Posted on 09/29/2008 2:35:17 PM PDT by NormsRevenge
I completely agree with what you said. I have a question that has always bothered me in all of this. So the government does not have 700 billion sitting in a bank account somewhere. They have to sell bonds or something to get the money. I would think that in this environment it would be hard to raise the money. So how is that if this bill is passed that they can just start spending this kind of money? Or does it just come from all of the people buying into treasuries in the flight to safety. Because people can pull right back out of there if they decide that is not a good place to be.
That is a good question. I would guess the Fed will provide liquidiy (free paper money, FDIC funds) to support those with deposits in banks with bad loans, or to investors with securitized bad mortgage loans. That is why some of these investment banks became commercial banks - so they could take advantage of the “free” money - er, FDIC insurance. I see over at Drudge, that the Fed is pumping up the cash supply, to provide liquidity. I guess that is “until” Congress passes a bailout, which will have to be financed by that Debt Ceiling they said they were going to raise,... to $11 Trillion, recently.
I hope this helps,
4liberty
THAT IS NONSENSE.
The only time the figure (share price * number of shares) has any meaning is in determining whether a stock is overvalued. If a stock which is overvalued falls in price to match its real value, that's a good thing. It's unfortunate that value was lost, but the falling price was a reaction to the value which had already been lost or never really existed.
Suppose I sell someone a 20-year CD at 41% interest, for a starting value of $10,000. Over the next twenty years, the CD is traded by various people at increasing prices (to match the increase in nominal value). Shortly before the twenty years are up, someone buys it for $1,000,000. Then at the end of the ten years, they bring it in for redemption (it should be worth $1,048,576) and discovers that I skipped town. When was the $1,048,576 lost?
Right but if they raise the debt ceiling again for this bill then does it not take time for the US to actually come up with the funds?
No- That money is not lost. The people who pulled out invested it in something else like maybe into a bank account or treasury. Money is just moving around...And out of the markets.
Don’t be concerned about me. I’ll be OK. What annoys me about a lot of the comments I’ve been seeing on FR and elsewhere (and pissant’s, though a good example, was hardly the worst) is that they are knee-jerk responses, simple slogans that don’t even begin to address the depth or intricacy of the problem before us. We really do not want to see a meltdown of our economy, which of course will be closely followed by a meltdown of the world economy. If it takes a quick dash of “socialism” to stop that, then that dash is worth considering and should not be dismissed out of hand. I can’t count the number of times in my life that I have held my nose while pulling a lever for a political candidate because I could not bear the thought of the greater evil that was the alternative. Frankly, I would like to see the Republicans exercise some leadership on this whole issue instead of just sitting back and screaming “evil socialism” at what the Democrats propose. This is not a problem that will be solved by slogans or posturing.
I agree, no easy answers on this one.
I hope you don’t really work until you drop. I am still getting used to the concept of retirement (i.e., I am still working a little bit, though liking that less and less), but there is a lot to be said for it.
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