Stocks Tumble at Open

reply to post by johnsky

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The bailout has nothing to do with this. The realization that the bailout doesn't work as soon as it is passed is. People are realizing "hey, where is that 700 billion they promised when they passed the bill?" and the answer is "we can't get things moving that fast"

As a result, banks are still hoarding to counteract the bad assets on their books. This isn't about the bailout passing, its about the bailout being too late.

The bail out was a scam.

Since the bailout the stocks have been tanking. They told us that the stocks had went up because Wall Street was anticipating a bailout, this was a lie.

All you had to do was watch CNBC or Fox Business. C.E.O. after C.E.O. was on TV saying that they have available capital. When you pass a 700B dollar bailout these people will not spend there money and this is what's happening.

All you had to do was continue to let stronger banks absorb weaker banks at a chep price and the government would take the bad assets odd the books of the weaker bank.

We didn't need 700B bailout and this has hurt because people will hold onto their money until they see how this money will be spent.

reply to post by Wise Dome

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Stocks have been tanking because the bailout was passed and nothing is done. They thought the bailout would be passed and the government would get right on it. In reality, this bailout takes time. They don't buy up all the bad assets tomorrow.

The market is reacting to the fact this bailout simply doesnt act fast enough to get the banks to lend again. Until those bad assets are OFF the balance sheet, they will not lend. This bailout bill is nothing more than a promise by government that they will buy the bad assets, IN TIME.

That isn't enough for these banks. A guarantee by the government that they will buy these bad assets, eventually, is not going to free up the credit market.

reply to post by grimreaper797

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I agree with this COMPLETELY!

As I've said before, Government is always many steps behind Wall Streets fury to make a buck. Good point Grim.


AB1

and what of the $693 BILLION the US treasury has allready pumped into the banking system in the last 2 weeks?

oh thats right

nothing happened

Other stuff is going on too. Oil is down big, and there is some really interesting currency action as well. As of 1pm est there has been a major move in lots of currency crosses. The dollar is strengthening? and pretty hard too.

reply to post by grimreaper797

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I don't think this is the case at all. People are not so stupid that they are just realizing today that the 700B would not be given out after the president signed the bill.

The stocks are tanking because 700B was not needed. People had available capital they just were not loaning it out because of these bad assets that were on the books.

We did not need to cover the losses of these companies with 700B. They just needed these assets off of the books and that could occur as stronger banks take over weaker banks.

Adding 700B only causes people to hold onto their money because their not going to spend their money if the government is going to spend the taxpayers.

This was a scam.

reply to post by jefwane

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My guess would be because every other currency is losing more value and more quickly...hence giving rise to the USD.

But you're right, there's some seriously odd movement in the currencies.


AB1

reply to post by Harlequin

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That is not going to improve lending dramatically. Its just a bandaid to the real issue. These assets and the banks need to have capital on hand should anything happen. Lehman Brothers was a good example for these banks of what happens when you have a great deal of bad assets with not enough capital on hand to cover them if something goes sour. Your bank goes under.

This is the banks reaction to what happened. We need to face the problem, not dance around it. Pumping equity into the market just inflates the dollar. Promises by government don't DO anything, they are just promises.

The government may have passed the bill, but they are NOT acting on it, and that is what is hurting the economy. I think government thought "we will pass the bailout, lending will resume, and we can take our sweet time buying these assets."

Not going to happen like that. Lending practices won't change till their balance sheets change.

The government sounds like a Popeye cartoon. - Wimpy:" I will gladly pay you Tuesday for a hamburger today." Sounds like the banks are telling the government:"Yeah, right. Your credit promise isn't good here anymore." Who the heck would be stupid enough to trust a bankrupt government for any financial backing?

[edit on 10/6/2008 by sad_eyed_lady]

reply to post by Wise Dome

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My personal opinion on this one is that they CLAIM that they cannot start lending out the reserves that they DO have for fear of insolvency WITH those bad debts on their books.

In as much as I hate to say this, I DO think that a majority of them did in fact think that a flood of capital via purging their crappy assets would have indeed been an overnight process. While, Paulson has 45 days to come up with a 'plan' that he purports he HAS been working on anyway (smart in one way, suspicious in another), it may give one pause to think "hmmm as a former investment banker and worth 700 million himself, why would he NOT try to profit from it himself as much as he possibly could too"? I mean, wouldn't you? [/sarcasm]

I can see his dinner table conversation:

"Don't worry honey, we'll still make more"


AB1

reply to post by Harlequin

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Bingo!!!!!!!!!!!!!!! I guess we are the only ones so far following the trail of the corrupted treasury department printing presses, so much for the 700 billion, before the month is over the tax payer will be footing for trillions of dollars on bail out money that will be squandered to fix something that right now is to late to fix.

They are pumping money!!!!!!!!!!!!!!!!!!!! already, yes our money people our tax money!!!!!!!!!!!!!!!!!!!!!!!

