The politics of panic » Forum Post by Paladin77

well welll still you all do not get it

there is an answer out there but you all are too blind to see it or you have been so brainwashed so much you can not accept the simple truth

what is this answer to all this well go to youtube.com checkout my channels at jdcriveau and there you will find the answers to all this hogwash you are complaining about

of course some of you are so brainwashed that you may find me amusing or comical but the truth is why do you all idots out there believe that a politician has to be the answers to our problems

OH YEA THE POLITICAL PARTIES HAVE TOLD YOU SO IT MUST BE TRUE ah you are such a fool

so to all you who have a brain and are free thinkers checkout youtube.com jdcriveau and listen to what he is saying

as the rest continue to go on complaining and do nothing

jd

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kingbee

Join Date 04/2004

+42

Have you seen evolution?

have you seen subatomic particles? how about those forms of matter which constantly pass through us?

if not, my brother, it's time to sign you up as a novice member of the church of subatomic particles and stuff passing through us. please send your check to PO Box 1134, land'o'goshen, ar. no stamps or gm stock certificates accepted.

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kingbee

Join Date 04/2004

+42

Religion is the belief in things unseen.

no matter how much you believe, it ain't religion unless and until the plate is passed around.

+1

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no matter how much you believe, it ain't religion unless and until the plate is passed around.

Good one. you got me to smile.

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OH YEA THE POLITICAL PARTIES HAVE TOLD YOU SO IT MUST BE TRUE

Thanks for the info, could not find it so i stopped paying attention to you. have a great day!

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the system can handle it [bank collapses] if left alone

It can't by itself. Banks are about confidence. They need people (and investors) to give them money which they can then give to other people, making a profit on the difference in the interest. The moment people and investors start to feel their money isn't safe with the bank, they'll take it out. If enough people do that, you end up with a run on the bank, where they don't have enough money (to hand) to give to those people, and it collapses. This then makes people doubt other banks more - if that one collapsed, why shouldn't the others? You then risk having your entire banking system come crashing down. This can be alleviated if the government bails out at the individual level - that is, guaranteeing a high amount of savings per person to prevent the individual run (although investors are still likely to withdraw their money if they have doubts, but at least they'd hopefully be in a better position to judge the banks reliability and less prone to wild panic). It could also be stopped by the government going to the next stage and guaranteeing the banks viability. Another option is for the government to create a government bank for people to use. Bailing out the banks may not be the best method, but it does at least solve the short term issue of the banking system collapsing.

How about the fact that dumping money on the economy has a MUCH larger chance to throw us into depression than having every bank in the country go out of business.

What fact? Bailing out the banks makes such a depression less likely. It improves things in the short term, it's in the long term that the problems occur (e.g. bail out the big banks and banks will look to merge to become big, causing monopoly problems. Furthermore they'll feel more comfortable taking risks since they know they'll be bailed out if it goes sour).

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It can't by itself. Banks are about confidence. They need people (and investors) to give them money which they can then give to other people, making a profit on the difference in the interest. The moment people and investors start to feel their money isn't safe with the bank, they'll take it out. If enough people do that, you end up with a run on the bank, where they don't have enough money (to hand) to give to those people, and it collapses. This then makes people doubt other banks more - if that one collapsed, why shouldn't the others? You then risk having your entire banking system come crashing down. This can be alleviated if the government bails out at the individual level - that is, guaranteeing a high amount of savings per person to prevent the individual run (although investors are still likely to withdraw their money if they have doubts, but at least they'd hopefully be in a better position to judge the banks reliability and less prone to wild panic). It could also be stopped by the government going to the next stage and guaranteeing the banks viability. Another option is for the government to create a government bank for people to use. Bailing out the banks may not be the best method, but it does at least solve the short term issue of the banking system collapsing.

Banks have failed before. It happens. It's not like this is the first banks to have ever went under in our history. That's why we have the FDIC and other catches in place to ensure that the public's money isn't just lost if a bank itself goes under. Loans are about confidence, not necessarily banks. Just because a bank went under somewhere else you don't draw the money out of your bank. If you're saying that this is the problem that happened, then you're just talking about people being stupid. Which I do have to agree happens a lot today because people don't bother to understand how the system works.

