Feels like wind started picking up again in my neck of the woods. May be quite a night ahead. If Sensen fire croses 118 again, it’ll likely be in Malibu by Morning...
Back than $ was backed by gold.
I assume that to stem deflation, government would print money like crazy.
Also, high interest rates would last 3-4 years, not longer.
09/23/2008 9:33:16 PM PDT
· 16 of 25 EddieUSA
to LiberalsSpendYourMoney
Actually, 80% loss is on top of what shares cost now, not 6 month ago or a year ago. Since they got the bail-out, it’s not reflected in trading price, but the way it works is,
If company has total of 100 shares, each share costing $1, total company worth $100.
If company prints another 900 shares, it magically doesn’t cost 9 times more. So, $100 company worth, devided by 1000 shares, = $0.10.
09/23/2008 9:32:05 PM PDT
· 15 of 25 EddieUSA
to LiberalsSpendYourMoney
Actually, 80% loss is on top of what shares cost now, not 6 month ago or a year ago. Since they got the bail-out, it’s not reflected in trading price, but the way it works is,
If company has total of 100 shares, each share costing $1, total company worth $100.
If company prints another 900 shares, it magically doesn’t cost 9 times more. So, $100 company worth, devided by 100 shares, = $0.10.
In my opinion, the best way to proceed at this point, is, instead of government purchasing all the “bad dept”, we should basically partially nationalize some of the banks that are failing.
At this point, I see it as a best way to protect taxpayers. With AIG, government got 80% of the company, diluting existing shares 5 to 1.
To avoid this, some banks would raise capital, while other, in the bigger hole, would be partially nationalized, to be resold a few years later.
Cost to the taxpayers would be a fraction of $700 bil., and it would prevent all out recession.
09/23/2008 8:23:07 PM PDT
· 7 of 85 EddieUSA
to proudtobeanamerican1
Strickly economically speaking, cost of liquid capital would skyrocket.
A few banks that would be left standing would be able to charge anything they want for morgages or loans.
As far as average Joe is concerned, he won’t be able to get a loan or morgage of any kind, period. Let’s see - housing prices drop further, car sales - drop further.
Unemployment skyrockets, as companies can’t borrow.
From previous lessons in economics, it should last about 3 years.