]

Examining the past? Yes, that's doable but I expect that no one will agree on what's really to blame but will point fingers at parties and government officials. I believe that it's likely a combination of many factors and each will need to be looked at.

I guess this is what I find depressing. There is a historical record. And it can, and should be looked at.

For instance, why is the crisis almost completely confined to residential real estate? Commericial real estate, while not booming, isn't in crisis. And it has been in the past (it played a huge part in the real estate bust in the late '80's). And the commericial sector is far more free-market oriented, and subject to much less government regulation and directives than the residential housing market is.

 

[DawnCt1]

I guess this is what I find depressing. There is a historical record. And it can, and should be looked at.

For instance, why is the crisis almost completely confined to residential real estate? Commericial real estate, while not booming, isn't in crisis. And it has been in the past (it played a huge part in the real estate bust in the late '80's). And the commericial sector is far more free-market oriented, and subject to much less government regulation and directives than the residential housing market is.

There were people who could not qualify for a used car loan but were able to get mortgages that far exceed their means to pay them back. The entire mess started at Fannie Mae and Freddy Mac and infected the rest of the financial sector. The rest of the market seems fine. I don't think we can let the financials fail but what concerns me, is that Obama today, (I heard it by a campaign spokesman) said that he wants $1000 credit and a bail out of all home owners that are in trouble with their mortgages. My opinion??? They aren't homeowners; they are renters who didn't pay the landlord; their lenders. One of the suggestions I heard from that camp is a fixed 5% mortgage and a lowering of the principle so they could "afford it". If we are bailing out the lenders, then we, the taxpayer should own the defaulted houses. When they sell, it goes back to the treasury and the 'homeowners' can become real renters again.

 

[SeeVee]

There were people who could not qualify for a used car loan but were able to get mortgages that far exceed their means to pay them back. The entire mess started at Fannie Mae and Freddy Mac and infected the rest of the financial sector. The rest of the market seems fine. I don't think we can let the financials fail but what concerns me, is that Obama today, (I heard it by a campaign spokesman) said that he wants $1000 credit and a bail out of all home owners that are in trouble with their mortgages. My opinion??? They aren't homeowners; they are renters who didn't pay the landlord; their lenders. One of the suggestions I heard from that camp is a fixed 5% mortgage and a lowering of the principle so they could "afford it". If we are bailing out the lenders, then we, the taxpayer should own the defaulted houses. When they sell, it goes back to the treasury and the 'homeowners' can become real renters again.

Come on, Dawn. Dont you know that rewarding bad behavior never causes more of the same? <sarcasm off>

 

[ntsammy5]

I'm still waiting for all the details before forming an opinion about it.

That's the smart thing to do.

 

[bsnyder]

The entire mess started at Fannie Mae and Freddy Mac and infected the rest of the financial sector.

I'd agree with this, although the degree to which it has infected the rest of the financial sector seems to be largely confined to firms that invested heavily in mortgage-backed securities, or in the case of AIG, insurance aginst the risks of investing in those types of securities.

Anyone disagree?

 

[Christine]

I am very concerned about this financial crisis and I'm trying to read all I can about it; however, right now it 100% overwhelms me and I feel like I can't even form an opinion on what the right course of action is. I feel like there is so much I don't know. My thoughts on the matter are:

1. I knew for a long time that this cheap, easy credit for homeowners what a BAD thing--how come no one else cared?

2. It disgusts me that these mortgage lenders rode the wave of HUGE profits through all of this, enjoyed those profits immensely, and are now getting bailed out.

3. My inner sense of "fairness" wants all of these gamblers to suffer their consequences and have there not be a bailout but I realize that those repercussions could affect more innocent people than are already affected.

4. And yeah, I'm REALLY worried about my retirement. I have no pension and have done EVERYTHING I've been told about investing--since I was about 25. Now at 44, I feel I will have nothing or not nearly enough when the time comes for me to stop working. And I won't be alone.

 

[ntsammy5]

It's a little more complicated:

In finance, a credit derivative is a derivative whose value derives from the credit risk on an underlying bond, loan or other financial asset. In this way, the credit risk is on an entity other than the counterparties to the transaction itself.[1] This entity is known as the reference entity and may be a corporate, a sovereign or any other form of legal entity which has incurred debt.[2] Credit derivatives are bilateral contracts between a buyer and seller under which the seller sells protection against the credit risk of the reference entity.[3]

The parties will select which credit events apply to a transaction and these usually consist of one or more of the following:

bankruptcy (the risk that the reference entity will become bankrupt)
failure to pay (the risk that the reference entity will default on one of its obligations such as a bond or loan)
obligation default (the risk that the reference entity will default on any of its obligations)
obligation acceleration (the risk that an obligation of the reference entity will be accelerated e.g. a bond will be declared immediately due and payable following a default)
repudiation/moratorium (the risk that the reference entity or a government will declare a moratorium over the reference entity's obligations)
restructuring (the risk that obligations of the reference entity will be restructured).
Where credit protection is bought and sold between bilateral counterparties this is known as an unfunded credit derivative. If the credit derivative is entered into by a financial institution or a special purpose vehicle and payments under the credit derivative are funded using securitization techniques, such that a debt obligation is issued by the financial institution or SPV to support these obligations, this is known as a funded credit derivative.

This synthetic securitization process has become increasingly popular over the last decade, with the simple versions of these structures being known as synthetic CDOs; credit linked notes; single tranche CDOs, to name a few. In funded credit derivatives, transactions are often rated by rating agencies, which allows investors to take different slices of credit risk according to their risk appetite.