What fact? Bailing out the banks makes such a depression less likely. It improves things in the short term, it's in the long term that the problems occur (e.g. bail out the big banks and banks will look to merge to become big, causing monopoly problems. Furthermore they'll feel more comfortable taking risks since they know they'll be bailed out if it goes sour).

Okay, that's what the FDIC is for. The FDIC insures the money that we put in banks. Bailouts upsets this balance and makes not the people in the banks worry, but the invenstors in the economy. Government interference in the market makes the market unpredictable when it is on this large of a scale. The market is self-correcting, it goes up then it will go down, these "swings" are made as stock switches hands from one investor to another. Right now the investors are just sitting still, that's what caused the problem not the market going down. Unless you have people to invest in the market there is no market.

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It can't by itself. Banks are about confidence. They need people (and investors) to give them money which they can then give to other people, making a profit on the difference in the interest. The moment people and investors start to feel their money isn't safe with the bank, they'll take it out. If enough people do that, you end up with a run on the bank, where they don't have enough money (to hand) to give to those people, and it collapses.

Sorry kid, I have to agree with MOMMIE! You are writing about two different sides of the banking industry. If I may explain?

People put their money in banks, the banks lend that same money out to people wanting to buy a house or start a business. The pepple that initially put thier money in the bank get paid for this in the form of interest from the person that bought the house or started the business. if the business fails or the house gets forclosed upon, the bank has to liquidate the assets in order to pay the depositors. If too many businesses fail or too many people don't pay thier mortgage the bank does not have the money to pay the depositors. Depositors get scared and pull thier money and the bank fails. To stop that from happening the FDIC insures every personal account up to 200k, the depositors are covered no worries.

The other side of the bank business are its investments. A lot of banks and insurance companies as well as nations bought the repackaged bad mortgages from Fannie and Freddie, they bought these bad loans because they are backed by the full faith and credit of the United States of America, or so the Congress said until fannie and freddie failed. Those investments are not covered by the FDIC because they are investments, speculation and if they fail you lose. Our out of touch government is now trying to live up to the promise it made years ago to cover any and all losses caused by the bad mortgages. That comes to 168 billion dollars, so they came up with a bail out bill of 700 billion dollars. Got to love government math. And to stimulate the economy the not so bright government will throw another 6 trillion dollars on top of the 168 billion. I know I must be stupid because if the debt is 168 billion why do I want to spend almost 7 trillion dollars to pay it off?

It would have been cheaper to just buy the bad mortgages back from the investors and slowly get rid of the properites over time. Because we were told to panic they panicked and we are going to be in debt for decades as we all get poor. This is called spreading the wealth.

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we have the FDIC and other catches in place to ensure that the public's money isn't just lost if a bank itself goes under...that's what the FDIC is for. The FDIC insures the money that we put in banks

Last I checked there wasn't a 100% guarantee on all money deposited into the banks.

Just because a bank went under somewhere else you don't draw the money out of your bank. If you're saying that this is the problem that happened, then you're just talking about people being stupid

It's not stupid at all. If a bank fails, then the likelihood of other banks failing is higher. The optimal strategy for an individual that believes either that the bank has a significant chance of failing, or alternatively that a significant number of people (investing/banking with that bank) believe that the bank has a significant chance of failing, is to take any money not fully guaranteed out of the bank. So, if you see one bank that only a short time ago looked as fine as the others fail, you're naturally going to be spooked and worry the same thing could happen to your bank. Even if you aren't spooked though and believe your bank is viable, if you think others will be, then you should take your money out of the viable bank because even if it's viable it could still go under due to the lack of confidence.

People put their money in banks, the banks lend that same money out to people...The other side of the bank business are its investments

They're all investments actually. People (and companies) invest in banks. The banks then choose where to invest that money (e.g. people/companies). Since that money is invested (and hence illiquid) rather than sitting around in a vault somewhere, if everyone wants to take out the money they've invested in the bank at short notice, they won't be able to. Also it wasn't $200k insured, it was $100k.