The banks in Europe are falling and what many are forgetting is that we are going to pay for their loses also as part of the anti American tax payer bill.

America's politicians has gone mad and now they are going to finish bankrupt the nation.

And the economy is going down the craper anyway.

Thanks to the piece of crap we have for leaders.

Yes, they are. The majority of people thought that the promise of government would some how resume the lending practices among banks like government was giving 700 billion out tomorrow.

The only difference between today and last week is a promise by government. That really doesn't mean much to the banks on wallstreet.



Where is the logic? The 700 billion to buy bad assets wasnt necessary because the only reason loaning came to a hault was bad assets being on their books? What?



Um, no, it doesn't work that way. In fact, I don't even know where that connection came from. The bad assets don't just disappear because you absorb another bank with MORE bad assets, hence the reason they needed to be bought.

You pretty much just said "they can get the bad assets off their books by acquiring MORE bad assets, along with good ones." In reality, that just makes them big enough to hide their true numbers and makes them too big to fail. That is a DANGEROUS market strategy to have.

They have X amount of bad assets. As a result, they need Y amount of capital on hand. If they don't, should something happen, like what happened to Lehman Brothers, they go under, whether they have the assets or not.

It doesn't matter if you have 900 billion in assets. If you can't raise 50 billion in CAPITAL within X amount of time, you go under. The issue was not being able to raise capital fast enough. Other banks do not want to face a similiar fate.



Thats not true. People are cutting spending because they see credit markets getting really tight and they have been living on their credit cards all this time (beyond their means). This was going to happen, bailout passed or not.

reply to post by marg6043

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Yes Marg, and sadly, the day isn't even close to over yet.

Im beginning to bet with myself that either today or tomorrow WE will actually see suspended trading.


Sigh...


AB1

A couple points. 1st off we dont know if the bail out will work or not. Nothing has been implemented yet. It will be months before we will know how it has worked. Most people in finance knew this, that is why the market is down. Secondly, although most of you think this is a US problem, it is global. So unless Europe does something they are going to be far worse off. It was also below 10000 in 2004 not 1999. If you have extra money laying around now is the time to start buying stock. Using Dollar cost averaging of course. This is where new millionairs will be made. You can take that to the bank, or put it in a safe. Curious to see what tomorrow brings. After all webbot supposedly predicts some major disaster. Bet it is in the European Markets. Russia's complete economic collapse maybe?

reply to post by grimreaper797

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You seem to have fallen hard for this nonsense.

If you listened to the problem, it's about money being loaned out between banks. Banks were not loaning money to other banks because of bad assets.

So these banks did not want to risk their capital, it's not that they didn't have capital available.

So the 700B dollars will be used to cover the losses of these banks and that was not needed. We don't even have a clue as to how much these assets are worth.

Bush and Paulson said they just threw out that number 700B because the problem was big.

Again, you seem to have fallen hard for this nonsense.

When you remove these assets off the books, then credit limits will increase and banks will be willing to risk their capital.

THE 700B IS JUST BEING USED TO COVER THE LOSSES OF THESE COMPANIES. WE DON'T SHARE IN THEIR PROFITS SO WE SHOULDN'T HAVE TO COVER THEIR LOSSES!

Why you want to cover their losses is beyond me.

You also don't understand why the markets are tanking.

When the bill didn't pass, the markets corrected themselves and fell 777 points.

The next day the markets were up and then they went up again.

When the bill passed the market has been tanking.

Why? Because people with capital will not spend or risk their money in the markets until they see what will happen with the 700B.

So if anyone caused a FREEZE in the markets it's the government with this bill.

C.E.O. after C.E.O. was coming on CNBC and FOX business talking about how they had available capital and they were ready to do some bargain hunting.

The bailout stopped this.

reply to post by tide88

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Russia has the third largest reserves in the World. It will not be going bust, but the government will finally decided to introduce a proper working system, which isn't controlled by the state and Oligarchs.

Iceland could face a potential economic collapse, a member raised its possibility back in March this year. The currency and financial markets of Iceland have been eviscerated.

Inching toward the 9700 mark as we speak . . . it was steady around 9800-9850 for most of the day so far but it is clearly sagging . . .

reply to post by GoalPoster

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Yes, but the key moment will be around 15:15 EST.... this is always the rally/sell-off point in the US market it seems...about 1.25 hours from now make the judgements...not just yet...


AB1

huh, I guess you just don't read. That is exactly what I just said these past couple posts. Lehman Brothers tanked because they didn't have the capital to cover the bad assets that went sour.

AS A RESULT, other banks started to hoard capital. Giving them more capital doesn't solve the problem. Please try to read.



700 billion is at the very least, a good number to start with.



That is the point. To have them start risking capital again.



Yes you do. Your lack of understanding as to how we are vitally connected to the success of wallstreet shows your general lack of knowledge on the matter.

Further to boot, you lack some sort of reading comprehension because you say I don't understand why the markets are crashing, then reiterate what I have been saying.