These products were created by a bunch of mathematicians/rocket scientists and no one really understood them and more importantly didn't understand the risk. Why were these products introduced in the first place? Greed, plain and simple. These products were highly profitable.

 

[dvcgirl]

There were people who could not qualify for a used car loan but were able to get mortgages that far exceed their means to pay them back. The entire mess started at Fannie Mae and Freddy Mac and infected the rest of the financial sector. The rest of the market seems fine. I don't think we can let the financials fail but what concerns me, is that Obama today, (I heard it by a campaign spokesman) said that he wants $1000 credit and a bail out of all home owners that are in trouble with their mortgages. My opinion??? They aren't homeowners; they are renters who didn't pay the landlord; their lenders. One of the suggestions I heard from that camp is a fixed 5% mortgage and a lowering of the principle so they could "afford it". If we are bailing out the lenders, then we, the taxpayer should own the defaulted houses. When they sell, it goes back to the treasury and the 'homeowners' can become real renters again.

The mess didn't start at Fannie and Freddie, it started in Congress, four years ago, when a bill was passed that allowed investment banks to take up their leverage from about 12:1 to 30:1. Thank Phil Gramm for that one, the guy who said that the economy is fine...that Americans are a bunch of whiners.

Wall Street took the laws that they lobbied heavily for....and then "financial engineers" on Wall Street came up with very complex ways to bundle all kinds of debt, far more complex than in the past. The word went out from Wall Street that they were in the market for subprime mortgages of all types, in all kinds of bundles. And the mortgage industry went out and sold mortgages to anyone with a pulse.

That's how it started....and now the pendulum will swing so far in the other direction ( a very bad thing), that banks will be wondering for years what on earth happened to their profits.

And now, this plan is taking all of the pain from Wall Street, no, that's wrong, they're *purchasing* all the pain from Wall Street and transferring it to Main Street.

 

[bsnyder]

The mess didn't start at Fannie and Freddie, it started in Congress, four years ago, when a bill was passed that allowed investment banks to take up their leverage from about 12:1 to 30:1. Thank Phil Gramm for that one, the guy who said that the economy is fine...that Americans are a bunch of whiners.

Wall Street took the laws that they lobbied heavily for....and then "financial engineers" on Wall Street came up with very complex ways to bundle all kinds of debt, far more complex than in the past. The word went out from Wall Street that they were in the market for subprime mortgages of all types, in all kinds of bundles. And the mortgage industry went out and sold mortgages to anyone with a pulse.

That's how it started....and now the pendulum will swing so far in the other direction ( a very bad thing), that banks will be wondering for years what on earth happened to their profits.

And now, this plan is taking all of the pain from Wall Street, no, that's wrong, they're *purchasing* all the pain from Wall Street and transferring it to Main Street.

Please tell me what specific legislation you are referring to here, that Phil Gramm was responsible for four years ago?

 

[JCJRSmith]

The mess didn't start at Fannie and Freddie, it started in Congress, four years ago, when a bill was passed that allowed investment banks to take up their leverage from about 12:1 to 30:1. Thank Phil Gramm for that one, the guy who said that the economy is fine...that Americans are a bunch of whiners.

Wall Street took the laws that they lobbied heavily for....and then "financial engineers" on Wall Street came up with very complex ways to bundle all kinds of debt, far more complex than in the past. The word went out from Wall Street that they were in the market for subprime mortgages of all types, in all kinds of bundles. And the mortgage industry went out and sold mortgages to anyone with a pulse.

That's how it started....and now the pendulum will swing so far in the other direction ( a very bad thing), that banks will be wondering for years what on earth happened to their profits.

And now, this plan is taking all of the pain from Wall Street, no, that's wrong, they're *purchasing* all the pain from Wall Street and transferring it to Main Street.

Actually, I believe that last major piece of legislation pushed thru by Phil Gramm was the Gramm-Leach-Bailey act in 1999.

 

[bsnyder]

Actually, I believe that last major piece of legislation pushed thru by Phil Gramm was the Gramm-Leach-Bailey act in 1999.

I don't know if it was the last, but he wasn't in the Senate 4 years ago, hence my question to the other poster.

I've heard a number of people, including Barack Obama, alluding to the Gramm-Leach-Bailey act as some sort of catalyst or cause of the current problems. And I keep asking someone to please explain the specifics of how that act led to the crisis?

 

[JCJRSmith]

I have to learn to spell. I called it the Gramm-Leach-Baily when it is Gramm-Leach-Bliley. Anyway, here is a wiki:

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

 

[Charade]

That's what Bush, Paulson and Bernanke are asking for.....

Whatever number they end up with.....just double it, at a minimum and that's going to be what it costs.

And then you can add in Medicare part D, some sort of UHC.

ALL will cost considerably more than any government "estimate" ALWAYS!!!

To be fair (I know that's tough sometimes), but nearly the entire Congress is on board with this.

 

[bsnyder]

I have to learn to spell. I called it the Gramm-Leach-Baily when it is Gramm-Leach-Bliley. Anyway, here is a wiki:

http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

I know what the Act is. But I have yet to have anyone explain how that law led to the subprime mortgage crisis, or even how it led to the explosion of mortgage backed securities being sold by investment firms. I'd like to hear just one example of how it had any major effect on the current financial crisis.

In fact, I'd argue that without the passage of that law, Bank of America would not have legally been able to purchase Merrill Lynch this past week. And that purchase saved the taxpayers billions on the bailout plan.