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Last I checked there wasn't a 100% guarantee on all money deposited into the banks.

I don't see where anyone said there was 100%, Every depositor knows their money is insured up to 200k per account, this is because banks are not allowed to loan out more than 10% of their assets. The money in banks is safe from a run in most cases just because of that law,

They're all investments actually. People (and companies) invest in banks. The banks then choose where to invest that money (e.g. people/companies). Since that money is invested (and hence illiquid) rather than sitting around in a vault somewhere, if everyone wants to take out the money they've invested in the bank at short notice, they won't be able to. Also it wasn't $200k insured, it was $100k.

Your information is out of date. It was pushed up to 250K last year or the year before, I rounded it down just to keep the numbers round, and no bank is allowed to invest more than 10% of their assets. That means that 90% of their money is safe, What causes a run on a bank is the fact that most branches don't have enough cash on hand even though they have the money. There is just enough cash floating around for every person to take 500 dollars, any more than that and if everyone pulls money out the banks need time to get the cash from the reserve banks that actually hold the cash.

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If you and your family have $250,000 or less in all of your deposit accounts at the same insured bank, you do not need to worry about your insurance coverage –your deposits are fully insured.

http://www.fdic.gov/news/news/financial/2008/fil08102a.html

What is FDIC’s role in a bank failure?
In the event of a bank failure, the FDIC acts in two capacities. First, as the insurer of the bank’s deposits, the FDIC pays insurance to the depositors up to the insurance limit. Second, the FDIC, as the “Receiver” of the failed bank, assumes the task of selling/collecting the assets of the failed bank and settling its debts, including claims for deposits in excess of the insured limit.

http://www.fdic.gov/consumers/banking/facts/index.html

I hope this lets you understand the FDIC's role a little bit. I think we have to go back to basic economics class first though, cause he's not understanding how the system works.

Okay, first off, what does it mean when a bank goes under? It means that the company part of the bank is running more than a certain level negative, I can't remember what level that they consider that, but you can look it up I'm sure. (Sorry, have a headache atm and not researching everything for you.)

Does this mean that they have no money? No, you still have money in the bank, the bank still has money in their vaults, it's just the administrative end that folded.

Why can't I pull out all of my money from a bank whenever I want? Well, this would depend on how much money you have in the bank and how many other people are pulling their money out. A bank is required to keep only a certain amount of cash on hand in their vaults because of secruity reasons. The money will be shipped to the Federal Reserve Bank and the bank will be given an IOU by them for the money. That's why you see armored trucks go by banks all the time, they're usually shipping money to or from the Federal Reserve Bank or from that branch to the bank's main branch office. Most of the transactions reguarding bank to bank transfer of funds is done electronically through the Federal Reserve Bank. Because of this there really isn't as much actual physical money in circulation as the total amount of depositors have put into banks.

What about loans? Well, banks are able to make loans off of a certain percentage of what their depositors have put into the bank. This number is defined based off of the normal yearly deposit and withdrawl amounts. These numbers are considered very carefully by a bank and are gauged to allow them the most profit and you the best interest on your deposit. The interest that you get from your bank is usually paid for by the loans that they give.

Why wouldn't banks going under directly affect the stock market? The stock market uses virtual currency called stocks. It is given a dynamic value based off of how well the company that issued the stocks is doing. When a company goes under people will pull their stocks out of the company and then invest in another company.

Why do bail outs affect the stock market? Well, let's say that you have stock in Company X. Company X is hitting rock bottom so people start pulling their money out. Suddenly the government steps in and decides to "bail out" Company X and give them a bunch of money so that they don't fold. The stock for Company X goes back up again as if by magic. When this happens too many times you'll have investors leave their money in there just to see if Company X is going to get bailed out or not.

The stock market is a completely separate thing from the banking system. As a matter of fact we could have no private banking system and the stock market wouldn't be affected. The stock for that particular bank would be worthless but it's the same as an electronics store or a telephone company going under, nothing more.

Hope this helps you to understand a little bit.

+1

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Hope this helps you to understand a little bit.

That was very well done! Even an idiot could understand it. you win a cookie.

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Your information is out of date. It was pushed up to 250K last year or the year before

Still worrying inadequate. If you're going to tell me my information is out of date, you should have the decency to actually check that statement before making it. I'll help you out this once though. At the time where you had banks starting to fail, what was the insurance level?

Time of bank failure: ~Sept08. Time of increase in deposits to 250k: ~Oct 08 (and also only a temporary increase - it is for now pencilled in to return back to 100k).

So the relevant amount when discussing the response to that bank failure is in the context of 100k insurance, not 250k insurance, and certainly not the 200k you still keep referencing.

Why wouldn't banks going under directly affect the stock market? The stock market uses virtual currency called stocks. It is given a dynamic value based off of how well the company that issued the stocks is doing. When a company goes under people will pull their stocks out of the company and then invest in another company...The stock market is a completely separate thing from the banking system. As a matter of fact we could have no private banking system and the stock market wouldn't be affected.

The stock market doesn't use a virtual currency, it's based off a real currency. Lets say you have $100k, and you want to invest it. You can go to a bank who will invest it for you, pay you a basic interest rate, and you'll have it guaranteed. Or, you can go to the stock market, and lend it to a company in return for (partial) ownership of that company and the right to receive a share of dividends (there are other alternatives as well, but I'll keep things simple for now). You will pay your money based on the expected return you'll make from that stream of future dividends weighted against the increased risk. This then results in the company's share price (the amount that investors overall are prepared to pay for a certain share of those dividends, ignoring for now the value of ownership). Now if that company is suddenly expected to do better than forecast, that means they're likely to pay out more in dividends, and hence it's shares are more valuable, so the price goes up. If instead it is suddenly expected to do worse than previously expected, the reverse will happen.

Now lets say you have a major bank fail. Given the various regulations in place to try and prevent this happening, it's a sign that somethings gone seriously wrong, and in turn means that the other banks may well do worse than expected, hence you'd expect their share prices to drop (in other industries it'd be less clear cut - on the one hand a failing company could indicate tougher market conditions driving the share price down, yet against that there'd now be reduced competition meaning more profits+market share for the remaining companies, driving the share price up). What about the rest of the economy? Well if the banks are failing, that's going to hurt companies overall - for example they're going to find it harder to get investments for projects that will make more money, in turn reducing the amount of money they're expected to make, which will cause the share price to fall. They're also much more prone to cash flow shortages causing them to go under, since it will be more difficult to obtain a bridging loan to keep them going even if their underlying business is profitable. This risk would then need to be factored into the share price as well (since if a company goes under you're unlikely to get much, if anything). Meanwhile if the banks fail, those shareholders aren't likely to get anything back on their shares - they can't just take all their shares and put them in a different company in an equal proportion, because their shares are worthless.

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if you are looking for freedom of the mind

if your are looking for the truth

if you see the very fault of our inner governmental circle

if you believe you are important and you matter

if you are unhappy at what is

if you believe we can make a better tomarrow

then now go to youtube.com

go to jdcriveau check out those videos

support him pass them on to others

join jd to make the united states the country it should be

remember the party system in congress brought us to this point

it is now our time to make it a free governmential body

it is now our time to give all congress a term limit

vote in indepentents not party people

REMEMBER WE ARE FREE WILL PEOPLE AND WE DO NOT NEED A POLITICAL PARTY

TO TELL US HOW TO THINK AND WHAT WE ARE

SO GO TO YOUTUBE.COM CHECKOUT jdcriveau

you deside where you stand and if you agree with jdcriveau then support jd

pass jd on to others

help jd free this nation and in turn we will be an example for the rest

thank you

jd

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Still worrying inadequate. If you're going to tell me my information is out of date, you should have the decency to actually check that statement before making it. I'll help you out this once though. At the time where you had banks starting to fail, what was the insurance level?

It was at 250k and had been for about a year or more. It was a temporary increase that lasts through December 31 2009 then Congress will bring it back down to 100k unless they want to make it permanent, but it was before the housing crisis became public which was before the banks started to fail a year later. Do you wish to help me out some more?

So the relevant amount when discussing the response to that bank failure is in the context of 100k insurance, not 250k insurance, and certainly not the 200k you still keep referencing.

It is only relevant when the banks fail not before. If we let them go bankrupt it would not matter what the insureance is the money is covered. And go belabor the point, banks can not invest more than 10% of their total assets. Meaning 90% is still liquid, the only problem is that it is being held by the government.

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Now lets say you have a major bank fail. Given the various regulations in place to try and prevent this happening, it's a sign that somethings gone seriously wrong, and in turn means that the other banks may well do worse than expected, hence you'd expect their share prices to drop (in other industries it'd be less clear cut - on the one hand a failing company could indicate tougher market conditions driving the share price down, yet against that there'd now be reduced competition meaning more profits+market share for the remaining companies, driving the share price up). What about the rest of the economy? Well if the banks are failing, that's going to hurt companies overall - for example they're going to find it harder to get investments for projects that will make more money, in turn reducing the amount of money they're expected to make, which will cause the share price to fall. They're also much more prone to cash flow shortages causing them to go under, since it will be more difficult to obtain a bridging loan to keep them going even if their underlying business is profitable. This risk would then need to be factored into the share price as well (since if a company goes under you're unlikely to get much, if anything). Meanwhile if the banks fail, those shareholders aren't likely to get anything back on their shares - they can't just take all their shares and put them in a different company in an equal proportion, because their shares are worthless.

Sorry, I lost track, what is your point?

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SO GO TO YOUTUBE.COM CHECKOUT jdcriveau

OH YES, YouTube can SAVE AMERICA!!

Wow, why has NO ONE thought of THAT before? All we ever needed was YOUTUBE! Is your bank failing? Is your house being forclosed on? Have you lost your job?

Yes??

Don't worry, just go to YOUTUBE!

(The above said dripping with so much sarcasm there is now a swiming pool of sarcasm under me...)

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(The above said dripping with so much sarcasm there is now a swiming pool of sarcasm under me...)

Hmm, my waders aren't high enough.

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Hmm, my waders aren't high enough.

Haha... no... not even swimmies would help you in that pool.

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Still worrying inadequate. If you're going to tell me my information is out of date, you should have the decency to actually check that statement before making it. I'll help you out this once though. At the time where you had banks starting to fail, what was the insurance level?

Time of bank failure: ~Sept08. Time of increase in deposits to 250k: ~Oct 08 (and also only a temporary increase - it is for now pencilled in to return back to 100k).

So the relevant amount when discussing the response to that bank failure is in the context of 100k insurance, not 250k insurance, and certainly not the 200k you still keep referencing.

First off let's discuss why it was ever raised in the first place. Because people were upset when they didn't pay attention to the 100k limit of FDIC insurance when a bank went under and started to complain about it. The 250k limit was to make people happy. Please don't act like it's all banks that went under, either. Sorry, but that's the tone that's coming across not sure if it's meant or not, but there are plenty of banks that are still alive and kicking.

The stock market doesn't use a virtual currency, it's based off a real currency. Lets say you have $100k, and you want to invest it. You can go to a bank who will invest it for you, pay you a basic interest rate, and you'll have it guaranteed. Or, you can go to the stock market, and lend it to a company in return for (partial) ownership of that company and the right to receive a share of dividends (there are other alternatives as well, but I'll keep things simple for now). You will pay your money based on the expected return you'll make from that stream of future dividends weighted against the increased risk. This then results in the company's share price (the amount that investors overall are prepared to pay for a certain share of those dividends, ignoring for now the value of ownership). Now if that company is suddenly expected to do better than forecast, that means they're likely to pay out more in dividends, and hence it's shares are more valuable, so the price goes up. If instead it is suddenly expected to do worse than previously expected, the reverse will happen.

Now lets say you have a major bank fail. Given the various regulations in place to try and prevent this happening, it's a sign that somethings gone seriously wrong, and in turn means that the other banks may well do worse than expected, hence you'd expect their share prices to drop (in other industries it'd be less clear cut - on the one hand a failing company could indicate tougher market conditions driving the share price down, yet against that there'd now be reduced competition meaning more profits+market share for the remaining companies, driving the share price up). What about the rest of the economy? Well if the banks are failing, that's going to hurt companies overall - for example they're going to find it harder to get investments for projects that will make more money, in turn reducing the amount of money they're expected to make, which will cause the share price to fall. They're also much more prone to cash flow shortages causing them to go under, since it will be more difficult to obtain a bridging loan to keep them going even if their underlying business is profitable. This risk would then need to be factored into the share price as well (since if a company goes under you're unlikely to get much, if anything). Meanwhile if the banks fail, those shareholders aren't likely to get anything back on their shares - they can't just take all their shares and put them in a different company in an equal proportion, because their shares are worthless.

A stock doesn't have a set value. Stock values change from company to company. They are assigned a value only when they are traded. This is what I meant when I said they were virtual currency, which you agreed with all those points yourself. A stock sitting in your hand will buy you nothing unless it is cashed in.

Not all companies give out dividends. It is usually the case, but not always and can vary from company to company and month to month (most dividends are handed out either monthly or yearly) how much you'll get in dividends based on your investment.

The one thing that I didn't address in my above post and that you reminded me of (sorry like I said I had a headache) was why the banks failed in the first place, subprime morgages. Under the Clinton administration the regulations on morguages were made more lenient in order to entice lenders to allow more people to own their own homes and be able to get a morguage. Most of these loans were given with highly variable interest rates or interest rates that were set to go up in ten years. In the last five years especially there has been a huge increase in the number or homes forclosed on because of subprime morguages and people not being able to meet their payments. Most if not all of these morguages were given through banks. When the forclosures got to be more prevelent that new morguages being given out then you have a problem. The bank is then loosing on their investments and subsequently goes under.

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It was at 250k [at time of lehmans failure] and had been for about a year or more

Care to provide a source to back that up?

I lost track, what is your point?

Having a (big) bank fail is a major problem for the economy (and will have a negative impact on the stock market). Certainly not a minor problem that should be brushed off as you indicated in your original post.

let's discuss why it was ever raised in the first place. Because people were upset when they didn't pay attention to the 100k limit of FDIC insurance when a bank went under and started to complain about it. The 250k limit was to make people happy

The reason it was raised was primarily to prevent runs on the remaining banks and shore up the banking system as a whole. As the sums required to go past the insurance limit get higher, so to does the incentive for the person investing it to actually get financial advice on the best way of investing their money, and the risks involved, and getting such advice becomes affordable.

Please don't act like it's all banks that went under, either

They didn't, thanks in large part to the bail out of the banks (and increase in depositers insurance) which is the point I've been making. Had there not been any action after the first main bank failed, then you likely would have seen many of the other banks fail.

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Having a (big) bank fail is a major problem for the economy (and will have a negative impact on the stock market). Certainly not a minor problem that should be brushed off as you indicated in your original post.

The bank going bankrupt will have other banks picking up the bank and moving on, the bailout money crippled the economy. In trying to save a few banks now all banks are subject to fail. When the treasury secretary got all the big banks in and said you all have to take this money before you leave the room it doomed us. Yes, I know Mr. Bush was the president at the time. A stupid idea is still a stupid idea no matter who is the president. At the time the banks were worried about 168 billion dollars in bad mortgages. This is why they rushed through 700 billion dollars. Once the banks smelled money they started to buy the failing banks just to get a piece of that money. Then insurance companies started to to buy into it so they could get a piece. Government was giving free money because the Congress has no idea what they are doing,

They didn't, thanks in large part to the bail out of the banks (and increase in depositers insurance) which is the point I've been making. Had there not been any action after the first main bank failed, then you likely would have seen many of the other banks fail.

Sorry, but I saw no evidence of this, please explain.

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Please don't act like it's all banks that went under, either

They didn't, thanks in large part to the bail out of the banks (and increase in depositers insurance) which is the point I've been making. Had there not been any action after the first main bank failed, then you likely would have seen many of the other banks fail.

Taken out of context. *sigh*

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